The V.I. Department of Finance’s recent assertion that Virgin Islanders have racked up over $2 million in bounced cheques made out to the government turns out to be based on a lapse in communications between the department and the Bureau of Internal Revenue, according to BIR Director Joel Lee.
Mr. Lee appeared before the Committee on Budget, Appropriations and Finance on Friday. Upon being questioned by committee members, he indicated that the Bureau had already collected $900,000 of the $1.7 million in bounced checks finance officials had attributed to BIR. Based on his team’s research, Mr. Lee explained that “only about $200,000 is actually bounced insufficient funds.”
According to Mr. Lee, the issue arises when the bank rejects large checks “because the signatures are not quite right based on their signature card.” When BIR reaches out to those taxpayers, they are many times already aware of the issue. “They know if it bounces, that bill is still there. We can go after it by any means necessary,” explained Mr. Lee. He described the BIR’s recovery process as “aggressive.” Where checks are bounced due to insufficient funds, the Bureau requires future payments be made by cashier’s check for the following two years.
For committee chair Senator Donna Frett-Gregory, the explanation shone a spotlight on the lack of a functional mechanism to inform the Department of Finance when payments are rectified. “There is that communication component that's missing,” she observed. She advised the BIR that there should be a “structure in place where you are now notifying them…so they are now responsible for updating their financials.”
On Tuesday, when discussing the issue of bounced checks presented by taxpayers, Frett-Gregory suggested a $25,000 cap on check payments, because the TeleCheck service used by the government of the Virgin Islands only guarantees up to that amount. It’s a sentiment that Mr. Lee did not share, however. “I am discouraging a cap,” he told lawmakers, arguing that it would be a “big inconvenience” for “a lot of businesses who frequently write checks for over the $25,000 amount.”
Although he sought to reassure lawmakers that the current outstanding sum due to bounced checks was smaller than originally reported, Mr. Lee admitted to Senator Carla Joseph that BIR calculates some $150 million in uncollected income taxes dating back to 2017. Again describing their internal collection efforts as aggressive, the BIR director asked lawmakers to allocate more funding in order to “allow us to fill a lot of our vacancies to get more bodies to be able to collect.” He maintained that it was the only way to recover the vast sum owed.
Despite this sentiment from the BIR director, the Office of Management and Budget has recommended a 10 percent cut in the Bureau of Internal Revenue’s FY2025 budget. It’s a decrease that Mr. Lee anticipates will pose major personnel and operational challenges.
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