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Pete A. asks governor to invoke Section 902
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Posted on Jul 28 2005
Washington Rep. Pete A. Tenorio has asked Gov. Juan N. Babauta to invoke Covenant Section 902 to resolve differences related to residency and income source changes required by the American Jobs Creation Act of 2004.
In a recent letter to Babauta, Tenorio said, “I am pessimistic that the proposed regulations would be comprehensively and fairly revised to meet the critical needs of the insular areas, particularly the CNMI.”asked the governor to use his authority under the Covenant and “insist that the proposed regulations be addressed under the authority of Covenant Section 902.”
Last October the U.S. Congress passed the American Jobs Creation Act of 2004 that contained tax provisions that would decrease local revenue and slow down economic recovery in the CNMI. The law was supposed to close tax loopholes in the U.S. Virgin Islands, but ended up re-defining the residency and income source laws for all U.S. insular areas, including the CNMI.
At an Internal Revenue Service Hearing last week, Tenorio testified that the proposed rules promulgated under the American Jobs Creation Act were in direct violation of the intent of the Covenant.
In his letter to Babauta, Tenorio said, “Your letter might serve to delay the implementation of the new IRS regulations, as the deadline for final publication is fast approaching, and at the same would serve notice to the president to direct IRS to exclude the CNMI from its final regulations.”
“I feel we must be proactive in opposing these regulations; we cannot chance anything else cutting into our tax revenues. The problems we are having with the decline of the garment industry and the pullout of JAL, are bad enough, but for the U.S. government to take our badly needed local revenue just makes it worse. We must do everything possible to stop that, and I think appealing to the president for help is the most appropriate step to take,” said Tenorio. (PR)
