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IRB Collections Top $485 Million

July 26, 2005 – Rebuking senators for questioning his leadership capabilities, Bureau of Internal Revenue Director Louis Willis presented members of the Senate Finance Committee on Tuesday with a $485.5 million revenue collection figure for fiscal year 2005 — enough to fund 85 percent of the government's new operating budget.
"There were people who questioned my qualifications, said I didn't have enough degrees, etc.… But I think that my department is the best in the government. We've brought in $485.5 million in collections so far this year, and I project that number will increase to $610 million by the end of this fiscal year," Willis said.
Willis listed many other achievements, including $20 million collected in excise taxes — a new high for the territory — and the successful processing of income tax refunds for fiscal year 2004.
"This is our most outstanding accomplishment this year — for the tax year 2004, IRB paid $39.7 million in income tax refunds before May 31, without incurring any additional cost for interest to the government," Willis said. He explained that when a tax refund is not processed on time, the government has to pay the taxpayer interest on the refund money requested.
Based on that information, Willis urged senators to support the governor's budget recommendation of $10.1 million for fiscal year 2006 so the IRB could continue to meet its revenue-collecting responsibilities. Willis floated the idea of a lump-sum budget in order for the bureau to have some flexibility in allocating money for employee training.
Willis explained that because the IRB is a "time driven, technical agency," all employees must undergo training to keep up to date with changes in federal and local tax laws.
While senators did not approve of the lump sum concept, they had few other objections to the breakdown of IRB's budget request — except for allotments made to fund employee salaries and rent for IRB's facilities.
Looking over the request for $5.7 million to fund 180 IRB positions, senators were concerned about how vacancies were filled. Willis explained that IRB uses an in-house system, in which vacancies are either filled by the promotion of other employees within the agency or filled by IRB retirees called back to service.
"These retirees have the training and skills needed to get the jobs done," he said.
Willis also justified a $1.2 million request for the payment of rent for IRB facilities on St. Thomas and St. Croix.
"Right now, we have to sustain a monthly rental on St. Thomas for $37,875," Willis said, adding that while this facility is not specifically designed to meet the needs of the IRB, it has been the best space available so far.
"But we have been looking into relocating the St. Thomas office and will be adding a new line item in the budget to accommodate this move," Willis said. While this figure is estimated to be between $12 million and $14 million, Willis urged senators to approve this addition.
"We have obtained leased property at Crown Bay Marina from the Port Authority, and will obtain bank financing through the PFA [Public Finance Authority] in order to construct a three-story, 46,000 square foot facility," Willis said.
He added that he also intended to lobby the PFA for $3.3 million for the expansion of IRB's offices in St. Croix, so that employees do not have to travel to St. Thomas to input certain documents into the IRB system.
Sen. Lorraine Berry was concerned about the lack of collection agents to address concerns with individuals evading tax payments.
"We do need at least one more collection agent,… but the problem is that no one is qualified to do that job in territory. We also don't have the money to pay for that position," Willis said.
However, Willis assured senators that the IRB is managing the job by itself and has been responsible for settling "many" tax evasion cases. Willis added that $43 million a year will come out of IRB collections to address delinquent taxes.
Sens. Usie Richards and Norman Jn Baptiste added that more revenues could be generated if the IRB aggressively pursued collecting taxes from goods coming into or going out of the territory. Richards said only about $1 million is being given to the central government from taxes collected by customs agents on foreign goods coming into the territory.
Richards added that IRB workers should do the job themselves, enabling more revenues to come in.
Discussion on revenue-generating techniques extended to budget presentations made by the Finance Department, where senators questioned methods being taken to collect delinquent property taxes.
"The problem with this is that there are individuals who have been delinquent in paying their property taxes since the 1980s," Finance Commissioner Bernice Turnbull said. "But we recently made a statement in the newspaper that there will be no more amnesty given to individuals with these delinquent taxes. Since then, many individuals have come out and paid their taxes,… but there are still many individuals who are seriously delinquent."
Turnbull added that an increase in real property taxes is forthcoming, due to the recent revaluation of commercial and residential properties under the Office of the Lieutenant Governor.
"This will provide a substantial increase in real property tax revenues," Turnbull said. She added that numbers for property taxes collected in 2004 were outstanding as well, with more than $78 million collected.
"However, due to a delay in the issuing of property tax bills for 2004, the department will only be able to collect $42.2 million in property taxes this year."
Turnbull also discussed implementation of the new Enterprise Resource Planning System, a system of financial management which various government departments and agencies use to access and record their financial data.
The system, which was supposed to have been fully set up by Sept. 30, is currently in its beginning stages and will not be fully implemented for three to five years, Turnbull said.
"But by this time next year, we hope to have the first stage complete so that we can show it to you," Turnbull added.
Senators had no other questions for Turnbull as the department submitted a budget request of $10.9 million, a $602,557 increase from fiscal year 2004.
Present at Tuesday's hearing were Sens. Berry, Jn Baptiste, Richards, Roosevelt C. David, Adlah "Foncie" Donastorg, Terrence "Positive" Nelson and Juan Figueroa-Serville. Sen. Neville James was absent.

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