Finance Ministry’s Hopes Dashed in US$19M Tax-Evasion Case

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    A request opposing the Ministry of Finance’s (MOF) plan to impose US$19,197,903 .44 as additional taxes against Lonestar Communication Corporation, (LCC) was on Monday, February 3, granted by Judge Mozart Chesson of the Tax Court, at the Temple of Justice.

    Lonestar had complained to the court, praying for a “Judicial Review” of the ruling of the Board of Tax Appeal (BOTA) ruling against it in the US$19,197,903.44 tax evasion sued for by the Ministry of Finance (MOF).

    In counteraction, BOTA and MOF filed two separate motions, one to dismiss the appeal.

    They argued in the second motion that Lonestar had failed to serve its amendment pleadings upon the opposing party prior to 24 hours of the hearing of the motion under the law.

    However, delivering the Court’s ruling on Tuesday, February 4, Judge Chesson declared that “since this wrought no harm to the substantial rights of LCC, the motion is hereby denied. 

    He further ruled that the “Court denies the motion to dismiss filed by both the Board of Tax Appeal (BOTA) and the Ministry of Finance (MOF). And it is so ordered.”

    Judge Chesson said the “Court concedes the point by Lonestar, but with disregard to same as harmless error under the law, as the court instruction could have contributed to the Ministry not adhering strictly to the provision of the CPLR, Section 9.10.”

    “The Court also considered as harmless error, the Ministry’s serving of the motion on LCC in delay of one hour and 35 minutes.”   

    The case began in November 2012, after MOF conducted an audit of Lonestar’s tax return, indicating it must pay US$749,853.42, of which 53% of that amount was for turnover taxes, 5% in Goods and Services (GST) taxes and the bulk of the difference for penalty and interest.

    The request, the management of LCC fully cooperated and accepted the report and requested a 60% waiver of the interest and penalty be granted.

    They on November 26, 2012, paid into government revenue the amount of US$597,988.38, benefiting from a waiver of US$75,932.52 in penalty and US$75,932.52 in interest.

    After paying that amount, MOF cleared the company for the taxable period 2007 to 2011 in accordance with the Revenue Code of Liberia.

    However, between November 11, through November 30, 2013, MOF informed LCC that it was in possession of new evidence that raised the need for another assessment of its books and records for the same period.

    They claimed that they had discovered through a forensic investigation, documents showing dubious business accounting that had defraud government of a substantial   amount, to the tune of  US$19,197,903 .44.

    LCC categorically denied any fraudulent activities and requested the opportunity to review the report of the alleged forensic investigation.

    LCC further argued that, because it had been cleared under the Revenue Code of Liberia Act of 2000, it would not allow the ministry to make an additional assessment or an additional re-assessment of that taxable period.

    Lonestar later reported the matter to the Board of Tax Appeal.

    Unfortunately, that Board denied Lonestar’s complaint, which caused the company to file a Motion for a Judicial Review of the two rulings of the two government institutions.

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