FSMC, TITLE 54.  TAXATION AND CUSTOMS

CHAPTER 8
Revenue Administration
[FOR REFEREENCE ONLY]

Editor’s note: This version of chapter 8 of this title is included here for reference only, as at the time of this codification the provisions of section 87, that set forth codified section 934 of PL 17-50, as amended by section 1 of PL 17-83, made this Act null and void.

Section 1 of PL 17-83 states:

Section 1. Section 934 of title 54 of the Code of the Federated States of Micronesia, as enacted by Public Law No. 17-50, is hereby amended to read as follows:

§ 934. If any of the four states of the Federated States of Micronesia have not passed into law value added tax legislation as of midnight July 19, 2013, this act is null and void.

PL 17-83 was signed into law by Vice President Alik L. Alik on April 19, 2013.

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SUBCHAPTER VIII
Representatives
[FOR REFEREENCE ONLY]

SECTIONS

§ 851. Liabilities and obligations of representatives.
§ 852. Liability for tax payable by a company left with insufficient assets.

Editor’s note: This version of chapter 8 of this title is included here for reference only, as at the time of this codification the provisions of section 87, that set forth codified section 934 of PL 17-50, as amended by section 1 of PL 17-83, made this Act null and void.

Section 1 of PL 17-83 states:

Section 1. Section 934 of title 54 of the Code of the Federated States of Micronesia, as enacted by Public Law No. 17-50, is hereby amended to read as follows:

§ 934. If any of the four states of the Federated States of Micronesia have not passed into law value added tax legislation as of midnight July 19, 2013, this act is null and void.

Section 46 of PL 17-50 added a subchapter VIII of chapter 8 entitled Representatives.

§ 851. Liabilities and obligations of representatives.

(1) Every representative of a taxpayer is responsible for performing any duties or obligations imposed by a revenue law on the taxpayer, including the payment of tax.

(2) A representative making a payment of tax on behalf of a taxpayer is treated as acting under the authority of the taxpayer and is hereby indemnified in respect of the payment.

(3) Subject to subsection (4) of this section, any tax that, by virtue of subsection (1) of this section, is payable by a representative of a taxpayer is recoverable from the representative only to the extent of any assets of the taxpayer that are in the possession or under the control of the representative.

(4) Subject to subsection (5) of this section, a representative is personally liable for the payment of any tax due by the representative in that capacity if, while the amount remains unpaid, the representative disposes of or parts with any moneys or funds belonging to the taxpayer that are in the possession of the representative or which come to the representative after the tax is payable, if such tax was required by law to have been paid from or out of such moneys or funds.

(5) Nothing in subsection (3) of this section prevents a representative paying an amount on behalf of a taxpayer that has priority over the revenue payable by the taxpayer.

(6) If there are two or more representatives of a taxpayer, the duties or obligations referred to in this section apply jointly and severally to the representatives but may be discharged by any of them.

(7) Nothing in this section relieves a taxpayer from performing any duties or obligations imposed on the taxpayer under a revenue law that the representative of the taxpayer has failed to perform.

(8) The amount that a representative is liable for under subsection (4) of this section is treated as if it were tax payable by the representative for the purposes of subchapters V and VI of this chapter, and section 865 of this title.

Source: PL 17-50 § 47.

Editor’s note: The sections of this chapter were numbered such that all of the sections were not numbered in the eight hundreds, but were also numbered in the nine hundreds. This created a problem because some of the nine hundred section numbers were already designated by chapter 9 of this title. This section was therefore renumbered from 871 to 851 to allow all of the sections in this chapter to have eight hundred section numbers.

§ 852. Liability for tax payable by a company left with insufficient assets.

(1) This section applies if an arrangement has been entered into with the intention of rendering a company unable to satisfy a current or future tax liability under a revenue law.

(2) Subject to subsection (3) of this section, if this section applies, every person who was a director or controlling shareholder of the company at the time the arrangement was entered into is jointly and severally liable for the tax liability of the company.

(3) The amount that a person is liable for under subsection (2) of this section is treated as if it were tax payable by the person for the purposes of subchapters V and VI of this chapter, and section 865 of this title.

(4) A director of a company is not liable under this section for the tax liability of the company if the CEO is satisfied that the director derived no financial or other benefit from the arrangement and:

(a) the director has, on becoming aware of the arrangement, formally recorded with the company his or her dissent and notified the CEO, in writing, of the arrangement; or

(b) the director satisfies the CEO that, at the time the arrangement was entered into:

(i) the director was not involved in the executive management of the company; and

(ii) the director had no knowledge of, and could not reasonably have been expected to know of the arrangement.

(5) For the purposes of this section, a controlling shareholder of a company is any person who beneficially holds, either alone or together with an associate or associates:

(a) more than fifty percent (50%) of the voting rights in the company;

(b) more than fifty percent (50%) of the rights to dividends; or

(c) more than fifty percent (50%) of the rights to capital.

Source: PL 17-50 § 48.

Editor’s note: The sections of this chapter were numbered such that all of the sections were not numbered in the eight hundreds, but were also numbered in the nine hundreds. This created a problem because some of the nine hundred section numbers were already designated by chapter 9 of this title. This section was therefore renumbered from 872 to 852 to allow all of the sections in this chapter to have eight hundred section numbers.