Link: Pacific Islands Report
Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i

$12 Million In Guam Tax Refunds Expected By Week’s End
Governor reiterates commitment to reimbursing taxpayers

By Gaynor Dumat-ol Daleno

HAGTA, Guam (Pacific Daily News, Nov. 21, 2012) – On Guam, tax refund checks worth $12 million will be mailed out by the end of the week, the governor's office announced yesterday.

The $12 million will cover more than a third of what remains possibly owed for the 2011 tax year and previous years. In court documents, the government of Guam stated about $31 million may be owed to Guam taxpayers through 2011.

The administration didn't state what tax filing date is the cutoff for the $12 million that's being released this week.

A press release from the governor's office also didn't specify where the $12 million came from.

"We are beginning the holiday season, so I'm happy that my fiscal policy team continues to prioritize the payment of tax refunds," Gov. Eddie Calvo said in the press release. "Our administration is committed to making these payments, and we will continue to find ways to cut spending, so we can pay refunds."

In the District Court of Guam, the local government faces an order that could potentially force it to pay tax refunds within six months of tax returns being filed.

GovGuam faces a class-action lawsuit filed on behalf of taxpayers who waited years for their tax refunds to be paid.

The lawsuit alleges that preferential treatment, rather than the first-in, first-paid rule followed by the Internal Revenue Service (IRS), dictated some of the decisions by the local government to release tax refund checks.

"Class members who are legally entitled to (Guam income tax) refunds, have routinely had to wait for many months and often several years to receive their refunds, while a few taxpayers have been permitted to receive their refunds ahead of similarly situated taxpayers," the lawsuit states.

The court ordered the plaintiffs to file a proposed order and, if the parties were unable to reach an agreement, GovGuam was to file any objections by Sept. 26, which was then extended to Nov. 30.

GovGuam and plaintiffs' attorneys held several settlement discussions but failed to come up with a deal, court documents state.

GovGuam, through the attorney general's office, has taken a position that it could not commit to firm dates to pay the tax refunds, such as the six-month window proposed by the plaintiffs.

GovGuam simply doesn't have the cash to keep tax refund payments current and would immediately be held in contempt if it agreed to what the plaintiffs had proposed, the local government argues in federal court documents.

In January, another tax filing season begins, which means GovGuam faces a new tax refund bill of about $105 million based on previously stated numbers by GovGuam.

The plaintiffs are seeking a federal court order to stop GovGuam from continuing its past practice of "expedited" tax refund payments.

For each tax year from 2005 through 2009, GovGuam paid an average of about 5,000 refunds totaling approximately $15 million on an expedited basis, the plaintiffs stated in federal court documents.

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