Financially troubled Doral Financial Corp. fired off a letter to the Puerto Rico Treasury Department late last week asking the agency to comply with the terms of a closing agreement reached in 2012 obligating the government to refund the bank for tax over-payments estimated at about $232 million.
In the letter addressed to Treasury Secretary Melba Acosta, the bank established that it had “provided clear and uncontestable evidence of its rights under the closing agreement” to request a refund of the amount in question.
On April 15, Doral received a letter from the Treasury Department asking the bank to provide information to prove that it made actual tax payments to the agency that are the subject of the 2012 Closing Agreement pursuant to which the local government agreed to pay back to Doral its tax over-payments. The bank claims it responded to that letter in April 23.
In addition to the request for information, Treasury said it did not understand the basis upon which Doral would be due a tax refund if it was due to “accounting” losses versus actual tax payments.
On April 23, Doral responded to the letter and provided copies of tax payments made of approximately $155.6 million, which together with interest entitled, the under Puerto Rico tax law as of the 2012 Closing Agreement to a refund of $232 million, it said.
Doral also explained in its response how Treasury used the accounting basis of the deferred tax asset held by Doral as recorded in its financial statements to negotiate a lower refund payment than the tax refund that was actually due pursuant to Puerto Rico tax law.
“Doral expects payments to be made immediately. Doral also intends to exercise all legal remedies available to it to enforce collection and protect the interests of Doral and its stakeholders, including shareholders, depositors and employees,” the letter signed by Doral CEO Glen Wakeman stated.
“We also request a meeting with you as soon as possible to discuss this request and to understand the department’s timeline for meeting its payment obligations to Doral under the 2012 Closing Agreement,” said the letter also sent to Commissioner of Financial Institutions Rafael Blanco and Federal Deposit Insurance Corporation Regional Director John Vogel.
In addition, Doral notified the Treasury Department that the 2012 Closing Agreement expressly provided that it would constitute a violation of the agreement if Treasury sought to reopen negotiations concerning the tax refund due to Doral.