Customs’ OPA recommendations yet to be implemented

The Department of Finance’s Division of Customs has yet to persuade the Office of the Public Auditor that they have resolved previous issues in audit findings.

In a July 2, 2018 letter addressed to Senate President Arnold I. Palacios (R-Saipan), House Speaker Rafael S. Demapan (R-Saipan), House minority leader Rep. Edmund S. Villagomez (Ind-Saipan), Department of Finance Secretary Larissa C. Larson, and Special Assistant to the Office of Management and Budget Virginia C. Villagomez, OPA noted Customs have yet to satisfy the previous audit recommendations.

Customs was found in a previous audit that it is struggling to hold the cargo of delinquent taxpayers. According to a previous OPA recommendation, Customs should adhere to its policy of holding future cargo until outstanding balances to the DOF are satisfied. If Customs were to release cargo without the full payment of outstanding taxes or without the approval of a payment plan, then OPA recommends that Customs should maintain adequate documentation and approval by the director of Customs.

During OPA’s review of existing laws, new formal procedures were given to Customs to ultimately resale the held items in order to collect past due amounts.

OPA recommended that the division seek legal opinions on the matter to “determine if a change in the law is required or if such; can be incorporated through revised regulations.”

According to an April 30, 2018 communication to OPA, the division informed them that cargo arriving for taxpayers with installment payment plans must be paid prior to release of cthe argo, therefore resolving the previous issue. Customs further informed OPA that only the Customs director or his designee shall authorize the release of cargoes for businesses with delinquent outstanding for reasons such as off-island checks, pending status on accounts and disputes.

OPA, however, in their May 10, 2018 response said that they reportedly reviewed the Declaration of Entries of several importers with existing outstanding balances and found that cargoes are still being released without adequate documentation of the director of Customs’ approval, therefore, OPA continues to consider the recommendation as unresolved.

OPA further noted in a previous audit on the Customs that the division is struggling to collect overdue balances.

OPA recommended that written procedures be developed immediately to pursue importers with outstanding receivable balances that are greater than 30 days past due.

“OPA also recommends that receivable greater than 90 days be forwarded to the Division of Revenue and taxation, Collection Branch in accordance with…Customs Service Regulations,” OPA noted in their recommendations to the division.

On the same April 30, 2018 communication from Customs, the division informed OPA that a billing and collection unite within the compliance section of the division allows Customs to bill delinquent taxpayers.

However, the division noted that the standard operating procedure for the billing and collection, or SOP, have yet to be approved by the department, therefore OPA still considers the recommendation to be unresolved until the SOP’s are approved.