The issue of bank accounts of Palauans placed on hold by Bank of Guam after receiving US Economic Impact Payment (EIP) is “becoming serious conflict between the Government of Palau and Bank of Guam” stated President Tommy E. Remengesau Jr. in a letter to Bank of Guam President and CEO Joaquin P.L.G. Cook.
“The Republic takes no position on the eligibility of the any person for a U.S. Government Economic Impact Payment. That is not Palau’s decision. The Republic does, however, take a position on the behavior of financial institutions operating in Palau. We expect lawful behavior, and Bank of Guam may not hold funds properly deposited to Palau accounts unless specifically requested or ordered to do so by a competent government authority,” stated Remengesau in his letter.
President Remengesau emphasized that “Continuing to maintain holds that have not been requested or ordered is a lawless action.”
After letters and a resolution from Palau national congress to Bank of Guam questioning the basis of its decision to place a “hold” on accounts of Palau customers that received U.S. Economic Impact Payment and receiving “unsatisfactory” answer from Bank of Guam CEO & President Cook, Palau President Remengesau Jr. penned a letter to Bank of Guam expressing his disappointment over its action.
Earlier Bank of Guam President Cook responded to Delegate Jonathan Isechal’s inquiry that they have consulted numerous times with IRS Office in Guam and been assured by IRS that it took the right steps.
In a four-page letter, Remengesau expressed that Bank of Guam is mistaken in its interpretation of IRS FAQs and does not fully understand EIP’s eligibility requirements. He said Bank of Guam does not know which of its Palau Branch customers are U.S. citizens, does not know which account holders are eligible to file FORM 1040 or filed tax returns in 2018 or 2019, does not know which account holders are beneficiaries of US SS or VA systems and does not know which EIPs were received automatically and which ones were based on “non-filer” applications.
Furthermore, he said that Bank of Guam’s response that it will not change the action it took because IRS “will not guarantee” that the bank will not be asked to return the money later is “an unacceptable standard”.
“The fact that you have now reported these holds to the IRS does not change the fact that you imposed these holds in the first place, without any request to do so by the IRS…Without a specific response from IRS, these funds should not just be held indefinitely” asserted the letter.
Remengesau expressed clearly his displeasure that Palau’s national congress and himself have to weigh in on the matter.
Although Palau is a different country and US federal law and regulations do not apply, Remengesau said that Palau laws and regulations do apply. “To date, Bank of Guam has not made any attempt to justify its actions under the laws of Palau, even after the direct intervention of Palau’s top government authorities.”
President Remengesau demanded release of accounts held. “EIP holds that have not been requested by the U.S. government should be terminated now.”