BOISE – Federal authorities moved Friday to foreclose on the Athol, Idaho, home of tax-protesting state Rep. Phil Hart for years of unpaid federal income taxes, interest and penalties.
The log home was built partly with timber Hart illegally logged from state school endowment land in 1996, for which he never fully satisfied a court judgment. His court appeals on the issue failed, and the Idaho Court of Appeals termed his illegal logging “stealing.”
Federal prosecutors, in a complaint filed in Boise over the back income taxes, wrote, “Hart has neglected, failed, or refused to make full payment to the United States of the assessed amounts and the interest and penalties accrued thereon.” The complaint seeks $550,000.
The U.S. Department of Justice says Hart, who didn’t return a reporter’s calls Friday, will as of Monday owe the IRS $549,703.48. It has filed tax liens against Hart and a trust in whose name he placed the home in 1997 for more than half a million dollars; now the government seeks to foreclose those liens and take the property.
Kootenai County tax records, however, show the home on 10 rural acres in Athol is valued for tax purposes at $271,573 as of 2010.
The federal complaint also contends Hart’s transfer of the home into a trust in the name of his now-grown daughter was a “fraudulent transfer” that the federal court should set aside. It happened in 1997 when he knew the IRS was after him for unpaid income taxes, the complaint says.
Hart executed a series of warranty deeds transferring the home to a firm called White Peak Ventures, and that firm then transferred the property to “John Doe” as trustee for the Sarah Elizabeth Hart Trust, according to the complaint. That trust owns his home, but the IRS has determined that it is a nominee for Phil Hart – in other words, that he still owns the home, where he has continued to live and pays no rent.
The complaint calls the trust a “sham entity.” It asks the court to rule that “the United States has valid and subsisting federal tax liens on all property and rights belonging to Hart, whether real or personal, wherever located, and whether presently held or hereinafter acquired,” including the Athol home. “The property shall be sold, and … the proceeds from the sale shall be distributed in accordance with the court’s findings,” the complaint states. It also asks that Hart be ordered to pay the federal government’s court costs for bringing the case.
Hart will have an opportunity to respond to the federal complaint before a judge considers it.
Hart stopped filing federal income tax returns in 1996 while he unsuccessfully pressed a lawsuit charging that the federal income tax is unconstitutional; he also stopped filing state income tax returns and has argued the state income tax also is unconstitutional. Hart contends he started filing again after several years, but both federal and state authorities say he has never fully paid up.
Hart was removed from the House Revenue and Taxation Committee and agreed to give up his vice chairmanship of the House Transportation Committee this year in response to ethics complaints filed over his tax issues, his use of legislative privilege to delay his state and federal tax cases, and the timber theft. He apologized to the House in February.
Hart continues to serve as a state representative representing District 3 in North Idaho. He was first elected in 2004.