by Ken Quintanilla

Guam - For the first time, the Office of Public Accountability has conducted an audit of the Department of Revenue & Taxation. And while the audit showed Rev & Tax has not processed Gross Receipt Tax forms for two years, it also showed that GovGuam is at risk of losing revenue.

The OPA has issued its audit of Rev & Tax's Gross Receipt Tax exemptions. Auditor-in-charge Rachel Field said, "That was the initial audit that we were going to do, but what we found was that there was a backlog in processing of GRT forms."

That backlog dates back two years and revealed DRT has not processed GRT forms and assessed taxes and exemptions since then. Audit supervisor Franklin Cooper-Nurse says it happened for a number of reasons some very technical in nature, saying, "We had a system failure, we had a interface breakdown between the Treasury of Guam and the Department of Revenue & Taxation that coupled with the scanner not being utilized as well as the termination of the contract with the vendor provider really put DRT in a bad positions, in a weak position."

As a result, for two years the Business Privilege Tax Branch did not scan or input GRT tax and exemptions data from tax forms into its system specifically totaling close to 80,000 GRT forms. Basically, Public Auditor Doris Flores Brooks says it was a perfect storm of events that hit DRT. "So if a taxpayer voluntary pays that's recorded, if a taxpayer doesn't file, there's no way of knowing who has not filed, so that's really where the risk is who are the non-filers and the under reporters, no one knows for sure how many people are out there like that," he said.

Fortunately, there were some compensating controls in recording GRT payments involving the Department of Administration, Treasurer of Guam and its point of sale system and the AS/400. Cooper-Nurse however says a lot of time is spent manually inputting data because of the system not working, saying, "There's a lot of redundant work and there's a lot of time manually inputting rather than analyzing and using this information to report to managers, to directors and using that information to make sound decisions in regards to taxes."

The OPA has since recommended DRT work with the governor, Guam Legislature and DOA in three areas including establishing a tax administration task force and a financial management task force. Auditor Vincent Duenas said, "Going in line with the e-filling to establish and have a target date. We asked management, can you please set a target date so we can shoot, so you can shoot to that you can fully transition for the electronic filing for the Gross Receipt Tax and all other related taxes," he said.

Rev & Tax director John Camacho meanwhile has indicated that transitioning to e-filing will improve efficiency and offers several benefits, saying, "Basically we concur with her comments and recommendations on the audit of the Gross Receipt Tax exemption."

Camacho adds DRT has provided the figures for 2006 to 2010. For 2011 and 2012 GRT forms, they'll be processed this month along with those from 2013 currently being processed. Ultimately he says DRT is trying to improve the system. "We're working at a pace that we will get back on track," he said.

The Public Auditor meanwhile says unlike past administration directors, DRT management and staff have been accepting of the OPA and hopes this audit will be a wakeup call that DRT needs to be strengthened in order to improve revenue collections. "And hopefully this audit will wake everybody up that we need to invest today so that we can have the right information tomorrow," she said.

Following this audit, the OPA is also working on more reports dealing with Rev & Tax specifically with real property taxes and the Qualifying Certificate Program.