TAXATION
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TAXATION
§1.Incorporation of Federal Tax Law
2(1) —General Provisions
2(3)—Jurisdiction
3(1)—Estate Taxes
3(2)—Excise Taxes
3(3)—Gift Taxes
3(4)—Income Tax
3(5)—Property Taxes
3(6)—Taxation of Awards or Settlements
5(1)—Refunds
5(2)—Credits
6.Power of Levy, Distraint & Tax Liens
8(2)—Permitted Suits
9(2)— Failure to Pay
9(4)—Reliance on Professional Advice
10(1)—Generally
10(2)—Notice Requirement
11(1) —Tax Exemption Policy Generally
11(2) —Authority of Governor, Board
11(3) —Proof of Public Interest
11(4) —Constitutionality
§ 1 Incorporation of Federal Tax Law
SEE AMERICAN SAMOA GOVERNMENT § 1 – THE FEDERAL GOVERNMENT, CONSTITUTION, & LAWS OF AMERICAN SAMOA
Congress has delegated all powers of governance of American Samoa, including the power to tax, to the President. Mahoney v. Am. Samoa Gov’t, 2 A.S.R.2d 74 (Trial Div. 1985).
Since Congress has entrusted the governance of this Territory to the Department of the Interior, which has approved the Territory’s Constitution and all the laws promulgated under it, there is no need for special Congressional authorization of the power to tax. Mahoney v. Am. Samoa Gov’t, 2 A.S.R.2d 74 (Trial Div. 1985).
Territorial legislature has incorporated by reference the United States Internal Revenue Code, 26 U.S.C., for income taxation in American Samoa. A.S.C.A. § 11.0403. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Employers and employees within American Samoa must pay U.S. Social Security taxes, as the Federal Insurance Contributions Act applies to any employment performed within the United States or to any employment performed outside the United States by her citizens or residents for an American employer. 26 U.S.C. §§ 3101-3128. Alamoana Recipe Inc. v. American Samoa Government, 24 A.S.R.2d 156.
American Samoa’s income tax law does not conflict with or purport to supplant federal tax laws, but it merely creates an additional, territorial tax modelled on the federal tax law. A.S.C.A. § 11.0403. Alamoana Recipe Inc. v. American Samoa Government, 24 A.S.R.2d 156.
Suits to restrain assessment or collection of any federal tax in any court are prohibited by the federal Anti-Injunction Act. 26 U.S.C. § 7421(a). Alamoana Recipe Inc. v. American Samoa Government, 24 A.S.R.2d 156.
The Federal Anti‑Injunction Act prevents the High Court, at any level, from restraining the assessment of collection of any federal tax. 26 U.S.C. §§ 876, 7421(a). Alamoana Recipe Inc., v. American Samoa Gov’t, 25 A.S.R.2d 46.
The Federal Anti‑Injunction Act is applicable to temporary, as well as permanent pleas for injunctive relief. Alamoana Recipe Inc., v. American Samoa Gov’t, 25 A.S.R.2d 46.
Federal FICA applies to any employment performed within the U.S. or outside the U.S. if performed by U.S. citizens or residents, pursuant to 26 U.S.C. § 3121(b), and applies specifically to American Samoa, pursuant to 26 U.S.C. § 3121(e). Alamoana Recipe, Inc., v. American Samoa Government, 25 A.S.R.2d 97.
Federal laws need not be passed by the American Samoa legislature, since Congress has the constitutional power to make rules and regulations for the territories, pursuant to U.S. Const. art. VI, and the federal Constitution and laws are the supreme law of the land, pursuant to U.S. Const. art. IV, § 3. Alamoana Recipe, Inc., v. American Samoa Government, 25 A.S.R.2d 97.
A.S.C.A. § 11.0408 confers jurisdiction on the High Court with respect to disputes concerning the American Samoa income tax, and A.S.C.A. § 11.0403 incorporates by reference the United States Internal Revenue Code, 26 U.S.C. § 1 et seq., for income taxation in American Samoa. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
Actions pertaining to improperly assessed tax deficiencies and penalties in American Samoa are subject to the statutory requirements applicable to such actions brought in a Tax Court under the United States internal revenue code. Boral Gas of American Samoa, Inc. v. Iaulualo, 6 A.S.R.3d 232 (Trial Div. 2002).
A.S.C.A. § 11.0403 does supplant federal tax laws, but it merely creates an additional, territorial tax modeled on the federal tax. Boral Gas of American Samoa, Inc. v. Iaulualo, 6 A.S.R.3d 232 (Trial Div. 2002).
American Samoa has adopted certain income tax laws and rules of the United States through A.S.C.A. § 11.0403(a). Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
The Samoan Income Tax Act consists of chapters 4 and 5 of the American Samoa Code and the provisions of the United States Internal Revenue Code adopted by § 11.0403(a). Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
By rejecting the Governor’s several proposals to remove the child tax credit from the Samoan Income Tax Act, the Legislature has evidenced clear intent to recognize the child tax credit as the law of American Samoa. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
The Legislature has enacted the child tax credit as the law of American Samoa and only the Legislature may remove the credit from the Samoan Income Tax Act. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
In cases where the language of Samoan Income Tax Act is ambiguous and conflicts with the Internal Revenue Code, the Court must determine whether the Legislature intended to “de-link” the Samoan Income Tax Act section. Boral Gas of American Samoa, Inc. v. Iaulualo, 7 A.S.R.3d 57 (Trial Div. 2003).
Order staying payment of taxes pending litigation on tax exemption is not authorized by Federal Rules. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Court will allow amendment of petition substituting Governor for Director of Tax Office as respondent in challenge to alleged tax deficiency, despite running of 90 days statutory period for amendment, since High Court will hear matter in any event and denial of amendment would result in injustice. Patu v. Westervelt, 4 A.S.R. 818.
Equal Protection guarantees forbid statute unnecessarily penalizing United States citizenship as between similarly situated taxpayers one of whom is a citizen and one of whom is a national even though they may both be American Samoans. Where the substitution of terms renders referential legislation ambiguous, court will not favor meaning that is inconsistent with constitutional rights. Naber v. Am. Samoa Gov’t, 1 A.S.R.2d 109 (Trial Div. 1983).
All hearings of the tax exemption board, when considering a request for tax exemption, must be open to the public. Samoa Packing Co. v. Am. Samoa Gov’t, 2 A.S.R.2d 56 (App. Div. 1985).
Under rules governing tax litigation, a party may amend pleadings by leave of court which shall be given freely when justice requires. Tax Court Rule 41. King v. Commissioner of Revenue, 7 A.S.R.2d 90.
In proceeding involving issue of fraudulent intent to evade tax, government bears burden of proof by clear and convincing evidence. 26 U.S.C. § 7454. Ah San v. Lutali, 4 A.S.R.2d 177.
When the High Court sits as a Tax Court, it follows the tax court rules and procedures set forth in the Internal Revenue Code. Boral Gas of American Samoa, Inc. v. Iaulualo, 7 A.S.R.3d 57 (Trial Div. 2003).
Review of a decision of the High Court, sitting as the Tax Court, shall be obtained by filing a notice of appeal with the clerk of the High Court within 90 days after the decision is entered. Boral Gas of American Samoa, Inc. v. Iaulualo, 7 A.S.R.3d 57 (Trial Div. 2003).
Absent an express rule to the contrary, a motion for reconsideration of a Tax Court decision terminates the running of the ninety day limitations period within which to file an appeal, and, in effect, restarts the clock for appealing if and when the motion is denied. Boral Gas of American Samoa, Inc. v. Iaulualo, 7 A.S.R.3d 57 (Trial Div. 2003).
§ 2(2) —Statutes of Limitations
Normal three-year statute of limitations for collection of delinquent taxes expands to six years when taxpayer failed to report over 25 percent of his includible gross income in tax return. 26 U.S.C. § 6501(e)(1)(A). Ah San v. Lutali, 4 A.S.R.2d 177.
The limitation period for the government to bring an action seeking assessment of additional income taxes, penalties, or interest under the Samoan Income Tax Act is three years from the date that the taxpayer files the tax return. Boral Gas of American Samoa, Inc. v. Iaulualo, 6 A.S.R.3d 232 (Trial Div. 2002).
SEE CIVIL PROCEDURE § 1 – JURISDICTION
High Court sits as Tax Court if petition is timely filed challenging notice of deficiency, otherwise High Court sits as District Court to hear refund claim. Patu v. Westervelt, 4 A.S.R. 818.
High Court of American Samoa has exclusive and original jurisdiction over territorial income tax proceedings, sitting as a District Court in refund cases and a Tax Court in deficiency proceedings. A.S.C.A. §§ 11.0401, 11.0408. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
According to Tax Court rule, a 90-day notice must have been issued for the court to have jurisdiction in a deficiency proceeding initiated by a taxpayer. United States Tax Court Rule 13(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
For a court to have jurisdiction over a suit to recover taxes erroneously or illegally assessed or collected, the government must have assessed such taxes and the taxpayer must have timely filed a refund claim with the Tax Office. 26 U.S.C. § 7422. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Statutory requirement that petition for redetermination of deficiency of income taxes be made within 90 days after notice of deficiency was mailed is jurisdictional. 26 U.S.C. § 6213(a); A.S.C.A. § 11.0401. Stephens v. American Samoa Government, 15 A.S.R.2d 87.
The High Court, while sitting as a Tax Court for deficiency proceedings, does not have jurisdiction to hear such a deficiency proceeding unless it was filed within the statutory deadline; while sitting as a District Court for refund cases, it lacks jurisdiction until there has been payment or collection of disputed taxes. 26 U.S.C. § 7422; A.S.C.A. § 11.0409. Stephens v. American Samoa Government, 15 A.S.R.2d 87.
The High Court lacks jurisdiction to block enforcement of federal tax laws. Alamoana Recipe, Inc., v. American Samoa Government, 25 A.S.R.2d 97.
The High Court lacks jurisdiction to grant relief for unauthorized tax collection by the IRS, since such actions must be brought in a district court of the United States, pursuant to 26 U.S.C. § 7433(a). Alamoana Recipe, Inc., v. American Samoa Government, 25 A.S.R.2d 97.
American Samoans may litigate unauthorized tax collections in the federal district court where the defendant resides, where a substantial part of the claim arose, or where a substantial part of the relevant property is situated. Alamoana Recipe, Inc., v. American Samoa Government, 25 A.S.R.2d 97.
A.S.C.A. § 11.0408 confers jurisdiction on the High Court with respect to disputes concerning the American Samoa income tax, and A.S.C.A. § 11.0403 incorporates by reference the United States Internal Revenue Code, 26 U.S.C. § 1 et seq., for income taxation in American Samoa. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
The High Court, Trial Division, has exclusive, original jurisdiction over all judicial proceedings in American Samoa, both criminal and civil, with respect to the Samoan Income Tax Act. Boral Gas of American Samoa, Inc. v. Iaulualo, 6 A.S.R.3d 232 (Trial Div. 2002).
In tax deficiency proceedings, the High Court sits as a Tax Court. Boral Gas of American Samoa, Inc. v. Iaulualo, 7 A.S.R.3d 57 (Trial Div. 2003).
26 U.S.C. § 7521(b), which describes procedures involving taxpayer interviews, does not give rise to a cause of action for a failure to abide by its requirements, and the Court will not enjoin the tax office from investigations when it appears that a plaintiff has independently apprised himself of his rights and is exercising them. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
§ 3 Specific Taxes
RESERVED
Fono has power to impose excise tax on incidental importation of used motor vehicles, even if Hawaii and California have legislatively chosen not to do so. Letuli v. Government, 4 A.S.R. 830.
Statute imposing excise tax on imported motor vehicles applies whether or not vehicle imported is used and imported incidental to change of residence by owner. 34 A.S.C. §§ 401, 402(a)(3)(C). Letuli v. Government, 4 A.S.R. 830.
In order for goods to fall under an exception to the excise tax that the goods were imported for export sale for consumption outside American Samoa, the goods must be packaged and stored according to the requirements under A.S.C.A. § 11.1002(c). YRT, Inc. v. Progressive Ins. Co., 6 A.S.R.3d 108 (Trial Div. 2002).
RESERVED
Income tax law provides that employer is liable for employee’s tax liability unless portion of earnings are retained, even as to foreign corporation entering territory for a single business transaction; however, tax liability does not accrue until after taxable year. Pacific Salvage v. Am. Samoa Gov’t, 1 A.S.R.2d 107 (Trial Div. 1983).
Language of tax statute which uses property and land interchangeably cannot be construed to include tax on leased houses. Government v. Bird, 2 A.S.R. 102.
Court takes judicial notice that Attorney-General construed tax on leased property not to include lease of houses. Government v. Bird, 2 A.S.R. 102.
Admission of ownership of land for tax purposes by Samoan usually means admission of right to use family lands assigned to him by matai. Government v. Bird, 2 A.S.R. 102.
§ 3(6) —Taxation of Awards or Settlements
An award or settlement can be exempt from government taxation only if: (1) the claim was based on tort or tort type rights and (2) the damages were received on account of personal physical injuries or physical sickness. Gibbons v. Am. Samoa Gov’t, 6 A.S.R.3d 50 (App. Div. 2002).
Government must issue a statutory notice of deficiency (90-day letter) by registered mail before assessing or collecting any deficiency, and is expressly prohibited from such assessment or collection until it has done so. 26 U.S.C. §§ 6212(a), 6213(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
The American Samoa Government does not have, and cannot obtain, any ownership interest in the monies representing income tax refunds. The Senate v. Lutali, 27 A.S.R.2d 157.
The American Samoa Government collects income taxes, through wage withholdings, periodic estimated payments and other means, with the clear-cut statutory obligation to pay refunds for overpayments. 26 U.S.C.A. § 6402; A.S.C.A. § 11.0403(a). The Senate v. Lutali, 27 A.S.R.2d 157.
Refund monies are the taxpayers’ private funds. The Senate v. Lutali, 27 A.S.R.2d 157.
The American Samoa Government holds tax refund monies with the fiduciary duty to account for and refund those monies to the taxpayers as the rightful owners, with interest if not timely paid. The Senate v. Lutali, 27 A.S.R.2d 157.
The American Samoa Government’s fiduciary obligations regarding income tax refunds are absolute, regardless of the tax year in which the government assumes responsibility to return to its taxpayers their excess tax payments in the government’s possession. The Senate v. Lutali, 27 A.S.R.2d 157.
Tax credit refunds need not be expressly funded by appropriations since the government does not have, and cannot obtain, any ownership interest in monies representing tax refunds. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
The government holds tax credit refund monies with a fiduciary duty to account for and refund those monies to the taxpayers as the rightful owner, with interest if not timely paid. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
Because legislative appropriations to pay tax refunds are unnecessary, the entire appropriation process is irrelevant to an action seeking payment of tax refunds. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
Taxpayers that prevailed in action against government for recovery of tax refund entitled to court costs and reasonable attorney fees. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
For a taxpayer claiming the child tax credit and having one or two children, the credit is nonrefundable, meaning the taxpayer can only offset income tax liability in excess of the mandated alternative minimum tax for all American Samoa taxpayers, but not recover any refund for the amount of the credit over the amount of tax liability. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
For a taxpayer claiming the child tax credit and having three or more children, a portion of the credit is treated as refundable. Dameworth v. Am. Samoa Gov’t, 6 A.S.R.3d 242 (Trial Div. 2002).
§ 6 Power of Levy, Distraint & Tax Liens
Leins to secure the payment of taxes may only be established by statute or some act of the legislature. Moimoi v. Howden, 1 A.S.R. 3.
When Board of Assessors established a “Sa” pursuant to an order of the Commandant of the Naval Station, valid tax lien was created. Moimoi v. Howden, 1 A.S.R. 3.
Samoan custom of “Sa” establishes a lien on property for purposes of taxation. Moimoi v. Howden, 1 A.S.R. 3.
Before the government can distrain and seize a taxpayer’s property, it must validly assess a deficiency by preparing and sending a 90-day statutory notice to the taxpayer before the statute of limitations expires. 26 U.S.C. §§ 6212(a), 6501(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
A taxpayer may sue and enjoin the government from levying on, distraining, or seizing property under the authority of purported deficiency assessments where the government did not issue a 90-day statutory notice of deficiency. 26 U.S.C. § 6213(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Tax laws permitting the seizure and sale of property must be strictly construed. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Government violates due process when it seizes a taxpayer’s property for unpaid taxes without following the procedures mandated by the Internal Revenue Code for distraint and levy. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Where government failed to issue a 90-day statutory notice of deficiency before seizing plaintiff’s property for unpaid taxes, it was enjoined from depriving plaintiff of his right to due process, either by continuing to deprive him of his rights under the Internal Revenue Code to challenge and contest income tax deficiencies or by withholding the property it had seized from plaintiff, until it complied with the applicable Code provisions pertaining to distraint and levy. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Power of levy and distraint over a taxpayer’s property may be invoked without intervention of judicial process, on the theory that the taxpayer has already had the opportunity to invoke administrative and judicial remedies. 26 U.S.C. § 6331(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
Under 26 U.S.C.A. §6331, the government may levy the property of a delinquent taxpayer to satisfy the taxpayers debt; and because each party to a joint bank account has the right to withdraw all of the funds from the account, the funds in a jointly held bank account are considered the taxpayer’s property, and are subject to levy. Mulitauaopele v. American Samoa Gov’t and Tax Office, 4 A.S.R.3d 86 (Trial Div. 2000).
The “marital deduction” is a deduction from a decedent’s gross estate allowed in computing the estate’s liability for federal estate tax. 26 U.S.C. § 2056. Beaver v. Craven, 19 A.S.R.2d 14.
The “marital deduction” was intended to equalize the treatment of estates of married decedents in community property and common law states. 26 U.S.C. § 2056. Beaver v. Craven, 19 A.S.R.2d 14.
Intended to permit marital property to be taxed in two stages and not to allow a tax-exempt transfer to succeeding generations, the “marital deduction” is generally restricted to the transfer of property interests that will (unless disposed of or consumed) ultimately be included in the surviving spouse’s estate. 26 U.S.C. § 2056. Beaver v. Craven, 19 A.S.R.2d 14.
No “marital deduction” is allowed for most terminable interests which perish at the survivor’s death and would not be included in her taxable estate or for property which passes to the survivor without having first been included in decedent’s gross estate. 26 U.S.C. § 2056. Beaver v. Craven, 19 A.S.R.2d 14.
The “marital deduction” allows a couple to arrange their affairs so that their combined wealth is divided between their estates in a manner that achieves the lowest net total tax. 26 U.S.C. § 2056. Beaver v. Craven, 19 A.S.R.2d 14.
The essence of a “life estate power of appointment” trust, qualifying for the “marital deduction,” is the combination of income for life and a general power to appoint, both vested in the surviving spouse. Beaver v. Craven, 19 A.S.R.2d 14.
Distributions from decedent’s estate to a “power of appointment” trust qualify for the “marital deduction” if they are first included in the gross estate, but the survivor’s power to appoint must be quite broad to qualify for the marital deduction. 26 U.S.C. § 2056(a). Beaver v. Craven, 19 A.S.R.2d 14.
SEE AMERICAN SAMOA GOVERNMENT § 6 – SOVEREIGN RIGHTS
SEE TORTS § 10 – GOVERNMENT TORT LIABILITY ACT
26 U.S.C. § 7421(a)—the Anti-Injunction Act—prohibits suits against the tax office for its actions in assessing and collecting taxes, and this section does not permit a court to enjoin a summons. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
Sovereign immunity does not bar a taxpayer’s suit to recover property seized by the government for unpaid taxes where the government failed to comply with the procedures of the Internal Revenue Code, because Congress deliberately waived sovereign immunity by providing for deficiency hearings and refund suits. Klauk v. American Samoa Government, 13 A.S.R.2d 52.
When the tax office concludes that taxes are owed, it must issue a notice of deficiency under 26 U.S.C. § 6212 as a prerequisite to assessment, and it is at that point that a challenge to the deficiency can be made by petitioning this Court under 26 U.S.C. § 6213, which provides for an exception to the general prohibition on suits contained in 26 U.S.C. § 7421(a). Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
In the case of tax proceedings, Congress deliberately waived sovereign immunity by providing for deficiency hearings and refund suits; and as an alternative to naming the Tax Office and the Director of the Tax Office, a plaintiff may name the American Samoa Government (“ASG”) as a defendant in a suit founded on valid claims. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
Under 26 U.S.C.A. §§6532(a) and 7422(a), before filing a suit for the recovery of taxes erroneously or illegally assessed or collected, a plaintiff must file a claim for a refund or credit and this claim must be either denied or ignored for six months. Mulitauaopele v. American Samoa Gov’t and Tax Office, 4 A.S.R.3d 86 (Trial Div. 2000).
Willful failure to file return requires prosecution to prove only deliberate intention not to file returns which defendant knew ought to have been filed. Government v. King, 4 A.S.R. 785
Failure to file income tax return, although knowledgeable is not willful is not deliberate, intentional and is based upon reliance on Government agent who failed to prepare return. Government v. King, 4 A.S.R. 785.
Willful failure to pay tax requires Government to meet stronger burden than willful failure to file a return. Government v. King, 4 A.S.R. 785.
Willful failure to pay income tax requires prosecution to prove that defendant had a bad purpose or evil motive in not paying. Government v. King, 4 A.S.R. 785.
Failure to pay income tax timely with intent to deprive Government of payment as time required is prompted by bad purpose and thus willful. Government v. King, 4 A.S.R. 785.
It is not defense to a charge of failure to pay income tax that defendant has made voluntary partial payment. Government v. King, 4 A.S.R. 785.
It is not defense to a charge of failure to pay income tax that defendant objects to Government or detests its activities. Government v. King, 4 A.S.R. 785.
In determination whether taxpayer omitted 25 percent or more of gross income from return, in order to trigger special six-year statute of limitation, an item is not “omitted” if taxpayer did not include the item in gross income but referred to it elsewhere in the return or in an attachment in a matter sufficient to apprise the government of its nature and amount. 26 U.S.C. § 6501(e)(1)(A). Ah San v. Lutali, 4 A.S.R.2d 177.
Where government’s own documents indicate that taxpayer included allegedly omitted items on return, but simply did not include them in calculation of gross income, items were not “omitted” so as to justify special six-year limitation of actions to remedy taxpayer omissions of over 25 percent of gross income. 26 U.S.C. § 6501(e)(1)(A). Ah San v. Lutali, 4 A.S.R.2d 177.
§ 9(4) —Reliance on Professional Advice
While hiring an attorney or accountant does not insulate the taxpayer from negligence penalties, good faith reliance on professional advice concerning tax laws is a defense. Boral Gas of American Samoa, Inc. v. Iaulualo, 6 A.S.R.3d 232 (Trial Div. 2002).
Deficiency proceedings, which allow a taxpayer to litigate the government’s determination of a deficiency before paying such deficiency, are an essential part of the statutory scheme. 26 U.S.C. § 6213(a). Klauk v. American Samoa Government, 13 A.S.R.2d 52.
The deficiency procedures referred to in 26 U.S.C. § 6201(d) require that a notice of deficiency be issued before attempting to assess the same, but such notice is not required to be given at any specific point in an audit. Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
When the tax office concludes that taxes are owed, it must issue a notice of deficiency under 26 U.S.C. § 6212 as a prerequisite to assessment, and it is at that point that a challenge to the deficiency can be made by petitioning this Court under 26 U.S.C. § 6213, which provides for an exception to the general prohibition on suits contained in 26 U.S.C. § 7421(a). Ames v. Dept. of Treasury, 4 A.S.R.3d 78 (Trial Div. 2000).
§ 11 Industrial Incentive Act
§ 11(1) —Tax Exemption Policy Generally
Samoa Industrial Incentive Act empowers Governor to grant tax exemptions for new businesses which are in public interest on recommendation of Tax Exemption Board. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
A primary objective of Industrial Incentive Act is to establish firm foundation for self-government and to attain maximum possible self-support, and this is construction to be given term “public interest.” Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
§ 11(2) —Authority of Governor, Board
SEE AMERICAN SAMOA GOVERNMENT § 4 – THE EXECUTIVE
Under provisions of Industrial Incentive Act, if tax exemption board and Governor find applicant is new business, fill tax exemption must be granted unless Governor makes affirmative finding that new business is not in public interest. A.S.C. 1961, Ch. 26.01. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Questions of Governor’s approving or disapproving application for tax exemption under Industrial Incentive Act, on grounds of public interest, is discretionary, and courts have no power to interfere with Governor’s authority on questions involving his discretion and judgment. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Determination as to whether business is in public interest is function of Governor. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Governor’s decision to permit tax exemption for initial capital investment which would benefit local economy, but not to permit exemption for imported materials which would not, was reasonable. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Industrial Incentive Act required Governor to grant or deny tax exemption and did not authorize discretion to grant partial tax exemption. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 938.
Governor’s granting tax exemption on initial capital investment in plant and equipment only was disapproval of application of industry for full tax exemption. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Tax Exemption Board is not required by statute to make recommendation to Governor nor to grant tax exemption, but such recommendation is not illegal. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Trial Division erred in holding that appellant Bottling Corporation was not entitled to full tax exemption, under provisions of Industrial Incentive Act. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 938.
§ 11(3) —Proof of Public Interest
When challenging disapproval by Governor, burden of proof is on industry to show it is in public interest and therefore entitled to tax exemption under Industrial Incentive Act. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Five local employees and a few shareholders do not necessarily mean business is in public interest. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
Governor’s decision to consider industry which takes money out of economy for non-necessity not in public interest was reasonable. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.
If Industrial Incentive Act gives Governor authority to grant partial tax exemptions without prescribing guidelines or standards, then it is unconstitutional. Bottling Corporation of Samoa v. Lee, 4 A.S.R. 499.