MidPac responds to tax evasion allegations

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Guam – After facing weeks of allegations of tax evasion and now diversion and smuggling of tobacco products, MidPac Distributors is responding, saying on the contrary, the company volunteered information that led to the discovery of unpaid taxes.

In a release issued this evening, MidPac says it discovered issues with its reconciliation of tobacco taxes and “unilaterally brought the matter to the attention of the Department of Revenue and Taxation.”

“As a result of Mid Pac’s voluntary notice, DRT reviewed the situation, assessed Mid Pac
for additional taxes, and then agreed to an installment plan involving substantial initial
payments as well as monthly payments in addition to Mid Pac’s regular on-going
monthly excise tax payments,” the release adds.

In June 2017, Rev and Tax filed a tax lien in District Court against MidPac for $14.7 million in back taxes dating back to 2014.

Although the outstanding taxes were labeled as gross receipts tax but it was later revealed by Rev and Tax Director John Camacho that it was actually for tobacco taxes.

Sen. Michael San Nicolas then urged the ATF to perform an investigation for possible tax evasion, pointing out that a bonded warehouse system should have prevented the release of tobacco products without the payment of taxes.

Later, Attorney General Elizabeth Barrett-Anderson announced that the AG’s Office would investigate Rev and Tax to determine if the agency was complicit since MidPac’s business license was apparently renewed despite millions in back taxes.

Speaker BJ Cruz today wrote to the FBI and the U.S. Attorney’s Office, urging them to conduct an investigation for not just possible tax evasion but also for underreporting of taxes, smuggling of tobacco products and diversion tactics.

The speaker says based on MidPac’s market share, it appears that the company may not be fulfilling its duty in properly reporting how much tobacco it imports versus how much is sold in the market.

You can read MidPac’s press release here.