Better some than none: EIC recipients receive money

It’s better than nothing.

Over 2,500 taxpayers awaiting Earned Income Credit will begin receiving this week 25 percent of their tax credits which have been held up for almost a year due to funding shortfall.

The Department of Finance is currently preparing checks to be mailed out starting Wednesday that will form the first installment for the long-delayed EIC for tax year 1997.

“Those who are entitled to receive the EIC will get an equal share. Everybody will receive the money regardless when they filed their EIC claims,” Gov. Pedro P. Tenorio said in an interview.

The governor assured that partial disbursement of EIC money will not impede release of tax rebates, funds which the administration is planning to tap to cover repayment of the tax credits to low-income families.

In the past Tenorio said his financial advisers were considering using part of the money deposited in the special rebate trust account as a way of reducing the government’s EIC obligation to taxpayers.

The first installment will cost the financially-troubled government at least $1.5 million out of the $6.2 million it needs to raise to settle EIC payment.

It is not yet clear when the second batch of checks will be released, but the CNMI leader vowed that his administration will make sure that all taxpayers claiming EIC will be paid back.

Lack of cash resources has delayed release of EIC checks for tax year 1997 since last year. In 1998 taxpayers did not receive their refunds and rebates until July due to shortfall in the special trust account.

In the past tax rebates, refunds and EIC were released in lump sum during the month of May, but when Tenorio took office in January last year, his officials discovered that money intended for rebates was almost wiped out. It was believed that rebate money may have been merged with the general funds.

Plans are also being prepared for the disbursement of rebates and refunds for tax year 1998 which combined cost is expected to reach $25 million.

A total of $28.07 million in rebates and refunds have been paid out by the finance department for the previous tax year to more than 42,000 individual and corporate taxpayers.

Over $20.45 million have been spent to pay back 42,780 individual filers and some $7.62 million for 51 corporate taxpayers. For tax year 1996, the government spent $31 million for refunds and rebates.

But the worsening financial condition in the Commonwealth spawned by the prolonged crisis in Asian economies clobbered by the 1997 currency crunch has renewed worries among taxpayers for another delay in the release of rebate and refund checks.