SDA GC files suit over $12M

John O'Connor Jan 10 2017

The General Conference of Seventh-Day Adventists has filed a civil case against Department of Revenue and Taxation Director John Camacho in the Superior Court of Guam over alleged non-payment of more than $12 million in back taxes.

According to court documents filed in October 2016, DRT determined that the Guam Seventh-Day Adventist Clinic Pharmacy owed about $12.6 million in business privilege taxes for the years 1991 through 2013. This includes about $3 million in penalties. 

The Guam Adventist Book and Food Center was also assessed more than $350,000 in business taxes, with penalties exceeding $88,000 for the same time period.

Letter from Rev & Tax

An informal hearing with SDA on the tax issue was conducted on Sept. 1, 2016, according to a Sept. 29 letter from DRT. The church claimed that both the clinic and food center were covered under its tax-exempt status through a "blanket exemption" in local law that also applied to unrelated business income. 

However, Camacho contended that Guam law specifically outlined which activities the tax exemption applied to. These included regular activities, a lottery or a carnival, fiesta, dance, athletic performance or other similar entertainment sponsored by the entity.

"There is no legislative history or committee reports to provide examples on the types of activities which would be regular activities of a church under statute," Camacho stated in the letter. "Doubts concerning exemption are to be resolved against the exemption and in favor of taxation."

Camacho ultimately concluded that the SDA clinic and food center were not tax-exempt activities and that the church would be required to pay taxes on those operations.

Exemptions

The law exempts charitable, scientific and educational activities, according to the suit, and the operations of the food center and clinic fall within that purview.

Among its claims for relief, SDA requested a determination from the court that its tax-exemption applies to all subsequent and future revenues of the clinic and food center. 

Legal counsels for SDA and DRT appeared before Judge Alberto Lamorena of the Superior Court of Guam yesterday. A status hearing is set for Feb. 13.     Post Guam