Tax & Estate Planning

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Estate PlanningEstate planning can be challenging in some circumstances, there may be disagreement between those forming and setting up the plan and the family members, friends, and other beneficiaries involved. Often, these misunderstandings can be cleared up through communication. One particular issue, however, has a way of creating problems for those expecting to be named as beneficiaries in a loved one’s estate plan: undue influence.

Undue influence takes place when a person in a position of power manipulates an elderly or ill person into forming or modifying an estate plan in a way that benefits him or her. Typically, this individual will be a caretaker or someone who has some control over the grantor’s finances or living situation. Whether a health care worker, an accountant or a relative, such individuals likely wouldn’t have been named as a beneficiary had he or she not been in the position to influence the estate planning process.

This is why such an individual is said to have “undue influence,” as his or her role in the grantor’s life normally would not eclipse the role of the deceased’s spouse, children, and/or other family members.Continue Reading What Constitutes ‘Undue Influence’ in Estate Planning?

IRS Form 1023For nonprofit organizations, navigating the process of establishing tax-exempt status can be a challenging experience, but the benefits are more than worth the effort. Contributors being able to deduct donations from your taxes, being exempt from income and property taxes and having access to funding through grants, for example, are just a few of the…

Carole Chestnut appealed a judgment in favor of her aunt, Elsa Goodman. The jury found Chestnut liable for negligent misrepresentation when she convinced Goodman to give her an interest in her property on St. Croix, U.S. Virgin Islands in exchange for Chestnut’s promise to move in and care for Goodman in her advancing age.
Continue Reading Misrepresentation Requires a Promise to Act Now

U.S. Virgin Islands residents pay income taxes to the Virgin Islands Bureau of Internal Revenue (VIBIR) rather than the Internal Revenue Service (IRS). The appellants in the recently decided case, Vento v. Director of Virgin Islands Bureau of Internal Revenue, (C.A. 3 April 17, 2013). Richard and Lana Vento filed a joint 2001 income tax return with the VIBIR, as did their three adult daughters. The United States argued that Richard and Lana Vento and their daughters (collectively, "The Ventos") were required to file those returns with the IRS instead. The proper tax jurisdiction depended upon whether they were bona fide residents of the U.S. Virgin Islands as of December 31, 2001.Continue Reading U.S. Third Circuit Uses Vento for Guidance on Residency

There is no guarantee that you will not be audited by the Virgin Islands Bureau of Internal Revenue (BIR), but there are four (4) simple steps that you can take to minimize your chances of being audited and, if you are audited, to minimize your chances of having to pay additional taxes, penalties and interest.Continue Reading Keeing the VI Bureau of Internal Revenue at Bay on Audits

U.S. Virgin Islands Governor John P. de Jongh  De Jongh has executed an executive order this past week laying the groundwork for new economic and cosmetic renewal projects in historic towns on St Croix and St Thomas.

“The United States Virgin Islands recognizes the importance of revitalizing these once-vibrant towns with an infusion of new business and economic opportunities, to renew their physical appearance, and to rejuvenate and diversify the local economy by providing incentives for business relocation and job creation,” de Jongh said in the order.

Accordingly, Government House will establish Enterprise Zones within those towns “in order to attract new businesses and provide incentives for investment in order to sustain the future preservation of these towns for the People of the Virgin Islands.”Continue Reading Governor Promotes Urban Renewal with Tax Benefits

U.S. Virgin Islands Delegate to Congress Donna Christensen has introduced legislation that would create an innovative tax program that would leverage private pension assets to raise funds for infrastructure development in the U.S. Virgin Islands.  The bill amends the Internal Revenue Code of 1986 to assist in the recovery and development of the Territory by providing for a reduction in the tax imposed on distributions from certain retirement plans’ assets which are invested for at least 30 years under a U.S. Virgin Islands investment program.  The new program is projected to raise approximately $250 million a year dedicated to infrastructure of the U.S. Virgin Islands, while simultaneously raising an additional $500 million a year for the U.S. Treasury. Continue Reading New VI Tax Break Legislation Introduced in U.S. Congress

An interesting tax case with implications for beneficiaries of the Virgin Islands Economic Development Program is currently being fought in U.S. Tax Court.  On April 1, 2010, Arthur I. Appleton filed a Petition with the Tax Court to challenge as void the tax assessments leveled against him by the Internal Revenue Service (“IRS”) because, he argued, the assessments were imposed after the expiration of the statute of limitations.

Under Section 932 of the Internal Revenue Code, Virgin Islands residents, like Appleton, are required to pay income tax directly to the Bureau of Internal Revenue (“BIR”), not the IRS, pursuant to the “mirror code”, where the term “Virgin Islands” is substituted for the “United States” in the Internal Revenue Code. Yet, the IRS retains audit and assessment powers.  Continue Reading Third Circuit Overrules Tax Court on EDC Case