As reported Jan. 22 by the VirginIslandsDailyNews, “The lengthy legal battle over the territory’s property tax system ended this week when District Judge Curtis Gomez lifted the injunction freezing V.I. tax values and rates at the 1998 level. He made the decision after a settlement agreement was signed Jan. 7 by the government and the group of commercial property owners who sued the territory more than a decade ago.
“The property owners’ lawsuit claimed that the government’s tax system was unfair and unconstitutional. A settlement agreement was reached in 2000, but after three years of inaction by the government, the plaintiffs returned to court. In 2003, the court ruled in the property owners’ favor, issuing an injunction freezing property tax valuations at 1998 levels – the last set of values the court deemed fair. The court also ordered the government to revaluate all property in the territory using fair market value and demonstrate that it has a functioning Tax Review Board.
“During the dispute, portions of the injunction were lifted, but the last piece was to bring the taxpayer appeal process into compliance with Constitutional requirements for due process. Quoting Shakespeare and case law in his opinion, Gomez wrote that the V.I. government has experienced a ‘positive sea change’ and the Tax Review Board is now functioning as it should.
“Under the agreement:
– The Tax Review Board hearing examiner’s report will be given to the taxpayer before the hearing.
– The taxpayer shall be notified of the hearing and the right to appear and present objections.
– If the board fails to make a decision 120 days after an appeal has been filed, the appeal automatically will be granted and the assessed value will revert to the prior year’s assessed value.
– If there is a continuance in a board proceeding, the parties may agree to give the board an additional 30 days to make a decision. If the taxpayer refuses the request, the board has the right to advise the taxpayer that unless consent is given, the appeal must be denied without consideration.
– The 1998 property values and tax rates shall continue for the 2007, 2008, 2009 tax years.
– The governor will submit legislation to the V.I. Senate to extend the waiver of interest and penalties for six months on the 2009 tax year bills.
– The plaintiffs will withdraw their appeal currently before the 3rd U.S. Circuit Court of Appeals.
– The court retains jurisdiction to decide pending attorney’s fees motions.
“Under the agreement, the government will not be able to collect property taxes using fair market values or the new tax rate structure – made law in 2007 – until the 2010 tax year. Because the government did not issue any tax bills at all for four years, taxpayers will receive two years’ worth of bills each year until the bills are current. The 2010 tax bill will not be issued until 2012.”
Read more at VirginIslandsDailyNews.com, and be sure to contact our Coldwell Banker St Croix office with any questions you have on how the new law will affect you and your real estate investment.