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Senators: Tax Commission needs reform

BOISE - Idaho’s state Tax Commission hasn’t complied with the recommendations in a state report that followed a whistleblower’s allegations that the panel was cutting secret deals to excuse millions in taxes for large corporate taxpayers, and lawmakers showed Thursday that they’re losing patience.

“We’ve got to do something about this. It’s been five months,” Senate Tax Chairman Brent Hill told Tax Commission Chairman Royce Chigbrow. “I really want to make it clear that on behalf of the people, we’re holding your feet to the fire on this.”

Gov. Butch Otter in August ordered the Tax Commission to submit an annual report to the Legislature on the secret deals, starting in January of 2009 - but no report has been sent. Hill told Chigbrow, pointedly, “I guess one of the points I want to make is this isn’t going to go away.”

Tax Commission attorney Ted Spangler said the report on the deals has been sitting on his desk for review, and he hasn’t gotten to it. “I will get that off my desk, Mr. Chairman,” he told Hill.

Chigbrow defended the Tax Commission’s approach to settling appeals. He told the senators, “The Idaho Tax Commission and their appeal process works, and I’m very pleased to announce that, despite our little differences of opinion last summer.”

“We have saved the state a lot of money,” Chigbrow said. He said settling disputed tax cases can mean big savings over taking them to court. “If you take it to a court, the best chance is there’s a 50-50 chance you are going to win, because there are two opinions,” he said.

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.

Chigbrow said the Tax Commission has improved its procedures, but Hill said he’d like to see something in writing showing that. Chigbrow responded, “We shall reduce it to writing.”

Asked by Hill how he sees the role of the Tax Commission, Chigbrow said, “I believe the role of the Tax Commission … is to see that the tax laws of the state of Idaho are administered in a fair and equitable way. … The role is not to go out and make sure that you shake every cent out of everybody’s pocket.”

Sen. Elliot Werk, D-Boise, said he’d like to know the dollar difference between what taxpayers owed before the settlements, and what they paid after them. But Chigbrow said that could be misleading. “If people don’t supply information, then it’s the worst-case scenario when the auditor writes up his report,” he told the senators. “It’s a very unrealistic figure.”

After the hearing, Hill, a CPA himself, said he wasn’t satisfied. “It should not be on the back burner, it should be on the front burner,” he said, “and from that standpoint, I’m disappointed.”

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