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By Steve Limtiaco

HAGATNA, Guam (Pacific Daily News, April 5) – The island's working poor this week started to receive part of what they are owed from the Earned Income Tax settlement, but some Guam residents are finding a letter from Rev and Tax, and not a check, in the mail.

That's because Rev and Tax is deducting any amounts owed for taxes, child-support payments, hospital bills and other debts before giving the balance to taxpayers, said Rev and Tax Director Art Ilagan.

According to an itemized breakdown provided by Ilagan, Government of Guam is keeping about US$1.87 million of the US$10.55 million payout because of taxpayer debts to the government.

Guam Memorial Hospital is receiving most of that windfall, about US$1.21 million, and those owed child support are receiving US$438,240 of the Earned Income Tax Credit settlement.

Three different groups of taxpayers sued the government in 2004 for failing to give taxpayers the earned income credit, which is intended as an incentive to keep the working poor on the job instead of on welfare.

Gov. Felix Camacho last year agreed to pay US$90 million to settle with two of the parties in the class-action case. District Court of Guam Chief Judge Frances Tydingco-Gatewood in January gave preliminary approval to the settlement, triggering the payments for 1997 and 1998.

Camacho agreed to pay those tax years first because taxpayers already had been paid the tax credit for most of 1997, with a balance of about US$300,000. Taxpayers were allowed to file for the tax credit in 1998, but were never paid.

Checks for 1997 and 1998 were mailed this week, but payment of the remaining amount of the settlement will require additional court approval.

Attorney Mike Phillips, who represents taxpayers in the class-action lawsuit, yesterday said the government is allowed to offset the Earned Income Tax Credit settlement payments against what those taxpayers owe the government and its agencies.

He said taxpayers who received a letter instead of a check could offset their debt to the government as long as they agree to be a part of the settlement.

If they opt out, Philips said, they will continue to owe the government money and can attempt to reach an alternative Earned Income Tax Credit settlement with the government.

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