by Mindy Aguon

Guam - For the next five years, the Government of Guam will be under a permanent injunction to ensure it pays tax refunds on a timely basis. District Court Judge Consuelo Marshall issued the permanent injunction, spelling out just how the government must pay the refunds. But the Calvo Administration believes such isn't necessary.

"This is something that I have believed in," Governor Eddie Calvo explained, "We pay the tax refunds on time. It shouldn't have to be done through a court order. It's just the right thing to do." The island's chief executive reacted to the latest permanent injunction imposed on the public sector that requires that tax refunds be paid out within six months of filing.

As a result of the order, the Department of Revenue & Taxation and tax must prioritize the processing of claims for tax refunds and payment must be made according to the filing date of the claim. Judge Consuelo Marshall held that the governor and the Department of Administration and Rev & Tax 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.

"We have not violated the Organic Act, not this Administration," Calvo said. "She's singing to the choir. I think it's all a moot point."

The order requires that beginning on March 1, the government must pay all tax refunds no later than six months after the filing of the claim for refund and this includes paying out those refunds that have already been filed. Said Calvo, "But as far as this administration is concerned and this governor, we've made this a priority since Day One. It's moot now because we've paid those obligations in terms of past due tax refunds."

The six-month timeframe kicks in when a taxpayer files their refund, but for those claims that contain errors or those that are subject to audit or investigation, the six months kicks in from the time the designation of the claim is made. The governor says he's now working with his fiscal team to see how the government can comply with the permanent injunction while also ensuring the critical services of the government are funded.

When KUAM News asked if he felt GovGuam is going to have enough money to pay out the amount in a half-year, Calvo responded, "In fact, this morning I got together with my fiscal team and I asked them those same questions. We have a cash flow projection report in terms of not only revenues coming in but actual cash coming in.

"I must note that the legislature diverged in our original game plan to pay all tax refunds on time so that we could build a reserve, so unfortunately we have not gotten that full reserve but we did put monies in reserve."

How much and whether it will be enough to pay out the estimated $104 million needed for 2012 tax refunds remains to be seen. But the plaintiffs and their legal counsel will no doubt be watching closely and inform the court if the government is not complying and request for the imposition of a federal receiver or the sequestration of government funds to ensure the timely payment of tax refunds.

Today was the deadline for the Administration to submit its proposed Fiscal Year 2014 budget.