U.S. child tax credit extended to CNMI • 3,700 families in Northern Marianas qualify to new U.S. tax refund program

It is going to be a real Merry Christmas for more than 3,500 families in the Northern Marianas.

The United States Internal Revenue Service is now laying the groundwork for the implementation of a special tax credit given to American taxpayers who have three or more dependent children under 17 years old.

Around $10 million in additional cash is expected to flow into the Commonwealth economy at least before Christmas from the implementation of the Additional Child Tax Credit Program in the CNMI, according to IRS chief for special projects Doug Rogers.

Under the program, individuals or couples who have three or more children under the age of 17 are entitled to a tax refund of $400 per child for 1998, and $500 per dependent for 1999 onwards.

Mr. Rogers placed the estimate of families eligible to make the claims under the recently-implemented tax program to 3,700, which may translate to between $8 million and $10 million in total credits for 1998 and 1999.

The Additional Child Tax Credit Program was implemented in the mainland U.S. beginning 1998. All insular territories were left out. IRS started reviewing the law only after a resident of one of the U.S. territories asked for a refund.

“Early this year, or about April, someone from an insular territory asked for a refund. We did a research and found out that residents of insular areas are also entitled to the tax credit,” Mr. Rogers told a press briefing yesterday.

Mr. Rogers, along with IRS Program analyst for U.S. possessions Steve Flesner and Jean Cella, are also working with the local tax agencies in Guam, American Samoa, Puerto Rico and the U.S. Virgin Islands for the implementation of the program.

The tax credit will be paid to recipients out of funds from the U.S. Treasury although the claims will be filed to the Department of Finance’s Revenue and Taxation Division.

IRS has developed a framework which is currently being put in place in coordination with the CNMI taxation division, in order to do the paper works for the claim within 15-20 minutes. “We try to keep the process as simple as possible.”

“In the next couple of weeks, the Revenue and Taxation Division will be giving out advisories of the actual mechanics on how to make the claims. We believe that the amount of money can be significant since it is expected to reach about $10 million,” Mr. Rogers said.

He added the tax credits will be refunded directly to the individual recipient in no more than 45 days after the filing date. He also mentioned that claims for 1998 should have been made on or before April 15, 2002.

For this year, IRS and the Revenue and Taxation Division will process tax refund claims for 1998 and 1999, while succeeding processing will be right on target.

Mr. Rogers also explained that married couples whose average annual income exceeds $110,000 but with three dependent children are also eligible to receive tax refund although $50 will be deducted for each child.

However, the good news is that the program also applies to nonresident workers who have three or more U.S.-born children under 17 years old.

Special consultant for finance and budget Michael Sablan said a public education program is already underway to help the Northern Marianas community completely understand the new federally-guaranteed tax refund program.

“Hopefully, before Christmas this year, we will be able to have between $6 million and $10 million in fresh cash into the CNMI economy,” Mr. Sablan said.