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More secret tax deals alleged in Idaho

BOISE - Three more longtime senior employees of the Idaho State Tax Commission have come forward with sworn statements charging that secret tax deals were offered to those with political influence, and now Rep. Shirley Ringo, D-Moscow, is offering to put her pending lawsuit over the deals on hold in favor of an in-depth investigation of the charges.

“I think it should make people realize that we have something very serious we’re dealing with,” Ringo said Friday.

She and her attorney, former Idaho Supreme Court Justice Robert Huntley, sent the three new sworn statements to Attorney General Lawrence Wasden yesterday, along with a letter offering to suspend the lawsuit if the state launches an investigation meeting certain requirements, and grants job protection to current Tax Commission employees who testify.

“We have found several people who work within the Tax Commission who would like to speak up, but they’re in fear of jeopardizing their employment,” Ringo said.

Bob Cooper, spokesman for the Attorney General’s office, said Friday, “We did receive Mr. Huntley’s letter yesterday, and we’re reviewing it.”

Longtime state tax auditor Stan Howland sent lawmakers, the governor and the attorney general a 17-page whistleblower report in 2008, 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 several reforms were recommended. Legislation passed in 2009 to add some new requirements to the settlement process, though tax settlements remain secret.

In the new sworn statements, longtime senior auditor Gary Mattox, who retired from the Tax Commission in 2009 after 30 years, said, “To put it simply, over the last 15 years the Tax Commission has resorted to a ‘Let’s Make a Deal’ philosophy of handling audit cases.”

The new allegations include:

—- From Mattox: Years ago, an $80,000 assessment was ordered forgiven with no reason given for a politically influential taxpayer who had a radio talk show. Charges were dropped that an Idaho furniture retailer was selling items from an Oregon outlet and delivering them to Idaho customers to avoid Idaho sales tax when the business wouldn’t provide documents.

—- From auditor Robert Chatterton, who retired from the Tax Commission in 2006 after 33 years: That a commissioner canceled an audit he’d had scheduled for months to settle the case for $150,000, though all the documents weren’t yet in; when they arrived, they showed the amount due should have been $300,000. Chatterton also described a protest hearing at which “the commissioner said he and his wife had a wonderful time at dinner with the corporation tax manager last night,” and then the corporation received a “very favorable” settlement.

—- From Joe Schwartz, who worked for the state from 1981 to 2001 and was the manager of the Coeur d’Alene office of the state Tax Commission for the final 18 years of his employment: “Stan Howland is absolutely correct when he says that deals have been struck that reek of favoritism.” Schwartz said politicians threatened to “punish” the Tax Commission if it enforced compliance with a particular law, and that a Benewah County politician “backed a particular tax law change, and then obtained an exemption from complying with this law because of the monetary hit he would take if forced to comply.”

Ringo noted that House and Senate tax chairmen have been critical of her lawsuit, and said the latest proposal is in part a response to that.

“Part of it is just timing,” she said, “because while all of this goes on, and we know that lawsuits take a long time to resolve, these deals continue to be made and the state continues to lose revenue, and we know the consequences of that. … I think we need to move this forward as fast as we can.”

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