Title 26 — Internal Revenue Code
Part III · Chapter 1 — Normal Taxes and Surtaxes
§ 932. Coordination of United States and Virgin Islands income taxes
Statutory text
Treatment of United States residents
Application of subsection
This subsection shall apply to an individual for the taxable year if—
such individual—
is a citizen or resident of the United States (other than a bona fide resident of the Virgin Islands during the entire taxable year), and
has income derived from sources within the Virgin Islands, or effectively connected with the conduct of a trade or business within such possession, for the taxable year, or
such individual files a joint return for the taxable year with an individual described in subparagraph (A).
Filing requirement
Each individual to whom this subsection applies for the taxable year shall file his income tax return for the taxable year with both the United States and the Virgin Islands.
Extent of income tax liability
In the case of an individual to whom this subsection applies in a taxable year for purposes of so much of this title (other than this section and section 7654) as relates to the taxes imposed by this chapter, the United States shall be treated as including the Virgin Islands.
Portion of United States tax liability payable to the Virgin Islands
In general
Each individual to whom subsection (a) applies for the taxable year shall pay the applicable percentage of the taxes imposed by this chapter for such taxable year (determined without regard to paragraph (3)) to the Virgin Islands.
Applicable percentage
In general
For purposes of paragraph (1), the term “applicable percentage” means the percentage which Virgin Islands adjusted gross income bears to adjusted gross income.
Virgin Islands adjusted gross income
For purposes of subparagraph (A), the term “Virgin Islands adjusted gross income” means adjusted gross income determined by taking into account only income derived from sources within the Virgin Islands and deductions properly apportioned or allocable thereto.
Amounts paid allowed as credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the taxes required to be paid to the Virgin Islands under paragraph (1) which are so paid.
Treatment of Virgin Islands residents
Application of subsection
This subsection shall apply to an individual for the taxable year if—
such individual is a bona fide resident of the Virgin Islands during the entire taxable year, or
such individual files a joint return for the taxable year with an individual described in subparagraph (A).
Filing requirement
Each individual to whom this subsection applies for the taxable year shall file an income tax return for the taxable year with the Virgin Islands.
Extent of income tax liability
In the case of an individual to whom this subsection applies in a taxable year for purposes of so much of this title (other than this section and section 7654) as relates to the taxes imposed by this chapter, the Virgin Islands shall be treated as including the United States.
Residents of the Virgin Islands
In the case of an individual—
who is a bona fide resident of the Virgin Islands during the entire taxable year,
who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, and
who fully pays his tax liability referred to in section 934(a) to the Virgin Islands with respect to such income,
for purposes of calculating income tax liability to the United States, gross income shall not include any amount included in gross income on such return, and allocable deductions and credits shall not be taken into account.
Special rule for joint returns
In the case of a joint return, this section shall be applied on the basis of the residence of the spouse who has the greater adjusted gross income (determined without regard to community property laws) for the taxable year.
Special rule for applying section to tax imposed in Virgin Islands
In applying this section for purposes of determining income tax liability incurred to the Virgin Islands, the provisions of this section shall not be affected by the provisions of Federal law referred to in section 934(a).
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Tax Reform Act of 1986
Pub. L. 99–514 title XII § 1274(a) · 100 Stat. 2085
Enacted · 26 U.S.C. § 932
Added Pub. L. 99–514, title XII, § 1274(a), Oct. 22, 1986, 100 Stat. 2596
Source evidence
Code source credit
Added Pub. L. 99–514, title XII, § 1274(a), Oct. 22, 1986, 100 Stat. 2596Enacted provision · exact public law section
(a) In General.— Subpart D of part III of subchapter N of chapter 1 is amended by inserting after section 931 the following new section: “SEC. 932. COORDINATION OF UNITED STATES AND VIRGIN ISLANDS INCOME TAXES. “(a) Treatment of United States Residents.— “(1) Application of subsection.— This subsection shall apply to an individual for the taxable year if— “(A) such individual— “(i) is a citizen or resident of the United States (other than a bona fide resident of the Virgin Islands at the close of the taxable year), and “(ii) has income derived from sources within the Virgin Islands, or effectively connected with the conduct of a trade or business within such possession, for the taxable year, or “(B) such individual files a joint return for the taxable year with an individual described in subparagraph (A). “(2) Filing requirement.— Each individual to whom this subsection applies for the taxable year shall file his income tax return for the taxable year with both the United States and the Virgin Islands. “(3) Extent of income tax liability.— In the case of an individual to whom this subsection applies in a taxable year for purposes of so much of this title (other than this section and section 7654) as relates to the taxes imposed by this chapter, the United States shall be treated as including the Virgin Islands. “(b) Portion of United States Tax Liability Payable to the Virgin Islands.— “(1) In general.— Each individual to whom subsection (a) applies for the taxable year shall pay the applicable percentage of the taxes imposed by this chapter for such taxable year (determined without regard to paragraph (3)) to the Virgin Islands. “(2) Applicable percentage.— “(A) In general.— For purposes of paragraph (1), the term ‘applicable percentage’ means the percentage which Virgin Islands adjusted gross income bears to adjusted gross income. “(B) Virgin islands adjusted gross income.— For purposes of subparagraph (A), the term ‘Virgin Islands adjusted gross income’ means adjusted gross income determined by taking into account only income derived from sources within the Virgin Islands and deductions properly apportioned or allocable thereto. “(3) Amounts paid allowed as credit.— There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the taxes required to be paid to the Virgin Islands under paragraph (1) which are so paid. “(c) Treatment of Virgin Islands Residents.— “(1) Application of subsection.— This subsection shall apply to an individual for the taxable year if— “(A) such individual is a bona fide resident of the Virgin Islands at the close of the taxable year, or “(B) such individual files a joint return for the taxable year with an individual described in subparagraph (A). “(2) Filing requirement.— Each individual to whom this subsection applies for the taxable year shall file his income tax return for the taxable year with the Virgin Islands. “(3) Extent of income tax liability.— In the case of an individual to whom this subsection applies in a taxable year for purposes of so much of this title (other than this section and section 7654) as relates to the taxes imposed by this chapter, the Virgin Islands shall be treated as including the United States. “(4) Residents of the virgin islands.— In the case of an individual who is a bona fide resident of the Virgin Islands at the close of the taxable year and who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, for purposes of calculating income tax liability to the United States gross income shall not include any amount included in gross income on such return. “(d) Special Rule for Joint Returns.— In the case of a joint return, this section shall be applied on the basis of the residence of the spouse who has the greater adjusted gross income (determined without regard to community property laws) for the taxable year. “(e) Section Not To Apply to Tax Imposed in Virgin Islands.— This section shall not apply for purposes of determining income tax liability incurred to the Virgin Islands.”Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1012(w)(3) · 102 Stat. 3342
Substituted · 26 U.S.C. § 932(c)(2)
Pub. L. 100–647, § 1012(w)(3), substituted “an income tax return” for “his income tax return”
Source evidence
Code amendment note
Subsec. (c)(2). Pub. L. 100–647, § 1012(w)(3), substituted “an income tax return” for “his income tax return”.Enacted provision · exact public law section
(3) Paragraph (2) of section 932(c) of the 1986 Code is amended by striking out “his income tax return” and inserting in lieu thereof “an income tax return”.Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1012(w)(2) · 102 Stat. 3342
Amended · 26 U.S.C. § 932(c)(4)
Pub. L. 100–647, § 1012(w)(2), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “In the case of an individual who is a bona fide resident of the Virgin Islands at the close of the taxable year and who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, for purposes of calculating income tax liability to the United States gross income shall not include any amount included in gross income on such return.”
Source evidence
Code amendment note
Subsec. (c)(4). Pub. L. 100–647, § 1012(w)(2), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “In the case of an individual who is a bona fide resident of the Virgin Islands at the close of the taxable year and who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, for purposes of calculating income tax liability to the United States gross income shall not include any amount included in gross income on such return.”Enacted provision · exact public law section
(2) Paragraph (4) of section 932(c) of the 1986 Code is amended to read as follows: “(4) Residents of the virgin islands.— In the case of an individual— “(A) who is a bona fide resident of the Virgin Islands at the close of the taxable year, “(B) who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, and “(C) who fully pays his tax liability referred to in section 934(a) to the Virgin Islands with respect to such income, for purposes of calculating income tax liability to the United States, gross income shall not include any amount included in gross income on such return, and allocable deductions and credits shall not be taken into account.”Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1012(w)(1) · 102 Stat. 3342
Substituted · 26 U.S.C. § 932(e)
Pub. L. 100–647, § 1012(w)(1), substituted current heading for “Section not to apply to tax imposed in Virgin Islands”
Amended · 26 U.S.C. § 932(e)
Pub. L. 100–647, § 1012(w)(1), amended text generally. Prior to amendment, text read as follows: “This section shall not apply for purposes of determining income tax liability incurred to the Virgin Islands.”
Source evidence
Code amendment note
Subsec. (e). Pub. L. 100–647, § 1012(w)(1), substituted current heading for “Section not to apply to tax imposed in Virgin Islands” and amended text generally. Prior to amendment, text read as follows: “This section shall not apply for purposes of determining income tax liability incurred to the Virgin Islands.”Enacted provision · exact public law section
(1) Subsection (e) of section 932 of the 1986 Code is amended to read as follows: “(e) Special Rule for Applying Section to Tax Imposed in Virgin Islands.— In applying this section for purposes of determining income tax liability incurred to the Virgin Islands, the provisions of this section shall not be affected by the provisions of Federal law referred to in section 934(a).”Pub. L. 108–357 title VIII § 908(c)(2) · 118 Stat. 1418
Substituted · 26 U.S.C. § 932(a)(1)(A)(i); 26 U.S.C. § 932(a)(c)(1)(A); 26 U.S.C. § 932(a)(1)(4)(A)
Pub. L. 108–357 substituted “during the entire taxable year” for “at the close of the taxable year”
Source evidence
Code amendment note
Subsecs. (a)(1)(A)(i), (c)(1)(A), (4)(A). Pub. L. 108–357 substituted “during the entire taxable year” for “at the close of the taxable year”.Enacted provision · exact public law section
(2) Section 932 is amended by striking “at the close of the taxable year” and inserting “during the entire taxable year” each place it appears.Effective date note
Amendment by Pub. L. 108–357 applicable to taxable years ending after Oct. 22, 2004, see section 908(d)(1) of Pub. L. 108–357, set out as an Effective Date note under section 937 of this title.
6 of 6 references resolved to an enrolled provision
Editorial Notes
Prior Provisions
A prior section 932, acts Aug. 16, 1954, ch. 736, 68A Stat. 292; , Pub. L. 89–809, title I, § 103(m), 80 Stat. 1554; , Pub. L. 92–606, § 1(f)(2), (3), 86 Stat. 1497; , Pub. L. 99–272, title XII, § 12103(a), 100 Stat. 285, related to income taxation of citizens of possessions of the United States, prior to repeal by Pub. L. 99–514, title XII, § 1272(d)(1), , 100 Stat. 2594.
Amendments1988–2004 · 2 rounds
2004
Subsecs. (a)(1)(A)(i), (c)(1)(A), (4)(A). Pub. L. 108–357 substituted “during the entire taxable year” for “at the close of the taxable year”.
1988
Subsec. (c)(2). Pub. L. 100–647, § 1012(w)(3), substituted “an income tax return” for “his income tax return”.
Subsec. (c)(4). Pub. L. 100–647, § 1012(w)(2), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “In the case of an individual who is a bona fide resident of the Virgin Islands at the close of the taxable year and who, on his return of income tax to the Virgin Islands, reports income from all sources and identifies the source of each item shown on such return, for purposes of calculating income tax liability to the United States gross income shall not include any amount included in gross income on such return.”
Subsec. (e). Pub. L. 100–647, § 1012(w)(1), substituted current heading for “Section not to apply to tax imposed in Virgin Islands” and amended text generally. Prior to amendment, text read as follows: “This section shall not apply for purposes of determining income tax liability incurred to the Virgin Islands.”
Statutory Notes and Related Subsidiaries
Effective Date of 2004 Amendment
Amendment by Pub. L. 108–357 applicable to taxable years ending after , see section 908(d)(1) of Pub. L. 108–357, set out as an Effective Date note under section 937 of this title.
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date
Enactment of section 932 and repeal of prior section 932 applicable to taxable years beginning after , with certain exceptions and qualifications, see section 1277 of Pub. L. 99–514, set out as an Effective Date of 1986 Amendment note under section 931 of this title.
Regulations
Pub. L. 99–514, title XII, § 1274(c), , 100 Stat. 2598, as amended by Pub. L. 100–647, title I, § 1012(w)(4), , 102 Stat. 3530, provided that: “The Secretary of the Treasury or his delegate shall prescribe such regulations as may be necessary or appropriate for applying the Internal Revenue Code of 1986 [this title] for purposes of determining tax liability incurred to the Virgin Islands.”
Authority To Impose Nondiscriminatory Local Income Taxes
Pub. L. 99–514, title XII, § 1274(b), , 100 Stat. 2597, provided that: “Nothing in any provision of Federal law shall prevent the Virgin Islands from imposing on any person nondiscriminatory local income taxes. Any taxes so imposed shall be treated in the same manner as State and local income taxes under section 164 of the Internal Revenue Code of 1954 [now 1986] and shall not be treated as taxes to which section 901 of such Code applies.”
Credits
1986–2004 · 3 acts
- 1986Added Pub. L. 99–514, title XII, § 1274(a), , 100 Stat. 2596
- 1988amended Pub. L. 100–647, title I, § 1012(w)(1)–(3), , 102 Stat. 3530
- 2004Pub. L. 108–357, title VIII, § 908(c)(2), , 118 Stat. 1656.
Show as published
(Added Pub. L. 99–514, title XII, § 1274(a), , 100 Stat. 2596; amended Pub. L. 100–647, title I, § 1012(w)(1)–(3), , 102 Stat. 3530; Pub. L. 108–357, title VIII, § 908(c)(2), , 118 Stat. 1656.)