False Alarm

by Senator Brent Hill

People love scandals. And political scandals are particularly enjoyable. We like to assume that powerful politicians and government employees are guilty of whatever they are accused. It’s very satisfying to watch as they are stripped of their power and arrogance. A blow delivered to big government is as exciting as the fall of a giant by the sling of a shepherd boy.

Many of us felt a rush of anger and resentment when we heard of illegal activities within the Idaho State Tax Commission as reported by a courageous whistleblower. His accusations contained titillating phrases like, “illegal actions by the Commissioners,” “secret deals,” “preferential treatment,” and “costing the taxpayers millions.” A scandal—right here in Idaho! And who better to be found guilty than the agency we all hate for extracting taxes from us. This was good stuff.

A Call to Arms
Immediate action was required to protect Idaho taxpayers and halt any improprieties. As chairman of the Senate Local Government and Taxation Committee and a CPA with thirty-five years experience, I initiated the attack against the Tax Commission. I arranged a meeting with the whistleblower, Stan Howland, and invited him to bring any other Tax Commission personnel that had concerns. I joined Senator Kate Kelly in asking the Attorney General to determine if anyone in the State Tax Commission had acted illegally as alleged. I applauded Governor Otter for selecting LaVern Gentry, a retired CPA with extensive knowledge in multi-state income tax law, to conduct a review of actual cases within the Tax Commission to determine if impropriety existed.

 All Reviews Lead to the Same Conclusion
In addition to recommending an independent review of additional tax cases settled by the State Tax Commissioners, my 5 ½ page report to the governor and the legislature concluded, among other things, “that the Idaho State Tax Commissioners are functioning well within their legal responsibilities and in a manner that is generally in the best interest of the citizens of Idaho.” (Read the Hill Report.)

This was confirmed when the Attorney General’s office issued a well-documented report concluding that its “review of the allegations made by Mr. Howland does not disclose any illegal activity by the State Tax Commission.” (Read the Attorney General Report [PDF].)

After spending three weeks reviewing individual cases, analyzing applicable tax laws, and conducting twenty-five interviews with auditors, audit managers, other Tax Commission personnel and other people, Mr. Gentry also concluded that the Tax Commission was not violating or misusing the laws or rules. (Read the Gentry Report [PDF].)

Mr. Howland and a group of his fellow auditors continue to allege that each of us has a conflict of interest and we are trying to mislead the public. Mr. Gentry is retired from public practice and has nothing to gain by concealing wrongdoings within the Commission. Attorney General Lawrence Wasden has always demonstrated complete integrity and professionalism. To attack the character of these dedicated people, along with the reputations of the four Idaho State Tax Commissioners, is inappropriate and misguided. As well-meaning as the disgruntled auditors may be, I agree with the Attorney General that their interpretations of the law in this area are inaccurate. They have a very restrictive view of the Commissioners’ role, failing to recognize that the Commissioners are not advocates for the auditor’s position. The Commissioners’ duty is to provide fair, unbiased evaluations of those cases appealed to them and determine reasonable and equitable solutions. Their role is much different than that of the auditors who are to apply the letter of the law, representing the government’s interests to collect as much revenue as legally possible. This difference in roles will naturally generate some conflict between the Commissioners and audit personnel.

The accusing auditors characterize as “secret” those procedures designed by law to legitimately protect the privacy of each of us as taxpaying citizens. They continue to introduce charges of illegality, cover-up, and misrepresentation against credible people who disagree with them—an easy sell to those who are already suspicious of government.

State government must always strive for higher levels of accountability, fairness, and efficiency. The concerns brought to light by Mr. Howland and some of his fellow auditors will help accomplish that. Governor Otter’s order for the Commission to submit an annual report to the public legislative tax committees is but one of the positive improvements that will result. (Read Governor's Order.)

But, when it comes to accusations of illicit, secretive, and corrupt activities by the State Tax Commission, the reports are in, the facts are laid out, the conclusions have been declared. And, as disappointing as it may be to some, the claims that the sky is falling can no longer be heeded.