ExpressCare challenges $4.2M Guam tax assessment

Attorney Tina Azarvand says a nearly $4.2 million tax dispute involving ExpressCare founder Dr. Jitka Lom essentially boils down to whether Guam tax authorities can treat money placed into an employee ownership retirement plan as income belonging to Lom.

In a Zoom interview with Marianas Press last Sept. 30, Azarvand, managing partner of Azarvand Tax Law and co-counsel in the case, said the dispute centers largely on ExpressCare’s Employee Stock Ownership Plan, or ESOP, which gives employees an ownership interest in the company.

Azarvand, who resides on Saipan and also practices tax law in the CNMI, represents individuals and businesses in tax matters in the Northern Marianas as well as Guam.

“Essentially, they’re trying to tax her on income that’s not hers,” Azarvand said, describing her client’s position.

She compared an ESOP to a 401(k), except employees receive ownership in the company where they work rather than having their retirement money invested in publicly traded companies.

Azarvand said Lom is trustee of the plan and has obligations under the federal Employee Retirement Income Security Act. She contends that the disputed funds belong to the employee retirement structure rather than Lom personally.

“The dispute just arises out of their, you know, position is like, well, we would have gotten tax revenue if she didn’t structure it as an ESOP,” Azarvand said.

The Guam Department of Revenue and Taxation has not yet filed its response to Lom’s petition, and the allegations and legal arguments raised by Lom and her attorneys have not been adjudicated by the court.

Lom’s attorneys said in a press release that the assessment threatens the retirement security of ExpressCare employees. The release said Lom established the ExpressCare ESOP in 2017 with assistance from mainland ESOP tax specialists and Deloitte. It also said ExpressCare’s medical facilities remain fully operational.

The press release further alleged that Guam Rev and Tax improperly sought to disallow the structure funding the employee trust and hold Lom personally liable for income taxes on funds set aside for employees. Those assertions represent Lom and her attorneys’ position in the dispute.

Azarvand told Marianas Press that Lom’s legal team had attempted for more than two years to resolve the dispute administratively before going to court.

“This case, we’ve been going back and forth over two years on,” she said. “We did try many, many times to resolve this.”

She also questioned Rev and Tax’s decision to disallow management and basic fees claimed as business expenses by ExpressCare Health & Skin Center Inc.

“It is a legitimate business expense, first of all,” Azarvand said.

The dispute formally reached the District Court of Guam on Sept. 30 when Lom, through attorney Michael J. Berman of the Berman Law Firm, filed a petition seeking redetermination of a July 2, 2026 notice of deficiency issued by the director of Guam Rev and Tax.

According to the petition, Lom is the sole shareholder of ExpressCare Health & Skin Center Inc., a licensed medical practice treated as an S corporation for Guam Territorial Income Tax purposes. She is also identified as founder and a principal beneficiary of the ExpressCare Employee Stock Ownership Plan. The ESOP trust legally owns 100% of the issued and outstanding stock of ExpressCare Management Services Inc., according to the filing.

Rev and Tax examined ExpressCare Health & Skin Center’s tax returns for 2019 through 2023. Adjustments made to the corporation’s ordinary income were then passed through to Lom as increases to her share of S corporation income, the petition states.

The disputed assessments total approximately $4.19 million, consisting of $3,488,998 in additional taxes and $697,800 in accuracy-related penalties for tax years 2019 through 2023.

The largest assessment is for 2021, when Rev and Tax determined an increase in tax of $1,069,419 and a penalty of $213,884. For 2022, the assessment was $954,574 in additional tax and $190,915 in penalties. The remaining assessments were $545,096 plus a $109,019 penalty for 2019; $582,158 plus $116,432 for 2020; and $337,751 plus $67,550 for 2023.

Lom disputes the assessments in their entirety.

Among other things, her petition alleges that Rev and Tax improperly disallowed management and basic fees paid by ExpressCare, incorrectly determined that the company understated gross receipts, improperly increased Lom’s taxable income and incorrectly imposed accuracy-related penalties.

The petition also challenges determinations involving Lom’s child tax credit for 2021, a short-term capital gain reported for 2022, and interest income and capital gains stemming from a related-party transaction involving ExpressCare Management Services and ExpressCare Health & Skin Center in 2023.

Azarvand said the gross-receipts dispute is closely tied to the ESOP.

“Because the gross receipts, those are the employee benefits. Those are not taxable,” she said, stating her client’s position.

The petition alleges that the management and basic fees were ordinary and necessary business expenses and that ExpressCare accurately reported its gross receipts. It further maintains that Lom properly reported her taxable income for the years at issue.

Azarvand also raised broader concerns about Rev and Tax’s administrative review process, staffing and tax-law expertise. Drawing a comparison with her experience practicing tax law in the CNMI, she said additional specialized tax expertise and training could help Guam Rev and Tax.

“It's just a lack of independent review,” she said.

Azarvand said she hopes the litigation ultimately clarifies the application of Guam’s tax laws and federal Internal Revenue Code provisions incorporated into Guam law.

Lom is asking the District Court of Guam to determine that she owes no deficiencies for tax years 2019 through 2023 or, alternatively, that the deficiencies are lower than those assessed. She also wants the court to find that she is not liable for the accuracy-related penalties.