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Friday, April 18, 2014

Johnson’s Hawaii-based counsel explains request for $48,000 tax reimbursement

The Hawaii-based Bronster Hoshibata law firm, one of the counsels for Betty Johnson, has explained its request for reimbursement for a tax on fees totaling $48,349 and a tax on costs in the amount of $37.62.

Attorney Robert M. Hatch, of Bronster Hoshibata, informed the U.S. District Court for the NMI on Friday that there is both a General Excise Tax and County Surcharge Tax applied to gross receipts received by a law firm operating in the city and county of Honolulu and in the state of Hawaii.

Together these taxes require payment of 4.712 percent on all gross receipts by any law firm located in Honolulu, Hatch said.

“The taxes added to the bills submitted in support of Bronster Hoshibata’s fee petition are the total of 4.712 percent required by the applicable GET and CST,” he said in the law firm’s response to the court’s order for explanation.

U.S. District Court for the NMI designated judge Frances Tydingco-Gatewood directed Bronster Hoshibata on Wednesday to explain the law firm’s request for reimbursement for a tax on fees.

Tydingco-Gatewood said the law firm’s request does not indicate how these taxes were computed and also does not provide any legal authority to justify reimbursement.

In Bronster Hoshibata’s response, Hatch attached a declaration of their employee Pegi Braun, who is responsible for calculating and complying with the excise taxes applicable to legal bills in Hawaii.

Braun said the Department of Taxation Announcement 2006-15 explains that all businesses operating in Hawaii must pay the General Excise Tax and County Surcharge Tax on all gross receipts.

“Lawyers are subject to this tax. In total, these two taxes require payment of 4.712 percent on all gross receipts received by a law firm in Hawaii,” Braun explained.

The tax issue was supposed to be among the agenda in yesterday’s status conference. Tydingco-Gatewood canceled the hearing and instead set a telephone conference for tomorrow, Wednesday.

Bronster Hoshibata is seeking $17.5 million in attorney’s fees and costs from the CNMI government.

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