(a) Every person, partnership, firm, corporation or other business association failing to file reports or pay the total amount of tax within the time required by this chapter is subject to the payment of a penalty at the rate of five (5) percent per month or any fraction thereof, but not exceeding 25 percent in the aggregate; Provided, That if the gross receipts tax report or the excise tax report on United States Postal Service shipments is not received within 30 days after the due date of such report, the Director of the Bureau of Internal Revenue shall make arbitrary determination of the tax for the delinquent taxpayer, and after giving him due notice, proceed to collect the tax plus the penalties as provided by this chapter. The report shall consist of an estimated amount of tax due and chargeable against the delinquent taxpayer. Provided further, that the penalties provided for, and paid, under this chapter and under the provisions of sections 1281 (relating to failure to file tax return), and 1285 (relating to bad checks) of this title, shall not be considered to be taxes or additions to tax which are subject to the allowance of credit on the exportation of articles, goods, merchandise, and commodities from the Virgin Islands for purposes of computing the credit under the provisions of section 42d of this chapter. Every hotelkeeper or innkeeper failing to file reports or pay the total amount of tax within the time required by this chapter is subject to the payment of a penalty at the rate of fifteen percent (15%) per month or any fraction thereof, but not exceeding twenty-five percent (25%) in the aggregate.
(b) When the arbitrary determination of tax due is made, as provided in subsection (a) of this section, the taxpayer shall be billed for said amount and may be proceeded against in any way that any other delinquent taxpayer may be proceeded against, including the levy and attachment and sale of property, whether real or personal; Provided, however, That the taxpayer may file a petition in the Superior Court asking that such execution be stayed, pending determination of the actual amount due. The Court shall advance such petition and shall hear such relevant evidence as the taxpayer and tax administration authority may produce and shall, in the light of such evidence, arrive at the amount the taxpayer should have paid had he complied with the law. Whereupon, the taxpayer shall be required to pay such amount plus any accrued penalty and Court costs.
(c) The Director of the Virgin Islands Bureau of Internal Revenue after arbitrarily determining the amount of tax due may, upon the taxpayer having complied with the law by furnishing the information required prior to the levy of attachment, reach any agreement with the taxpayer respecting the amount due, plus accrued penalties.
(d) The Director of the Virgin Islands Bureau of Internal Revenue, upon satisfactory proof by a taxpayer that failure to file a return or pay any tax or penalty required under the provisions of this chapter was due to reasonable cause and not due to wilful neglect, may waive any and all penalties.