CNMI Tax Rebates Delayed by Cash Shortage

February 3, 2012

What happens when federal stimulus money is not used for the intended purpose (refunds to residents), but is spent by a state or territorial government? How can federal tax dollars intended for specific recipients disappear into the general fund of the CNMI government?

The CNMI government has been stringing the CNMI tax payers along for over a year telling them that their stimulus and tax rebate checks are in the mail, were sent (when they were not) or that the forms were not properly completed. Actually, it appears that the government has put at least some of the rebate and stimulus money into their shell game pot to cover government deficits in unrelated areas. Lt. Governor Inos said this week that a "cash shortage" is the cause of the delay of $6 million in tax rebates and stimulus money.

As reported here continuously over the last year, many foreign workers and residents are complaining that they have not received their tax rebate and/or stimulus checks. Officials claim that "deficiencies" were delaying rebate checks; however, tax payers claim that they made many trips to the CNMI Department of Finance to check the status of their rebates and were not told of deficiencies.

Some foreign workers want their checks for emergencies or they need them to pay for airfare to leave, as is the case of one foreign worker who wrote a letter to the editor detailing his plight. In July 2011 it was reported that the FBI was investigating fraudulent cashing of stimulus checks, but no news of followup or any results of an investigation was ever reported.

Year, after year, after year residents complain of long delay in receiving their tax rebates. In June 2008 foreign workers appealed to the U.S. Department of Justice and Internal Revenue Service to investigate the fact that most of them did not receive stimulus checks owed to them. The response? There was none. In August 2008 I met with foreign workers who were desperate to receive long-delayed stimulus checks.  The problem was brought to the attention of U.S. officials who ignored it.

Senator Paul Manglona said that the problem with delayed rebates coincides with the economic downturn that began in 1998. In November 2010 he declared that the Senate would look into the cause for the delayed rebates. What became of that investigation? Was a report issued? Were solutions hammered out?

In May 2011 the government blamed the delay on a lack of funds, not a lack of personnel as was previously suggested. In July 2011the government claimed "computerized processing" delayed the issue of the checks. In September 2011 the lieutenant governor acknowledged that 3,500 recipients will receive $4.6 million in child tax rebates. The governor's press secretary made a statement to the Marianas Variety suggesting that the delay was caused by a problem with the process between the U.S. treasury, IRS and the CNMI government.

In November 2011 the government admitted it did not have enough money to cover the rebates.  Lt Governor Inos stated:
The rebates are being funded by current collections to supplement what is in the rebate trust fund, he added.

Collections are coming in, he said, “but they are insufficient to cover all the rebates.”
If the CNMI is receiving federal funds allocated for stimulus tax rebates or child tax rebates or any other tax rebates, then the money should be immediately dispersed to the intended recipients and not played with like Monopoly money by the corrupt CNMI government.

The CNMI government had a total of $23.4 million in rebates in 2011, and over the last year slowly paid out $17 million. Where is the remaining rebate money? How do they decide who is paid first and who waits at the end of the line? Do they even have a system?

If they have a system, it may need a serious overhaul. In July 2010 the Office of the Public Auditor disclosed that 629 rebate checks with a total value of $121,387 were returned by the post office because their recipients could not be located. According to the Marianas Variety:
“The checks have dates ranging from Oct. 4, 2007 through August 29, 2008. The Division of Treasury does not appear to have monitored these returned checks as such are reported as outstanding checks in the Sept. 30, 2008 reconciliation,” OPA said.

OPA said the division’s lack of policies and procedures to ensure that all manual checks are posted to the general ledger may provide opportunity for fraudulent activities and suggested that adequate monitoring should be put in place.

“The effect of the above condition is the misstatement of cash, payables and expenditures and numerous reconciling items in the bank reconciliation. Further, the above condition may provide opportunity for fraudulent activities,” it said.
No kidding...


Anonymous said...

After 21 years in the CNMI of putting up with the tax refund/rebate nonsense I have made a number of observations and come to a few conclusions.
Locals,politically connected, and influential family names get paid first.
If your name appears to be from the US mainland and you appear to have some power as a businessperson you could be second. If they think (or know via your notice of personell action)you have moved off island. Your paperwork will sit on a back burner until you keep hammering and notifying R&T. Finance knows sometimes the off islanders throw their hands up in disqust and give up. If you know someone in Finance or R&T they can help, but they will expect a small payment. I had to do this back in 2005. Illegal? Hell yes, but I did get paid. CW's are last. If you have a strange address the check will be sent out knowing it will eventually return to the CNMI uncashed.If you have a loyal friend on island have them keep visiting the R&T and Dept. of Finance with a copy of your return. Last resort is to hire an on island attorney......... but they will take a 30% blood sucking commission if and when you do get a payment.

Anonymous said...

The last paid should demand interest.

TAGLISH said...

Anon 8:42 you're correct! Absolutely happening on US soil....I know group of CWs whose rebates, refunds and stimulus checks have been followed up by a local person and successfully got theirs thru him. Disgusting and ridiculous!! This government is worse than any government on this planet! This I should say to those who are big dumb racists, who criticize other nationalities.... look on the mirror first, the shit is on your faces!!!!

Anonymous said...

Remember when they hand-delivered the former Lt. Govs, when thousands had yet to receive theirs.