Does the USVI have a separate income tax?

U.S. Virgin Islands Income Tax System

The United States Virgin Islands (USVI) does indeed have a distinct income tax system that is separate from the federal income tax system of the United States. However, it is closely coordinated with the U.S. federal income tax system under certain provisions of the U.S. Internal Revenue Code (IRC).

Key Provisions for Coordination

1. 26 U.S. Code § 932 - Coordination of United States and Virgin Islands income taxes:

- This section of the IRC outlines the coordination between the U.S. and USVI tax systems. It includes provisions for how residents of the USVI and those who earn income from the USVI should report and pay their taxes. The full text and details can be found in the [26 U.S. Code § 932].

2. 26 U.S. Code § 934 - Limitation on reduction in income tax liability incurred to the Virgin Islands:

- This section places limitations on the ability to reduce tax liability to the USVI. It specifies that tax liability incurred to the USVI shall not be reduced or remitted by any law enacted in the USVI, with certain exceptions related to income sourced within the USVI and income effectively connected with a trade or business within the USVI. The exceptions and rules are detailed in [26 U.S. Code § 934].

Access to Tax Information and Bulletins

- The Internal Revenue Service (IRS) provides bulletins and other tax-related information that can be accessed online. These resources may include guidance on the application of the tax laws, including those that pertain to the USVI. The Internal Revenue Bulletin can be viewed on the IRS website at [Internal Revenue Bulletins].

Conclusion

The USVI operates under a unique tax system that is separate but coordinated with the U.S. federal tax system. The specific rules governing the coordination of taxes and the limitations on tax reductions are outlined in the IRC and can be further explored through the provided links to the law. Tax professionals and individuals with tax obligations related to the USVI should familiarize themselves with these provisions to ensure compliance with both USVI and U.S. tax laws.

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Sources:

26 U.S. Code § 932 - Coordination of United States and Virgin Islands income taxes 26 U.S. Code Chapter 1 - NORMAL TAXES AND SURTAXES 26 U.S. Code Subchapter N - Tax Based on Income From Sources Within or Without the United States 26 U.S. Code Part III - INCOME FROM SOURCES WITHOUT THE UNITED STATES 2023-12-11

26 U.S. Code § 934 - Limitation on reduction in income tax liability incurred to the Virgin Islands 26 U.S. Code Chapter 1 - NORMAL TAXES AND SURTAXES 26 U.S. Code Subchapter N - Tax Based on Income From Sources Within or Without the United States 26 U.S. Code Part III - INCOME FROM SOURCES WITHOUT THE UNITED STATES 2023-12-11

Internal Revenue Bulletin: 2008-20 2008-05-18

Internal Revenue Bulletin: 2005-20 2005-05-15