House Ways and Means Committee chair Tony Sablan (Ind-Saipan) pre-filed yesterday afternoon a bill seeking a fourth CNMI tax amnesty that will expire on April 30, 2014, after the last one gave only about a three-week window that was too short for both taxpayers to complete all requirements and the government to accommodate all those that wanted to avail of the program before the Jan. 1 expiration.
Press secretary Angel Demapan said last night that the timeframe in the new bill is acceptable to the administration.
Sablan’s pre-filing of House Bill 18-166 came four days after Gov. Eloy S. Inos said the tax amnesty may be extended.
The pre-filed bill does not extend the third program; rather, it offers a new tax amnesty program.
Under a tax amnesty program, taxpayers may request for the waiver of penalty and interest imposed on late-filed returns, under-reported income, and delinquent tax liabilities.
The new bill’s provisions are identical to the previous programs, except for the expiration date.
Sablan, in an interview before pre-filing the bill, hopes that his colleagues would act on the new tax amnesty bill as soon as possible, considering that the government would need an additional $40 million this year for it to meet all its responsibilities and goals.
This is on top of the $123.4 million budget for fiscal year 2014 ending on Sept. 30.
Sablan said that restoring the deferred 25 percent retiree pension alone is estimated to need $16.1 million, while paying the interest on employee contribution for those that withdrew their Retirement Fund contributions would need $13.5 million.
Add to this the $5 million that the government has yet to generate to add to the $20 million it budgeted for fiscal year 2014, to meet the total $25 million that is the minimum required payment to the Retirement Settlement Fund for this year.
Sablan said the anticipated increase in government health insurance premium could be some $10 million.
“That’s over $40 million. We need to generate more revenues to meet that,” he said.
Although the Department of Finance has yet to issue the back taxes collected as a result of the last tax amnesty program, Sablan said there is a market out there that is just waiting to be tapped and should be given ample time to complete the amnesty requirements.
If HB 18-166 passes and is signed into law, it would be the fourth time that the CNMI government will offer a tax amnesty.
Sablan, in his bill, said the tax amnesty programs under Public Laws 12-51 in 2001, 14-28 in 2005, and 18-29 on Dec. 4, 2013 to Jan. 1, 2014 were “highly successful.”
The bill’s findings say that for various reasons, not all eligible persons and entities took advantage of the law. They also state that many delinquent taxpayers would welcome another opportunity to pay their taxes under an amnesty law.
Sablan reiterated that a fourth amnesty program should be created because an amnesty period is still the most cost-effective way for the government to collect tax revenue during difficult economic times.
He said the last tax amnesty bill was introduced on March 8, 2013, but it took several months for it to pass the House and Senate until it reached the governor who signed it into law on Dec. 4, 2013. That tax amnesty expired Jan. 1, 2014.
Sablan’s bill says when individuals and entities flocked to Finance’s Division of Tax and Revenue to avail of the tax amnesty, it took Revenue and Taxation an additional 10 days to provide the proper documents for filing, which gave individuals and entities approximately only two weeks to take advantage of the amnesty period.
The tax amnesty does not apply to the following: persons against whom a criminal or civil action has been initiated and is pending for any violation of CNMI tax laws or any person being investigated for fraud; any person who has been convicted of tax fraud; any person who source of income is illegal; and any person who fraudulently files a special return under this Act.
Covered under the proposal are all taxes, including withholding taxes and all returns, including deductions, exemptions, and credits erroneously claimed in returns filed for all tax years prior to calendar year 2013.
These include taxes for wages, salary or earnings; gross revenue tax; room, bar and jackpot tax; excise tax; and income and/or tax pursuant to NMTIT.