Legislation placing new requirements on the state Tax Commission when it reaches large secret settlements with taxpayers has passed the House unanimously, and now goes to Gov. Butch Otter. The bill, SB 1128, earlier passed the Senate, also on a unanimous vote. “While it may not solve all of the issues that people have with the Tax Commission, it does, I believe, give additional reassurance in some transparency and reporting requirements that will help us understand better what’s happening over there,” said Rep. John Rusche, D-Lewiston. House Tax Chairman Dennis Lake, R-Blackfoot, said, “This is consensus legislation.”
In May, longtime state tax auditor Stan Howland sent lawmakers, the governor and the attorney general a 17-page report charging that tax commissioners routinely excuse large sums in taxes owed by large, multistate corporations, and confidentiality laws prevent anyone from finding out about it. He said the deals have become so frequent that corporations routinely protest their taxes to get their “Idaho tax break.” Two state investigations concluded no laws had been broken, but a veteran CPA, LaVern Gentry, who investigated the issue for Gov. Butch Otter, made several recommendations for changes. Among them were more transparency, including full reports on the deals to the Legislature, and for tax commissioners to provide more support to auditors, who complained that taxpayers sometimes would refuse to even provide information they requested, instead waiting to unveil their information at appeals with the commissioners.
The bill requires all such settlements over $50,000 to have an additional hearing at which at least two tax commissioners would be present, along with a representative of the commission’s audit staff, a deputy attorney general and a tax policy analyst. Full summaries and copies of the agreements would have to be kept by the commission, and though they’d remain exempt from disclosure to the public, they’d be open to legislative auditors. The legislation also requires the Tax Commission to adopt formal administrative rules outlining how it will conduct such settlement procedures. Howland, however, opposed the bill, saying it didn’t fix the problem. “This legislation simply codifies current Tax Commission practices, the same practices used to grant special favors to a few select taxpayers,” he wrote in a letter to lawmakers. “You have given these Tax Commissioners full license to secretly determine who does, and who does not, have to follow the laws that you wrote.”