Taskforce collects over $14M in tax arrears

The Department of Finance’s Tax Collection Taskforce has collected over $14 million on delinquent accounts as of last week.

In a recent presentation by DOF Secretary Tracy Norita before CNMI stakeholders during the 2nd annual Economic forum hosted by the Saipan Chamber of Commerce, she shared that as of last week, the newly formed Tax Collection Taskforce has collected a total of $14.46 million on delinquent accounts.

“The most important take away from our meeting with SCC last year was ‘you have to level the playing field’ by increasing tax enforcement. So, we did that by creating a Tax Collection Taskforce and I’m glad to say we were able to collect $14.4 million in tax arrears,” she said.

Norita also shared that through the taskforce, Finance has been able to create 113 installment agreements to help taxpayers to come into compliance.

“We’ve also seen an increase in delinquent cases assigned to revenue officers pending review, about 226,” she shared.

Meanwhile, Norita also shared that as of the second quarter of FY24, the CNMI saw a cumulative shortfall of $4.1 million in revenue collected.

“This fiscal year 2024, we forecasted approximately $163 million [in revenue collections]. We’ve reported to the legislature our Q2 collections which was forecasted at $82 million but we are short at $78.5 million. We are monitoring this shortfall as we enter Q3 and should we be reasonably certain that we might not meet the overall forecast, we will be preparing a revised budget,” she said.

Breaking down how much revenue was collected in the first two quarters of FY24, Norita said of the revenue collected in Q1 and Q2, most was from business gross revenue tax. Specifically, BGRT made up 45% of revenue collections in Q1 and 46% in Q2.

Meanwhile, other income taxes (like earnings tax, wage and salary tax, etc.) made up about 20% of the revenue collected in Q1 and Q2.

As for hotel occupancy tax, Norita shared in her presentation that HOT made up only 5% of the revenue collected in Q1 and 4% in Q2.

“In preparing our budget forecast, it is definitely a challenge because finding a base year similar to what we are going through now, we’re definitely not close to pre-pandemic years. So, we had to look far back, as far as 10 years back (pre-casino, pre-Soudelor) and that brought up back to FY2014, we are closest to FY2014 government revenue collections. In 2014, we had around $154 million and our forecast for FY25 is about $158 million which is a reduction from our current fiscal year,” she said.

ARPA status report

The ARPA program, which was $481.8 million given up front to the CNMI, of that amount $414.5 million has been identified as expended.

Our team has also identified what was so called “missing funds” and we are in the process recouping and recovering those funds.

When we find expenditures that were not necessarily missing, they were just booked incorrectly,

It’s just a matter of reclassification of expenditures.

What were the ARPA funds used for, our largest expense was wages and salaries which was about $73 million.

Based on Norita’s breakdown, the largest expense of ARPA was labelled “other expense categories” which was about $56.9 million. Norita did not go into detail about what they were specifically.

Norita also noted over $77 million in ARPA was spent on health insurance premiums, professional services, utilities, repair and maintenance, and vehicles.

The largest payout of ARPA funds was given to the CHCC at $23 million, followed by the Tinian municipality that received $5.13 million. The Rota Municipality on the other hand received $200,000 in ARPA funds.

Meanwhile, the Northern Marianas College also received $5.04 million in ARPA funds while MVA received $2.5 million.

Tracy B. Norita