- 38 -
2. Implementing Agreement
Congress gave the Secretary the responsibility to negotiate
the implementing agreement, without which section 931 is
inoperative. Tax Reform Act of 1986 (TRA 1986), Pub. L. 99-514,
sec. 1271, 100 Stat. 2085, 2591; S. Rept. 99-313, supra at 479.
Moreover, the implementing agreement indicates that the Secretary
has the responsibility of defining the scope of American Samoa’s
tax authority and explicitly states that “the United States may
use its regulatory authority over sourcing rules under section
931(d)(2) and 7654(e) of the Code to determine that certain
income is U.S.-source income.” Tax Implementation Agreement
Between the United States of American and American Samoa, 1988-1
C.B. 408, 410. (Emphasis added.)
Pursuant to section 1271 of TRA 1986, and the resulting
implementing agreement, the Secretary is granted extraordinary
authority. For example, American Samoa is allowed to replace the
“mirror” system of taxation with its own tax scheme, but the
Secretary has the authority to return the possession to the
“mirror” system if the possession enacts discriminatory tax laws
or the possession’s tax receipts fall (revenue requirement). TRA
1986 sec. 1271, 100 Stat. 2592. Thus, after discovering a
violation of these requirements and informing Congress of its
findings, the possession will return to the “mirror” system
unless Congress passes a law providing otherwise. Id.
Page: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 NextLast modified: May 25, 2011