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IRS files $300K in liens on Hart

by Alecia Warren
| June 15, 2010 9:00 PM

The IRS filed nearly $300,000 in tax liens against Idaho state Rep. Phil Hart, R-Athol, last year to address the debt he still owes from several years of refusing to pay income tax for philosophical reasons.

"I think as long as I'm engaged in the process (I'll be all right)," Hart said on Monday.

After refusing to pay income tax between 1996 and 2003, which Hart believes is unfair and a misinterpretation of the Constitution, he piled up $90,000 in unpaid taxes and penalties he owed the federal government.

The three liens, which are on all property and rights belonging to Hart, were filed over an unpaid balance of $13,266 from 2008, an unpaid balance of $21,703.52 from 2006, and unpaid balances spanning 1997 through 2003, totaling $257,947.

Hart acknowledged that the liens do have him worried for his estate and his business, Alpine Engineering.

Before addressing the liens, however, there are still issues he wants to resolve over a recent federal audit that denied him any deductions over the course of eight years.

"I've been trying to reopen that, and I've been unsuccessful," said Hart, adding that he has hired an attorney. "When it will get resolved, I wouldn't know."

After that he hopes to negotiate a settlement with the federal government over his back taxes, he added.

"I guess I can try to hope for the best," he said. "I think it's just a grinding process, and I'm just going to continue on with it until I feel we have a resolution."

Although IRS spokeswoman Karen Connelly couldn't speak about Hart's situation due to disclosure laws, she said any property that carries a lien can be forced into sale by the lender, in order to collect what is owed.

A filed federal lien may appear on credit reports and harm credit ratings.

Although Hart has paid roughly $104,000 in state and federal income tax since 2006, he said, he still believes it is an inefficient tax.

He worked last session on House Bill 454 to eliminate income tax on wages and salaries and meanwhile keep investment income and raise the sales tax. He didn't request a hearing, he said, because he had more financial analysis to do.

"I would very much like to have a hearing in the next session," he said. "I think in this economic environment we're in, whether outside of the fact I have this litigation issue going on, I think we really need to be talking about our tax system."

Hart is a third-term legislator who will be running unopposed in the November election. He also serves on the House Revenue and Taxation Committee.

He stopped paying his taxes in 1996 when he sued the IRS contending income tax is unconstitutional. A federal judge ruled against him in 2000, and his appeal was later denied. The U.S. Supreme Court refused to take up the case.

Rep. Frank Henderson, R-Post Falls, said Hart's tax problems are personal and he hopes Hart addresses his responsibility appropriately.

"It is an issue which I believe leadership in the Legislature may be concerned with in the future, but it depends largely on how Phil responds," Henderson said.

For instance, Hart could lose his position on the state tax committee, though Henderson said that is purely speculative at this point.

"I know Phil is highly educated in business. He has a bachelor's from a very prestigious business school. He's knowledgeable on issues of money - I believe those are the reasons he was appointed to that committee in the first place," Henderson said. "Whether he's retained lies purely with the leadership in the overall consideration of the elected people who are available."

Sen. Mike Jorgenson, R-Hayden Lake, said someone with such a severe tax problem has a conflict of interest when it comes to tax policy.

"Ordinary citizens don't have that same opportunity to influence policy that might affect them," he said.

He also has doubts about Hart's legislation ideas to do away with income tax, Jorgenson added.

"If we had more of his type of legislation, maybe he could do away with his income tax problem," he said.

House Minority Leader John Rusche, D-Lewiston, said he didn't know much about the situation, but he said he doesn't plan to call on Hart to resign from the tax committee.

"I don't think, knowing what I know, that I would do that," Rusche said. "Although it is problematic that someone with significant tax problems is making tax policy."

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