By Abednego Davis
Court documents showed that the Liberia Revenue Authority (LRA) and Lonestar Communications Corporation (Lonestar) have reached a compromise on the controversial US$2,376,098.78 tax evasion allegation without the intervention of the Tax Court, although tax is imposed and collected by law, and is not to be compromised.
It may be recalled that the Supreme Court on September 9, 2016 turned down Lonestar’s appeal for a deduction of US$2,376,098.78 as unpaid expatriates’ salary taxes from the LRA, according to the record.
The Supreme Court’s action sided with the Board of Tax Appeal’s (BOTA) earlier decision that allowed the LRA to re-characterize the taxable period of 2009-2011 as the taxes on expatriate salaries owed by Lonestar, which the GSM operator claimed it did not owe.
The Supreme Court later sent a mandate to the Tax Court directing Judge Mozart A. Chesson to resume jurisdiction over the case and to effect its judgment against Lonestar.
The document said that on September 26, 2016, Judge Chesson read the mandate in the presence of Lonestar and LRA lawyers, but neither party made any effort to comply with it.
Their refusal, the record claimed, so annoyed Judge Chesson that he summoned both parties to show cause why they should not be held in contempt for failing to comply with the Supreme Court decision.
Later, on November 18, 2016, both parties then petitioned the court for relief from the contempt charge, which Chesson removed.
Subsequently, the Lonestar and LRA presented separate motions to the court.
Lonestar alleged that it had paid excess taxes in advance, to the tune of US$4 million, and presented a document in support of the allegation.
Lonestar then requested the court to direct the LRA to offset its US$2.3 million judgment against its excess tax payment, citing the authority of the Revenue Code 2000 Section 74(A).
The section provides that “the Revenue Authority should automatically apply any excess tax payment amount against any current tax debt.”
On the other hand, the LRA based it arguments on several grounds, namely that since neither Lonestar nor the LRA had yet verified the amount of excess tax payment, the Revenue Code 2000 Section 74(A) could not be applied in their case, because a offset can only be effected when the amount owed to either party is certain and verified.
The court agreed, but then directed both parties to consult together and, as quickly as possible, return to the court with the verified amount of the excess tax due, if any.
However, Lonestar and LRA again rejected the court’s decision and announced another appeal before the Supreme Court, which Judge Chesson granted.
Up to present none of the parties has even gone to the court to collect the necessary documentation that would enable them to take the matter to the Supreme Court.
“The law provides for an appeal to take 90 days, which has expired without the Lonestar and LRA doing anything regarding the matter, thereby leaving the court in total suspension,” said a staff of the Tax Court, who spoke anonymously.
In the Supreme Court’s judgment, the justices said BOTA did not err in its ruling that under the Revenue Code of Liberia Act 2000, as amended, the LRA has the authority to re-characterize certain arrangements entered into by a taxpayer and other parties with taxable implications.
“Under the said authority the LRA acted properly in re-characterizing in the taxable period from 2009-2011 as the taxes on expatriates’ salaries, inclusive of withholding taxes on expatriates in the amount of US$956,786.20,” the judgment further declared.
“Withholding on non-residents in the amount of US$889,682.38, including interest of US$159,391.99 and US$370,238.21 respectively totaled an accumulated amount of US$2,376,098.78.”
Accordingly, the ruling said, “LCC is adjudged liable to the Government in tax obligation in the amount of US$2,376,098.78.”
Before the Supreme Court action, BOTA had earlier held Lonestar liable and authorized the telecommunications operator to pay US$1.9 million, which the company rejected on grounds that it owned no taxes, thereby contesting the decision and appealing to the Supreme Court.
Initially, the LRA had claimed that the LCC owed US$19.2 million including the unpaid expatriate salaries, which BOTA reduced to US$1.9 million, before it was increased to US$2,376,098.78 by the Supreme Court.
The 2000 Revenue Act provides for the revenue authority “to assess or audit once and to reassess or re-audit once a taxpayer’s books, records and accounts for the same period, but not more than twice for the same period, unless fraud is expressly shown on the part of the taxpayer.”