Thursday, 05 January 2017

Rev & Tax disputes audit on returned checks, saying there's no revenue loss

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DRT says the audit only covers a five year period while they are able to collect for up to 10 years.

Guam - The Department of Revenue and Taxation is responding to an audit that reveals millions in lost revenue because of bad checks, saying that the audit appears to be misleading because while the audit only covers a five year period, DRT has up to 10 years to collect on delinquent accounts.

The Office of Public Accountability released an audit report stating that the handling of returned checks at DRT has worsened, noting that millions in revenue were lost because of the department’s failure to collect on these bad checks. But we sat down with DRT Director John Camacho who pointed out that the audit only covers a period of five years.

 

"The part there where it says loss of revenues, really, in a sense, there’s no really loss of revenues. It’s just timing. It’s a timing issue because the taxes for collection is 10 years and if you notice this audit is for 5 years from 2010 to 2015. So it’s still within a 10 year period. Basically it’s just a matter of us collecting from these returned checks," Camacho pointed out.

According to the audit report between DRT, the Department of Administration and the Attorney General's Office Child Support Division's Disbursement Unit, there were a total of 2,464 checks that were returned between 2011 to 2015. This number equates to $5.5 million dollars of which $5.2 million dollars were checks handled by DRT. In fact, the report states that one check amounted to $459,000 that had not been collected since December 2014.

"Maybe one way of looking at it, it may not be collected now and it may be a tax that was due in 2011 or '12 or '13, where the audit period [covers], but in the future if something were to come up and these makers of these returned checks have the funds then the opportunity is there for us to collect," explained Camacho.

 

According to the report, the number of checks processed by DRT increased tenfold. In 2011 the agency processed 24,000 checks. In 2015 they processed 297,000 checks. But the number of checks that were returned between those years did not significantly change. Of the 24,000 checks that were processed in 2011, 511 were returned. For the 297,000 that were processed in 2015, only 485 checks were returned.

"There is room to improve we are looking in improving our processes and our procedures for both our section and DOA. We have talked about meeting and to improve the reconciliation process," Camacho said.

 

 

 

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