Guam OPA cites recurring issues with collection of excise taxes
By Pacific Island Times News Staff
The assessment and collection of excise taxes on Guam continue to be a problematic process that is riddled with anomalies, some of which have been repeatedly cited in previous audits.
"Our audit of the Department of Revenue and Taxation’s assessments and collections of excise taxes imposed upon alcoholic beverages and tobacco products found that the DRT Business Privilege Tax Branch is not required by law to verify entries of taxes due for alcoholic beverages unless there is cause for an audit of a BPT return," Public Auditor Benjamin Cruz said following the release of the Office of Public Accountability's performance audit on the agency.
OPA said the audit was prompted by Lt. Gov. Josh Tenorio's request as well as concerns received by the agency from corporate taxpayers, who noted that reports containing inconsistent tax collection data indicated that taxes were not fairly assessed or collected from all respective taxpayers.
The OPA's findings are as follows:
One business was listed as an active licensed tobacco bonded warehouse wholesaler, despite having two active tax liens with a total BPT liability of $15 million (from 2015 to present).
Irregularities in licensing regulation. DRT’s listed Guam-licensed wholesalers did not match the listed named taxpayers who filed BPT returns for alcoholic beverages and tobacco products.
Guam Customs and Quarantine Agency (CQA) data of imported and exported goods contain inconsistent data entries and does not always clearly segregate alcoholic beverages from tobacco products.
OPA noted that taxpayers are only required to reconcile their own records to determine how much is due for tobacco products withdrawn from a warehouse under bond.
"Due to the current staffing shortage at the BPT branch, the procedures required for assessing tobacco taxes at warehouses under bond have affected the Branch’s management of its other mandated procedures for delivering taxpayer services to over 1,200 businesses," OPA said.
Auditors also found conflicting presentations and reports of the actual monthly collections of alcohol and tobacco taxes.
"The conflicting information was due to the timing between when the reports are published and when tax payments are collected," OPA said.
The audit made five recommendations to help capture more taxes, such as repealing certain provisions of law, requiring DRT to enforce licensee requirements, conducting an annual financial audit of the Healthy Futures Fund, and using tracer forms to verify entries, were among them.
“DRT generally concurred with our findings and recommendations and we thank them for their cooperation during this audit," Cruz said.