Won Pat Bill Would Require Rev & Tax to Target Cash Based Businesses to Raise More Revenue for GovGuam

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Guam – Speaker Judi Won Pat has introduced a measure that would require the Department of Revenu and Taxation to target “high-risk, cash based transaction businesses” for stepped up enforcement efforts in order to collect more revenue for GovGuam.

And, according to a release from the Speaker, her Bill 210 would “provide the Department of Revenue and Taxation the additional tools and resources” to do that.

She has dubbed the bill “The Cash Economy Enforcement Act of 2011.”

Read Bill 210

Under the proposed legislation, the Tax Enforcement Division would be required to “investigate reported or suspected violations of tax laws for civil enforcement purposes, including through covert means, with a stated priority of investigating cash-based businesses.”

The measure would also establish the “Better Public Service Fund,” separate and a part from the General Fund. It would require that 15% of all fees and license revenues received by Rec & Tax  be deposited into the “Better Public Service Fund.”  And “One hundred percent (100%) of all penalties and fines collected by the I3 Department of Revenue and Taxation’s … shall be deposited into said fund.”

The funds deposited in the “Better Public Service Fund” would, in turn, be used by the Tax Enforcement Division to hire additional enforcement officers and upgrade computer software and hardware applications.

In a release, Speaker Won Pat says the measure could “generate millions of dollars in both direct and indirect revenues” for GovGuam.

READ Speaker Won Pat’s release in FULL below:

News Release
May 25, 2011

WON PAT’S BILL LOOKS TO BOOST GOVERNMENT REVENUES

Hagåtña – Speaker Judi Won Pat, Ed.D. introduced legislation yesterday that will provide the Department of Revenue and Taxation the additional tools and resources it needs to boost government revenues by targeting high-risk, cash based transaction businesses and to shore up confidence in Guam’s tax system by assessing penalties for those who do not comply.  

Bill 210, also known as the “Cash Economy Enforcement Act of 2011,” can potentially generate millions of dollars in both direct and indirect revenues for our island.  Similar legislation passed in Hawaii several years ago has assisted the State in enforcement and collection of millions of dollars in un-reported and under-reported taxes.

“This legislation is not meant to deter or regulate our local entrepreneurs from doing business on Guam, it simply levels the playing field for the thousands of businesses that are in compliance and ensuring that those high-risk cash-based businesses that continually underreport or do not report these taxes are in fact living up to their responsibilities,” said Won Pat.

These cash-based (both for-profit and not-for-profit) businesses are those where goods, services, and other transactions are paid for substantially in cash and where the business is found to have met one or more of a number of factors, including:

§  Substantially underreporting or misreporting the proper amount of tax liability on any tax return.

§  Failure to have a license to do business as required by law.

§  Having no fixed and permanent principal place of business.

§  Failure to maintain adequate books and records.

§  Failure to record transaction by receipt.

§  Failure to record the transaction in a cash register.

§  Not accepting checks or electronic payment devices for business transactions.

The Cash Economy Enforcement Act of 2011 also establishes additional powers, functions and duties to the Tax Enforcement Division which will civilly investigate reported or suspected violations of tax laws, with a special emphasis on cash-based businesses and issue fines or cease and desist citations to any person if there is cause to believe the person has violated any provision of the Act. 

Additionally, the Act will provide a funding for an educational awareness campaign to educate tax payers on their responsibilities and provide funding for critical enforcement officers and investigators.

The purpose of this Act is to provide the Department of Revenue and Taxation
9 (DRT) with the necessary resources and tools to target high-risk, cash-based
10 transactions to shore up confidence in Guam’s tax system for those that do comply.
11 Importantly, I Liheslaturan Guahan intends that the enforcement resources provided
12 focus on the civil collection and enforcement nature of Guam’s tax laws. In an effort to
13 demonstrate the targets of this undertaking, this Act defines “cash-based business” f