AT&T-Virgin Islands has agreed to pay $169,608 in disputed franchise taxes in order to obtain a certificate of good standing and continue to do business in the territory.
However, the money will be returned to AT&T if it wins its court challenge of recalculated franchise taxes.
Caneel Bay also has paid some disputed back franchise taxes but under a similar agreement.
The issue arose in 1998 when then-Lt. Gov. Kenneth Mapp declared that franchise taxes had been miscalculated going back to 1971 and demanded that V.I. businesses pay the recalculated taxes retroactively.
A letter sent to AT&T demanded payment of $484,010.79 in redetermined franchise taxes, plus penalties and interest going back to 1982.
Shelly de Chabert, spokesperson for AT&T, said AT&T paid the back taxes for six years, which is the most it could owe.
"We have paid the taxes, but have also petitioned in Territorial Court for a declaratory judgment on how the tax should be calculated," de Chabert said. "I am confident the court will favor our position."
The government is maintaining that the capital stock in the corporation, on which franchise taxes are based, did not include the capital paid in since the company was formed here in 1971.
But AT&T says it does not owe the government any additional franchise taxes because by standard accounting definition, "capital stock" refers only to the stock that exists
at the time the corporation is formed, which means there are no grounds for recalculation.
The $169,608 represents recalculated franchise taxes from 1993 to 1998, according to de Chabert, but that money, paid under an interim agreement, would be returned if the court rules in AT&T's favor.
The Lieutenant Governor's Office issued a release Wednesday saying it had collected $540,000 in back franchise taxes under an interim consent order from AT&T and Caneel Bay, which has filed suit along with AT&T for a judgment.
The lieutenant governor's release said, "An audit conducted last year revealed that for years, corporations have underpaid their annual franchise taxes. Thus, our office
has commenced the process of collecting these back taxes."
