$2.6M in Guam tax refunds to be mailed Monday

TAX REFUNDS: The Guam Department of Administration will be mailing out about 964 tax refund checks Monday, totaling $2.8 million. The checks cover error-free returns filed on or before Feb. 15. Post file photo.

The Department of Administration will be mailing out 944 tax refund checks Monday, totaling $2.6 million, according to a joint release from DOA and the Department of Revenue and Taxation.

The checks cover error-free returns filed on or before Feb. 18.

During testimony on the 2020 budget bill at the legislature Friday morning the director of the Department of Administration, Edward Birn, was asked by Sen. Therese Terlaje how much in tax refunds have been paid in the current fiscal year.

Birn said about $88 million in 2018 and prior year returns have been paid out since the current fiscal year began on Oct. 1, 2018. That includes the $2.6 million that will be mailed out Monday.

In 2013, the District Court of Guam ordered the government of Guam to pay tax refunds by Oct. 15 for taxpayers who filed their returns on or before April 15.

Birn has said that the government of Guam is on track to meet the Oct. 15 deadline.

ACTC vs. EITC

Birn also said in his testimony that about $125 million is budgeted for tax refunds in the 2020 spending plan now under consideration by lawmakers.

"The same as last year," he said. "But please remember that the $125 million is net of ACTC."

The ACTC is the Additional Child Tax Credit which the federal government reimburses to the government of Guam on a quarterly basis, said Birn. It has been averaging about $16 million a year.

The ACTC is counted as a tax refund payment by the Department of Revenue and Taxation which has reported roughly $145 million in tax refund payments in recent years, explained Birn.

But since GovGuam gets reimbursed for the ACTC the actual amount in tax refunds paid with local funds and listed in the budget bill amounts to roughly $125 million, he said.

The ACTC is not to be confused with the EITC which is the Earned Income Tax Credit.

The EITC is a federal subsidy for low-income working families.

The federal government pays the EITC directly to qualified residents living in the states. However since Guam residents file their taxes here with the Department of Rev and Tax, there is no reimbursement from the feds.

However since Guam’s tax code mirrors the U.S. tax code, GovGuam must bear the cost of paying the EITC which has become a growing liability.

In the last 15 years, the amount of EITC owed to local residents each tax year has nearly tripled – from $23.9 million for tax year 2005 to nearly $60 million in the last fiscal year.