Vento v. Director of Virgin Islands Bureau of Internal Revenue
58 V.I. 753
| 3rd Cir. | 2013Background
- Consolidated Virgin Islands tax residency appeals focused on whether Ventos and their three adult daughters were bona fide Virgin Islands residents as of December 31, 2001 for § 932(c) filing.
- Mirror code framework: VI residents pay VI taxes; § 934(a) limits VI tax credits or subsidies; § 932(c) governs VI residency reporting for residents.
- District Court bench trial in 2010 held Ventos were not bona fide VI residents; United States intervened to argue taxes should be filed with IRS.
- Ventos purchased Estate Frydendahl on St. Thomas in May–August 2001, spent substantial renovation funds, and lived there intermittently; family offices and multiple homes elsewhere remained.
- Daughters Nicole, Gail, and Renee largely maintained ties to Nevada/ mainland; only adult daughters filed 2001 VI returns and none were VI residents on Dec. 31, 2001; court holds Ventos were VI residents, daughters were not.
- Court reverses District Court as to Richard and Lana Vento; affirms as to Nicole Mollison, Gail Vento, and Renee Vento.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sochurek factors establish bona fide VI residency for Ventos. | Ventos assert intent, presence, and ties show residency. | Government argues lack of sufficient factors to prove residency. | Ventos were bona fide VI residents as of 12/31/2001. |
| Does burden of proof lie with the United States to show non-residency? | United States bears burden to negate VI residency under § 932. | Burden not clearly allocated; court declines to decide burden issue. | Issue not necessary to resolve; burden not decided. |
| Did the Ventos’ tax-motivated relocation undermine bona fide residency under Sochurek? | Tax avoidance motivations do not negate residency; § 932(c) supports VI filing. | Tax motives could undermine residency in some contexts. | Tax avoidance motives did not defeat bona fide residency given other indicia. |
| Were the Ventos’ absences from VI in 2001 inconsistent with residency? | Absences were explained by mobile lifestyle and legitimate activities; not dispositive. | Significant absences weigh against residency. | Absences weighed little; presence and ties favored residency. |
| Did the daughters Nicole, Gail, and Renee constitute VI residency as of 12/31/2001? | Daughters’ filings with VI could imply residency by family linkage. | Each daughter must independently satisfy § 932(c); none did. | Daughters were not bona fide VI residents as of 12/31/2001. |
Key Cases Cited
- Sochurek v. Comm’r, 300 F.2d 34 (7th Cir. 1962) (factors used to assess residency in tax contexts; intent and presence matter)
- Bergersen v. Comm’r, 109 F.3d 56 (1st Cir. 1997) (intent to remain and substantial presence support residency claims)
- Weible v. United States, 244 F.2d 158 (9th Cir. 1957) (taxpayer rights to minimize taxes; relevance of avoidance motives)
- Gregory v. Helvering, 293 U.S. 465 (1935) (tax planning motives generally not dispositive where statute permits)
- Downs v. Comm’r, 166 F.2d 504 (9th Cir. 1948) (permits multiple residences; residency analysis depends on broader context)
- Martinez v. Bynum, 461 U.S. 321 (1983) (residency concepts vary by context; not solely domicile)