Guam - While the Government of Guam continues to pay out tax refunds as cash becomes available, a proposed plan spelling out when and how the island's public sector intends to pay tax refunds fairly and on time is evidently going to take a little more time for GovGuam to figure out.
While the Government of Guam wants more time to review a proposed permanent injunction for tax refunds, the plaintiffs have made it clear they want the government to pay refunds within six months from the time they're filed. Attorney Ignacio Aguigui represents Jeffrey and Ria Paeste, Sharon Zapanta and taxpayers who sued the government over late and expedited tax refunds and won their case last month.
The plaintiffs filed their proposed permanent injunction today saying they are entitled to summary judgment as the government violated their constitutional rights to equal protection. Given the government's history of failing to pay refunds in a regular and timely manner, the plaintiffs have asked that the court impose a permanent injunction.
Their proposal includes four specific terms - the biggest is that the government pay refunds no later than six months after a claim for a refund is filed.
Others terms include monthly reports with specific details on the number of refunds, the total paid, and the number processed as well as the immediate suspension and discontinuation of the practice of expediting tax refunds and an enforcement provision that requires the government to make interest payments to each taxpayer who is owed a refund on a monthly basis. If the government fails to do so, the plaintiffs will seek the appointment of a receiver.
Because of the government's current cash flow situation, Rev & Tax director John Camacho says the six-month timeline may not be feasible. "That's why I think we're going to sit down and see," he explained. "At some point in time, it may be realistic, but for now I think until we really settle our government operation and costs and find that money, and in order to find that money, we really need to cut down on some of that government costs to find that money and reserve that money to put aside and pay tax refunds and other obligations of the Government of Guam."
It's a concern that's been raised by Department of Administration director Benita Manglona, who filed a declaration with the court today that was attached to the government's request for an extension. She saying the proposed injunction fails to address Guam's obligations to pay the $30-$40 million owed for tax returns already filed not to mention the $105 million projected shortfall for payment of 2012 tax returns.
Camacho clarifies that the estimated $40 million figure takes into account ready-to-go A-status returns, error and problem returns and those with unprocessed returns who have a three-year window to file.
While the Calvo Administration has convened a fiscal team to formulate a plan on how to begin paying refunds promptly while still meeting the government's financial obligations, officials warn that there just isn't enough money coming in to meet all current year expenditures, unpaid prior year obligations and unpaid tax refunds.
The Government of Guam has asked that they be given until October 12 to respond to the proposed injunction and begin negotiations soon after with a final proposal to be submitted to the court on November 2. The plaintiffs meanwhile indicate that they want to move the process along at a much faster pass but are willing to engage in negotiations should the court grant the request for an extension.