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Pacific Islands Development Program, East-West Center

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

Guam Taxpayers To Receive Returns Within 6 Months
Failure to fully comply may mean receivership for GovGuam

By Geraldine Castillo

HAGTA, Guam (Marianas Variety Guam, Jan. 31, 2013) – Island taxpayers no longer have to worry about waiting months or years to get their hands on tax refunds, now that the government of Guam has been ordered to pay out appropriately-filed tax claims within six months.

Ruling in favor of the taxpayers who sued GovGuam for late tax refund payments, District Court Judge Consuelo Marshall yesterday signed a permanent injunction, which ultimately ends GovGuam’s practice of delaying the release of tax refunds.

Based on Marshall’s order, GovGuam will face possible receivership if it fails to fully comply with the court order within six months.

The injunction also discontinues the system of expediting tax refund payments to certain individuals.


For years, even decades, GovGuam – as alleged by the taxpayers – has run annual deficits which it sought to close by withholding the payment of tax refunds, resulting in the delay of refund payments.

"This practice of not paying all [tax] refunds in a timely manner has persisted even after Guam’s Legislature twice enacted legislation requiring the government of Guam to set aside money for the timely payment of [tax] refunds," Marshall wrote.

"Government officials have not complied with either of the laws passed to compel timely payment of [tax] refunds."

One month from judgment

GovGuam is now required to comply with the federal court’s order beginning one month from yesterday’s final judgment.

The imposed six-month timeframe will apply not only to claims for refunds filed in the future, but also to claims for refunds that have already been filed as of the court order.

However, no part of the court order will interfere with GovGuam’s right to conduct offsets, garnishments, audits, or any other such processes or procedures that are expressly authorized by the provision of the Internal Revenue Code in effect on Guam, Marshall said.

Expedited refunds

The judgment also orders the suspension and discontinuation of expedited tax refunds.

GovGuam admitted it has paid tax refunds on an expedited basis for those claiming financial hardship, but apparently it had no standard operating procedures in place.

Taxpayers generally are asked to fill out a Request for Refund Assistance Form at the Department of Revenue and Taxation (DRT) with supporting documentation of their hardship.

However, Marshall found that some expedited refunds were made to individuals who hadn’t submitted documentation.

"Defendants admit that up to 10 percent of expedited refunds are paid to taxpayers who do not submit one of these forms, and the majority of expedited refunds that are paid to taxpayers submit no supporting documentation with their claim, according to DRT records," Marshall said of GovGuam.

She also noted that the Legislature’s two attempts to compel GovGuam to pay refunds on time though the passage of legislation has been "largely ignored" and thus the requested injunctive relief is needed to bring the administration of tax refunds into compliance with the Organic Act and Equal Protection Clause.

As part of the order, GovGuam will be required to submit a written report on a quarterly basis for a period of five years, with its first report expected by the court no later than April 1.

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