here - Fuerst Ittleman David & Joseph, PL

Case: 11-1612 Document: 003110561288 Page: 11 Date Filed: 06/13/2011
Appleton v. Comm’r, 3d. Cir. case # 10-4522, United States Virgin Islands
(―USVI‖) Brief (January 14, 2011) at page 8 of 57.
Sometime in late 2003 or early 2004 the IRS began to audit United States
citizens who resided in the USVI and filed income tax returns with the USVI
Bureau of Internal Revenue (―BIR‖) to determine if they were bona fide USVI
residents, whether the taxpayers had properly claimed an Economic Development
Program (―EDP‖) tax credit, and whether the taxpayers‘ income was sourced in or
effectively connected with a USVI trade or business. See generally Katcher, Stark,
& Schantz, Signed, Sealed, Delivered – USVI Returns and Section 6501, 2009
TNT 161-8 (Aug. 24, 2009) (noting that in a 2007 report to Congress the IRS
disclosed that 279 United States citizens were under audit, and that 90 percent of
the 279 cases were for 2003 and earlier tax years). This IRS audit program is
referred to, at least within the IRS, as the ―Virgin Islands project.‖ 4 Mr. Gangi is
one taxpayer in the hundreds of program participants that has been, and is being,
subject to the IRS‘ never-ending audits.
At first the IRS asked taxpayers, such as Mr. Gangi, who were under audit to
execute Form 872. Form 872 is the internal form the IRS uses to ―extend‖ the
normal statute of limitations period under IRC § 6501(a). By executing Form 872
taxpayers agree to extend the statute of limitations on assessment for a set amount
4 The undersigned has personally been told this by numerous IRS Revenue Agents.
FUERST ITTLEMAN, PL
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