Bill to allow taxpayers to offset taxes with government retro payments held for further review after tax office raises concerns

Legislators on April 15 debated a bill that would allow property owners to offset past property‑tax liabilities with amounts the Government of the Virgin Islands owes the owner. Sponsor Senator Milton E. Potter introduced the measure citing household examples in which residents owed property taxes while the government owed them retroactive pay.

What the bill would do: The measure, as introduced, would amend section 24‑94 of Title 33 of the Virgin Islands Code to permit the lieutenant governor to apply “proof of debt” — such as a certified judgment, settlement or other evidence accepted by the lieutenant governor — as a credit against delinquent property taxes owed by the taxpayer. In committee discussion, the sponsor circulated an amendment narrowing the offset to retroactive wages (retro) owed by the government to taxpayers and applying the offset to older tax debts (the amendment language was received during the hearing).

Tax office and finance concerns: Brent Lairdham (tax collector, Office of the Lieutenant Governor) testified the division does not support the bill in its present form. Lairdham and Tax Assessor Ludense Romney said the proposed offset could materially reduce real‑property revenue the government relies on, complicate the tax management system and require costly software changes. Lairdham flagged these specific concerns in testimony: - The bill’s definition of “proof of debt” is sufficiently broad to allow many types of government obligations (including large judgments, contractor or union retro liabilities) to be applied as offsets, which could dramatically reduce collections. - The division relies on delinquent property‑tax revenue for cash flow; an offset that reduces receipts could complicate payroll and vendor payments during lean periods. - The existing property‑tax management system lacks the accounting features to hold and apply such credits without modification; system upgrades would require funding.

Numbers discussed in committee: Officials and OMB staff cited territory figures during the hearing. The tax office said historical annual delinquent property‑tax collections have been roughly $33 million; a post‑audit figure cited in committee materials showed a delinquent property‑tax balance of about $87.9 million in 2022 rising to roughly $124 million by March 2025. OMB cited retroactive obligations to government employees in excess of $100 million in some remarks; witnesses warned that offsets tied to those obligations could have substantial fiscal consequences if they were posted against delinquent taxes without a funding mechanism.

Sponsor’s view and amendment: Sponsor Potter said the bill was intended as a practical remedy for homeowners (he cited an elderly St. John homeowner who owed taxes while the government owed her wages) and to reduce government liabilities by clearing legitimate debts. After consultations with the lieutenant governor’s office, the sponsor circulated and described an amendment limiting offsets to retroactive wage obligations and focusing on older tax debts to avoid incentivizing nonpayment of current taxes.

Committee action: Senator Duane DeGraff moved to hold the bill in committee for further study; the motion was seconded and carried by roll call. Tax office staff asked that Office of Management and Budget and the Department of Finance be invited to provide fuller analysis and cost estimates so the committee can weigh revenue impacts, system costs and appropriate guardrails.

Ending: The committee held the measure for further review and asked staff to produce a thorough fiscal and systems impact analysis; senators suggested possible guardrails (caps, time limits or source restrictions) should the bill move forward.