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The Kootenai County Democratic Central Committee issued a press release today calling on Idaho elected officials to say where they stand on Rep. Phil Hart’s tax woes, which are the subject of pending House ethics committee; the committee will look into whether Hart had a conflict of interest in serving on the House Revenue & Taxation Committee while pressing his legal fight over unpaid state and federal income taxes, and whether he abused legislative privilege by citing it in seeking delays in his tax cases.
“Idaho citizens work hard and pay their taxes that provide for roads, schools and our national defense,” said Thom George, chairman of the Kootenai County Democratic Central Committee, in the release. “Even if we don’t always agree with how those taxes are collected and distributed we understand our responsibility to comply with federal and state laws. For Mr. Hart to refuse to pay his taxes for years and then fail to comply with a court decision ordering repayment is reprehensible. Each and every elected official in the state of Idaho should call upon Mr. Hart to step down immediately.”
Idaho state Rep. Phil Hart on Friday defended his long tax fight against the IRS and the state Tax Commission, and said he looks forward to going before a House ethics committee. ”I would welcome the opportunity to tell my story,” said Hart, R-Athol, a third-term state lawmaker who’s unopposed for re-election in November. You can read my full story here at spokesman.com.
Idaho Rep. Phil Hart, in his first public comment since House Speaker Lawerence Denney said yesterday he’d appoint an ethics committee to investigate Hart’s conduct, sent a guest opinion to newspapers this afternoon defending his fight against income taxes, but making no mention of his use of legislative privilege in his fight, his service on the House Revenue & Taxation Committee while he pressed his fight, or the pending ethics action, which is aimed at those two matters. Hart’s op-ed piece (click below to read it in full) focuses on his legal challenge to the federal income tax, including a quote from a lawyer who he said called his challenge “brilliant legal work;” his subsequent problems with an IRS audit; and his concerns about revealing the names of those who bought his book, “Constitutional Income.”
As for the ethics committee, Hart told Eye on Boise this afternoon, “I would welcome the opportunity to tell my story.”
In his op-ed piece, Hart writes that the IRS denied eight years of his business deductions because he refused to provide those names. However, federal court documents filed in both California and Idaho in June of 2007 show the IRS and Hart both agreed that he could provide the book-sale information with buyers’ names redacted, and that the IRS agreed not to seek that same information again. Hart suggests in his op-ed that the IRS is defying the court stipulations: “For them, this isn’t about the liens or the money; it is about getting the names,” he writes. He said this afternoon, “Well the reality is, they did it.”
“It’s a nightmare,” Hart writes in his op-ed article. “I would happily trade places with any of my detractors who somehow think I’ve gotten a ‘good deal.’ Regardless of whether or not the income tax on wages and salaries is constitutional, most agree on one thing: it is an inefficient and privacy invading tax. It is also subject to manipulation and abuse. Is it then wrong to fight for my legitimate deductions and to stand on my principals(sic)?”
House Minority Leader John Rusche, D-Lewiston, said he discussed Rep. Phil Hart’s case with “many” members of his House minority caucus, and also heard lots of comment from the public about it, before deciding to formally call for a House ethics committee to be convened. “I think there are significant questions among both legislators and the general public about the behaviors and whether they’re ethically appropriate or not,” Rusche said. “The Legislature has an ethical cloud hanging over it. It really is not a good deal for any of us, minority or majority legislators.”
He added, “I don’t want it to be viewed as a political thing, but rather an ethical investigation to protect the process in the House of Representatives.”
Here’s a link to my full story at spokesman.com on how the Idaho House will convene a rare ethics committee to look into a complaint regarding Rep. Phil Hart.
The last time the Idaho House convened an ethics committee was in 2003, when then-Speaker Bruce Newcomb called for the committee to investigate himself for holding a closed meeting with a quorum of the House Revenue & Taxation Committee; the panel cleared Newcomb of any wrongdoing. In 2005, the Idaho Senate convened an ethics committee that censured then-Sen. Jack Noble after he introduced legislation that would have made his own convenience store eligible for a state liquor license, though it’s across the street from an elementary school, without disclosing his personal stake in the issue, and then lied about it to the Ethics Committee. Noble resigned on the eve of a Senate vote on whether to expel him from office.
Current Speaker Lawerence Denney said it’s rare for an ethics committee to be convened; this will be his first since he’s been speaker. “It is (rare), and that’s really good,” he said.
House Minority Leader John Rusche, D-Lewiston, has filed a formal request for the Speaker of the House to convene an ethics committee to look into two issues regarding Rep. Phil Hart, R-Athol: Hart’s invoking of legislative privilege from civil process in his personal tax disputes over income taxes with the IRS and the Idaho State Tax Commission; and Hart’s service on the House Revenue & Taxation Committee while pressing his own case in a state tax appeal that Idaho’s income tax is unconstitutional. “Does he have a conflict, if he’s trying to set aside tax law through his personal suit while at the same time he’s sitting on the committee making tax law for everybody?” Rusche asked. He also questioned whether “by invoking the privilege in the manner he has, is that abusing the privilege of a legislator.”
Under House Rule 76 (click below to read the full rule), Rusche’s submission of the complaint requires House Speaker Lawerence Denney to appoint an ethics committee of seven senior House members, four from the majority party and three from the minority. The committee then will conduct a preliminary investigation, and if probable cause is found that an ethics violation has occurred, it can hold a hearing and make recommendations to the full House ranging from dismissal of the charges to expulsion from the House.
Denney, who is attending a conference of speakers of the House in Maryland, said, “I haven’t officially received it yet, but when I do get the official one, I will immediately appoint an ethics committee and appoint a chairman.” He returns to Idaho on Sunday; Denney said he’ll likely appoint the committee by around the end of next week. “Really, I think this is probably as good a way to handle this whole thing as anything,” he said.
Earlier, Denney had been sympathetic to Hart, who has invoked his status as a state legislator to argue that he should be able to appeal an order to pay $53,000 in back state income taxes, penalties and interest despite having missed a filing deadline. Denney had even planned to go to the Attorney General and make a case for giving Hart more time; now, he said, he’ll hold off on that.
This year’s legislative session began a few days after Hart’s 91-day appeal period ran out on hisback state income taxes; he argues that legislative privilege should stop the clock and give him until spring to appeal. Hart also is fighting the IRS, which has filed nearly $300,000 in tax liens against him in Kootenai County in the past year; he stopped filing state and federal income taxes in 1996 while he pressed an unsuccessful lawsuit charging the income tax was unconstitutional. He’s since made partial payment.
Here’s a link to my full story today on how Rep. Phil Hart, R-Athol, has used the legislative session to hold off the tax man four times in the six years he’s served as a state lawmaker, starting his first year in office; and here’s a link to a letter from a Spokane attorney that Hart submitted to the state Board of Tax Appeals to bolster his case. Washington has a very similar legislative privilege clause in its state constitution to the one that Hart cites in Idaho’s constitution, but Hugh Spitzer, who teaches state constitutional law at the University of Washington School of Law, said he hasn’t heard of lawmakers invoking it in similar situations.
“The reason for these provisions, which are very common not only in the United States but throughout the world, is to protect elected legislators from harassment by their opponents,” Spitzer said. “It became very important in England in the 17th century … because the kings would try to shut down parliament, arrest members of parliament with whom the king disagreed.” But, he said, “It’s one thing to say the government can’t force you to do something, can’t arrest you, can’t harass you with a new lawsuit, but it’s another thing to say that this somehow frees you up from procedural requirements of litigation in which you are already involved, and that you have a right to an automatic stay.”
It turns out that Rep. Phil Hart’s current dispute with the Idaho State Tax Commission and state Board of Tax Appeals isn’t the first time he’s invoked his status as a state legislator to hold off the tax man. In 2006, as a newly elected lawmaker with just one session under his belt, Hart came to Boise for a one-day special session called by then-Gov. Jim Risch. While Hart was in the state Capitol, an IRS employee snagged him and served him with a document subpoena. “They just caught me in the building. It was a surprise,” Hart said. “They just handed me some paper work and it was a summons, and that was that.”
He protested, noting the state Constitution’s protection of lawmakers from civil process while in session, and the IRS served him with the same summons again in November during a face-to-face meeting. Hart took that as a sign he’d won on the civil process question.
Then, in January of 2008, the Internal Revenue Service mailed a Notice of Deficiency on income taxes to Hart during the first week of the month. “The legislative session commenced January 7 of that year and continued for approximately three months,” according to a letter Hart requested from a Spokane attorney and submitted to bolster his case in his current state income tax appeal. “It appears that you are privileged to argue that the issuance of the NOD was ineffective under the legislative immunity provisions of the Idaho Constitution,” attorney Donald J. Gary Jr. wrote to Hart in September of 2009.
Then, on Hart’s state income tax dispute, the Idaho State Tax Commission issued Hart two notices of deficiency in September of 2008, covering tax years from 1996 to 2004. He protested the decision, and then, on Jan. 15, 2009, sent the state Tax Commission a letter asking to delay his hearing until 30 days after the adjournment of the 2009 legislative session. After being granted a delay to May 15, he sent another letter April 29 asking for another delay; that year’s legislative session ran until May 8. The Tax Commission agreed to another delay, but said the hearing should take place within two weeks of the end of the session. Hart then didn’t contact the commission until June 6, proposing dates in late June or July; the hearing finally was held on July 8, though the commission said he still didn’t provide all the requested documents. He then sent additional materials to the commission in September of 2009, including the letter from the Spokane attorney.
An Idaho state legislator is fighting the state Tax Commission over $53,000 in back taxes, interest and penalties, claiming in part that because he’s a legislator, he’s exempt from the deadlines for tax appeals that apply to all other taxpayers. Rep. Phil Hart, R-Athol, who also argued unsuccessfully to the Tax Commission that Idaho’s state income tax is unconstitutional, was notified on Oct. 2, 2009 that he owed the money and had 91 days to appeal. But Hart argued that time frame would run out 10 days before the start of the 2010 legislative session.
“As a member of the Legislature, I can defer filing an appeal and all the work that that entails while the Legislature is in session and 10 days prior to the beginning of the session,” he wrote in a Dec. 31 letter to the Tax Commission. Asked why he didn’t file his appeal during October, November or December, Hart said, “I don’t know. We were putting our game plan together.” On March 31, two days after the legislative session ended, Hart filed a notice of appeal, but he didn’t pay the full required prepayment of 20 percent of the amount owed until April 13. The state has now moved to dismiss Hart’s appeal for failing to file on time and failing to pay the required deposit on time.
Hart, the Tax Commission argues in legal documents, “is seeking to use his status as a legislator to relieve himself of having to comply with the statute of limitations.” The case is prompting debate about Idaho’s state constitutional provision that exempts lawmakers from “civil process” during the legislative session. You can read my full story here at spokesman.com, and read the Tax Commission’s published decision in Hart’s case - the decision he’s now appealing - here. Here’s a link to the state’s brief arguing for dismissal of the appeal; here’s Hart’s memorandum in opposition to dismissal; and here’s Hart’s motion for a time extension.
The IRS has filed nearly $300,000 in new federal tax liens against Idaho state Rep. Phil Hart in the past year, five years after Hart said he’d reached an agreement to repay $90,000 in back taxes, penalties and interest. The new liens, filed in Kootenai County, cover the tax years from 1997 through 2003, plus 2006 and 2008. They are against anything Hart owns or has rights to, including real estate, cars, business accounts receivable and more; such liens go on credit reports and can keep a delinquent taxpayer from getting a loan, signing a lease or obtaining credit. Hart said, “I will eventually get through this, so it’s the motivation to get through it, I’ll put it that way. It’s like running on the beach where the water’s up to your knees.” But, he said, “I think it makes you a better legislator, to have these life experiences. … You get first-hand dealings with the bureaucracy, see how they operate, see how they interpret things, experience the process.”/Betsy Russell, Eye On Boise. More here.
The IRS has filed nearly $300,000 in new federal tax liens against Idaho state Rep. Phil Hart in the past year, five years after Hart said he’d reached an agreement to repay $90,000 in back taxes, penalties and interest. The new liens, filed in Kootenai County, cover the tax years from 1997 through 2003, plus 2006 and 2008. They are against anything Hart owns or has rights to, including real estate, cars, business accounts receivable and more; such liens go on credit reports and can keep a delinquent taxpayer from getting a loan, signing a lease or obtaining credit.
Hart said, “I will eventually get through this, so it’s the motivation to get through it, I’ll put it that way. It’s like running on the beach where the water’s up to your knees.” But, he said, “I think it makes you a better legislator, to have these life experiences. … You get first-hand dealings with the bureaucracy, see how they operate, see how they interpret things, experience the process.”
House Speaker Lawerence Denney called Hart’s continuing tax woes “kind of a distraction for us, but it’s his personal thing.” Denney said, “I think certainly he does have experience that most of us don’t have and certainly don’t want to have. … It appears to me that the people up there love him.” You can read my full story here at spokesman.com, see the tax liens here, and read the 2000 U.S. Tax Court decision here in which a federal tax judge dismissed Hart’s lawsuit challenging the constitutionality of the income tax.