This information is for ALL employers in Guam -- including local, national and international companies, corporations or other employers that offer a retirement plan for Guam employees.

Pass this report to your Chief Financial Officer, Controller and Human Resource staff immediately.

The principals of ASC Trust Corporation were drafting a document to help clients to navigate the Department of Revenue and Taxation of Guam (DRT) rules on qualified retirement plans.

In the course of their research, ASC discovered that many Guam companies are out of compliance with the tax laws that relate to retirement plans and can be facing past due taxes, interest and penalties in the tens of thousands of dollars per plan!

• When employers offer a retirement plan for their Guam-based employees, the

plan defers taxes payable to the Treasurer of Guam.

• When the employees are paid out from the plan upon retirement or termination, or other "distributable" event, (and if the employee files their income taxes in Guam that year) withholding taxes and tax filings should be made with the Treasurer of Guam.

• The Department of Revenue and Taxation of Guam (DRT) recently found that many plan sponsors are paying the taxes owed to the U.S. Internal Revenue Service (IRS) -- not to DRT.

• This is a serious problem -- equivalent to not filing payroll taxes at all.

• ASC and DRT found that this practice has been going on for years, costing the Treasurer of Guam millions of dollars in withholding taxes.

• In addition to collecting the taxes due, DRT has the authority to require companies to pay penalties and interest on past-due taxes.

• To help employers that are currently out of compliance, DRT is offering to forgive the penalties due and work with them to reconcile their overdue taxes with the DRT by December 31, 2008.

• This is a one-time opportunity to correct any obligations with DRT. DON’T PROCRASTINATE! After December 31, 2008, the DRT will actively pursue violators. ASC has been working with DRT over the last few months to come up with a solution to this problem. If you think you might be out of compliance, please contact ASC Trust Corporation, DRT or your CPA.

ASC will present a series of "Breakfast Briefings" on this problem later this month. YourCFO and HR staff should attend. Dates, times and locations will be posted here on TECGUAM.COM when schedules are firm.

David John

671-477-2724 671-635-1813

david.john@ascpac.com