DOF sued for failure to pay tax refunds

A local business entity has leveled a lawsuit against the Department of Finance for alleged failure to grant a complete refund of all excise taxes the plaintiff claims it is entitled to since 2000.

Plaintiff Island Apparel has termed the finance department’s alleged refusal to release its business tax rebate as an “adverse decision” that has denied the company complete refund of all excise taxes paid on apparel and other goods it has imported and exported in and out of the CNMI.

The Airport Road-based company further alleged that the government agency’s alleged decision to stay the release of tax refunds is “unlawful, unreasonable, arbitrary, capricious, an abuse of discretion, and not in accordance with the law.”

Court documents state that Island Apparel’s goods were not used, sold, leased, or rented within the Commonwealth prior to export.

With this contention, the plaintiff has asserted that it is entitled to complete refund of all excise taxes paid on the apparel and other goods.

According to plaintiff, the former Finance Secretary entered into a Memorandum of Understanding with the local firm last February 13, 1997, granting approval to Island Apparel’s request for a full refund as well as the establishment of a monthly procedure to accomplish the said purpose.

Through the 1997 signed documents, the plaintiff received monthly refunds of excise taxes for a period of two years.

Last May 4, 1999, the Acting Director of the CNMI Customs Services approved anew the firm’s request for refund of excise taxes which granted Island Apparel full tax relief for delayed payments covering June 25, 1999 to February 25, 2000.

But to date, plaintiff claims the defendant refuses to provide the requested refund in violation of local laws and in derogation of the Commonwealth’s unwritten and contractual promises and representation to plaintiff.

Island Apparel is then seeking injunctive relief for what it has suffered under the Finance department’s alleged neglect to grant it complete excise tax refunds.

Plaintiff has then petitioned the court for compensatory damages in excess of $20,000, notwithstanding the full tax refund.

The company is also seeking to collect award for damages to the maximum extent permitted by law, including attorney’s fees and costs, payment of pre-judgment interest until date of judgment at the 12 percent per annum legal rate, and post judgment interest accruing the 9 percent legal rate per annum.