# Profoundd archive — Epstein Files
# Bates number: EFTA00811471
# Title:        Monday. October 22. 2018 VIRGIN ISLANDS The Virgin Islands Daily News 3
# Dataset:      9
# Pages:        1
# Tags:         epstein, doj, dataset-9
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=== SUMMARY ===
Monday. October 22. 2018 VIRGIN ISLANDS The Virgin Islands Daily News 3 Excise tax violates U.S. Constitution, Gomez rules By BRIAN O'CONNOR Dairy News Staff A federal judge's ruling could imperil $45 million in government tax revenues, court records show. US. District Court Judge Curtis Gomez ruled on Sept. 28 that the excise Lax — levied against items and goods imported into the Virgin Islands — violated the Commerce Clause of the U.S. Constitution. The tax is worth 545 million in revenue for


=== EXTRACTED TEXT ===
Monday. October 22. 2018 VIRGIN ISLANDS The Virgin Islands Daily News 3 
Excise tax violates U.S. Constitution, Gomez rules By BRIAN O'CONNOR 
Dairy News Staff 
A federal judge's ruling could 
imperil $45 million in government 
tax revenues, court records show. 
US. District Court Judge Curtis 
Gomez ruled on Sept. 28 that the 
excise Lax — levied against items 
and goods imported into the Virgin 
Islands — violated the Commerce 
Clause of the U.S. Constitution. 
The tax is worth 545 million in 
revenue for the territorial govern-
ment, budget documents show. 
It wasn't clear whether the rul-
ing would free businesses from ex• 
else tax obligations. or create new 
taxes for businesses not currently 
covered by the tax. 
The government. represented 
by V.I. Attorney General Claude 
Walker. has filed for an appeal 
with the 3rd U.S. Circuit Court of 
Appeals. 
The Commerce Clause gives the 
federal government sole power to 
regulatecommerceamong the states. 
The lawsuit that sparked the ruling Curbs 
Gomez involves Reerce 
Services lac., rep-
resented by Alex 
Golubssky. 
Reefro spc• 
cialires in in• 
stalling refrig-
eration units. 
air conditionen, 
is makers and 
water makers 
on local boats. 
according to 
Gomee's ruling. The V.I. Internal 
Revenue Bureau — which col-
lects taxes for the government —
changed Reck° for importing vari-
ous items over a number of years. 
Territorial law allows an exemp-
tion to the excise tax for boats, 
boat engines and boat pans. 
Reel& sued the government. 
arguing that the tax collected was 
improper. The government argued 
that the pans in question — in-
eluding small refrigerators and ice 
makers — were not boat parts. 
In an amended complaint, Reef-
ea also argued that the excise tax was unconstitutional. Gomez ini• 
daily dismissed that portion of the 
complaint. in pan because the gov-
ernment is neither a person. nor a 
federal agency, which arc covered 
under other sections of federal law. 
However. the Commerce Clause 
— and constitutional law generally 
— allows for claims against gov-
ernments. so Gomez reversed his 
dismissal. 
Excise taxes in the territory — 
<sealed in V.I. Code Title 33, Sec-
tion 42 — date back at least as far 
as 1980, when Congress passed a 
law allowing for the collection of 
the tax whenever an item is brought 
into the territory Two years later. 
Congress instructed federal offi• 
cials to assist in the collection of 
the tax. 
In 1987, a case challenging the 
excise tax as an illegal barrier to 
commerce made it to the U$. Su-
preme Court. 
Justices judged the ease moot, 
in pan because of a 1984 change 
to the law that required excise tax 
to be levied against goods made in the Virgin Islands, in addition 
to goods imported into the Virgin 
Islands. 
However, Internal Revenue Bu-
reau employees testified during a 
deposition that the government has 
not charged local businesses the 
exetse tax, despite the change in 
law. Gomez wrote. 
The opinion quotes Glenford 
Hodge. the supervisor of excise tax 
for the Internal Revenue Bureau. 
as representative of the govern-
ment position. 
"We have no basis to charge a 
tax on something that's not im-
ported into the territory." Hodge is 
quoted as saying. 
Government regulations relating 
to the excise tax have not been up• 
dated since 1983. Gomez wrote in 
his opinion. 
The government "ignores the 
corrective amendment to Section 
42 and continues to implement 
the pre.1984 statute that the Third 
Circuit held was invalid under the 
Commerce Clause." he wrote. 
The law thus represents illegal economic protectionism. Gomez 
wrote. 
The government "has not as-
serted any 'legitimate local pur-
pose' for this scheme, let alone 
evidence or argument dot 'this 
purpose could not be served as 
well by available nonditetimina-
tory means.'" Gomez wrote, quot-
ing earlier case law. "Accordingly. 
the Court holds that the Section 42 
— as interpreted and enforced by 
the GVI — violates the Commerce 
Clause." 
Gomez ordered $5.287.74 in 
collected excise taxes returned to 
Reefco 
Internal Revenue Bureau Di-
rector Marvin Pickering directed 
questions to Walker. 
Walker declined to comment, 
citing the ongoing legal case. 
The case is tentatively scheduled 
for hearing during a December 
2019 visit by the 3rd Circuit judg-
es. court documents show. 
— Contact Brian O'Connor 
as 140414.9130 or email boron-
nor@dailynews.H. 
Yacht Haven Grande, EDA come to terms over benefits By BRIAN WCONNOR 
Ciatay News Stan 
ST THOMAS — The VI. Foe-
norm Development Authority and the 
owners of Yacht Haven Grande have 
settled over the company's tax exempt 
slam officials said. 
The disagreement prompted EDA 
officials to hold a "show cause" hear-
ing last week, in which the company 
was ordered to show cause why it's 
status should not be revoked suspend• 
ed cc rrinds&d 
Officials from Yacht Haven USVI. 
which is owned by Island Global 
Yachting, lad taken the position that 
in-kind contnbutions — donations of 
time and space for events for com-
munity stoups —should coon( finan-
cially ;ward community contribution 
obligations required to maintain the 
company's Economic Development 
Commission program status. EDA 
staff said they were bound by the letter 
of the law to consider only monetary 
contributions toward the total. 
Thomas Mukamal. CEO of Island 
Global Yachting. said the company 
routinely often space at Yacht Haven 
Grande foe community events Those 
events come at a cost to his company. 
Mukarnal 
"We donate the venue and then 
provide the cleaning services. Hai-
My staff, if it's an indoor maw." he 
said. 'All of that stuff can be quite 
expensive." 
The dispute reached the Economic 
Development Commission in part Thomas 
Mukamal bfc30‘f EDA 
lud Ixot 
unckat about 
\View: Of ram in. 
kind contr-Sut ions 
mild be counted, 
NIL:41331 said 
"It would have 
been cheaper 
to pay the fine 
a year ago," he 
said. "We wanted 
to force them to 
take a position." 
The dispute over comnbutions is the 
second time this year finthrial tensions 
between WA aril Island Global Yacht-
ing have spilled into public. IG1LAYII 
St. Thomas Holdings. aruther subsid-
iary company. was paced under a ben 
for 549.036.90in unpaid gross receipts 
taxes on June 25. The company was re-
leased from the lien — metwating the 
tows had been paid or administrathey 
waived — on Oct. 4. 
The AYH stands for Amman 
Yacht Haim, anodes EDC bor.& 
ciary. Mukamal said. The Red lkok• 
based retail location was awaiting 
miewal of its EDC benefits for two 
years, at which point the Internal Rev 
awe Bureau mistakenly charged the 
company gross receipts tax it was ex-
=ivied front. Mukamal said. 
"They mina have bawd us up for 
that pence he said. 
The taxes were waned on renewal. 
Mukamal said 
Community contributions, mini-
mum employment standards, and lo-:tie veers Of Men 
he V.I. Revive Festwal in December draws a large crowd to Yacht Haven 
Grange on St. Thomas. The Economic Development Authority and the 
Property's owners have settled a dispute over the company's tax-exempt 
taws and whether in.krid contnbutons of space ft( events for community 
groups shosid count toward nsoblgatons under the Economic Development 
Con-reason program 
cal hire rewirenwrns are all part of 
the EUM EDC program_ In exclanµe 
for meeting MOW Cnteria — rewired 
community contributions can vary 
from company to company and num-
ber in the lens of thousands of dollars 
— EDC beneficiaries reccnv the fol-
towbar:tax benefits: 
• 90 perms reduction in corporate 
income tax 
• 90 percent ;Simian in personal interne lax 
• I00 percent exemption on gross 
receipt tax 
• 100 percent exemption on business 
property sex 
• 100 percent exemption on excise 
tax payments 
• Reduction in the custorm duty 
from the standard 6 percent to I percent 
EDA Assistant Executive Direct& 
Waync Biggs Jr. said officals were togued 1'acht Haven's certificate 
— %%Inch lists 'he compuny -speak re-
quirerrtnts for the program to count 
mccetary donations instead 
"Mk follow the a...Idioms" lie said. 
"The certificate. when it done, is a 
contract between the EDC and the 
Island Global las filed at applica-
tion to tredify its certificate to count ith 
kind retributions in addition to mon-
easy contributiorn. Rigid aid. EDA 
staff are m theI:cocoa of mincing the 
spoken:m.84;gs said. 
Similar settlements are a regular pan 
of the EDC pecgram. Biggs said. 
"1 think stele moving ahead." he 
said "Settlements are all pan of the 
proca 
Once additinnal monetary contribu-
tions are made. Pt company will be 
fully renewed Bus said. The FDA 
welcomes in-kind contributions. but 
officials are bound a follow the,
kites 
of the law, Boggs said. 
"Now that we've settled, we consider 
them to be in fullcompliance." he sari 
Homier. Mukamal said the corn-
pony will hue to scrutinize community 
events to host at Yacht Ibsenasa result 
of the decision. 
"Now we know" he said. "When 
somebody asks us to do it. We'll likey 
have to be a little mote selective in 
how we do it. That's a potential and 
unfortunate" 
EDA board members Jose Pam. 
Haklane Davies. Juan Figuerea and 
Eugene Farrell vend unanimously for 
the scnkmag 
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