BOISE – A federal judge has cleared the way for the Internal Revenue Service to foreclose on former state Rep. Phil Hart’s North Idaho home.
U.S. District Judge Edward Lodge ruled last week that Hart, a Republican from Athol, was still the true owner of the log home and that his attempt to transfer the property to a trust was ineffective. The judge also said Hart couldn’t claim a “head of household” tax exemption because he had no dependents at the time.
Hart, who lost his bid for a fifth term in the Idaho House last year, stopped filing income tax returns in 1996 while he pursued a federal lawsuit challenging the constitutionality of the federal income tax. He lost the lawsuit and the IRS is seeking to collect more than half a million dollars in back taxes, penalties and interest.
Hart is in the midst of his third bankruptcy filing in a year, but unlike the first two, the third wasn’t allowed to automatically stay the foreclosure case. “The bankruptcy, when viewed in light of Debtor’s previous two filings, appears intended to halt the progress of the federal litigation,” wrote U.S. Bankruptcy Judge Terry Myers in a February decision, adding that Hart’s petitions were “filed without regard to eligibility but with an eye toward delay and potential forum shopping.”
Hart built the home in part with trees he cut illegally from Idaho state school endowment land; he contended that as a citizen he was entitled to take the logs, but that argument was rejected repeatedly in court. He never fully satisfied a court judgment over the timber theft.
The court is still trying to work out exactly how much Hart owes in taxes and penalties as the former lawmaker and federal attorneys battle over exemptions, deductions and other aspects of the tax code. But in the order granting partial summary judgment in the case to the federal government, Lodge said the amount Hart owes for back taxes and penalties for the year of 1996 is well established at more than $25,000.
It’s too soon to impose summary judgment on the rest of the tax years, Lodge found, because the total amount he owes hasn’t been determined yet.
Lodge rejected Hart’s attempt to claim tax deductions under his “head of household” status. The judge said it’s undisputed that Hart’s daughter, Sarah Elizabeth Hart, wasn’t a qualifying dependent because she only stayed with him a couple of months out of the year.
According to the court documents, Hart transferred his property to White Peak Ventures on Aug. 8, 1997, and the next day, White Peak Ventures transferred the property to the Sarah Elizabeth Hart Trust. But Lodge said that neither recipient actually purchased the property, so the supposed transfers weren’t valid.
Staff writer Betsy Z. Russell contributed to this report.