Editor’s notes: Section 1 of PL 16-75 added a new chapter 7 of this title entitled FSM Unified Revenue Authority. PL 16-75 was signed into law by Vice President Alik L. Alik, in his capacity as Acting President, on April 19, 2011.
§ 751. Funds of the Authority.
§ 752. Funding of Authority operations.
§ 753. Taxes collected by the Authority held in trust for National or State Governments.
§ 754. Expenditure to be charged on funds of the Authority.
§ 755. Bank accounts.
§ 756. Annual budget and costs of administration.
§ 757. Accounts, annual report, and audit.
§ 758. Distribution of revenues.
§ 759. Memorandum of Understanding.
Editor’s note: Section 26 of PL 16-75 added a new subchapter V of this chapter 7 entitled Financial Provisions and Reporting.
(1) Establishment. There shall be established a Federated States of Micronesia Special Fund, hereinafter referred to as the “Fund”, separate and apart from all public monies or funds of the Federated States of Micronesia, which shall be administered by the Authority exclusively for the purposes of this chapter.
(2) Deposits. Except as may otherwise be required by grantors in cases of grants, all funds specified under subsection (4) of this section, and all funds derived from deductions made pursuant to section 752 of this chapter, shall be deposited in the Fund. Any unexpended moneys in this Fund shall neither revert nor lapse to the General Fund, or any other Fund.
(3) Administration. The Fund shall be administered by the CEO in accordance with the regulations and procedures which the Board shall promulgate as appropriate for the effectuation and implementation of the provisions of this subchapter. Procurement of goods and services to be funded wholly or partially from the Fund shall be subject to the Financial Management Act of 1979 and its subsidiary regulations.
(4) Authority funds. The funds of the Authority consist of:
(a) money appropriated from time to time by Congress and paid to the Authority;
(b) money derived from the disposal, lease, or hire of, or any other dealing with, any property vested in or acquired by the Authority;
(c) money borrowed by the Authority in accordance with subsection (5) of this section;
(d) income from investments referred to in subsection (6) of this section;
(e) except as provided herein, any other moneys that may become payable to the Authority in respect of any matter incidental to its functions and powers, including but not limited to grants or other donated funding; and
(f) money deducted for the operations of the Authority pursuant to section 752 of this chapter.
(5) The Authority may borrow upon such terms and conditions as the Board may approve, any sums required by the Authority to meet any of its obligations or to perform any of its functions.
(6) The Authority shall, to the extent practicable, maintain its funds in the form of liquid, interest bearing bank deposits.
(7) The Authority shall conserve its funds by performing its functions and exercising its powers under this chapter so as to ensure that the total revenues of the Authority are sufficient to meet all sums properly chargeable to its revenue account including depreciation and interest on capital.
(8) The funds of the Authority do not include National and State taxes, or any interest or penalty in relation to such taxes, collected by the Authority on behalf of the FSM National Government or the Governments of the several States.
Source: PL 16-75 § 27.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on Government Finance and Contracts are found in title 55 of this code. Chapter 2 of title 55 is on Financial Management.
(1) Unless otherwise provided by an Act of Congress, the Authority shall deduct from the National Government’s share of the National taxes collected during the current year an amount not exceeding the prescribed percentage as funds for its operations in collecting National taxes in the ensuing year. Such deductions shall be deemed appropriated as if set forth in the comprehensive budget Act for the relevant fiscal year.
(2) The Authority’s operations in collecting each state’s taxes will be funded pursuant to a Memorandum of Understanding described in section 759 of this chapter and any law enacted by a state to give effect to such Memorandum of Understanding.
Source: PL 16-75 § 28.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.
(1) The National taxes collected by the Authority are held by the Authority in trust for the FSM National Government and the Governments of the several States in the proportion specified in section 758 of this chapter.
(2) The State taxes collected by the Authority on behalf of a State are held by the Authority in trust for the State in the proportion specified in section 758 of this chapter.
(3) The amounts referred to in subsections (1) and (2) of this section do not form part of the assets of the Authority available to meet the claims of creditors of the Authority.
(1) The funds of the Authority shall be expended for the purposes of:
(a) paying any expenditure lawfully incurred by the Authority in the performance of its functions or the exercise of its powers under the revenue laws;
(b) discharging any obligations and liabilities of the Authority and making any payments that the Authority is required or authorized to make; and
(c) paying any expenses for carrying into effect the provisions of the revenue laws.
(2) The FSM National Government and the Governments of the several States are not liable for any debts incurred by the Authority unless all the Governments have agreed otherwise in relation to a particular debt or debts.
(1) The Authority shall maintain one or more bank accounts into which funds of the Authority shall be deposited and from which operational expenses are paid. Funds of the Authority shall be deposited into the appropriate account no later than the next business day following receipt of such funds.
(2) The Authority shall maintain a separate bank account for each Government. The Authority shall deposit the funds held in trust pursuant to section 753 of this chapter into the respective account of each Government. Such funds collected by the Authority shall be deposited into the appropriate account no later than the next business day following receipt of such funds. The Authority shall not commingle funds.
(3) No withdrawal or payment of money from an account opened under subsection (1) of this section can be made without the signature of the CEO or his/her designee. No withdrawal or payment of money from an account opened under subsection (2) of this section can be made without the signature of the CEO or his/her designee and the signature of the Chief Financial Officer of the Authority or his/her designee.
(4) No amount can be withdrawn from an account opened under subsection (2) of this section except in making a refund of tax deposited into the account or in the transfer of the balance of the account of the FSM National Government or a State Government in accordance with section 758 of this chapter.
(5) The Authority shall maintain in each account a sufficient balance to meet minimum bank balance requirements as set by the bank.
(1) At such time and in such manner as the Board may prescribe, but not later than six months prior to the close of the current fiscal year, the CEO shall submit to the Board a detailed estimate of the budget for the next ensuing fiscal year for the proper conduct of the Authority. This submission shall include:
(a) for the last completed fiscal year;
(i) audited accounts indicating the amount of revenue collected by the Authority on behalf of the FSM National Government and the Governments of the several States;
(ii) the amount of other income of the Authority;
(iii) the amount of all expenditures incurred by the Authority; and
(iv) the closing balance of all bank accounts maintained by the Authority;
(b) for the fiscal year in progress, a statement showing the estimated amount of revenue to be collected on behalf of the FSM National Government and the Governments of the several States, the estimated amount of other income of the Authority, and the estimated amount of all expenditures to be incurred by the Authority, together with such summaries, schedules, and supporting data as the Board or the President may require by notice in writing to the CEO; and
(c) for the next ensuing fiscal year, a budget showing the estimated amount of revenue to be collected on behalf of the FSM National Government and the Governments of the several States, the estimated amount of other income of the Authority, and the estimated amount of all expenditures to be incurred by the Authority, including salaries and wages, purchases of office supplies, operational expenses, and the cost of maintaining branch offices.
(2) The annual budget of the Authority shall be no more than ten percent (10%) of the National Government’s share of National taxes, expressed as the prescribed percentage authorized by Congress; PROVIDED, HOWEVER, that the Board may designate in writing a lower budget cap, within the prescribed percentage.
Source: PL 16-75 § 32.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.
(1) The Authority must keep accounts of its transactions and financial affairs, and must ensure that:
(a) all moneys received by the Authority are properly recorded and accounted for;
(b) all payments by the Authority are properly authorized and recorded;
(c) adequate control is maintained over the Authority’s property and the incurring of liabilities; and
(d) the accounts are kept in accordance with Generally Accepted Accounting Principles.
(2) Within three months after the end of each fiscal year, the CEO must prepare a report of the Authority’s activities during the fiscal year (referred to as the “Annual Report”), and submit a copy of the report to the Board, the President, the Governor of each State, and the Finance Officials.
(3) The annual report must contain, among other things:
(a) a statement of financial performance, including a statement of the financial position of the Authority;
(b) a statement of cash flows;
(c) a statement of distribution of revenues to the States pursuant to section 758 of this chapter;
(d) a copy of the most recent budget submitted pursuant to section 756 of this chapter;
(e) a report of the Authority’s operations for the year; and
(f) such other information as is required to give a true and fair view of the Authority’s financial affairs.
(4) The annual accounts of the Authority must be audited by the Public Auditor or, if the Public Auditor indicates in writing that an audit cannot be completed within six months of the end of the financial year, by an independent accounting firm satisfactory to the Board. For this purpose, the CEO must, within three months after the end of each financial year, submit to the Auditor:
(a) the accounts of the Authority for the year; and
(b) the annual report for the year prepared in accordance with subsection (2) of this section.
(5) The Board shall cause a copy of the annual report and a copy of the auditor’s opinion of the Authority’s accounts for a financial year to be laid before Congress and the State legislatures within 30 days following receipt of the Auditor’s opinion.
(6) The CEO shall, from time to time as the Board may require, and no less than once each fiscal quarter, submit to the Board an interim report accounting for estimated and actual revenue collections, as well as estimated and actual expenditures of the Authority.
Source: PL 16-75 § 33.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.
(1) The Authority shall pay the following amounts to the treasury of each State Government:
(a) one hundred percent (100%) of the net tax collected pursuant to the Value Added Tax Act of the State;
(b) one hundred percent (100%) of the net tax collected pursuant to any other taxes imposed by the State;
(c) eighty percent (80%) of the net tax collected pursuant to section 221 of this title in relation to the import of gasoline and diesel fuels into the State;
(d) fifty percent (50%) of the net tax collected pursuant to section 121 of this title in relation to wages and salaries received by employees in the State;
(e) fifty percent (50%) of the net tax collected pursuant to section 221 (other than section 221 of this title in relation to the import of gasoline and diesel fuels into the State) of this title in relation to the import of goods into the State; and
(f) fifty percent (50%) of the net tax collected pursuant to:
(i) sections 521 and 522 of this title in relation to business carried on through a permanent establishment in the State as determined under section 512 of this title;
(ii) section 524 of this title in relation to the carriage of passengers, livestock, mail, merchandise, or goods embarked in the State or to the insurance of risks in the State; and
(iii) section 525 of this title in relation to interest, royalties, a natural resource amount, or a management fee derived by a non-resident person from sources in the State determined under section 513 of this title on the basis that the reference in that section to FSM is a reference to the State.
(2) The Authority shall pay the following amounts to the treasury of the National Government:
(a) twenty percent (20%) of the net tax collected pursuant to section 221 of this title in relation to the import of gasoline and diesel fuels into the State;
(b) fifty percent (50%) of the net tax collected pursuant to section 121 of this title in relation to wages and salaries received by employees in the State;
(c) fifty percent (50%) of the net tax collected pursuant to section 221 (other than section 221 of this title in relation to the import of gasoline and diesel fuels into the State) of this title in relation to the import of goods into the State; and
(d) fifty percent (50%) of the net tax collected pursuant to:
(i) sections 521 and 522 of this title in relation to business carried on through a permanent establishment in the State as determined under section 512 of this title;
(ii) section 524 of this title in relation to the carriage of passengers, livestock, mail, merchandise, or goods embarked in the State or to the insurance of risks in the State; and
(iii) section 525 of this title in relation to interest, royalties, a natural resource amount, or a management fee derived by a non-resident person from sources in the State determined under section 513 of this title on the basis that the reference in that section to FSM is a reference to the State.
(3) All distributions referenced in this section shall include any interest accrued while the funds have been held by the Authority in trust.
(4) The timing of the distribution of revenue shall be as follows:
(a) By no later than the last day of each month the Authority shall distribute to each Government the net taxes collected and deposited by the Authority during the previous month.
(b) Refunds to taxpayers shall be paid from the subsequent month’s distribution of revenue to the Governments.
Source: PL 16-75 § 34.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.
(1) The FSM National Government and the Governments of the several States shall enter into a Memorandum of Understanding to give effect to each Government’s commitments in relation to the establishment of the Authority, including the states’ commitments to fund the Authority’s operations in collecting state taxes.
(2) The amendment of this chapter or the regulations promulgated without the unanimous consent by all parties to the Memorandum of Understanding will constitute a ground for withdrawal by any party from the Memorandum of Understanding.