But where's the candy and flowers? Idaho's own 'Butch' Otter must be in rut: The Guv sent a 'love letter' to businesses in neighboring states where voters have approved progressive taxes. This crie de coeur promises companies a balmy business climate just across the stateline. But what it delivers amounts to a cheap one night stand: Business tax-wise, Oregon ranks 14th nationwide. Idaho is 18th. Romance may be in the air, but 'Butch's' math is in the tank...the heart is a lonely hunter...Or as they say in Idaho, Esta perpetua...
Tax cheats, others shorting Idaho $250 million
Tax Commission: Cheats, others shorting Idaho $250 million; lost cash hurts in budget crisis By John Miller, Associated Press Writer , On Wednesday February 3, 2010,
BOISE, Idaho (AP) -- Whether through cheating or ignorance, taxpayers are shorting Idaho by about $250 million annually at a time when Gov. C.L. "Butch" Otter and lawmakers are cutting budgets for public schools and other state agencies.
Idaho Tax Commission Chairman Royce Chigbrow told members of the Joint Finance-Appropriations Committee on Wednesday this uncollected tax gap undermines faith in the system and is unfair to people who are following the law.
His agency says not all of the $250 million is collectible, but figures it could probably bring in an additional $64.5 million -- if it had more staff and a few policy changes. Some are politically difficult, like collecting more taxes on Internet sales or going after out-of-state owners of Idaho homes after they sell their property for a profit. Bills aimed at doing both have stalled in recent years.
Chigbrow says the basic rule is, for an additional $1 million investment in staff, his employees could bring in $10 million more.
"With greater enforcement, compliance moves up automatically," he told members of the budget committee.
The Tax Commission is facing a proposed fiscal year 2011 budget starting next July of $31.9 million, about $200,000 less than the original appropriation for the current year that's now being trimmed back through a series of holdbacks.
Since last year, the commission has gotten about $2 million to hire 74 temporary tax auditors to go after tax cheats, including a $1.5 million infusion of reserves backed by Otter in late 2009. Otter is recommending the agency get another $1.5 million in fiscal 2011 to keep the auditors on board.
The temps were charged with bringing in an additional $17 million in revenue this year; Chigbrow says they are ahead of schedule and could bring in about $20 million by July.
"We are well on our way," he said. "It's money well invested."
Auditors are investigating people who haven't filed tax returns, prompting suspicions that they've joined the ranks of tax dodges amid an economic downturn that appears to be rippling tax collections.
For instance, the Tax Commission has recorded a 21 percent increase in underpayments, a 30 percent spike in non-filers and a 49 percent jump in underreporting, in addition to nearly a third more bankruptcy filings in 2009 -- all developments that will likely reduce state revenue.
To help meet holdbacks ordered by Otter over the last year, Chigbrow's agency hasn't filled 30 vacant positions and has ordered about 20,000 furlough hours for its roughly 400 employees. Amid tough budget times, it's also opted not to purchase upgrades to tax-collection software it's been using since 2002 to find more money, though that's an expense that can't be delayed forever.
"We will be coming to you in future budget years to ask you to protect your investment," Chigbrow said.
He did take some heat from budget panel members who questioned including auditors among the ranks of Tax Commission employees who must take furloughs to help meet budget cuts ordered by Otter. He says the agency tried to get by without, by reducing copier expenses and reducing out-of-state travel to a minimum.
Still, most of his agency's budget is personnel.
"If no cuts can be made in other areas of the Tax Commission, we have no other choice," Chigbrow said, pointing out that he and the three other tax commissioners -- David Langhorst, Tom Katsilometes and Sam Haws -- also took unpaid time off.
Other than the fact that he hung up on the caller he was described as "rude, defensive and at best a very poor public official, and that was after we fought to find out who would help us find out anything at all about the process...."(oh yes, it's the Idaho Way)
Secret Tax Policy
Posted By dave On August 31, 2006 @ 10:31 am In Taxes | 22 Comments
If reports are true in the Daily Paper, Idaho has a secret tax system administered by a commission which grants sales tax breaks to some businesses, but not others.
Ken Dey, the reincarnated business editor at the Daily Paper broke a major story Thursday when he revealed a secret tax deal between the Idaho Tax Commission and Cabela’s.
We all know the quiet way to avoid the Idaho sales tax–now at 6%–is to buy out of state. The GUARDIAN even made mention of the potential loss of revenues if there was a big shift to out of state and internet shopping.
Catalog merchants with physical locations in state like CostCo, R.E.I., Sears and many others collect and pay sales tax. However, the big guns at the outdoor store don’t play by the same rules. They claim it is such a wonderful benefit to have a Cabela’s store that catalog sales should not be taxed.
They got the Idaho Tax Commission to agree that catalog sales are a different company than the retail outlet–despite the same merchandise, company name, etc.
One would think that a store specializing in hunting supplies would be able to recognize that if , “It looks like a duck, walks like a duck, and flies like a duck, chances are it IS A DUCK.”
In their zeal to attract more business, more jobs, more cars, more people, our government agents constantly make concessions to the big boys. This one is simply wrong–if not illegal.
This deal is so wrapped in camouflage the only you can find it is by smell. The tax commission refused to discuss or show the daily paper the concession deal and would not even confirm or deny it exists. That folks, is secret government cloaked in camo.
We don’t want to know any confidential tax return information. This is a SECRET POLICY which Ken Dey has revealed. How many other secret private deals has this commission struck. Does your neighbor get an exemption from income tax because he is richer than you? Secrecy in tax policy destroys any faith we may have in our government. They won’t even tell us the rules!
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Article printed from Boise Guardian: http://boiseguardian.com
URL to article: http://boiseguardian.com/2006/08/31/secret-tax-policy/
May 29, 2008
Auditor says secret tax deals cost state millions
A whistleblower's report says the Idaho Tax Commission improperly allows out-of-state corporations to escape paying their fair share.
Idaho tax officials have let corporations out of millions of dollars of taxes by cutting secret deals when the companies fight their audits, a commission auditor said Wednesday in a 17-page whistleblower report.
Stan Howland, a corporate income tax auditor for the tax collection agency for 28 years, said the four appointed members of the Tax Commission, as well as the deputy attorneys general who advise them, routinely allow largely out-of-state corporations to pay just a percentage of what they really owe.
And the companies share information about how to save money on Idaho taxes, he said.
Howland said legislative auditors tried to stop the practice more than a decade ago, but it continues today.
Commissioners use disclosure loopholes in the state's public records laws to keep these decisions secret, Howland said in his report, which he delivered to Gov. Butch Otter, Attorney General Lawrence Wasden and Idaho's 105 legislators.
Otter and Wasden's offices declined to comment Wednesday, saying they hadn't had time to review the report.
But Sen. Brent Hill, R-Rexburg, a certified public accountant and chairman of the Senate Local Government and Taxation Committee, read the report. Hill represents taxpayers before the commission but not out-of-state corporations of the sort targeted in Howland's report. He said the commission strikes an appropriate balance in disputes over tax liability.
Hill said that in his experience the commission is aggressive about collecting taxes, but that compromise is sometimes in the state's interest.
"If you had the Tax Commission going after cases on the grounds of principle regardless of how much money was involved or how much time it would take in court we'd be sitting here talking about taxpayer harassment, inappropriate use of taxpayer funds in pursuing these cases and poor management," Hill said.
Without naming names of corporations, Howland's report details a few examples, each costing the state between $46,000 and $680,000 in unpaid taxes.
Hill said he accepted Howland's report as a good faith effort by a frustrated auditor and would consider his recommendations, including a possible review of the state's settlements with out-of-state taxpayers.
"If we're being too lenient, we need to look at that," Hill said.
Howland said the questionable practices began about 17 years ago and have continued despite complaints from auditors who believe the practices violate state law.
Howland said auditors feel undermined when companies win compromise settlements worth hundreds of thousands of dollars - even though the auditors' objections are proper and reflect state tax law.
"I'm hoping the Legislature will totally review all of the activities of the Tax Commission and all of its internal control policies, or lack thereof, and they'll address this situation," Howland told The Associated Press in an interview, adding that he's tried unsuccessfully to address the matter internally. "I believe Idaho taxpayers are suffering because of deals cut with large corporations."
Idaho's tax commissioners are Royce Chigbrow, an Otter appointee from 2007; Tom Katsilometes, named to the panel by then-Gov. Dirk Kempthorne in 2005; and the two longest-serving members, Severina "Sam" Haws, named by Gov. Phil Batt in 2000, and Coleen Grant, appointed by Gov. Cecil Andrus in 1991. Commissioners serve six-year terms.
Lawmakers who oversee tax issues in Idaho said they hadn't yet seen the report and couldn't comment.
"I'll look at it and follow up from there," said House Revenue and Taxation Chairman Dennis Lake, R-Blackfoot. "But as we speak, I have no knowledge of it."
Howland contends the improprieties result when companies file an incorrect Idaho income tax return, which is then corrected by the audit staff.
When a company formally protests, he says, it has become standard practice for a tax commissioner to offer a so-called "Confidential Compromise and Closing Agreement" requiring the company to pay only a percentage of what is really owed.
"This allows these companies to avoid paying millions of dollars of income tax that are properly due the state of Idaho, and to do so in complete secrecy," Howland said in his report. "The commission has settled the majority of all multistate corporate protests over the past 17 years with C&Cs. The commission has settled almost all multistate corporate protests in the past year in this manner."
Howland, who said he is about 1 years from retirement and wanted to take a stand now, contends the companies share information among themselves about how to take advantage of this practice in Idaho.
He doesn't identify the companies in his report, saying that would violate state law.
"The commission has operated that way for so many years, I think they just take it for granted," Howland said. "They don't see that all of the other taxpayers in this state are paying their full tax, and it's not fair."
The Idaho Statesman contributed to this report.
The mission of the Idaho State Tax Commission is to provide courteous, quality services and to administer the state's tax laws in a fair, timely, and cost-effective manner to benefit Idaho and its citizens.
