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October 06, 2004
Feds poised to crack down on EDC companies
Changes to JOBS bill would set strict residency guidelines for tax-break beneficiaries
By PATRICK JOY
Wednesday, October 6th 2004
ST. CROIX - Three months after it fired the first warning shot over the bow of the territory's Economic Development Commission tax-incentive program, the federal government took direct aim this week at residency loopholes it says have led to abuse and fraud within the program.
New language inserted Monday into an amendment to the federal Jumpstart Our Business Strength bill would set strict definitions for tax residency in U.S. territories and remove tax breaks from money made on the U.S. mainland.
Government officials and EDC representatives said the changes - added in conference committee - came as a shock and could cripple the tax-incentive program that officials estimate bring approximately $100 million into the territory annually.
Companies operating here could leave, taking their jobs and island investments with them, they said, and companies considering a move to the territory may reconsider if the new rules are in place.
"This could have a major impact on our watch factories and EDC companies," said Acting Gov. Vargrave Richards. "This could have a numbing, devastating and debilitating effect."
Gov. Charles Turnbull was out of the territory Tuesday.
Territory officials said they thought they had negotiated a compromise on the issue, with language in the U.S. Senate version of the bill tightening residency standards but allowing for several options to establish residency. They said the single-option language that appeared Monday came as a surprise.
V.I. Delegate to Congress Donna Christensen said the changes were made by committee Chairman Rep. Bill Thomas, R-Calif., but originated in the Treasury Department.
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Posted by afinta at October 6, 2004 06:47 PM
