John D. Forbes and Rosalind L. Forbes v. A. G. Maddox, Commissioner of Internal Revenue and Taxation, Government of Guam

The single question presented on this appeal is whether the District Court of Guam has jurisdiction of suits to redetermine deficiencies assessed under the income tax law of the Territory of Guam. We conclude that it does.

1. 48 U.S.C.A. § 1424 (a) grants jurisdiction to the District Court of Guam over “causes in Guam, jurisdiction over which has not been transferred by the legislature to other court or courts established by it.” With specific regard to tax litigation, 48 U.S.C.A. § 1421i(h) provides in subsection (1) that “the District Court of Guam shall have exclusive original jurisdiction over all judicial proceedings in Guam * * * with respect to the Guam Territorial income tax.” Both of these jurisdictional grants appear to include suits to redetermine Territorial income tax deficiencies.

Despite these provisions, the District Court of Guam concluded that it lacked jurisdiction because subsection (2) of section 1421i(h) expressly authorizes suits against the government of Guam for the recovery of income tax already paid, but is silent as to pre-assessment suits; and because certain letters which passed between the Departments of the Treasury and the Interior indicated that…