August 15, 2012 in Idaho

Hart bankruptcy plan draws rebuke

Lawmaker offered to pay 2 percent
By The Spokesman-Review
 

Hart
(Full-size photo)

Federal prosecutors are calling for Idaho Rep. Phil Hart’s proposed bankruptcy plan to be dismissed, saying it’s improper, it wouldn’t appropriately satisfy his half-million-dollar federal income tax debt and it relies on an income source that will disappear at the end of this year: his legislative salary.

Hart, a tax protester and fourth-term state lawmaker, was defeated in the May GOP primary, so his legislative salary will end in December.

“Hart’s plan is not feasible,” wrote U.S. Department of Justice attorney Adam Strait in court documents. Hart had proposed paying $200 a month for five years – a total of $12,000 – to get his entire debt of more than $600,000 discharged. Most of that debt is to the IRS; it also includes more than $50,000 in back state income taxes, penalties and interest, and $22,000 in credit card debt.

The plan, Strait wrote, “fails to make adequate provision for paying the United States’ priority income tax debts.”

Prosecutors also noted Hart’s refusal to answer numerous questions about his assets during a bankruptcy proceeding last month, from the home where he lives to the car he drives – neither of which he acknowledges owning.

Hart’s Athol home, which the federal government is seeking to foreclose on in a separate federal lawsuit to pay his IRS debt, is owned by a trust in his daughter’s name. But he still lives there. Federal authorities called the transfer of the home to the trust a “fraudulent” transaction with a “sham entity.”

That foreclosure lawsuit was placed on hold by Hart’s bankruptcy filing.

During a bankruptcy hearing last month, Hart refused to answer questions about who owns the house, how long he’s lived there and who built it. But court records show that Hart was ordered to pay more than $22,000 for illegally cutting trees from state school endowment land in 1996 and using them in the construction of the log home, for which he had a building permit. He maintained he had the right as a citizen to take the logs for free, but he lost repeated court appeals. He never fully satisfied the judgment.

Hart stopped filing both federal and state income tax returns in 1996 while he pressed an unsuccessful lawsuit claiming the federal income tax is unconstitutional. He also charges that the state income tax is unconstitutional. After his lawsuit failed he began filing again, but authorities maintain he never fully paid up.


There are three comments on this story. Click here to view comments >>

Get stories like this in a free daily email