LRA Takes LoneStar GSM To Court…For Alleged US$13.1m Tax Evasion

The Liberia Revenue Authority (LRA) has instituted an action tax evasion against the Lonestar Communications Corporation (LCC) in the amount of US$13.1million.Lonestar Communications Corporation (LCC) is the first GSM Company operating in Liberia.

The Lonestar Communications Corporation (LCC) is the first GSM Company among the two GSM companies operating in the county.

Court documents obtained by Inquirer on Friday, revealed that the case was transferred to the Tax Court at the Temple of Justice following the Board of Tax Appeals (BOTA) final ruling on July 23, 2014, holding LCC liable to the Government of Liberia in the amount of US$13, 146, 385.21, for total taxes due, including penalties and interests for the taxable years from 2007 up to 2011.

The record showed that following BOTA’s final ruling, counsels representing the legal interest of LCC, took exception to the ruling, and filed a petition with the Tax Court for judicial review, praying the court to affirm certain portions of the final ruling in their favor and reverse some portions against the LRA.

During argument on Friday on the petition for judicial review and its resistance thereto, Cllr. Stephen Dunbar told the court that co-respondent BOTA erred when it reversed the payment of LCC/ petitioner’s due in the amount of US$5,239, 142.93 due for the period of 2007 and 2008.

Cllr. Dunbar said his client, LCC acted within the five years period as in keeping with section 74 (d) of the Revenue Code of 2000, when it reassessed its own Lodestar’s books for the period 2007 to 2011, contrary to BOTA’s ruling, claiming that the appellant/defendant reassessment for said period fell outside of the statute.

The defense lawyer told Judge Mozart A. Chesson that the section 74(d) of the Revenue Code of 2000, which he cited as his reliance clearly provides that: “The period for the Minister of Finance to make an assessment under subsection (a) (3), or an emended assessment under subsection (b), ends on the date of five years after the date on which the return was required to be filed or the tax required to be withheld tax, except that if a person is required to file a return or to with hold tax,”

One of the counsels for the defendant/LCC argued that in the instant case, the return is not filed or the withholding does not occur, then the assessment period ends on the date, 10 years after the due date for filing the return, or making the withholding.

The defense counsel stated that BOTA is that the phrase, “Period of Assessment”, does not means the time or year within which the audit or assessment is carried out.

He noted that BOTA misunderstood the meaning of the phrase, “Period of Assessment” as contemplated by the revenue Code, when it ruled that LCC was barred by Statute of Limitations on grounds auditors at the Ministry of Finance opted to carry out reassessment of LCC’s books in 2012.

Cllr. Dunbar admitted that even though the audit was conducted in 2012, but the period of assessment was for otherwise known as the period under audit remained exactly five years, 2007 to 2011.

In counter-argument, Atty. Eric B. Morlu, who represented the LR A, prayed the court to deny the unmeritorious petition for legal and factual reasons.

Atty. Morlu said the LCC refused to allow the LRA access into its books and records which prompted that Minister to apply the Revenue Code entitled, Determination on grounds that the minister lacked such authority.

The prosecuting attorney told court that the determination was based on available documents and information resulting in a tax liability of US$19, 197, 903.44 covering the period, 2007 to 2011.

Atty. Morlu said when the Minister demanded payment of the amount of US$19, 197, 903.44; LCC refused to make said payment and later filed an objection with the MoF Division of Appeals, contending that the Minister lacked the authority to amend the previous assessment made.

He said on May 27, 2013, the MoF Division of Appeals denied the Appeal, and ruled that the Minister has the authority to conduct reassessment of the November, 2012 tax bill.

However, the Resident Judge of the Tax Court, Chesson reserved ruling on the petition for judicial review and its resistance.