by Mindy Aguon

Guam - The District Court issued findings of fact and conclusions of law today, supporting its ruling for a permanent injunction and final judgment in Ria and Jeffrey Paeste's class action lawsuit against the Government of Guam. In her findings, Judge Consuelo Marshall held that the governor and the Department of Administration and the Department of Revenue & Taxation's directors are in violation of the Organic Act of Guam and have failed in their roles in administering the Guam Territorial Income Tax in a manner that violates the Equal Protection Clause.

As a result of the finding, the court entered declaratory judgment for the plaintiffs. This means the government will have to pay refunds on time and in a first-in/first-out sequence, which the judge says will save the government money on interest owed on refunds and conserve resources previously devoted to processing expedited requests.

The judge also found that the public interest supports a permanent injunction. The government however opposed the timeline asking that they be given a year to pay the refunds arguing that the organic act does not require defendants to set aside money to pay tax refunds or define a time period to pay them. The judge overruled the government's objection to the timeline.

The judge also noted in her findings that the provisions of the Internal Revenue Code applicable on Guam generally require the government to pay refunds to taxpayers no later than six months after the filing date of the claims for refund. Marshall added, "Defendants are obligated to administer the GTIT consistent with the aspects of the federal tax scheme made applicable on Guam through the Organic Act's mirroring provisions."

Governor's Chief of Staff Frank Arriola meanwhile responded to the latest development in the case, stating, "We just received word about the case this evening, so we need some time to go over the order. What we can say in the meantime is the fact remains Governor Calvo is the first governor in two decades to pay tax refunds in the same year they were filed. He's clearly demonstrated to taxpayers his commitment to paying tax refunds. If there's anyone best suited to look at our financial situation and decide where to go from here, it's Governor Calvo. His commitment to paying refunds timely is unquestionable."