Opinion ID: 868140
Heading Depth: 4
Heading Rank: 3

Heading: Taxpayers’ Policy Arguments

Text: Taxpayers point to the possibility of inconsistent results and double taxation if the cases against the IRS filed in the Tax Court reach different outcomes than the cases filed against the VIBIR in the District Court of the Virgin Islands. Taxpayers further state that allowing the District Court of the Virgin Islands to resolve the entire dispute would improve judicial economy by allowing one court to resolve the related issues in the redetermination petitions brought against the IRS and the VIBIR. Consequently, Taxpayers argue that these considerations support a finding that the entire litigation should be before one court: the District Court of the Virgin Islands. Although we are mindful of the possibility of inconsistent results and double taxation, Taxpayers‘ claims must proceed under the jurisdictional framework established by Congress. The Tax Court has jurisdiction over federal tax deficiency proceedings under I.R.C. §§ 6213 and 6214, federal district courts have jurisdiction over tax refund proceedings under I.R.C. § 7422, and the District Court of the 14 Virgin Islands has jurisdiction over proceedings implicating territorial tax law under 48 U.S.C. § 1612(a). In light of the unambiguous statutory scheme established by Congress governing the adjudication of tax disputes and the firm sovereign immunity bar, Taxpayers‘ policy arguments are unpersuasive. See United States v. Craig, 694 F.3d 509, 512 (3d Cir. 2012) (―[N]either fairness considerations nor rules applicable to private disputes can alone provide grounds for abrogating sovereign immunity.‖ (citation and internal quotation marks omitted)). Additionally, Taxpayers‘ fear of being subject to double taxation without a remedy appears to be misplaced because the United States and the Virgin Islands have established an administrative procedure that could grant them relief in the event of double taxation. See Tax Implementation Agreement between the United States of America and the Virgin Islands, 1989-1 C.B. 347, Art. 6 (1989). Nonetheless, even if Taxpayers might be unfairly subjected to double taxation, this equitable consideration does not override the sovereign immunity bar that may only be waived by Congress.