$121.4M in outstanding collectibles

Tracy B. Norita

The Department of Finance has $121.4 million in total outstanding collectibles from account receivables from the past 10 years, including $30 million in employee quarterly withholdings that were not remitted by employers, according to Finance Secretary Tracy B. Norita on Friday.

With that much money being left on the table, the department’s Tax Collection Task Force has set an initial target of collecting on these outstanding receivables within 180 days, according to Norita during an appearance before the Senate Fiscal Affairs Committee’s Fiscal Year 2024 budget for Finance.

Even if the task force only has a 5% success rate, they would still realize at least $6,071,445 out of the $121,428,909 in total outstanding collectibles in the next six months, Norita said.

“Of course 5% is the minimum, but we want to go more than that,” she said.

If they collect as much as 20%, that would translate to $24.2 million, she added.

Norita disclosed these numbers to explain efforts by the department to beef up their enforcement section.

At the start of the budget hearing, Fiscal Affairs Committee chair Sen. Donald M. Manglona (Ind-Rota) said they are going to address some of Finance’s needs, but also mainly to investigate what has been proposed by the administration and where the CNMI is currently at in its collection and how that would play into next fiscal year’s projections, among other things.

Norita said one of their actions is the Tax Collection Task Force, which consists of the Department of Finance’s Revenue and Taxation, Department of Commerce, Zoning Board, Scholarship Office, and other agencies that are already regulatory agencies that are familiar with enforcement and customer service.

She said these agencies will be assisting the Department of Finance in its collection activity.

The Finance secretary said the task force members had already attended disclosure certification training and will be doing a collection boot camp and will be going out and making their presence felt in the community.

“That’s part of what the administration is doing to beef up collection and to assist with our revenue projections,” Norita said.

Sen. Corina L. Magofna (Ind-Saipan) noted that $30,016,768 in outstanding employee quarterly withholdings from Chapter 2 tax is a significant amount to be outstanding since employee payroll deductions are normally on time. Such outstanding employee quarterly withholdings are for both government and private sector.

Norita agreed with Magofna that these withholdings are held by the employers and not remitted to the CNMI Treasury.

Norita said that’s one of the top categories that they will be going after because these are monies that were withheld from people’s pockets to be remitted to Revenue and Tax.

“So this will be part of our enforcement actions that we will be taking—making contact, delivering notices and just reminding the taxpayers that they go through our collection process, to see their ability to repay and just get them into compliance,” she said.

Norita said the legal actions that they will take must follow due process, which is the collection process.

She said they don’t want to get to court as they want to get these employers into compliance and start paying. The secretary said the whole purpose is to collect immediately and so she is just highlighting the top four categories that they will be focusing on.

The other tax type categories in the $121.4 million total outstanding collectibles are $7.2 in individual income tax, $58.8 million in corporate income tax, and $25.3 million in Business Gross Revenue Tax. Norita said these have been determined to be collectible based on the statute of limitation.

She said their team will be going through the list of taxpayers, will be making contact, will be out there in the community, and they may be seizing assets as well.

In particular, Sen. Celina R. Babauta (D-Saipan) asked Norita about the Commonwealth Healthcare Corp. Of the $30 million in outstanding employee quarterly withholdings, approximately what percent of that is CHCC not remitting to Revenue and Tax, she asked.

Norita said she does not have that information off the top of her head.

“I just know that I can’t disclose that,” said the secretary as she agreed with Manglona that they can discuss that during an executive session.

Norita said part of the collection actions that they normally take after the first notice is that a lien can be filed against the taxpayer. She said liens are public information so they will be revisiting all those that have filed liens against them and filing new ones as well.

“So anyone that is requiring a title report for any reason will see a CNMI tax lien on their record,” Norita said.