How Guam Stole Christmas

Just Sayin

Every Who down in Whoville liked Christmas a lot ... But the Guam officials sued in this Ninth Circuit case, did NOT!

On (the eve of) Christmas Eve, they asked the U.S. Supreme Court to step in and revive their expedited tax refund process that was struck down by the Ninth Circuit in the summer season.

Now, please don't ask why. No one quite knows the reason.

It could be that their heads aren’t screwed on just right.

It could be, perhaps, that their shoes are too tight.

But some think that the most likely reason of all … is that the officials wanted to keep expediting their own refunds while making the majority of Guamanians wait months or even years for their windfall.

Here’s what the Ninth Circuit had to say when it enjoined the U.S. territory from carrying out its expedited refund program:

“Like many state, local, and territorial jurisdictions, Guam has struggled for years with chronic budget deficits. Guam settled on a unique solution to its financial problems: It refused to refund over-withheld income taxes, using the money to fund government spending. Confronted with meritorious and uncontested claims for tax refunds, Guam did not issue the refunds, often for several years at a time.”

“Apparently recognizing that some Guam taxpayers desperately needed their excess tax payments — to which the Guam government has no legal claim — Guam established an ‘expedited refund’ process. Purportedly, taxpayers facing, for example, medical or funeral expenses, would move to the front of the line and be granted refunds without waiting for Guam to make good on the huge backlog of claims. In practice, the expedited refund process was effectively standardless, and it devolved into arbitrariness and favoritism.”

That sounds pretty grinchy, Guam!

Quoting the district court below, the Ninth Circuit went on to say that the expedited process was “opaque and tedious. Guam did not ‘formally approve or reject requests for expedited refunds,’ so some taxpayers stood in line at [the Department of Revenue and Taxation’s] offices day after day to check on the status of their refund requests. In practice, to obtain an expedited refund, a taxpayer would often need to ‘persuade one of a series of public officials to include his or her name on a list,’ given to DRT, resulting in expedited refunds for those with the right political connections. DRT employees also successfully expedited their own refunds, and those of family and friends, often without filling out the purportedly required form, submitting supporting documentation, or visiting the DRT.”

The Ninth Circuit said this process violated equal protection because the burden “fell most heavily on taxpayers of limited means, while expedited refunds were available to those with personal or political connections.”

The Ninth Circuit also required Guam to pay back all meritorious refunds within 6 months.

In rejecting Guam’s assertion that the 6-month deadline was too short, the Ninth Circuit said it “thoroughly” disagreed. “These tax overpayments were never Guam's to begin with, and it has no legal claim to them.”

“If anything, allowing Guam six months to honor refund requests it has determined to be valid and not subject to audit or investigation is more solicitous than necessary to Guam's concerns,” the Ninth Circuit said.

Guam has now asked the Supreme Court to put that ruling on hold while it appeals the case to the high court.

Much of Guam’s argument centers on whether the defendant officials are “persons” for purposes of 42 U.S.C. §1983, which allows some governmental officials to be sued for constitutional or statutory violations.

The request went to Justice Anthony Kennedy, the circuit justice for the Ninth Circuit. He didn't ask for a response until Jan. 6, probably so he could take some time to enjoy his roast beast.

The application is No. 15A663, Territory of Guam v. Paeste.

To follow along with the latest developments in this case and others at the U.S. Supreme Court, take a free trial to United States Law Week.