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Idaho needs to invest $5.2 million for a major computer upgrade in its tax collection system, state tax officials say, and it'll pay off big not far down the road. The upgrade, which state tax commissioners plan to pitch to lawmakers in January, could pay for itself within its first full year of operation, officials estimate, by allowing the state to better pursue fraudulent returns and tax lien debt.
The proposal comes as the state's four-member Tax Commission has been working to boost public confidence and employee morale, two years after a former director resigned amid scandal and charges that the commission was cutting secret deals with influential taxpayers. Current Chairman David Langhorst, a Democrat, said the commission is working toward "a more open and transparent way of doing business, and better communication within our own ranks." The Tax Commission assessed its status and outlook at its annual meeting today; you can read my full story here at spokesman.com.
Idaho State Tax Commission whistle-blower Stan Howland is now speaking in the Senate flex room, room WW17 in the Senate wing, on the lower level of the state Capitol. At least half a dozen legislators, from both parties, are among those in the audience. "Auditors are not against compromising taxes," Howland told the group. "What we are concerned about is the legality of them, the process, and how often they should be used. … The Tax Commission currently does not have sufficient internal controls."
Howland estimated that Idaho could lose $50 million to $100 million in state tax revenues in 2011 due to secret compromise deals, plus another $20 million to $30 million a year in future years. "It could be more," he said. At the conclusion of his talk, he'll take questions from lawmakers and others.
Howland detailed a list of changes he said are needed in Idaho's tax-settlement process to end improper secret settlements, from less secrecy to restoring restrictions on when cases can be settled, rather than leaving that to the tax commissioners' discretion. "The fact is, folks, that the Tax Commission is broken," he said. "You can't remove that commissioner and cure this problem, because unless you change the law, this problem will rear its head again."
Gov. Butch Otter will hold a press conference tomorrow at 2 p.m. to announce his choice for a new chairman of the Idaho State Tax Commission. The press conference, in the governor's ceremonial office, will be streamed live here.
Meanwhile, former longtime state tax auditor and Tax Commission whistle-blower Stan Howland will appear Tuesday from 3:30 to 5:30 p.m. in the Senate flex room, WW17, to give a talk and answer questions from legislators. His appearance is sponsored by Rep. Shirley Ringo, D-Moscow, and the group Stop Unequal Taxation in Idaho.
Idaho Tax Commission Chairman Royce Chigbrow resigned Friday after employees at the agency said he intervened in tax cases involving clients of his son's accounting firm as well as for a friend and political supporter, the AP reports. Click below for the full article from AP reporter John Miller.
Gov. Butch Otter just announced that he's accepted the resignation of Royce Chigbrow as chairman of the Idaho State Tax Commission. Here's Otter's statement:
“Royce has been my friend and trusted adviser for a number of years. He was kind enough to enter the arena of public service at my request, and I applaud his hard work, knowledge and expertise in that role. I wish him all the best in his future endeavors.”
Idaho State Tax Commission Chairman Royce Chigbrow has resigned. In a hand-delivered resignation letter sent to Gov. Butch Otter, Chigbrow wrote, "Our system of taxation is not perfect, but I tried to do my best on behalf of every Idahoan during my tenure, while treating taxpayers with the respect, fairness and dignity they deserve. … Despite all of this I know there needs to be a change." You can read his letter of resignation here.
The Associated Press reports that Idaho Tax Commission Chairman Royce Chigbrow allegedly tried to use his position to help a friend embroiled in a dispute with a former employer. The allegations, revealed in emails and documents that the AP obtained under the Idaho Public Records Law, include that Chigbrow sought to provide his friend, Skip Hofferber, with confidential information about the firm's tax problems after the man had been fired from the company; ordered a forced tax collection against the firm; and then improperly handled two company cashier's checks totaling more than $30,000 that Hofferber gave Chigbrow at an Arid Club lunch - and that the firm later reported stolen. Click below to read the full report from AP reporter John Miller.
The Associated Press reports today that public records it obtained under the Idaho Public Records Act show Idaho State Tax Commission Chairman Royce Chigbrow intervened on behalf of clients of his son’s accounting firm, over the objections of Tax Commission employees, bringing the clients significant breaks on their taxes. “The heavily redacted documents were among those collected by the Idaho attorney general’s office while representing the Tax Commission in a pending lawsuit that alleges commissioners have given politically connected taxpayers secret sweetheart deals for years,” reports AP reporter John Miller. Click below to read his full story.
Among the incidents detailed in the documents: Chigbrow’s son’s firm sent the chairman an e-mail in February seeking to reduce a state-recommended payment plan of $2,000 monthly for a client to $500 per month to satisfy an estimated $50,000 tax bill. The firm later received the reduced plan, over objections from the commission’s staff. In November 2007, Chigbrow’s former accounting firm, now run by his son, sent him two e-mails asking him for help in waiving tax penalty payments of $931.20 and $644.04. “Can you forward this request to someone in the appropriate department,” the firm’s e-mail requests at 10:51 a.m. Nov. 15. Eight minutes later, Royce Chigbrow forwarded the message to an unidentified Tax Commission employee. “Would you follow up on this,” he asks. A third e-mail from an employee shows the taxpayer received the abatement the next day.
Chigbrow, former longtime campaign treasurer for Gov. Butch Otter, denied any wrongdoing and said he just passed along messages. Lawmakers from both parties are now talking about ways to restructure the state Tax Commission, which now is operated by four political appointees.
Here’s a news item from the Associated Press: BOISE, Idaho (AP) — An Idaho prosecutor has declined to pursue a criminal case stemming from allegations that Idaho State Tax Commission leaders gave politically connected taxpayers inappropriate settlements. In a letter obtained by The Associated Press, Ada County Prosecutor Greg Bower told the Idaho attorney general’s office that even if the lawsuit’s allegations were true, “we do not see a criminal law violation.” Bower concluded the matter was best left addressed by the Legislature. Idaho Rep. Shirley Ringo had brought a civil case against tax commissioners. It’s since been dismissed, but Ringo’s lawyer, Robert Huntley, refiled claims after finding new plaintiffs who he says have court standing. When asked about Bower’s move not to pursue a criminal investigation, Huntley said Monday he’s still calling for an independent probe of the settlements.
4th District Judge Cheri Copsey on Thursday “reluctantly” granted the state’s motion to dismiss Rep. Shirley Ringo’s lawsuit over secret tax deals for lack of standing, but said in her decision that Ringo’s allegations were “very troubling” and should be addressed. Ringo’s attorney, former Idaho Supreme Court Justice Robert Huntley, said he’d anticipated the ruling, and already had filed a new version of the lawsuit on Tuesday with six new plaintiffs who he believes have clear standing: three education associations, a public school student, a parent of a student, and a public school employee. “I think we’ll be just fine with the case with the six new plaintiffs,” Huntley said in an email.
Ringo, D-Moscow, in her lawsuit, submitted sworn affidavits from eight current and former state Tax Commission employees saying the commission has been improperly cutting secret deals with influential taxpayers, letting them off the hook for millions in taxes due.
Three education groups are seeking to join Rep. Shirley Ringo, D-Moscow, in her lawsuit over secret tax deals at the state Tax Commission, saying the alleged deals are causing education funding in the state to suffer. ”We take the allegations very seriously,” said John Rumel, general counsel for the Idaho Education Association, one of the three groups. “The representative’s allegations indicate that because of some sweetheart deals and corrupt practices, a substantial amount of funds that should be going into the coffers of the state are not getting there.”
In addition to the IEA, the Idaho Federation of Teachers and the American Federation of Teachers local from the University of Idaho all have filed motions to intervene in the case as plaintiffs. The UI group represents 65 professors and staffers at the university; the IEA is the state’s largest teachers union, with 13,000 members. You can read my full story here at spokesman.com, and read the latest filings in the case here.
Sen. Brent Hill, R-Rexburg, chairman of the Senate Local Government and Taxation Committee, said he doesn’t see great need to reform Idaho’s state Tax Commission. “We tried to address some of the concerns with compromises, and yet these whistleblowers keep claiming there should be no compromises, and I don’t agree with that concept,” said Hill, a CPA. “That’s why the Legislature stepped in and very clearly said, ‘Yes, there should be compromises under these circumstances,’ and we outlined those.” He added, “As far as I’m concerned, we have addressed this issue, we’ve taken care of it, but … we are certainly amenable to suggestions from the public, from other legislators, from anyone else of how we can run our government better, and that includes the state Tax Commission.”
Rep. Wendy Jaquet, D-Ketchum, is proposing sweeping reform legislation, aimed in part at taking politics out of the process; but Hill said issues like property tax rules and revenue forecasts ultimately are decided by the state Legislature. “How you depoliticize the Legislature I don’t know - politics is part of what makes representative democracy work,” he said. “I don’t think politics is a bad thing necessarily.” You can read my full story here at spokesman.com.
Idaho Rep. Wendy Jaquet, D-Ketchum, has unveiled sweeping legislation she plans to introduce to reform the state Tax Commission, shifting it from an agency run by four full-time political appointees to one run by a professional director with a part-time commission, and consolidating the revenue forecasting functions that now fall under the governor’s Division of Financial Management into the new agency, to be renamed the Department of Revenue and Taxation.
“It is high time to professionalize the Commission,” Jaquet said in her announcement; you can read it here. It says, “Jaquet said she decided to act when it became obvious that the current administration was not taking steps to address recent whistle blower allegations of favoritism and, in fact, seems perfectly comfortable with the status quo.”
She also calls for a full, outside forensic audit of the state Tax Commission and its operations, and a new process to determine whose taxes get audited “where the selection is blind, which will ensure that the process is fair for all Idaho taxpayers.” In her announcement, she makes note not only of the whistleblower allegations about secret deals with influential taxpayers, but of a major dispute between the current Tax Commission chairman, Royce Chigbrow, and the state’s elected county assessors over property tax issues.
Jaquet said, “The governor’s office and I have talked about this for the last couple years, and they may be working on something themselves, but I just wanted to get out there and say it’s time to do this.” The move of economic forecasting to the new department, she said, would help “keep politics out of revenue forecasting.” Jaquet, an eight-term state lawmaker, is the former House minority leader, a former member of the House Revenue & Taxation Committee and a current member of the joint budget committee; she is unopposed for re-election in November.
Idaho stands to lose more than $75 million just from tax compromises that are now in the works, according to a group of whistleblowers who are current and former employees of the state Tax Commission - including one $203,000 tax break about to be handed to a taxpayer on his $7 million private plane. “This is the worst scandal I’ve seen in Idaho since I first came here in 1950,” declared Robert Huntley, the former Idaho Supreme Court justice who’s representing Rep. Shirley Ringo, D-Moscow, for free in her lawsuit against the state over the deals.
Ringo has offered to put the lawsuit on hold in favor of an immediate state investigation, along with job protection for the current Tax Commission auditors and managers who came forward with sworn statements about the deals. But so far, the state hasn’t taken her up on the offer; you can read my full story here at spokesman.com, plus see the full documents.
Three current employee of the Idaho State Tax Commission - a manager and two auditors - have gone on the record in affidavits in Rep. Shirley Ringo’s lawsuit over secret tax deals, the Times-News reports today, making a total of eight current or former Tax Commission employees, each with decades of experience, charging under oath that influential people got big tax breaks at everyone else’s expense. Click here to read the full report from reporter Ben Botkin, and see the full documents in the case.
Ringo, D-Moscow, has offered to dismiss the state Legislature as a defendant in the lawsuit if the state convenes an investigation and offers job protection to Tax Commission employees to testify.
Here’s a link to the letter that Rep. Shirley Ringo’s attorney, Robert Huntley, delivered to the Idaho Attorney General’s office yesterday on secret tax deals, with the three new sworn statements attached along with an earlier affidavit from Stan Howland. One note: One of the affidavits names two names, both of North Idaho legislators. The affidavit of Joe Schwartz, former longtime head of the North Idaho office of the state Tax Commission, includes a comment about “Representative Hart of Athol,” saying he “refuses to file or pay taxes.” Hart’s tax case, which became public when he filed an appeal to the state Board of Tax Appeals this spring, indicates he failed to file state tax returns for three years in the 1990s, but there’s no indication that he’s failed to file since, though he’s disputing the amount due.
The affidavit also references “Senator Shawn Keough” as an example of lawmakers who allegedly threatened to “punish” the Tax Commission if it attempted to enforce certain laws and allegedly advised constituents not to comply. Keough said, “I don’t recall ever saying anything like that. I don’t remember anyone by that name. I would never tell anyone to break the law.” She added, “I am pretty astounded by the charge.” Said Keough, R-Sandpoint, “At this point, so that the air can be cleared, I would welcome a full investigation and perhaps a court of law is where that needs to occur to remove any cloud of impropriety or political pressure.”
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 today. 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, “We did receive Mr. Huntley’s letter yesterday, and we’re reviewing it.” You can read my full story here at spokesman.com.
Bob Huntley, attorney for Rep. Shirley Ringo, D-Moscow, in her lawsuit over secret tax deals at the state Tax Commission, sent a letter to Idaho Attorney General Lawrence Wasden today with three new affidavits attached from longtime senior tax auditors, all making allegations just as shocking as those in the original affidavit from retired senior auditor Stan Howland about special tax deals being offered to those with political influence, and Huntley proposed that if the state would convene a special investigation panel to look into the charges and follow certain requirements, he and Ringo would suspend their lawsuit that’s now pending in 4th District Court.
Idaho’s initial response to Moscow Rep. Shirley Ringo’s lawsuit over secret tax deals: She can’t do that. The state has filed a motion to dismiss the case, saying Ringo lacks standing to sue as a lawmaker, something she and her lawyer dispute. Meanwhile, Ringo’s filed an amended complaint saying the secret deals that allegedly allow some wealthy and politically connected taxpayers to get millions in breaks violate constitutional guarantees of equal protection under the laws. Ringo’s also asking for an injunction to stop all secret tax compromises until Idaho institutes a new system.
“If we don’t do something like that, it’ll just be business as usual,” Ringo said, “and sometimes these things take quite a long time to work their way through the system. … It puts a little bit more urgency on it.”Bob Cooper, spokesman for the Idaho Attorney General’s office, declined to comment on the pending case, saying, “We will make any response to the court.” Fourth District Judge Cheri Copsey has scheduled a Sept. 9 hearing on the state’s motion to dismiss the case. If she grants it, the lawsuit would end there; if not, Ringo is seeking a November hearing on the proposed injunction; you can read my full story here at spokesman.com, plus read the documents filed in the case.
Democratic gubernatorial hopeful Keith Allred’s plan to audit tax deals between the Idaho Tax Commission and those protesting their payments has been endorsed by the state Senate’s tax committee leader. Sen. Brent Hill, a Rexburg Republican who heads the Local Government and Taxation panel, told the AP that Allred’s proposal would boost public confidence in the tax system’s fairness while protecting taxpayer privacy; click below to read the full story from AP reporter John Miller.
A North Idaho legislator has filed a lawsuit against the state over secret tax deals that allegedly allowed some wealthy and politically connected taxpayers to get millions in breaks. Those deals violated the Idaho Constitution, said Rep. Shirley Ringo, D-Moscow, which requires taxing to be “uniform.” Examples listed in the lawsuit, filed this morning in 4th District Court in Boise:
* A wealthy Idaho resident was given a $1.6 million tax break before the audit report on that taxpayer’s case had been filed, and the case was removed from the Tax Commission’s auditors. Auditors had alleged the taxpayer was fraudulently claiming no substantial business operations in the state.
* One state tax commissioner “reversed an audit adjustment on a friend and individual who is prominent in Idaho politics.”
* A tax manager for a large Idaho company “told a commissioner in a protest hearing that his opinion was asked by the governor on all reappointments. This event occurred several months before the commissioner was up for reappointment and the taxpayer received a $100,000 discount.”
Ringo called the cases cited in the lawsuit “appalling.” “If those things have been going on, it just speaks to the need for reforms,” Ringo said. “I would put in on the emergency status, because I don’t want to accuse anybody of being corrupt, but I think it bears looking into.” You can read my full story here at spokesman.com.