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Tax department claims Rodriguez owes $3.2 million

By Steve Limtiaco HAGÅTÑA, Guam (Marianas Variety, Feb. 24, 2010) – A former Cabinet official allegedly failed to pay US$944,903 in income taxes during his time as agency director, according to federal court documents.

Former Department of Public Health and Social Services Director Dennis Rodriguez Sr. is in the middle of a tax battle with the Guam Department of Revenue and Taxation, which alleges he and his wife, Asuncion, owe more than US$2.3 million in back taxes, interest and penalties for tax years 1996 to 2001, according to federal court documents. The taxes in question are related to the couple’s luxury goods store, documents state.

Rev and Tax in April 2009 placed tax liens against all current and future property owned by the couple, including six houses or condos on Guam, an undeveloped lot on Guam, and a house in Honolulu.

The Rodriguezes brought the tax dispute to federal court last September, saying Rev and Tax failed to properly consider their US$40,000 compromise offer. Rev and Tax failed to conduct an independent administrative review of the offer before rejecting it in October 2008, they stated in court documents.

The government, through the attorney general’s office, has argued that the Rodriguezes failed to respond to a "Notice of Deficiency" issued by the Rev and Tax director within 90 days, so the amount owed cannot be challenged. The notice was issued by Rev and Tax Director Art Ilagan July 5, 2007.

The government also has argued that no tax assessment had been made at the time of the compromise offer, so there could be no compromise.

District Court of Guam Magistrate Judge Joaquin Manibusan on Feb. 3 denied the government’s motion to dismiss the case, and the court last week scheduled a bench trial, to begin Aug. 3.

Dennis Rodriguez was the director of the Department of Public Health and Social Services from 1983 to 1987, under Gov. Ricardo Bordallo, then from 1995 to 2003, under Gov. Carl Gutierrez, according to Pacific Daily News files. In between, the couple operated a boutique in Tumon, according to news files, which Dennis Rodriguez left in January 1995 for his second stint as public health director.

Asuncion Rodriguez had two business licenses for stores in the 1990s, according to Rev and Tax files -- Denson Boutique and Denson Duty Free Shop.

According to tax adjustments prepared by Rev and Tax and filed in federal court by the attorney general’s office, the couple allegedly failed to report hundreds of thousands of dollars in income each year.

They allegedly failed to keep and maintain adequate records to properly ascertain their income; to properly ascertain the cost of goods sold; and to properly ascertain expenses. The resulting increase in their adjusted gross income had a ripple effect on other tax rules, according to the adjustment.

In 1996, for example, the couple allegedly had US$729,037 in additional income, beyond the US$110,318 reported for that year, or a total of US$839,355 in taxable income.

Rev and Tax officials yesterday declined to comment on the tax case, saying the agency needs to consult legal counsel.

Dennis Rodriguez Sr. also declined comment because it is an ongoing court case.

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