I Liheslaturan Guåhan finds that in all tax systems, government administrators are continually working to reduce tax noncompliance known as the “”tax gap.”” In the United States, the tax gap, which is the difference between the amount of tax that is required to be reported and timely paid and the amount of tax that is actually reported and paid, is estimated to be almost Four Hundred Billion Dollars ($400,000,000,000) per year. Of this tax gap, it is further estimated that about Two Hundred Billion Dollars ($200,000,000,000), or half of the tax gap, is composed of what is known as the “”cash economy””.

Cash-based transactions are a fundamental part of any economy. As the oldest form of payment, cash continues to dominate many facets of the local economy. Cash is inherently private, efficient, and predictable for both purchaser and seller. However, cash transactions are also the simplest means of underreporting or non-reporting for tax purposes, because no bank, no means of electronic oversight, and no intermediary

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11 Guam Code Ann. FINANCE & TAXATION
CH. 71 THE CASH ECONOMY ENFORCEMENT ACT

maintains records of the movement of funds from one pocket to another.

The purpose of this Act is to provide the Department of Revenue and Taxation (DRT) with the necessary resources and tools to target high-risk, cash-based transactions to shore up confidence in Guam’s tax system for those that do comply. More importantly, I Liheslaturan Guåhan intends that the enforcement resources provide focus on the civil collection and enforcement nature of Guam’s business license laws. In an effort to demonstrate the targets of this undertaking, this Act defines “”cash-based business”” for enforcement purposes, and DRT is directed to focus on such businesses. At the same time, education is equally important as enforcement. Therefore, this Act requires the DRT to reach out to industry groups, specific demographics in the economy, and practitioners to educate taxpayers on their tax responsibilities.