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.
SUBCHAPTER V
Recovery of Unpaid Tax
[FOR REFEREENCE ONLY]
SECTIONS
§ 824. Payment of tax.
§ 825. Extension of time to pay tax.
§ 826. Trustees, liquidators, and executors.
§ 827. Recovery of unpaid tax from third party.
§ 828. Seizure of goods.
§ 829. CEO may require security.
§ 830. Taxpayer leaving the FSM.
§ 831. Temporary closure of business.
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 22 of PL 17-50 added a subchapter V of chapter 8 entitled Recovery of Unpaid Tax.
(1) A taxpayer must pay tax in the prescribed manner.
(2) Any unpaid tax may be sued for and recovered in any court of competent jurisdiction by the CEO suing in his or her official capacity as collection agent for the National or State Governments, as the case may be.
(3) In any suit under subsection (2) of this section, the production of a certificate signed by the CEO stating the name and address of the taxpayer and the amount of tax due is sufficient evidence that the amount of tax is due by the taxpayer and sufficient authority for the court to give judgment with full costs of suit against the taxpayer.
Source: PL 17-50 § 23.
Cross-reference: The statutory provisions on the FSM Supreme Court and the Judiciary are found in title 4 of this code.
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 841 to 824 to allow all of the sections in this chapter to have eight hundred section numbers.
(1) A taxpayer may apply, in writing, to the CEO for an extension of time to pay tax due under a revenue law.
(2) If an application has been made under this section, the CEO may, having regard to the circumstances of the case:
(a) grant the taxpayer an extension of time for payment of the tax due; or
(b) require the taxpayer to pay the tax due in such installments as the CEO may determine, and the CEO must serve the taxpayer with written notice of the decision.
(3) If a taxpayer permitted to pay tax by installments defaults in the payment of an installment, the whole balance of the tax outstanding, at the time of default, is immediately payable.
(4) The grant of an extension of time or permission to pay tax due by installments does not preclude the liability for late payment interest arising from the original date the tax was due for payment.
Source: PL 17-50 § 24.
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 842 to 825 to allow all of the sections in this chapter to have eight hundred section numbers.
(ii) a receiver for debenture holders who has taken possession of any assets of a company;
(iii) a trustee in bankruptcy;
(iv) a mortgagee in possession;
(v) an executor of a deceased estate; or
(vi) any other person holding a similar office or acting in a similar capacity; and
(b) “taxpayer”, in relation to a trustee, means the person whose assets are in the possession or control of the trustee, including if the trustee is an executor, the estate of the deceased person.
(2) A trustee must, within 14 days after becoming a trustee in respect of, or assuming the control of assets of a taxpayer in the capacity as trustee, give written notice thereof to the CEO.
(3) The CEO must notify the trustee, in writing, of the amount of any tax that is payable by the taxpayer and such notice must be served on the trustee within one month of the CEO being served with a notice under subsection (2) of this section.
(4) Subject to subsection (5) of this section, a trustee:
(a) must not, without the leave of the CEO, dispose of any asset of the taxpayer until a notice has been served on the trustee under subsection (3) of this section;
(b) must set aside, out of the assets available for the payment of tax due by the taxpayer, assets to the value of the amount notified under subsection (3) of this section, or the whole of the assets if their value is less than the amount notified; and
(c) is, to the extent of the value of the assets required to be set aside, liable for the tax due by the taxpayer.
(5) A trustee may pay the expenses properly incurred by the trustee in the capacity as such, including the trustee’s remuneration, in priority to the amount notified under subsection (3) of this section.
(6) If two or more persons are trustees in respect of a taxpayer, the obligations and liabilities under this section apply jointly and severally to the trustees but may be discharged by any of them.
(7) The amount that a trustee is liable for under subsection (4)(c) of this section is treated as if it were tax payable by the trustee as taxpayer for the purposes of this subchapter, subchapter VI of this chapter, and section 851 of this title.
Source: PL 17-50 § 25.
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 843 to 826 to allow all of the sections in this chapter to have eight hundred section numbers.
(a) owes or may subsequently owe money to a taxpayer;
(b) holds or may subsequently hold money, for or on account of, a taxpayer;
(c) holds money on account of some other person for payment to a taxpayer; or
(d) has authority from some other person to pay money to a taxpayer.
(2) This section applies if a taxpayer is liable to pay tax and the tax has not been paid by the taxpayer by the due date for payment. This remedy shall be in addition to any right of levy and execution set forth in subchapter VI of this chapter.
(3) If this section applies, the CEO may, by notice in writing, require a payer in respect of the taxpayer to pay the amount specified in the notice to the CEO, being an amount that does not exceed the amount of tax that has not been paid.
(4) A payer must pay the amount specified in a notice under subsection (3) of this section by the date specified in the notice, being a date that is not before the date that the amount owed to the taxpayer becomes due to the taxpayer or held on the taxpayer’s behalf.
(5) If a notice served under subsection (3) of this section requires a payer to deduct amounts from wages or salaries, the amount required to be deducted by the payer from each payment must not exceed 20 percent of the amount of each payment of wages or salaries.
(6) If a person served with a notice under subsection (3) of this section is unable to comply with the notice by reason of lack of moneys owing to, or held for, the taxpayer, the person must notify the CEO, in writing, setting out the reasons for the person’s inability to comply.
(7) If a notice is served on the CEO under subsection (6) of this section, the CEO may, by notice in writing:
(a) accept the notification and cancel or amend the notice issued under subsection (3) of this section; or
(b) reject the notification.
(8) The CEO must, by notice in writing to the payer, revoke or amend a notice served under subsection (3) of this section if the taxpayer has paid the whole or part of the tax due or has made an arrangement satisfactory to the CEO for payment of the tax.
(9) A copy of a notice served on a payer under this section must be served on the taxpayer.
(10) An amount deducted from a payment by a payer pursuant to a notice served on a payer under this section is held by the payer in trust for the Authority.
(11) A payer making a payment under this section is treated as acting under the authority of the taxpayer and of all other persons concerned and is hereby indemnified in respect of the payment.
(12) The CEO must apply any amount paid by a payer under this section to the tax owing by the taxpayer.
(13) A payer who, without reasonable cause, fails to comply with a notice under this section is personally liable for the amount specified in the notice.
(14) The amounts referred to in subsections (10) and (13) of this section are treated as if they were tax payable by the payer as taxpayer for the purposes of this subchapter, subchapter VI of this chapter, and section 851 of this title.
Source: PL 17-50 § 26.
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 844 to 827 to allow all of the sections in this chapter to have eight hundred section numbers.
(1) In addition to any other right of levy and execution set forth in subchapter VI of this chapter and the powers of forfeiture under subchapter IV of chapter 2 of this title, the CEO or a revenue officer authorized by the CEO in writing for the purposes of this section may seize any goods if the VAT that is payable in respect of the supply or the import duty in respect of the import of those goods has not been paid or the CEO or authorized officer has reasonable grounds to believe that such VAT or import duty will not be paid.
(2) Any goods seized under this section must be stored in a place approved by the CEO or authorized officer for the storage of seized goods.
(3) If goods have been seized under subsection (1) of this section, the CEO or authorized officer must, as soon as is practicable after the seizure, serve on the owner of the goods or the person who had custody or control of the goods immediately before the seizure, a notice in writing:
(a) identifying the goods;
(b) stating that the goods have been seized under this section and the reason for seizure; and
(c) setting out the terms of subsections (6), (7), and (8) of this section.
(4) The CEO or authorized officer is not required to serve a notice under subsection (3) of this section if, after making reasonable enquiries, the CEO or authorized officer does not have sufficient information to identify the person on whom the notice should be served.
(5) If subsection (4) of this section applies, the CEO or authorized officer may serve a notice under subsection (3) of this section on any person claiming the goods, provided the person has given the CEO or authorized officer sufficient information to enable the notice to be served.
(6) The CEO or authorized officer may authorize any goods seized under subsection (1) of this section to be delivered to the person on whom a notice under subsection (3) of this section has been served if that person has paid, or makes an arrangement satisfactory to the CEO or authorized officer for payment of, the VAT that is payable in respect of the supply or import duty in respect of the import of the goods.
(7) Except if subsection (6) of this section applies, the CEO or authorized officer must detain the goods seized under subsection (1) of this section:
(a) in the case of perishable goods, for such period as the CEO or authorized officer considers reasonable having regard to the condition of the goods; or
(b) in any other case, for ten days after seizure of the goods.
(8) If the detention period in subsection (7) of this section has expired, the CEO or authorized officer may sell the goods by public auction or, in the case of perishable goods, may sell the goods in such manner as the CEO or authorized officer determines, and apply the proceeds of sale as follows:
(a) first towards the cost of taking, keeping, and selling the goods seized;
(b) then towards payment of any VAT that is payable in respect of the supply or import duty in respect of the import of the goods;
(c) then towards payment of any other tax due by the person whose goods have been seized; and
(d) the remainder of the proceeds, if any, must be paid to the person whose goods have been seized.
(9) If the proceeds of disposal are less than the sum of the cost of taking, keeping, and selling the goods seized and the VAT or import duty due, the CEO or authorized officer may proceed under this chapter to recover the excess.
(10) The costs of taking, keeping, and selling the seized goods is treated as if they were tax payable by the person whose goods have been seized as taxpayer for the purposes of this subchapter and section 851 of this title.
Source: PL 17-50 § 27.
Editor’s note: The reference to subchapter IV of chapter 2 of this title in subsection (1) of this section is retained even though a subchapter IV of chapter 2 of this title does not exist. See editor’s note to section 802 of this chapter.
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 845 to 828 to allow all of the sections in this chapter to have eight hundred section numbers.
The CEO may, for the purposes of securing payment of any tax that is or will become due, require a taxpayer to give security in such amount and in such manner as the CEO thinks fit.
Source: PL 17-50 § 28.
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 846 to 829 to allow all of the sections in this chapter to have eight hundred section numbers.
(1) If the CEO has reasonable grounds to believe that a taxpayer may leave the FSM before the due date for payment of any tax and the taxpayer has not made an arrangement satisfactory to the CEO for payment of the tax, the tax is due on such date as specified by the CEO by notice in writing to the taxpayer.
(2) If the CEO has reasonable grounds to believe that a taxpayer may leave the FSM without paying tax due, the CEO may issue a certificate containing those grounds and the particulars of the tax due to the FSM Department of Justice and requesting the prevention of the taxpayer from leaving the FSM until the taxpayer:
(a) makes payment of the tax due in full; or
(b) makes an arrangement satisfactory to the CEO for payment of the tax due.
(3) The CEO must serve a copy of a certificate issued under subsection (2) of this section on the taxpayer named in the certificate if it is practicable to do so.
(4) Payment of the tax specified in the certificate to a customs or immigration officer or the production of a certificate signed by the CEO stating that the tax has been paid or satisfactory arrangements for payment have been made is sufficient authority for allowing the taxpayer to leave the FSM.
Source: PL 17-50 § 29.
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 847 to 830 to allow all of the sections in this chapter to have eight hundred section numbers.
(1) If a taxpayer fails to pay VAT or tax withheld from wages and salaries on or before the due date, the CEO or a revenue officer authorized by the CEO, in writing, for the purposes of this section may notify the taxpayer in writing of the intention to close down part or the whole of the taxpayer’s business unless the taxpayer pays the tax due within seven days of the date of the notice.
(2) If a taxpayer fails to comply with a notice under subsection (1) of this section, the CEO or authorized officer may issue an order to close down part or the whole of the business of that person for a period not exceeding 14 days.
(3) The CEO or authorized officer may, at any time, enter any premises described in an order issued under subsection (2) of this section for the purposes of executing the order and shall require a police officer to be present while the order is being executed.
(4) The CEO or authorized officer shall affix, in a conspicuous place on the front of the premises of the business or part of the business which has been closed under an order issued under subsection (2) of this section, a notice in the following words ‘CLOSED TEMPORARILY FOR NOT COMPLYING WITH TAX OBLIGATIONS BY ORDER OF THE CEO OF THE FSM UNIFIED REVENUE AUTHORITY UNDER SECTION 831 OF THE REVENUE ADMINISTRATION ACT’.
(5) If the tax due is paid in full within the period of closure, or a satisfactory arrangement is reached with the CEO with respect to payment of the tax, the order issued under subsection (2) of this section ceases to have effect and the CEO must immediately arrange for removal of the notice referred to in subsection (4) of this section.
Source: PL 17-50 § 30.
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 848 to 831 to allow all of the sections in this chapter to have eight hundred section numbers.