Chapter 04 - Income Tax

Chapter 04 - Income Tax

11.0401 Substitution of terms.


In the application of this chapter and chapter 11.05, except where it is clearly otherwise required, the applicable provisions of the United States Internal Revenue Code of 1954 shall be read so as to substitute "American Samoa" for "United States", "Treasurer of American Samoa" for "Secretary or his delegate", "Treasurer of American Samoa" for "Commissioner of Internal Revenue" and "Collector of Internal Revenue", and "High Court" for "District Court" and "Tax Court", with other changes in nomen-clature and other language, including the omission of inapplicable language, where necessary to effect the intent of this section.

11.0402 Interpretation of chapter.


This chapter and chapter 11.05, the Samoan Income Tax, must be interpreted and administered in a manner to:

(1) prevent the collection of the Samoan Income Tax at the source on wages which, by virtue of section 931(i) of the United States Internal Revenue Code of 1954, are subject to the collection of the United States Income Tax at the source;

(2) suspend the assessment of interest or penalty on that amount of unpaid Samoan Income Tax, refund to which a taxpayer is entitled from the Internal Revenue Service for the same taxable period; provided, that the Samoan Income Tax is paid within 10 days of the receipt of the U.S. income tax refund, but no later than the 15th day of the 6th month following the due date of the Samoan return(determined with regard to any extension of time for filing); and provided also, that the Samoan Income Tax return is timely filed including extensions granted. In the event the Samoan tax return is not timely filed, the provisions for a 5% negligence penalty as provided in section 6653(a) of the Internal Revenue Code must apply to the total tax due American Samoa, unless delay in filing is due to fraud, in which case the fraud penalty of 50% as imposed by section 6653(b) of the Internal Revenue Code must apply;

(3) deny the relief offered in subsection(b) to taxpayers who do not avail themselves of the credit allowed by sections 33 and 901 of the United States Internal Revenue Code of 1954 against their United States Income Tax;

(4) treat a citizen or resident of the United States as a citizen or resident of American Samoa for purposes of section 152(b)(3), relating to the definition of a dependent, and section 6013(a)(l), relating to joint returns by a husband and wife, of the United States Internal Revenue Code of 1954;

(5) give appropriate and binding effect on the Governor and the High Court for action taken by the Tax Court, or any court of competent jurisdiction, of the United States.

11.0403 Imposition of tax - Citation.


(a) The income tax and the income tax rules in force in the United States of America in effect on December 31, 2000, where not clearly inapplicable or incompatible with the intent of this section, are adopted by American Samoa, and shall be deemed to impose a separate Territorial income tax, payable to the government. These laws include, but are not limited to, the following provisions of the United States Internal Revenue Code of 1954: subtitle A; chapters 24 and 25 of subtitle C, with reference to the collection of income tax at source on wages; and all provisions of subtitle F which apply to the income tax, including provisions as to crimes, other offenses and forfeitures contained in chapter 75.

(b) For reference purposes, this chapter and chapter 11.05, and all provisions of the United States Internal Revenue Code of 1954 adopted by reference in subsection(a), may be cited as the "Samoan Income Tax Act

(c) In the event of a conflict between the provisions of the US Internal Revenue Code as adopted from time to time and the provisions of Title 11 Chapter 05 of the American Samoa Code Annotated, the provisions of Title 11 Chapter 05 shall take precedence.

11.0404 Administration and enforcement of income tax.


(a) The administration and enforcement of the American Samoa Income Tax shall be the responsibility of the Treasurer of American Samoa under the general supervision of the Governor.

(b) The Treasurer shall have the same administrative and enforcement powers and remedies with regard to the American Samoa Income Tax as the Secretary of the Treasury, and other United States officials of the Executive branch, have with regard to the United States Income Tax.

(c) Rules for enforcement of the Income Tax Act shall be prescribed by the Treasurer.

(d) The Treasurer shall have authority to issue, as needed, all or a part of the text of income tax laws in force pursuant to this chapter, but the failure to exercise such authority may not prejudice or limit the application of the laws so in force.

11.0404.1 Businesses operating under a tax exemption.


(a) All businesses having a tax exemption under 11.1601 et seq. shall claim the credits allowed by section 38(relating to the investment tax credit), section 50A(relating to the credit for expenses of work incentive programs), and section 51(relating to the credit for employment of certain new employees), in the year earned, without any carry over to other tax years, and shall depreciate property under the provisions of section 167 during the period of exemption, whether or not any taxable income is realized because of the tax exemption.

(b) A net operating loss sustained by a tax-exempt business during a taxable period will be allowed as an offset against income realized from other sources during the same period.

(c) If an excess of net operating loss(computed under subsection(b)), sustained during the tax exemption period exceeds the total income from the tax exempt business during the same period, the excess will be allowed as a carry-over subject to the provisions of section 172.

(d) The credit for foreign taxes under section 33 shall be allowed as a carry-back or carry-over only to the extent such credit, computed under section 901, exceeds the tax that would have been incurred except for the exemption granted under 11.1601 et seq.

11.0405 Part-year residents-Returns required-Deductions -Exemptions and credits.


(a) A part-year resident, for the period that he is a resident of American Samoa, must report on his Samoan income tax return all Samoan sources of income including wages from U.S. Government agencies.
(b) A part-year resident may claim the optional standard deduction in lieu of itemized deductions; however, the amount allowable is 1/12 per month for the number of months he is a resident of American Samoa.
(c) If itemized deductions are claimed in lieu of optional standard deduction they must have been paid during the period while a part-time resident and be American Samoa source items. For example, contributions to organized charities outside American Samoa or real estate taxes on property outside American Samoa would not be deductible on the American Samoa return.
(d) A part-year resident may not use the tax table.
(e) When the tax is computed under the graduated rates (without regard to the optional tax table), the personal exemption and dependency credits are allowed for each month of residency in American Samoa. The amount allowable for each month is based on 1/12th of the annual allowance for the number of qualified exemptions for the month. For this purpose, over ½ month will be considered a whole month.

11.0406 Withholding exemption certificate required.


(a) The provisions of the income tax relating to the collection of income tax at the source on wages shall apply to remuneration paid on or after the first day of the first month which begins more than 30 days after the date of enactment of this chapter.

(b) Not later than 15 days before the date on which the collection of income tax at source on wages first becomes effective under subsection(a), each employee receiving wages shall furnish his employer with the withholding exemption certificate required by section 3402(f)(2) of the United States Internal Revenue Code of 1954 as adopted and amended by American Samoa.

(c) The provisions of chapter 3 of the Internal Revenue Code, relating to withholding of tax on nonresident aliens and foreign corporations, shall be effective after 31 December 1962.

11.0407 Income tax reserve account.


(a) The Treasurer of American Samoa shall establish an "Income Tax Reserve Account" promptly upon the enactment of the Samoan Income Tax Act and shall deposit in such account 25% of all corporate income taxes, as and when collected, unless at the time of collection the reserve account has a net balance of not less than $ 1,000,000. Upon meeting the requirements of this section for the funding of the Income Tax Reserve Account, the funds thereafter collected by the Treasurer shall then be deposited in the Economic Development Fund, to be remitted to the Development Bank of American Samoa as set forth in section 28.0108.

(b) The reserve account shall constitute a trust fund out of which refunds and other adjustments shall be made in favor of any corporation subject to the Samoan Income Tax Act.

(c) The money in the reserve account shall remain in a segregated status unless the Legislature of American Samoa authorizes its use for other purposes and provides for reimbursement of the account as and when needed.

(d) The Reserve Account shall be reimbursed by continued collection and set aside of 25% of all income taxes designated in paragraph(a) above, which set aside shall continue until the net balance of the Reserve Account reaches the amount and level established in said paragraph(a).

11.0408 High Court jurisdiction.


The High Court shall have exclusive original jurisdiction over all judicial proceedings in American Samoa, both criminal and civil, irrespective of the degree of the offense or the amount involved, with respect to the American Samoa Income Tax.

11.0409 Suits for recovery of taxes - Payment of judgments.


(a) Suits for the recovery of any American Samoa Income Tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, are subject to the statutory requirements applicable to suits for the recovery of such amounts maintained against the United States in the United States District Courts with respect to the United States Income Tax.

(b) When any judgment against American Samoa under this section has become final, the Governor or his delegate shall order the payment of such judgment out of any unencumbered funds in the Treasury of American Samoa, after first resorting to funds in the income tax reserve account if the plaintiff or petitioner is a corporation.

11.0410 Execution against Governor and government personnel


(a) Execution may not issue against the Governor or any officer or employee of American Samoa on a final judgment in any proceeding against him for any acts or for the recovery of money exacted by or paid to him and subsequently paid into the Treasury of American Samoa in performing his official duties with respect to the American Samoa Income Tax if the court certifies that probable cause existed, or such officer or employee acted under the directions of the Governor or his delegate.

(b) When such execution has been issued, the Governor or his delegate shall order the payment of such judgment out of any unencumbered funds in the Treasury of American Samoa.

11.0411 Collection actions.


A civil action for the collection of the American Samoa income tax, together with any fines, penalties and forfeiture, or for the recovery of any erroneous refund of such tax, may be brought in the name of and by American Samoa in the High Court.

11.0412 Tax liens.


American Samoa shall have a lien with respect to the American Samoa Income Tax in the same manner and with the same effect, and subject to the same conditions, as the United States has a lien with respect to the United States Income Tax. Such lien shall be enforceable in the name of and by American Samoa. Where filing of a notice of lien is required, such notice shall be filed in the office of the Clerk of the High Court.

11.0413 Criminal offenses.


Any act or failure to act with respect to the American Samoa Income Tax which constitutes a criminal offense under chapter 75 of subtitle F of the United States Internal Revenue Code of 1954, as adopted by this chapter, is an offense against American Samoa and may be prosecuted in the name of American Samoa by the appropriate officer thereof.

11.0414 Notification and assessment of Samoan income tax in the case of adjustments to United States income tax of corporation.


(a) In the case of a taxpayer that is a corporation that has engaged in a trade or business in American Samoa during a taxable year, such taxpayer(or its successor) shall report to the Treasurer of American Samoa any change or correction by the gross income, deduction, credit, or allowance as reported for such taxable year(or for a taxable year of a person described in paragraph(2) that includes such taxable year) on the United States income tax return of:

(1) the taxpayer, or

(2) any person who is related(within the meaning of section 482 of the United States Internal Revenue Code) to the taxpayer, that is attributable or otherwise related to the carrying on by the taxpayer of such trade or business in American Samoa or to the purchase, sale, lease, or other transfer of goods, services, or property or other transactions between related persons and the taxpayer in carrying on its trade or business in American Samoa. For purposes of this section, the category of items of gross income, deduction, credit, or allowance of the taxpayer or a related person that are treated as otherwise related to the carrying on by the taxpayer of its trade or business in American Samoa or to do transactions between related persons and the taxpayer in carrying on its trade or business in American Samoa shall include an item that arises out of one or more transactions involving substantially comparable goods, services, or other property undertaken between related persons and the taxpayer in carrying on a trade or business outside of American Samoa. The taxpayer shall make such report to the Treasurer of American Samoa within ninety days after the final determination of such change or correction. The taxpayer shall concede the accuracy of such determination or state wherein it is erroneous. In the event that the taxpayer or any related person files an amended United States income tax return for any taxable year with respect to any item of gross income, deduction, credit, or allowance that is attributable or otherwise related to the carrying on by the taxpayer of a trade or business in American Samoa or to the purchase, sale, lease, or other transfer of goods, services, or property or other transactions between related persons and the taxpayer in carrying on its trade or business in American Samoa, the taxpayer(or its successor) shall file within ninety days thereafter a copy of such amended United States income tax return with the Treasurer of American Samoa and shall provide such additional information as the Treasurer of American Samoa may require. The Treasurer of American Samoa is not required to accept as correct for Samoan income tax purposes any such change or correction by the Commissioner of Internal Revenue or amended United States income tax return and may conduct an independent audit or investigation with respect thereto. The Treasurer of American Samoa shall determine whether the assessment of additional Samoan income tax is appropriate under the provisions of the Samoan Income Tax Act in respect of the taxable year or years to which the report required under this subsection or the amended United States income tax return relates.

(b) Upon the making by the taxpayer of the report required under subsection(a), or the filing of the copy of the amended return as described in subsection(a), or the filing of the copy of the amended return as described in subsection(a), the Treasurer of American Samoa shall have, notwithstanding any provision of the Samoan Income Tax Act to the contrary, a period of two years following the date upon which the taxpayer makes the report required under subsection(a), or files such copy of the amended return, within which to assess upon the taxpayer such additional Samoan income tax, if any, as is appropriate under the provisions of the Samoan Income Tax Act in respect of the taxable year or years to which such report or amended return relates. The provisions of this subsection shall not affect the time within which or the amount for which an assessment otherwise may be made by the Treasurer of American Samoa.

(c) In the event that a taxpayer fails to report a change or correction by the commissioner of Internal Revenue, or fails to file the copy of the amended return, as and when required by subsection(a) hereof the assessment of additional Samoan income tax by the Treasurer of American Samoa may be made at any time, notwithstanding any provision of the Samoan Income Tax Act to the contrary.

(d) For purposes of this section:

(1) The term "report" shall include, but not be limited to, the taxpayer's name, address, and identifying number, the taxable year or years that are affected by the change or correction described in subsection(a), a listing of the names, addresses, and identifying numbers of any related persons involved in the change or correction, a description and listing of the dollar amounts of such change or correction, a copy of the final determination of such change or correction, and such other information as the Treasurer of American Samoa may prescribe.

(2) The term "final determination" shall include:

(A) the issuance of a 90-day notice of deficiency pursuant to section 6211 and 6212(or a jeopardy assessment pursuant to section 6861) of the United States Internal Revenue Code, unless a timely petition to redetermine the deficiency is filed in the United States Tax Court in which case the judgement of a court of last resort affirming or redetermining such deficiency is deemed to constitute the final determination;

(B) the assessment of a deficiency pursuant to a waiver filed under section 6212 of the United States Internal Revenue Code in the case where no 90-day notice of deficiency is issued;

(C) a closing agreement made under section 7121 of the United States Internal Revenue Code or similar agreement in compromise executed by the Commissioner of Internal Revenue and the taxpayer or related person; and

(D) an allowance by the Commissioner of Internal Revenue, or by a court of competent jurisdiction in a final judgement, on the United States income tax return of the taxpayer or related person or of any deficiency thereafter assessed.

(e)(1) This section 11.0414 shall apply to taxable years ending after 1980 as to which a final determination(within the meaning of this section) by the Commissioner of Internal Revenue or the filing of an amended United States income tax return with the Commissioner of Internal Revenue is made after December 31, 1989.

(2) The amendments made by this act shall be effective as if included in section 11.0414, as originally enacted, of the American Samoa Code Annotated and shall apply to taxable years ending after 1980 as to which a final determination(within the meaning of section 11.0414(a) of the American Samoa Code Annotated) by the Commissioner of Internal Revenue or the filing of an amended United States income tax return with the Commissioner of Internal Revenue is made after December 31, 1989; provided that in the case of a final determination or the filing of an amended United States income tax return that has been made during the period prior to the date of enactment of this act, the ninety-day period described in section 11.0414(a) of the American Samoa Code Annotated within which the taxpayer is to make its report to the Treasurer of American Samoa shall be treated as commencing on the date of enactment of this act and the two-year period described in section 11.0414(b) of such Code within which the Treasurer of American Samoa may assess additional Samoan income tax upon the making of such report by the taxpayer shall be treated as commencing on the date on which the taxpayer files such report during the period following the date of enactment of this act.