The Tax Commission's blissful private
world
Submitted by Kevin Richert on Fri, 01/23/2009 -
9:20am.
As you might have noticed, times are tough over at the
pseudo-Statehouse — the converted old Ada County Courthouse. State
agencies are pleading for any stray dollar they can grab. Legislative
budget writers are looking for any drop of blood they can wring from the
stone, so they can reduce budget cuts affecting Idaho's 272,000 school
children.
I state the obvious because, evidently, the folks at the
Idaho State Tax Commission are living in some happier alternate world. One
where the state has plenty of extra dough, so it really doesn't matter
what kind of deals the commission cuts with corporate
taxpayers.
The Tax Commission left some basic questions unanswered
Thursday during an embarrassing appearance before the Senate Local
Government and Taxation Committee.
The commission didn't deliver an annual report on its
"compromise and closing agreements" — the deals reached with out-of-state
businesses who contest their tax bills. Gov. Butch Otter asked for just
such a report on Aug. 20, and set a
January deadline. Shouldn't that be enough to get the ball
rolling?
And yet it gets worse. The reason these deals are
controversial — aside from the fact that they are shrouded in secrecy — is
that they allow businesses to settle their tax bills for less that what
they owe. So Boise Democratic Sen. Elliot Werk asked a reasonable
enough question: How much money is the state giving up? The commission
didn't say.
That's inexcusable. Legislators — and the taxpayers they
represent — need some basic information so they can weigh the pros and
cons of these settlements, which are designed to allow the state to avoid
going to court. The current budget crunch ought to lend a little urgency
to the process.
Just not in the Tax Commission's world.
Rexburg Republican Sen. Brent Hill — one of the
softer-spoken and clearer-thinking people in the Legislature — didn't hide
his displeasure. "It should not be on the back burner. It should be on the
front burner. From that standpoint, I'm disappointed."
I second that.
Idaho Tax Commission told to speed up
reforms - Idaho Statesman
By Brian Murphy
The chairman of the Senate Local Government
and Taxation Committee chastised the State Tax Commission on Thursday for
the commission's slow response to reforms recommended in response to
allegations that the commission improperly settled corporate income tax
audits.
"I do want to make it very clear: On behalf of the people,
we're going to hold your feet to the fire," Sen. Brent Hill, R-Rexburg,
told Royce Chigbrow, chairman of the tax commission.
Hill was concerned that the commission had
not made much progress on recommendations made by an independent auditor
last year.
Last year, a commission staff auditor said
the commission routinely allowed out-of-state businesses to pay less in
taxes than they really owe. The deals, called "compromise and closing
agreements," occur when corporations contest tax bills and the state
agrees to settlements that aren't publicly disclosed.
The independent auditor, veteran Boise
accountant P. LaVern Gentry, looked into the allegations and found the
commission was not violating any laws or rules. Attorney General Lawrence
Wasden also cleared the commission of any wrongdoing.
But Gentry made recommendations to Gov.
Butch Otter, who presented them to the commission and ordered that it
submit annual reports on the agreements to the House and Senate tax
committees beginning this month.
The commission did not have an annual
report of such cases ready Thursday.
Hill said the commission has yet to carry
out Gentry's recommendations, which include transparency, committing the
procedures to writing, and defining the commission's role.
Commission lawyer Ted Spangler told the
committee that a policy letter meant to address reforms has been sitting
on his desk "for longer than it should have been sitting
there."
"This isn't going to go away," Hill said.
"We've got to do something about this. It's been five months. I know it's
difficult to get the wheels rolling, but it has been five
months."
The commission said it made 44 compromise
and closing cases in fiscal year 2008, including eight for
corporations.
Chigbrow said the commission has saved the
state money with many of the agreements. He said some of the
recommendations, including having two commissioners sign off on each
agreement, were already in place.
"We need more, faster," Hill said. "It
should not be on the back burner. It should be on the front burner. From
that standpoint, I'm disappointed."
Among the questions left unanswered
was one from Sen. Elliot Werk, D-Boise, who wanted some idea of how much
money the commission was leaving on the table with its
agreements.
Chigbrow said the role of the commissioners
is to provide an independent arbiter in disputes between auditors and
taxpayers.
"Our role is not to go out and make sure
that you shake every cent out of everybody's pocket, but to see that the
law is there and people adhere and follow it," Chigbrow
said.
Idaho senators criticize new rules
on secret tax deals - Spokesman-Review
By Betsy Z. Russell
BOISE - Senators weren't
enthusiastic this afternoon about a new Tax Commission rule that would
clarify when the commission can secretly settle big tax
cases.
It comes after a whistleblower's report
charging that the commission was cutting secret deals to excuse millions
in income taxes for large out-of-state corporations prompted several state
investigations. The Idaho Attorney General concluded that the Tax
Commission hadn't acted illegally, as did a review ordered by Gov. Butch
Otter, but Otter directed the Tax Commission to immediately develop new
rules better defining and laying out their settlement
procedures.
Those rules came before the Senate Local
Government & Taxation Committee this afternoon, as a temporary rule
that's already taken effect. Lawmakers review such rules and decide
whether to let them continue. But Ted Spangler, deputy attorney general
for the Tax Commission, said the commission plans to work further next
year on a permanent rule, and is proposing only a temporary rule at this
point. The new temporary rule essentially just writes the commission's
current practice into more specific rules.
It lets tax commissioners settle a tax case
where there's dispute about liability, when commissioners think litigation
will be more costly, when the taxpayer has economic hardship or when the
settlement will "promote effective tax administration." Spangler said that
last reason was added as "sort of a safety valve in the system." Tax
commissioners retain wide discretion.
Senators raised several concerns about the
new rule. Sen. Tim Corder, R-Mountain Home, said, "I still wonder if this
isn't a bit broad."
Sen. Curt McKenzie, R-Nampa, an attorney,
noted that the new rule appears to allow broader authority for waiving tax
penalties than the law actually allows. Spangler thanked him for pointing
that out and said it'll be looked at in the new, permanent
rule.
Sen. Eliot Werk, D-Boise, said he
thought the new rule "could lead to the same set of misunderstandings or
perceptions that we have been dealing with."
Committee Chairman Brent Hill,
R-Rexburg, said he's fine with the rule, but wants more information about
the process commissioners will follow for deciding who gets the
settlements and who doesn't. "These procedures, some of us would like to
see more of," Hill said.
Sen. Kate Kelly, D-Boise, told the
panel,"The process can be improved." Kelly said beyond the definitions in
the rule, the tax commission needs to provide for more "transparency and
internal controls." In an earlier letter to the state Tax Commission, she
wrote that the new rule "does little, if anything to respond to the
recommendations" of two state investigations.
The committee won't vote on the rule until
Thursday at the earliest.
