Are you on the Department of Revenue and Taxation’s E-list?
TAXPAYERS who are conveniently connected to officials and employees at the Department of Revenue and Taxation as well as local politicians are likely to make it to the agency’s “E-list” and get their tax refunds ahead of others, court documents revealed.
Although the expedited tax refund program has been suspended this year, records filed with the federal court yesterday exposed the practice of apparent favoritism that has allegedly been taking place at the department for many years.
Led by taxpayer Rea Milaiza O. Paste, the plaintiffs in the tax refund class action against the government of Guam asked the federal court yesterday to issue a permanent injunction compelling DRT to reform its administration of tax refunds and follow a fair policy across the board.
Represented by lawyer Ignacio Cruz Aguigui, the plaintiffs also asked federal judge Consuelo Marshall to issue a summary judgment declaring DRT in violation of the Organic Act and the Equal Protection Clause of the Fourteenth Amendment.
Details of the tax refund lobbying practices at the agency were revealed through depositions of DRT employees, who confirmed that top officials at the department each have their own “expedite” lists of favored taxpayers, and that the “first-in, first-out” policy was not always being followed.
“The lists are typically hand-carried to an employee at DRT’s Electronic Processing Branch and they are sometimes supplemented or superseded by phone calls,” court documents said.
Among the identified officials with E-lists are the director, deputy director, tax service administrator, insurance commissioner and tax enforcement administrator. Some DRT employees also create their own lists, according to court documents.
“Even government officials who do not work at DRT and thus have no regular access to most of the requested tax refunds have lists and thus have a say in who receives expedited tax refunds,” the plaintiffs’ motion said.
According to DRT employees deposed in court, prerequisites for expedited tax refunds – in theory – included medical-related expenses, death or funeral expenses and “miscellaneous hardships.”
Taxpayers were required to fill out forms substantiating their claims. They were supposed to receive their tax refunds in the order the requests and tax returns were filed.
DRT employees, however, admitted these requests were often “set aside” and often not revisited unless the taxpayers made follow-up calls.
According to court documents, DRT did not use the taxpayers’ income as a basis for expediting tax refunds. “Thus, millionaires are ‘absolutely’ permitted to apply for expedited tax refunds,” the plaintiffs said.
Court documents said an average of 5,000 tax refunds worth $15 million were expedited between 2005 and 2009, and only 40 percent of the approved requests were supported by documentations.
“Taxpayers bypass the first-floor counter and instead go upstairs to demand a meeting with high-level DRT officials, while others who do not go to DRT ask Guam’s politicians to intercede on their behalf,” the plaintiffs said.
The plaintiffs said prohibiting the expedited tax refund practice “would not create any burden.” On the contrary, they said, it would relieve DRT of added tasks.
“DRT officials and employees said expediting tax refunds only increased their work load and interfered with regular tax processing,” the plaintiffs’ motion read. “The injunction would only bring the defendants in line with federal policies they are already required to follow under the Organic Act.”