Idaho taxpayers who contribute their fair share to the cost of state government have reason to snarl over the possibility that many multistate corporations are getting a questionable break.

But taxpayers aren’t the only stakeholders. Other businesses, whom the practice puts at a competitive disadvantage, also have a beef.

A veteran auditor for the Idaho Tax Commission contends out-of-state corporations routinely avoid millions of dollars in state income tax liabilities through a scheme that relies on cooperation by commission members and remains out of public sight, thanks to a convenient regulatory gimmick. Tax auditor Stan Howland says the activity has been going on for 17 years and was flagged in 1976 but has only become more prevalent.

Thanks to Howland’s insistence on notifying the governor, attorney general and Legislature, state officials are taking an open look at the use of “confidential settlements” in tax disputes.

It works, more or less, this way: A company files an inaccurate income tax return. When tax auditors catch it the company protests, and the commission agrees to compromise on a lower amount. By resorting to a confidential settlement, the matter is kept secret.

As word has spread, says Howland, more and more companies have resorted to the strategy until now it’s almost universally exercised. Some businesses are so smug they blatantly refuse to turn over information demanded by tax auditors to back up information on tax forms, he says.

State Sen. Brent Hill, R-Rexburg, is chairman of the Senate Local Government and Taxation Committee and a certified public accountant. He doubts anything illegal is going on, but he wisely wants the Legislature to check into the process to see if lawmakers need to give tax commissioners clearer direction.

Rep. Jim Clark, a Hayden Lake Republican, is more succinct: “We’ve got to fix that, that’s for sure. That’s just not right.”

Indeed, the Legislature should take a long look at the situation that, legal or not, results in an inequitable tax structure while drawing a curtain of secrecy around the workings of government.

Hill has been quoted as conceding that privacy laws have posed “inconveniences” for state and federal officials charged with executing the law. If Idaho is carrying it further than other states, he says, “I think we ought to look into this to see if that’s what the Legislature really wants.”

What other states are doing should not be the benchmark, though. If Howland’s accusations are confirmed, Idaho lawmakers need to act on their constituents’ behalf. First and foremost, they should do away with secret deals for the forgiveness of tax liabilities.