Senator Cruz Concerned Rev & Tax Losing Revenue by Not Requiring Tax Clearances for Licensed Professionals

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Guam – Vice Speaker B. J. Cruz says he is concerned that Rev and Tax is issuing professional licenses without requiring tax clearances to be sure that the person applying for the license has paid their Business Privilage Taxes [BPT].

The Senator explains that he recently received information from local professionals that tax clearances are not a condition of licensure for physicians, attorneys, engineers and accountants. That allows professionals to continue engaging in professional service contracts,  without paying the BPT, says Cruz.

Senator Cruz expressed his concerns in a letter to DRT Director John Camacho writing that the failure to require tax clearnaces may have resulted in “possible losses in revenue due to unremitted BPT and other taxes despite the continued issuance of professional licenses”.

 

READ the letter from Senator Cruz to Rev & Tax Director John Camacho HERE  

The Senator says in a release that he has asked Rev & Tax for “a list of all professions that do not require tax clearances as a condition for licensure” and “an estimate of the total revenue lost due to nonpayment or evasion of the Business Privilege Taxes and other applicable taxes by licensed professionals.” 

“Put simply, if a single working-class family or a small business owner must struggle to pay a real estate tax on the rise, every attorney, accountant, physician and engineer should pay his or her fair share as well,” states Senator Cruz in his release.

READ the release from Senator Cruz below:

Absence of Tax Clearance Requirement for Professional Licensing May Lead to Lost Revenue

(October 30, 13 – Hagåtña) Following the receipt of information regarding inadequate professional licensing requirements, Vice Speaker Benjamin J.F. Cruz has called on the Department of Revenue and Taxation to provide a list of all professions that do not require tax clearances as a condition for licensure and an estimate of the total revenue lost due to nonpayment or evasion of the Business Privilege Taxes and other applicable taxes by licensed professionals.

Cruz, who heads that Committee of Government Operations and Cultural Affairs, expressed his concern in a letter to DRT Director John P. Camacho today about the possible losses in revenue due to unremitted BPT and other taxes despite the continued issuance of professional licenses.

“I have recently received information from local professionals that tax clearances are not a condition of licensure for physicians, attorneys, engineers and accountants,” wrote Cruz, who noted that this inadvertence is contradictory to the standard requirements for nearly every licensed business activity on island.  “While these professional licenses are issued by autonomous boards or nongovernmental entities and not by the Department of Revenue and Taxation, organizations like the Guam Bar Association, the Guam Board of Medical Examiners, the Guam Board of Accountancy and others must hold themselves and those they oversee to a higher ethical standard.”

Cruz said that this practice allows professionals to continue engaging in professional service contracts and without the remittal of Business Privilege Taxes (BPT).

“Given the flexibility of our laws regarding Professional Corporations, LLCs, LLPs, and Partnerships,” Cruz added, “I also fear that absent a tax clearance requirement for professionals, some may deliberately escape scrutiny.”

Cruz noted that the only professional licensing board that currently requires tax clearances is the Guam Contractors Board, an autonomous licensing agency.

“Put simply, if a single working-class family or a small business owner must struggle to pay a real estate tax on the rise, every attorney, accountant, physician and engineer should pay his or her fair share as well,” Cruz said.

The letter was also sent to Public Auditor Doris Flores Brooks to seek her office’s assistance in the compilation of the requested information.

The referenced documents are attached.  For more information, call 687-7567.