BOISE (CN) – A state legislator claims Idaho is losing millions of dollars in taxes every year because of an under-the-counter system in which its own tax commission favors wealthy people and corporations. House Representative Shirley Ringo sued the Legislature, and the Idaho State Tax Commission in Ida County Court.
Ringo, D-Moscow, claims the state and the four members of the tax commission violate the Idaho Constitution, which requires that taxes be collected in a “uniform manner.”
Ringo says she learned of the tax fraud by recently retired Tax Commission auditor Stan Howland. She claims that Howland provided information about a “possible and likely compromise of tax liability of approximately $50 million” with two taxpayers, and that based on the Tax Commission’s track record, the compromise “will result in a lost to the state tax base of between $15 million and $40 million.”
Ringo claims that the power to tax or exempt from taxation lies with the Idaho Legislature, and may not be delegated to the Tax Commission without “meaningful standards.”
“Broad delegation of legislative authority without designation of detailed standards is only proper when the agency’s internal guidelines provide meaningful standards against arbitrary decision making,” Ringo states.
She say that Idaho has no such standards, regulations or practices to prevent the Tax Commission from secretly and improperly forgiving corporations and individual taxpayers of all or a portion of their tax liability.
The tax-forgiving device used by the commission is called the Compromise and Closing Agreement. The rule that governs the device is “totally devoid of any protection from secret deals with favored taxpayers,” Ringo says.
She claims that Idaho is losing millions of dollars every year owed by favored taxpayers who know how to “game the system.”
A 1996 audit showed a number of unjustified tax compromises to large multistate corporations, Ringo says. She says that since then, the number of secret deals has increased, and because the Compromise and Closing Agreements are confidential, the public and the press have no way to fight the unfair allocation of tax liability – or even know about it.
Ringo seeks an injunction preventing the Tax Commission from entering into Compromise and Closing Agreements until a constitutional and transparent system is established.
She is represented by Robert Huntley.