Former Idaho state Rep. Phil Hart has settled his long-running tax dispute with the IRS, agreeing to let the feds auction off his Athol home for unpaid back taxes.
That’s the same home Hart built partly with logs he stole from state school endowment land, arguing he had a right to them as a citizen.
As part of the settlement, Hart dropped claims that various other people owned his home, and a string of bankruptcy filings in which he attempted to avoid losing it. He also agreed to make both monthly and annual payments to the IRS for the next nine years toward his $586,000 federal tax debt. If he misses a payment, the full amount would be due immediately.
Hart was defeated in his bid for a fifth term in the state House in the 2012 Republican primary, but he’s remained active in state GOP politics. He currently is the Idaho Republican Party’s Legislative District 2 chairman, and he is vice chairman of the Republican Liberty Caucus, an affiliated group.
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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; the federal settlement doesn’t cover the state taxes.
“The state of Idaho still has a claim against Phil Hart,” said Phil Skinner, lead deputy attorney general for the State Tax Commission. “However, the reality is the IRS has such a large claim against him and they’re first in line in priority, that we’ll probably never see anything.”
Neither Hart nor his attorney returned a reporter’s calls seeking comment.
Hart’s Spokane attorney, Brant Stevens, wrote in court documents that Hart neither admits nor denies the allegations against him, and agreed to the settlement “because of the costs and hazards of litigation and in exchange for the valuable consideration he is receiving under this settlement agreement.”
If Hart makes all the required payments under the settlement on time, some of the penalties could be waived. Hart also agreed to open all his books to the IRS at any time and to file no further appeals or disputes of his federal income tax liabilities from 1996 to 2008, including bankruptcy proceedings.
Court documents say Hart will be allowed to bid on the Athol home like any other bidder, if he’s able to obtain financing. If he’s the high bidder, he’d have to pay nearly $9,000 in back property taxes on top of the sale price. If someone else has the high bid, the back property taxes would come out of the sale proceeds.
The court’s order of sale, signed by U.S. District Judge Edward Lodge, requires the auction to be advertised in The Spokesman-Review before it takes place.
Hart tried to get a federal bankruptcy court to seal the settlement, arguing that it would expose “scandalous” information about him, but Chief Bankruptcy Judge Terry Myers refused. “Sealing is … inconsistent with the general proposition that the judicial records and processes of the federal courts are open and public,” the judge ruled.
Hart first ran for the Idaho Legislature in 2002 on the Constitution Party ticket, losing badly to Rep. Wayne Meyer, R-Rathdrum. Two years later, Hart switched to the GOP ticket and, running on an anti-abortion platform, defeated Meyer, a pro-choice Republican and farmer, by 845 votes.
Hart went on to serve on the House Tax Committee, which writes tax laws, drawing an ethics complaint in 2010 pointing to his ongoing personal tax cases. He argued repeatedly and unsuccessfully that his status as a legislator should exempt him from appeals deadlines and other requirements under “legislative privilege.”
Hart was removed from the tax committee; his attorney at the time, Starr Kelso of Coeur d’Alene, compared him to Rosa Parks and Nelson Mandela for his stand on taxes.
When the IRS went after his 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.
The federal tax settlement includes a clause waiving all statutes of limitations.