June 13, 2012 in Idaho

Hart says IRS garnished all his legislative pay

By The Spokesman-Review

BOISE - When the state of Idaho made out its paychecks for tax-protesting state Rep. Phil Hart twice a month for the past seven years, the money didn’t go to Hart - it went straight to the IRS.

That’s what Hart reported in documents filed this week in his bankruptcy case, in which he lists more than $600,000 in debt, most of it to the IRS and the Idaho State Tax Commission.

In his supporting documents seeking a Chapter 13 bankruptcy reorganization, Hart reported, “100 percent of Legislative pay garnished since 2005, $16,000 annually.”

Bruce Newcomb, who was Idaho’s longest-serving House speaker, said he was troubled by the revelation. “Let’s put it this way: I find it very odd,” he said. “A person has a right to protest their taxes. But this has been one of the more extreme endeavors I’ve ever seen in my life’s experience.”

Newcomb said he worries about the impact of the case on the institution of the House. “The general public is suspicious of politicians in general, and when something like this comes along, it only serves to confirm what some people think,” he said.

Hart, R-Athol, couldn’t be reached for comment; nor could current House Speaker Lawerence Denney.

Hart, who lost his bid for re-election to the Idaho House in the GOP primary last month, also indicated in his filing that he owns no real property. His Athol home is held by a trust he set up in the name of his daughter, but the U.S. Department of Justice, which is seeking to foreclose on the home to satisfy more than $500,000 in federal tax debts, called that a “fraudulent” transaction and a “sham entity,” in court documents.

The federal government has filed a foreclosure suit against Hart for the home, but that case has now been automatically stayed because Hart filed for bankruptcy.

Hart stopped filing both state and federal income tax returns in 1996 while he unsuccessfully pressed a federal lawsuit charging that the federal income tax was unconstitutional. After he lost, he began filing again, but both state and federal authorities say he’s never fully paid up. He’s now completing his fourth term in the Idaho House of Representatives, where last year he lost his seat on the Tax Committee amid an ethics investigation.

Hart’s initial bankruptcy filing listed just three creditors - the IRS, the state Tax Commission, and a Sacramento, Calif. construction defects law firm. In more detailed documents filed this week, Hart reported that his debt to the law firm, Anderson & Krieger, is for $4,600 for a stipulated settlement in a California lawsuit in 2011.

Hart also reported $22,000 in credit card debt, and listed assets including a 1990 Toyota pickup with 310,000 miles that “needs work,” three guns, sporting equipment, household items, clothing, office equipment, $1,210 in checking accounts., and a state retirement account worth $11,826. All those assets, which add up to just over $30,000, should be exempt from the bankruptcy, he said in court filings.

He also listed among his personal property a “State of Idaho tax refund due for 1998” in the amount of $100. Hart just lost a second appeal to the Idaho Supreme Court over an order to pay more than $53,000 in back state income taxes, penalties and interest, for the tax years 1996 through 2004. He listed his state income tax case as “on appeal,” and his federal tax case as “pending.”

Hart acknowledges in his bankruptcy filing that the IRS and state Tax Commission have claims against him for nearly $600,000, but says he disputes all but $7,009 of those claims.

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