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Tax refunds held back so war claims can be paid

By Troy Torres

(Tumon, Guam) Still waiting for your tax refund? The Leon Guerrero administration has purposely slowed the correction of thousands of error and suspended status tax refunds since May in order to save that money for war claims instead. They are counting on a federal reimbursement some time after February in order to release the refunds.

For the past eight months, Kandit has been monitoring the monthly Income Tax Refund Status Report. Since May, about $16 million in refunds were flagged each month as error- and suspended refunds, meaning they don't need to be paid until the flags are released following deeper inspection of the returns. The total each month, which only has nominally decreased to $16 million as of the November 2019 report, is the sum of refunds filed in 2019 for prior years for both individual and corporate returns for tax years 2006 through 2017.

The amounts under the flagged categories for each of those years has remained virtually unchanged since May, meaning those refunds have not been processed.

The Paeste ruling, which commanded the timely payment of tax refunds, states that Status-A refunds should be paid within six months of filing, commencing the tax filing deadline (normally April 15 each year). The loophole in the ruling is that filed but flagged returns don't have to be paid six months from the filing date so long as they remain flagged.

In October, Kandit conducted an analysis of tax refund payments against the use of Section 30 money and noticed a discrepancy of about $15 million that seemed to be sequestered into the government's accounts. We also noticed the nearly identical amount in flagged refunds. We asked Adelup to explain this and whether the money will be used to pay tax refunds for the flagged returns. Neither Adelup nor the Department of Revenue and Taxation have ever answered this question.

Yesterday Gov. Lou Leon Guerrero signed the local war claims bill into law. It promises to use a pot of local money using a General Fund authorization to pay adjudicated claims and then, when the federal war claims money is released through sequestered Section 30 money, that federally-authorized money will pay back the General Fund.

The amount of money she said the government has for this undertaking? About $14 million - almost the entire amount the government has been withholding from taxpayers owed refunds from belated processing of their returns.

There is no other wiggle room within the budget to produce this $14 million. There is no other pot of cash than the money sequestered from the Section 30 deposit in September. There are no anomalies in the government's monthly cash report to suggest that the governor was able to stow this money away based on daily collections. The wiggle room was the refunds, and it comes at the expense of thousands of people still waiting for their refund to be unflagged and paid.

Legally, no harm no foul. Morally and ethically? She's made thousands of people wait nearly eight months for money that is rightfully theirs so that she and Speaker Tina Muna Barnes can score political points.

But the flagged and yet-to-be-paid refunds aren't the only tax refund liability of the government.

As of the latest Income Tax Refund Status Report that was run on December 2, 2019, there are 2,177 people who filed a 2018 tax refund and waiting on the government to pay them some $7.45 million. In total, 5,761 people who filed for individual tax refunds for tax years 2006 through the present are owed $12.12 million in refunds and interest. And 2,103 corporate income tax filers are owed a total of $16.61 million in refunds and interest as well.

That is $28.73 million in tax refunds the government owes to the people it took the money from, and the new tax year already is here. What's worse? There still are 2,852 individual tax returns filed in 2019 that still haven't even been processed, and 73 corporate income tax returns in the processing waiting bin as well.

Despite all this money owed to people who overpaid their taxes, Ms. Leon Guerrero and Ms. Muna Barnes decided to hold that money back for war claims, hoping the federal war claims money will solve this deplorable fiscal scheme by February.

Numbers don't lie; politicians do.

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The comment about "claiming more dependents" is correct. I am surprised that more people do not do this as through the years of my working life, whenever I was not on contract at an overseas location and I was subject to Fed taxes, (and/or State, Guam and the CNMI)

I and other always did this. The taxes that are with held and the amounts returned are paid back, are paid WITHOUT interest so the various Govt. and/or State entities have free use of your money for the year.

But a word of caution, be mindful of your projected earnings for the year as you may owe taxes when filing, depending on your tax bracket.


Tax refunds are a scam. Claim more dependents on your withholding form so less is taken out each payday. At the end of the year you should owe zero and expect to get zero back. Ever since I can remember, Gov Guam has been playing this refund scam game like they are doing you a favor mailing you a "refund". It's like a robber returning your wallet after a robbery but telling you he is keeping twenty dollars for doing it. Make sense? No not really.

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