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Tang insists Settlement Fund is a non-profit, tax exempt entity
Tax exempt issue causes delay of audit for Settlement Fund
CNMI Settlement Fund trustee Joyce C. H. Tang has requested the federal court to confirm her position that the Settlement Fund is a non-profit, tax exempt entity under CNMI law.
Tang recently sought a legal opinion from CNMI Attorney General Edward Manibusan to affirm her interpretation and understanding of the Settlement Fund’s status as a non-profit, tax exempt entity.
Tang said that Manibusan declined to render a legal opinion as the Settlement Fund “does not fall within the scope of representation,” presumably because it is not a CNMI government agency.
The trustee discussed the tax exempt issue in her report on the status of the Settlement Fund and in her letter to Manibusan that she filed in the U.S. District Court for the NMI last week.
According to Tang, the audit for the Settlement Fund for fiscal year 2014 by Ernst & Young began in January 2015 and has been completed.
However, Tang said, the completion of the audit has been delayed because of a disagreement between the CNMI government and the Settlement Fund on the issue of whether the Settlement Fund is a non-profit tax exempt entity.
In her letter to Manibusan dated Nov. 2, 2015, Tang said the Settlement Fund serves a purely public purpose as it was created to preserve the Settlement Class’ constitutional rights to accrued retirement benefits under Article III, Section 20 of the CNMI Constitution, and to ensure that such benefits are not diminished or impaired.
Tang said the Settlement Fund’s purpose is not to make a profit.
Quoting Settlement Fund acting administrator Lillian Pangelinan, Tang said the Retirement Fund does indeed invest much of its capital and consult with third-party experts in order to accumulate a larger reserve of funds.
However, Tang said, the Retirement Fund’s main objective, according to Pangelinan, is not to make a profit for those who contribute to the Fund, and thus have an ownership interest in it.
The purpose of engaging in commercial activities, Pangelinan said, is to ensure that there is enough money to cover annuity payments that are presently due.
Tang said the tax exemption should equally apply to the Settlement Fund because it is a “creature” of the U.S. District Court for the NMI.
She said oversight of the Settlement Fund lies entirely and exclusively with the District Court, which appointed her to serve as trustee, and to oversee and run the Settlement Fund.
