By Gina Tabonares
Variety News Staff

U.S. DISTRICT Court for Guam and NMI Chief Justice Frances Tydingco-Gatewood is expected to issue today her decision on the preliminary settlement agreement between Gov. Felix P. Camacho and members of the earned income tax credit classes.
Tydingco-Gatewood said on Thursday she will issue her ruling today after reviewing the amended copy of the EITC preliminary settlement agreement that has to be submitted by the governor’s conflict counsels no later than noon today.
Camacho’s lawyers—Kathy Fisher and Dan Benjamin of Calvo & Clark LLP—earlier asked the court to submit a revised copy of the $90 million settlement which only requires some minor changes.
One of the amendments is the inclusion of the directors of the Bureau of Budget and Management Research and the Department of Administration as signatories to the agreement.
If the court approves the preliminary agreement, then the Camacho administration can start processing the payment of EITC refunds to 1997 and 1998 claimants using the $10 million fund set aside by the government.
A fairness hearing will be scheduled immediately to hear any objections to the $90 million settlement agreement.
The counsels for the Santos and Torres classes, which consolidated their cases and entered into an agreement with Camacho’s lawyers on May 26, 2006, said the approval of the preliminary settlement agreement will be beneficial to the taxpayers and the government.
The EITC was enacted by the United States Congress in 1975 as a subsidy to the working poor and as an extension of social welfare benefits.
It is funded in part by the collection of Social Security taxes, which are not collected by the government of Guam and therefore are not available to fund the payment.
In 1996, the Department of Revenue and Taxation issued a ruling which provided that the EITC was not applicable on Guam.
With the exceptions of tax years 1997 and 1998, DRT has, in most cases, not accepted filings that claimed EITC.
The Legislature, however, passed a number of laws intended to mirror the federal EITC but funding has not been aside for the program.
Last year, the federal court determined that the local government should pay Guam taxpayers the EITC.
And because it is a federal law, the local government is urging the federal government to fund the EITC on Guam to ensure equality among taxpayers residing in the United States and its territories.
While this was being done, the governor and the Legislature decided to pass an appropriation or bond measure to fund the payment of unpaid EITC claims.
Under Camacho’s executive order signed on Jan. 12, 2005, DRT shall determine the eligibility and calculate the proper amount of each claim submitted.
The Camacho administration earlier made a $60 million settlement agreement with the Santos class but this was blocked by several court challenges raised by former Attorney General Douglas Moylan.
A mediation resulted in the consolidation of the Santos and Torres classes, leaving the Simpao class outside of the primary settlement with the governor.
Based on the settlement agreement, the government will pay the EITC class not more than $15 million for their claims for tax years 1995, 1996, 1999 and 2000. The amount will be divided proportionally among each claimant found eligible for EITC by the Guam Department of Revenue and Taxation based on the value of their claim, up to 100 percent.
The same amount will be divided equally among each claimant found eligible for each tax year in 2001, 2002, 2003 and 2004.