Bill That Blocks Tax-Evading Landlords From Evicting Delinquent Tenants Approved By Rules Committee

ST. THOMAS — Landlords and landladies who don’t pay taxes on income earned through their rental properties will be barred from seeking relief from the judicial system until they pay what is owed, if a measure sponsored by Senator Nereida Rivera-O’Reilly is approved by the full Senate and signed into law by Governor Kenneth Mapp. The measure won the favor of all members of the Committee on Rules and Judiciary at a meeting held at the Earl B. Ottley  Legislative Hall on Thursday.

The bill, no. 31-0167, “Comes on the heels of the discussions that we’ve had in the last four years or so, regarding whether the government is truly capturing all of the taxes that we should be capturing as a result of rental property in the territory,” Mrs. Rivera-O’Reilly said when introducing the measure.

“I think we have identified a few areas where leakage exists, and so it turns out that if you look at the monthly credit report, you would note that a number of cases filed with the court are for eviction or restitution of property. And in many cases, some of those actions are brought on behalf of an owner by a property manager, so it means that that owner may not be living in the territory. Or, the actions are brought on by the owner — with the owner seeking remedies such as back rent, and restitution of the property.

“What I believe is important for us is to ensure that when the owners of rental properties seek to avail themselves of the judiciary process for restitution of property or payment of arrears, that they show that they too are good stewards and law-abiding citizens by way of showing that they are reporting their rental income, and in cases where they have to pay taxes, that they are doing so,” Mrs. O’Reilly added.

The veteran senator said that the bill is a simple measure that requires that landlords accompany their complaint with a certificate that clearly establishes that the person seeking relief from the judicial system has been reporting income made through rental properties, and that taxes, where required by law, have been paid.

Bureau of Internal Revenue Director Marvin Pickering, present to testify in support of the measure, said the bureau would suggest that the validation be confirmed through a statement from the BIR similar to a tax clearance letter.

“This validation would state that the taxpayer has reported its rental income to the Bureau of Internal Revenue. To obtain such a statement to include in the complaint, the plaintiff/taxpayer would have to request it from the bureau on a form similar to the LIC1 form. The form will be revised to meet this request,” Mr. Pickering said.

Mr. Pickering had previously explained that the bill is very direct in its goal, and falls in line with BIR’s initiative of recovering government revenues lost through tax evaders. He asked for 90 days to implement certain processes, including educating the community on the mandates of the law.

“[The bill is] very narrow, and only will apply to situations where a taxpayer is utilizing the court system for relief. This bill adds to the requirements that a plaintiff must expressly state in his complaint when seeking to recover possession of his property,” Mr. Pickering said.

Another item that won the Rules committee’s approval was a bill sponsored by Senator Sammuel Sanes that seeks to increase the threshold of petty larceny from $100 to $500. The measure attracted passionate debate on Thursday, but eventually was approved by Senators Novelle Francis, Jean Forde, Janette Miling Young and Rivera-O’Reilly. Senator Kenneth Gittens, chairman of the Rules committee, voted no. Senators Justin Harrigan and Neville James were absent.