Virgin Islands Economic Development Commission taxation issues escalate to the Third Circuit Court of Appeals

Jan 19, 2011   

On Monday January 17, 2011, three taxpayers filed motions to intervene in the Third Circuit Court of Appeals case of Appleton v. Comm’r, docket # 10-4522.

In Appleton, the Government of the U.S. Virgin Islands (“USVI”) moved to intervene at as a party at the trial level – before the U.S. Tax Court. The Tax Court denied the USVI’s motion to intervene in a full Tax Court opinion, Appleton v. Comm’r, 135 T.C. 23 (2010) available here. A full discussion of the significance of the Tax Court’s opinion will be the topic of a separate post.

The USVI appealed the Tax Court’s decision to the Third Circuit and also moved for an expedited briefing schedule. On December 30, 2010, the Third Circuit granted the USVI’s motion in part and entered an abbreviated briefing schedule which will require the parties to fully brief their positions on or before February 18, 2011.

On January 14, 2011, the USVI filed its opening brief. On January 17th, less than one business day after the USVI filed its opening brief, attorneys at Fuerst Ittleman moved under a judicially crafted exception to the Federal Rules of Appellate Procedure (International Union v. Scofield, 382 U.S. 205, 217 n.10 (1965)) that only allow intervention in certain limited circumstances.

The issue that the Third Circuit will have to decide is whether other taxpayers who could, potentially, have the USVI intervene in their case before the Tax Court, can have input at the appellate level as to whether the USVI can intervene. However the more fundamental issue that we will be seeking to address is who are the proper parties to the USVI residency cases. It remains to be seen how Mr. Appleton, the USVI, and the United States government will view the motion to intervene before the Third Circuit.

The attorneys at Fuerst Ittleman have intimate knowledge of the USVI. In particular one of the attorneys is a member of the USVI bar and lived and practiced on the island of St. Thomas for years.