News Story - Idaho State Journal

gally settled income tax protests by large corporations, shorting the state millions of dollars.

In a 12-page response to auditor Stan Howland's May 28 whistleblower complaint, the bipartisan Tax Commission, including Chairman Royce Chigbrow and Sam Haws, both Republicans, and Democrats Tom Katsilometes and Coleen Grant, denied that commissioners and other staff illegally cut companies secret deals.

The complaint by Howland, a 28-year employee of the agency who audits returns of large multistate corporations, reflects a long-simmering dispute where some auditors feel undermined when commissioners settle tax protests over auditors' objections.

Gov. C.L. ''Butch'' Otter had requested a response from the commission. Commissioners argued that court decisions, widely differing interpretations of tax law and simple efficiency mean settlements of tax protests are fair, legal and far from the cut-and-dried process Howland describes in his complaint.

''Tax law, particularly multistate corporate tax law, is actually quite complex,'' the Tax Commission wrote. ''If it was not, there would not be so many CPAs and tax attorneys making good livings dealing with it. Courts would not be split on it.

''Mr. Howland also says it is illegal to settle most cases because there is no doubt as to liability,'' the response said. ''This is rarely the case.''

In his 17-page complaint sent to 105 state lawmakers and Otter, Howland alleged Idaho has lost millions as a result of improper settlements over the years. And by relying on tax issue exemptions in public disclosure laws, the commission has also skirted accountability for improper settlements, Howland wrote.

On Wednesday, Howland said the Tax Commission's response doesn't address what he says are the agency's increasingly frequent decisions to settle tax protests even when there is little doubt over whether the companies owe Idaho the full amount.

''Their response represents a viewpoint of a few individuals that I believe have been involved in illegal compromises,'' Howland told The Associated Press. ''It's just not accurate. I want an investigation to let a third-party determine who is correct.''

In a statement, the Tax Commission said it was working with Otter's office to enlist independent experts to review settlement procedures.

''They're saying, 'They have nothing to hide,' '' said spokeswoman Liz Rodosovich. ''They welcome an investigation.' ''

Otter said he has yet to review the Tax Commission's response but believes some formal scrutiny is a good idea, to shore up confidence in one of the most important areas of state government.

State Sen. Brent Hill, R-Rexburg and chairman of the Local Government and Taxation Committee, was given the go-ahead by Senate GOP leaders last week to schedule special summer meetings to address the concerns, if he determines such scrutiny is necessary. Minority Democrats have also called for formal meetings of both the House and Senate tax committees on the issue.

On Tuesday, Hill, a certified public accountant, and Sen. David Langhorst, D-Boise, met with Howland.

Hill plans to meet with members of the Tax Commission on Thursday, while Langhorst said he will speak with them separately.

''We'll find out that something needs to be done and do it, or find out that things are OK,'' Langhorst said. ''Just based on what I know now, there are transparency issues. This rose to the level where enough of us thought we should get together as a group and determine if there's a policy hole.''

''I wouldn't discourage the Legislature from their review,'' Otter said. ''Obviously, the more folks you have looking at that, the better it's going to be. We've got to remove any doubt that there's been any favoritism.''

In their formal response, Tax Commission members said they have settled protests in part because court precedents from Idaho, other states and the U.S. Supreme Court often provided only ambiguous guidance, making a compromise preferable to a protracted court case with uncertain outcome.

Commissioners also took issue with Howland's claims that companies were getting off easy, arguing that only a few thousand dollars were at stake in settlements cited as improper. And they rejected his recommendation that information about tax protest settlements be disclosed to the public. Such a move would stop the Internal Revenue Service from sharing information with the agency - and compromise taxpayer privacy.

''What Mr. Howland deplores as unjustifiable secrecy, others regard as laudable confidentiality,'' the commissioners wrote.

This document was originally published online on Wednesday, June 25, 2008

Article Rating

Reader Comments

The following are comments from the readers. In no way do they represent the view of our paper.

Submit a Comment

Commenting Rules

We encourage your feedback and dialog. All comments are subject to deletion by our Web staff.

Report a Comment

Report a comment for review to the ISJ web staff.