BOISE – 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. Such liens go on credit reports and can keep a delinquent taxpayer from getting a loan, signing a lease or obtaining credit.
“I will eventually get through this.… It’s like running on the beach where the water’s up to your knees,” Hart 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.”
Hart, R-Athol, is a third-term lawmaker who serves on the House Revenue and Taxation Committee and is unopposed for re-election in November. He proposed legislation this year to eliminate Idaho’s state income tax on all earned income, while boosting the state’s sales tax from the current 6 percent to 8.25 percent. The bill never got a hearing.
Rep. Jim Clark, R-Hayden Lake, a friend and ally of Hart who has served with him from Idaho’s 3rd District for the past six years, said he was surprised by the new liens and thought Hart’s tax problems were long settled. “I’m just surprised that he’s still fighting it and it’s getting worse,” he said.
“I don’t think it makes him a better legislator,” Clark added. “I think if he solved the problem it would make him a better legislator, but if he has to keep fighting this all the time, eventually, over time, his constituency is just going to walk away from him.”
Hart stopped paying both state and federal income taxes in 1996 while he filed a lawsuit against the IRS arguing that the income tax is unconstitutional. He lost the case in 2000 when a federal tax judge in Spokane said he’d shown “an intentional disregard of the rules and regulations.” Hart appealed unsuccessfully, and after the U.S. Supreme Court refused to take up his case, he conceded in 2003 and began paying taxes again.
In 2005, he told The Spokesman-Review he’d reached an arrangement with the IRS to pay back $90,000 in back taxes, penalties and interest.
However, according to federal court documents, Hart didn’t file his tax returns for 1997 through 2002 until September 2004, and didn’t file his 2003 taxes until May 2005. Hart squabbled with the IRS over documents the agency demanded until 2007, when, he said, the two sides reached agreement.
Multiple tax liens were filed against Hart in Kootenai County in and prior to 2007. Then, after a time lag, the IRS filed $21,704 in liens against Hart last May for an unpaid 2006 tax liability. That was followed by liens of $257,947 filed in October for tax years 1997 through 2003, and another filing this January for $13,267 owed for tax year 2008.
Hart told The Spokesman-Review on Friday, “At some point in time there’ll be a settlement. There hasn’t been yet.”
In addition to filing liens against assets such as real estate, cars or business accounts receivable, the IRS can garnishee a taxpayer’s wages. Hart declined to say whether his state legislative pay is being garnisheed. “I’m just not going to provide that level of detail,” he said.
He said after his years of not filing returns “there was some catching up to do with the state, so I’ve been doing that also.” The state hasn’t filed any tax liens against him, he said, but he declined to say if the state Tax Commission has taken other steps.
Hart’s Athol home is owned by a trust he established in his daughter’s name. His engineering firm is owned by another trust.
However, an IRS spokeswoman said in cases where a taxpayer has conveyed property to a third party to avoid tax liability, the government still can go after it if the delinquent taxpayer is the one who “enjoys its full use and benefit.”
Tina Jacobson, newly elected Kootenai County Republican chairwoman, said Hart’s tax woes are “Phil’s personal business.”
Hart said that although he hasn’t settled his case with the IRS, he has been paying taxes. He said he’s paid about $20,000 a year in combined federal and state income taxes since 2006.
Still, he said, his philosophical opposition to the income tax continues. “I do think that it’s grown way beyond what the original intent of the people were who debated it and added it to our Constitution,” he said.
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