VIDEO: Pangelinan to Calvo: $55 Million is Not a Liability

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Guam – There has been a lot of debate recently between Budget Chairman Senator Ben Pangelinan and the Calvo administration over $55 million dollars that was given by the federal government for the making work pay tax credits. The administration says that the $55 million is a liability because it will have to be paid back to the federal government and Senator Pangelinan says this is not entirely accurate.

 

 The Obama administration passed a making work pay tax credit nationwide giving $400 dollars to individuals and $800 dollars to a married couple. The federal government agreed to give GovGuam the money necessary for this new federal mandate. Here’s how it works. For example if tax payer A is married and owes $5,000 dollars in taxes and is eligible for $800 dollars in credits, tax payer A only has to pay $4,200 dollars in taxes. To make up for this loss in revenue the federal government gave GovGuam money. “They said that we’re gonna advance you the money so that we don’t hurt government operations so that we don’t create this shortfall in your revenue stream to pay for government operations,” said Pangelinan.

 Then there are taxpayers who are owed money by GovGuam. for example if tax payer B is married and is owed a $1,000 dollar refund and an $800 dollar tax credit GovGuam must now pay taxpayer B $1,800 dollars.

 So will GovGuam have to pay back the entire $55 million to the federal government? “No, absolutely not. The $55 million is something that’s going to have to be accounted for to the feds,” said Pangelinan.

 The senator says this is accounted for by processing all the tax returns filed for 2009 and 2010 and determining whether or not Guam taxpayers claimed a total of $55 million dollars worth of tax credits. “If we process those refunds and we find that the credits totaled less than 55 we would have to re-imburse the difference if we process those refunds and when we process those refunds and we find for example that the Guam taxpayers claimed $60 million in refunds in credits then the IRS would have to pay us back to pay us an additional five million dollars.”

 The bottom-line is that no one knows whether or not any of the $55 million will have to be paid back to the federal government until after all taxes have been filed for 2010 and the deadline for 2010 tax returns is April 15th.

 Senator Pangelinan also admits that the $55 million has already been spent but he says he’s seen a report that showed nearly $40 million of it was spent on 2008 and 2009 tax refunds as opposed to being spent on actual government operations.