United States Tax Court Opines on its own Jurisdiction to Resolve USVI Tax Issues

Jan 19, 2011   
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On August 17, 2010, the Tax Court issued a full Tax Court Opinion in the case of Huff v. Comm’r, 135 T.C. 10 (2010) available here.

The issue before the Tax Court in Huff was whether the Tax Court had jurisdiction over the case given that the District Court of the Virgin Islands has “exclusive jurisdiction over the income tax laws applicable in the Virgin Islands” pursuant to 48 U.S.C. section 1612.

The Tax Court held that although this case involves putative Virgin Islands transactions, the notice of deficiency determines deficiencies in Federal income tax. Whether Petitioner satisfies all the requirements set forth in I.R.C. sec. 932(c)(4), and thus need not file a Federal tax return or pay Federal income tax for 2002, 2003, and 2004, is a matter which the Tax Court has jurisdiction to decide.

What is interesting to note is what is missing from the Court’s opinion. The Petitioner in Huff moved to dismiss on the grounds that 48 U.S.C. section 1612 divested the Tax Court of jurisdiction. However the Petitioner also moved to dismiss on forum non conveniens grounds citing the Supreme Court case of Sinochem Int’l Co. v. Malay. Int’l Shipping Corp. , 549 U.S. 422 (2007) (Ginsberg, J.) which stated:

“The common-law doctrine of forum non conveniens Ëœhas continuing application [in federal courts] only in cases where the alternative forum is abroad, and perhaps in rare instances where a state or territorial court serves litigational convenience best.”

The Tax Court never addressed this legal issue and even omitted any reference to it as if this argument never existed. The issue of what court has jurisdiction will soon be addressed as the attorneys at Fuerst Ittleman have sought certification on this very issue to the Third Circuit Court of Appeals.

The attorneys at Fuerst Ittleman handle all types of tax controversy and litigation including litigation with the IRS and USVI over USVI residency and income tax refunds. In fact one of the attorneys at Fuerst Ittleman lived and worked in the USVI and is a member of the USVI bar.