A recent reader email, lamenting that the territory should never have become part of the United States, seemed to infer that our income taxes go into the U.S. coffers. In order to set the record straight, we went right to the local Internal Revenue Bureau.
Under the federal Organic Acts of 1936 and 1954, residents of the U.S. Virgin Islands pay income tax to and receive refunds from the V.I. government—rather than the U.S. government.
"We mirror the U.S. income tax as far as individual and corporate income taxes are concerned," V.I. Internal Revenue Bureau Director Claudette Watson-Anderson explained Thursday. Employers remit those payroll taxes to the V.I. government and send social security, medicare and unemployment withholding to the U.S. Internal Revenue Service, she said.
The IRB processes tax returns and sends refund requests to the V.I. Finance Department for payment.
"So far, we have probably paid out a good $40 million this year already, and we continue to send them in increments of $5 million at a time to Finance," Watson-Anderson said Thursday. "That probably represents about 10,000 refunds. We usually pay in the neighborhood of 30,000 refunds each year."
IRB should finish processing returns in September, but actual payment is done by Finance and is partly determined by available funding, she said.
Gov. John deJongh’s 2012 budget contains $80.8 million for refunds, and Finance Commissioner Angel Dawson has previously said funding is in place for refunds.
