Former Idaho lawmaker re-buys home at auction, fails to pay on time
Former Idaho state Rep. Phil Hart was able to buy back an Athol home that had been seized for nonpayment of taxes, but he has now missed a deadline to pay the balance of the purchase price.
Hart bought the Athol log home – built using logs he cut illegally on state land – at an IRS auction on Oct. 1. It had been seized to help satisfy more than $586,000 in federal income tax debt.
After missing the Oct. 22 deadline, Hart is now appealing in court for more time.
Hart was the high bidder for the home on 10 acres, bidding $202,740, well above the minimum of $110,000. The three-bedroom, three-bath, 2,888-square-foot home is assessed for tax purposes at $268,681. He submitted a deposit to the IRS of $23,260.
But instead of paying off the balance due, Hart filed an emergency motion in federal court asking for a delay until December. Hart’s attorney, Charles McFarland of New Castle, Kentucky, wrote that the payment deadline was “an unrealistic time frame in light of the complications in this case.”
He said Hart had obtained financing through Loan Star Mortgage but had encountered delays getting title insurance.
Terms of the federal auction say that if the successful bidder defaults, he loses his deposit and the IRS would have the choice of offering the home for sale again or selling it to the second-highest bidder.
Federal prosecutors opposed Hart’s request, saying the delays were Hart’s own fault. Instead, they allowed for a 21-day extension, to Nov. 12, provided no further extensions are granted. Senior U.S. District Judge Edward Lodge sided with prosecutors and gave Hart until Nov. 12 to pay up.
“The terms and deadlines governing the sale of the real property were proposed by the parties,” Lodge wrote in an Oct. 28 order. “Mr. Hart waited until the day the balance was due and owing on the property to file his request for extension of time.”
Hart stopped filing both federal and state income tax returns in 1996 while he unsuccessfully pressed a federal lawsuit challenging the federal income tax as unconstitutional. After the case was rejected, he began filing returns again, but authorities said he never fully paid up. He’s also been fighting an order to pay more than $53,000 in back state income taxes, interest and penalties; he’s lost numerous appeals in that case, including one to the Idaho Supreme Court.
Hart settled his federal tax case in January and agreed to allow the auction of his home. When the IRS first went after the home, Hart claimed he didn’t own it, though he built it and lived there. Federal authorities, in court filings, called Hart’s attempted transfer of the home to a trust in his daughter’s name a “fraudulent transaction” with a “sham entity.”
It’s the same home for which Hart illegally cut trees from state school endowment land in 1996, maintaining that as a citizen, he had a right to take the logs for free. After repeated, unsuccessful appeals, he never fully satisfied a $22,827 court judgment over the timber theft.
An expired statute of limitations prevented the state from pressing collection efforts.
Hart’s federal tax settlement also requires him to pay $200 a month to the U.S. Treasury for the next nine years; pay up to 30 percent of his annual after-tax income through 2022; agree to a default judgment in his third bankruptcy filing, stating that his federal tax debts cannot be erased or reduced by the bankruptcy case; and make every payment on time, or the feds can go after him for the full $586,000 owed.
The federal settlement doesn’t settle Hart’s state income tax case.
Hart was defeated in his bid for a fifth term in the Idaho House in the 2012 GOP primary, but he has remained active in state politics. He is the Idaho Republican Party’s Legislative District 2 chairman and is vice president of the Republican Liberty Caucus.