Hart answers federal lawsuit - Coeur d'Alene Press: Local News

Hart answers federal lawsuit

Legislator says IRS is wrong to ask for 8 years of payments

Font Size:
Default font size
Larger font size

Posted: Friday, January 6, 2012 12:15 am | Updated: 11:54 am, Fri Nov 16, 2012.

A state legislator from Athol filed an answer on Thursday to the federal government's lawsuit against him seeking to collect more than half a million dollars in back-income taxes.

Rep. Phil Hart claims in the document that the IRS is wrong in asking him to pay eight years worth of business deductions, which he believes have been denied because of his book challenging the legality of the income tax.

"No, they won't accept my answer," Hart predicted of the federal government's reaction. "They never do in any lawsuit."

But his answer does kick off the legal process, he stated.

"Now we get to iron out all the details," he wrote in an email. "It will take some time."

Idaho's U.S. Attorney Wendy Olson and the U.S. Department of Justice sued Hart through the U.S. District Court last October, with a list of unpaid federal income taxes, penalties and interest from 1996 to 2008. The suit also included notices of federal tax liens recorded over several years.

The accumulated taxes stem from several years Hart refused to pay income tax out of his legal convictions. He also unsuccessfully sued the IRS in 1998 challenging the constitutionality of income tax.

All totaled, the federal government is holding Hart liable for $549,703.48.

The federal suit also pushes for foreclosure on property Hart appears to have transferred illegally.

Hart's answer, filed in the U.S. district court for the district of Idaho, states that assessments charged from 1997-2008 are barred, because the U.S. "arbitrarily denied legal deductions without justification."

According to the document, Hart believes the deductions were denied because of his refusal to turn over information to the IRS about individuals who purchased his book, "Constitutional Income: Do You Have Any?"

The answer also lists other defenses, including that the federal government's claims are barred because Hart was served a 90-day notice of deficiency while he was serving in a legislative session, violating the Idaho constitution.

The document also states that part of the claims by the U.S. are barred due to partial satisfaction through payments Hart has made.

Hart has said he has paid $150,000 in state and federal taxes in the past several years.

As for the U.S. action of foreclosure, the document states that the action is barred by Idaho Code 55-918, extinguishing a cause of action with respect of a fraudulent transfer after four years.

Hart said on Thursday he believes there have been many irregularities with numbers through the whole legal process.

"We'll go through the lawsuit process and see what happens," he said.

More about

More about

More about

  • Discuss

Welcome to the discussion.


  • slmosqueda posted at 5:51 pm on Tue, Jan 10, 2012.

    slmosqueda Posts: 1

    Oh how sick and tired I am of reading the same ridiculous argument. The argument that screams, "I am too lazy to actually do any homework and prove someone wrong." The argument I hear over and over again!

    The argument: "so and so has to pay his fair share of taxes, I do!"

    Really? Lame! Totally and completely lame!

    People, come up with a better argument. That is as strong an argument as, "Well I jumped off the bridge just like everyone else, so should you!" If you don't have any facts or debatable points, then keep your mouth shut. Hart decided to take a stand. Not because he simply did not want to pay taxes, but because he did his homework and took a stand. And WHO is going to win against a system that is designed to benefit the government? WHO? Of course he will lose his hearings. It would take a judge (or judges) that are not bought by the system, oh wait, they are all paid by our tax dollars. Hmmm. Think about that one.

    Come up with a better argument. A real debate with real substance. Not a wikipedia definition. Real homework.

  • Jeffrey Wherley posted at 8:57 am on Sun, Jan 8, 2012.

    Jeffrey Wherley Posts: 3969


    I agree with you we could go on for day the issues of perspective who favors what and why.
    But what you fail to understand able Taxation of used stuff is unless it is transported Interstate for Commerce it is not taxable by the Federal Government but can be a tax source for the States. So if "The Rich" want to buy a used 100-foot yachts or Rolls-Royces from another State they will have to pay Export/Import taxes and then State Sales taxes so that argument is pretty lame. And unless those Mansions are being transported across State lines Regulating and Taxing commerce between the States does not apply either.

    I know this stuff is foreign to Tax and Spend Statist, but it is Basic knowledge for a Limited Government Sovereign States Federalist.

  • Jeffrey Wherley posted at 7:53 am on Sun, Jan 8, 2012.

    Jeffrey Wherley Posts: 3969


    I am sure you hold Browning and Smith&Wesson and Colt Responsible for every death caused by their guns, too. Since you hold Hitler and Nazi Germany harmless for Gassing the Jews, because that Evil Corporation created a gas that HAD to be used in the way it was. Wow, I will never understand, the mentality of the class warfare crowd, your guilted vision of the world is so deranged.
    Mandoff was a criminal the lawful corporation he setup was a tool for his criminal activities.
    But if you actually think IG was responsible for the holocaust instead of Hitler than I'm sure you are beyond any reasonable thought.

  • Jeffrey Wherley posted at 7:41 am on Sun, Jan 8, 2012.

    Jeffrey Wherley Posts: 3969


    We will start with your comprehension problem with Art 1 Sec 8:
    The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
    To borrow Money on the credit of the United States;
    To regulate Commerce with foreign Nations, and among
    the several States, and with the Indian Tribes;
    To ............ and continues the Specific and very limited list of things the Congress shall have power to lay taxes on.

    This is the problem with Interpretational progressives love to bring out and prove their inability to read in context instead of trying to eliminate the words that get in the way of their agenda. If you will be so kind to notice Art 1 sec 8 has only One (count them one) sentence. I know all those pesky semi-colons you would like to change to Periods, but they are not that would change the entire intent of the constitution. To a totalitarian document, that you would so much like to have.

  • jmowreader posted at 10:39 pm on Sat, Jan 7, 2012.

    jmowreader Posts: 1130

    Jeffrey, the 26 percent I, as you put it, fearmonger with is the number the Fair Tax people use.

    I would really like to know how "The Rich" could change their method of earning to evade tax under a flat tax system. Flat tax, as we all know, means a certain amount on all income however derived. Earn $1 million cash compensation by running Acme? Pay $260,000 of it to the government. (Or whatever the number turns out to be, and 26 percent is what I've heard most of the time.) Earn $1 million by purchasing Acme stock from Sarah, holding it 366 days and selling it to John? Pay $260,000 of it to the government. Right now, under the tax system we have at this time, the CEO would pay $350,000 of his million in tax, and the stock speculator would pay $150,000 because income derived from stock transactions, if you held the stock longer than a year, is taxed at a preferential rate.

    We can go on and on all day about how the "entitlement society" or the "lobbyist society" would oppose a flat tax, but reality says otherwise: tell someone who earns $10 million per year by exercising his incentive stock options and selling the stocks two years later that his taxes are going up by over a million dollars a year because there won't be a preferential capital gains tax rate anymore, and he's going to start calling in favors from all the congressmen he owns.

    The national sales tax that's called the Fair Tax by anyone who hasn't actually analyzed it will not work as it is currently being promoted. That's because it exempts used goods from taxation...like used 100-foot yachts, Rolls-Royces and mansions. The tax will have two effects, neither of them good. First, it will starve the government, which is the whole point. The second is worse: it will completely eliminate the auto industry, housebuilding industry, boat building industry...basically, any industry that relies on the sale of new goods will vanish because very few people will buy a new product and pay a massive federal tax on it, when a used product that is just as capable of meeting the buyer's needs can be had tax-free. America will become like Cuba, where people who can't get cars just keep on fixing up their 57 Chevies. In America's case, we WILL be able to get all the cars we want but no one will buy one so as to avoid paying tax on it.

    Now as to your assertion that there are no evil corporations. Most corporations are not evil. But let's see here...Madoff Investment Securities was a corporation, Goldman Sachs was a corporation, Monsanto is a corporation, IG Farben (the huge chemical conglomerate that made, among other things, the gas the Nazis used at Auschwitz) in Germany was a corporation...I have a feeling that if you went to any farmer in America who's been sued by Monsanto for violation of their Roundup Ready patents because some of Monsanto's patented seed was blown by the wind into his field, that farmer would instantly say Monsanto was an evil corporation. Google "Percy Schmeiser" to see that yes, this has happened and almost certainly will again. (According to Monsanto, if they sample the edge of your field and find Roundup Ready genes in your crop, the assumption is the whole field is planted in their seed and you owe them $15 per acre technology fee. That adds up on even a small farm.)

    About this "limited powers of government" thing conservatives love to bring out: Pull out your Constitution and go to Article I, Section 8 and read the first line. This is the line that gives the Congress authority to tax We the People in order to provide for the "common defense and general welfare of the United States." In short, the Constitution, the document our current Congress spent a whole day reading out loud so they could then proceed to violate it by reauthorizing parts of the PATRIOT Act, gives Congress the power to, basically, spend money like a ship full of drunken sailors. And that line has always been in there.

  • Jeffrey Wherley posted at 7:17 am on Sat, Jan 7, 2012.

    Jeffrey Wherley Posts: 3969


    It's not the Rich that would be against a Flat tax or a sales tax. It is the Politically connected and Pro-Entitlement State people. "The Rich" will as with all changes in the economy change their methods of earning to best fit the model they work in, their adaptability is why they are "The Rich". The Corporations will have no choice but to pay the largest portion of taxes because their would be no hidden the expenses of maintaining service and productivity without capital improvements or raw material purchases. The Entitlement society will have to start paying taxes on anything they purchase from law biding citizens and companies, and will automatically No Earned Income Tax Credits, so will be forced to look for income options not relying on handouts and never having to pay their fair share.
    But the ones that will hate it the most is the Politically connected. From the lobbyists to the elected officials they would all hate it. Lobbyists would almost entirely disappear, Corporations and Unions will have no Tax exemption or tax credit reason to pay for high priced lobbyists. The Elected Official will hate it because with every Tax increase it will be noticeable immediately on every receipt or when they look at their deposit statement. No hiding Tax increases in State Mandates or credits and exemptions, making corporation just increase the cost of goods, or at least it will be harder to keep the corporations from pleading to the public about the heavy Regulations and Mandates that increasing the cost of their products. They will not be able to keep Corporations and consumers as adversary anymore, the only adversary will be the government as is was meant to be, and always has been but is hidden. No politician, That want to stay in office would raise taxes unless their voters were fully inferior of it. And with the addition of a simple Balanced Budget Amendment No extended Wars would be fought without a declaration of War so a war Tax can be raised, besides Deficit spending would be history.

    There are NO evil Corporations. They, like the Rest of us, are just doing what they have to, to survive in an environment that they are forced to live in. The Evil Government sets up that world, this is why the necessary but Evil Government is suppose to be limited and not the Totalitarian system are have burst through the barriers of the Constitution into.

    Oh that 26% tax you fear monger with, is including SS, Medicare, Medicaid, and every other welfare entitlement fully funded at current levels. That may end up being a Starting place, if limited government people just cave to the progressive, But economist say including a SS as the safety net it was intended to be, and reigning the Government back to its limited powers, they Federal Flat tax rate would be close to 10% within a generation or two.

  • jmowreader posted at 1:43 am on Sat, Jan 7, 2012.

    jmowreader Posts: 1130

    Babydriver, The Rich would never, in a million years, agree to a flat tax because The Rich have engineered their income so most of it's taxable as capital gains.

    Every year you can go to fortune.com and look at the 50 highest-paid executives in many categories...50 highest-paid women, 50 highest-paid minorities, 50 highest-paid overall and so on and so forth. Pull up one of the 50 and look at how their pay is structured, and you'll see it's almost all in stock option grants. There are a few reasons for this, but the two largest are:

    (1) corporations can only deduct $1 million of an executive's cash compensation and
    (2) if the executive holds the stock for two years and one day after the grant of options and at least one year after exercising the options, the money earned is taxed at the 15 percent capital gains rate rather than the 35 percent top ordinary-income rate.

    If you were to come up with a straight 26-percent flat tax, in addition to eliminating deductions for everyone (which would basically kill the housing market--one of the reasons they can charge so much for houses is the deductibility of mortgage interest), you'd be raising rich people's taxes from 15 to 26 percent.

    The "fair tax" national sales tax, because it doesn't tax previously owned goods, is no good either as it would kill the market for all new expensive goods. Why would someone purchase a new fancy car and pay 26 percent sales tax on it, when a used fancy car is just as fancy (or perhaps fancier--you can pick up used Rolls Royces for about what new Mercedes cost) and tax-free to boot?

  • Jeffrey Wherley posted at 3:29 pm on Fri, Jan 6, 2012.

    Jeffrey Wherley Posts: 3969


    Your new found writings are so refreshing, Thanks.

  • inclined posted at 2:31 pm on Fri, Jan 6, 2012.

    inclined Posts: 682

    When the left want to play moral, it’s when they postulate that taxes constitute more than an economic issue; they are, above all, a moral one. The pencil pushers on the left argue for higher taxes on economic grounds, but it is so translucent to most, higher taxes, especially “taxing the rich”, and what the beggars of “occupy” are parading, is what they believe morality demands. It’s always rich when the left do a morality play.

    The greater part of morality in this government, and with the little voices in the ally here, is being played out in the two possible ways to reduce government deficits: reduce spending or increase taxes, or some arrangements of both. The left advocates the later; the conservatives advocates the former. The left drone their constant barrage for raising taxes in order to lower government deficits, but their real motivations are “moral” you know, reducing economic inequality (by redistributing income) and expanding government(because unions and government are the most effective way to help the masses.) You know, in politics is our redemption, the supreme end.

    Now, anybody with a question and complaint against the holy part of the left’s heavenly redistribution program is in h_ll fire's cross hairs. Mr. Hart, as the local minions harp on, is sacrilegious. He is to be shunned, but more, put the witch in the chair. Immerse the heretic in sludge, better, deep water, not to breath. They have no idea how deep is their doo doo playing god.

  • CHSdad posted at 2:07 pm on Fri, Jan 6, 2012.

    CHSdad Posts: 364

    JW, it's all about prospective (sic) and entertainment value. I personally find the entertainment value of Mr Hart the greatest benefit for my money Screaming Hart supporters are always fun to watch.

  • babydriver posted at 12:29 pm on Fri, Jan 6, 2012.

    babydriver Posts: 1393

    Typical statists responses. You folks really need to take the blinders off.

    The entire taxing / spending system is crooked, and yet you direct your anger at one of the few willing to buck the crooked system.

    Hart and his issues with the crooked system are a distraction. The entire system needs to be destroyed and replaced with a flat tax where everyone pays, with no deductions. Welfare of all stripes needs to be abolished. There need to be FEWER government workers.

    I applaud HART and all who stand against this CROOKED system.

  • Jeffrey Wherley posted at 12:13 pm on Fri, Jan 6, 2012.

    Jeffrey Wherley Posts: 3969


    If not I'm sure they will catch it, and if he did do it legally I'm sure you will never be man enough to apologize for your slanderous inferences of improprieties for political gain or gamesmanship.

  • Jeffrey Wherley posted at 12:10 pm on Fri, Jan 6, 2012.

    Jeffrey Wherley Posts: 3969

    Why Not,

    I comply with the tax codes, because I know I don't have enough money to throw away fighting it. And I sure don't think he is a lunatic and especially not a sore loser because he has lost his whole case yet. Who knows a miracle might happen and his lawsuit will force the repeal of the 16th amendment. I really doubt it but just the thought of that possibility keeps you progressive lunes quaking.

    See it's all about prospective and entertainment value. I personally find the entertainment value of Mr Hart the greatest benefit for my money Screaming liberals are always fun to watch. All commonsense just flies out the window every-time your ducks (Taxes in this case) are not in nice neat orderly rows. It's like moving things around on a OCPD person it does no harm, but really shows just how nuts they really are, and fun to watch of course.

  • CHSdad posted at 11:35 am on Fri, Jan 6, 2012.

    CHSdad Posts: 364

    Still, I'm sure he was being completely above board when signing over the house he lives in so that it does not appear to be an asset of his.

  • Why Not posted at 11:09 am on Fri, Jan 6, 2012.

    Why Not Posts: 4019

    KJ and JW, you drink too much of PH laced Kool-Aide. You really need to cut back on that stuff you know.

    Kevin, the IRS did not allow $300,000 in expenses Hart claimed that were related to his business and book because he could not or would not prove those expenses were allowable pursuant with tax law (IRS pub 535). I don’t know about you, but I wouldn’t be too quick to take the word of some guy who didn’t pay his taxes, fought you in the courts, then when he did cry uncle he provides sketchy documentation and claims that some of it is “privileged information”.

    I don’t envy his situation, but to anyone who complies with the tax code, like it or not, Hart looks like a sore loser or a lunatic. There is not enough space on the MB to list all the related nonsense, but anyone can Google and research it and come to their own conclusion about whether he’s being honest or not.

  • carol posted at 10:35 am on Fri, Jan 6, 2012.

    carol Posts: 409

    I will take you figures that 47% of Americans did not pay anything in taxes. What is the percentage of large corporations/VERY wealthy people that did not pay any taxes because of write offs? How many billions of $$ is the US not receiving from these corporations/people? Compare that to the people who were so poor they qualified to not pay federal taxes. How many thousands of $$ is the US not receiving from these poor people? I think the slogan should not be "Pay their fair taxes" but get rid of the write offs that allow, legally, this travesty.

  • Flash Gordon posted at 10:06 am on Fri, Jan 6, 2012.

    Flash Gordon Posts: 1219

    Phil Hart IS a deadbeat "citizen". He refused to pay certain federal income taxes because he doesn't agree with the federal income tax law. Yet he avails himself of public services that others have provided him.....all because , like most responsible individuals, "they" pay their fair share of taxes for what he and they use or avail themselves of.

    And, Mr. Johnson, you left out his logging of public land and profiting from it....knowing that what he did was ...illegal. He never would have made restitution unless he was finally outed by someone who knew of his ...transgressions.

    What an heroic constitutional libertarian .....looking out for the rights of the common folk. He's a deadbeat huckster and a very self interested one at that.

  • Jeffrey Wherley posted at 8:58 am on Fri, Jan 6, 2012.

    Jeffrey Wherley Posts: 3969

    Keven Johnson,

    These ppl don't care about facts or law just their own perceptions and agenda. I hope Mr Hart has all the money in the bank, because he will end up having to pay the fines penalties and any other fees or taxes the courts finally rule. But I love that he is forcing them to spend probably almost as much to collect as he is going to have to pay. That alone prove we need a fair tax system and not a system that allows 47% of americas to pay nothing and most of those are paid money they didn't earn.

    Besides it does my HART good to see so many progressives in CDA, apoplectic over his legal challenges, that I will keep voting him into office till they shut the h3II up. ROFL

  • rollingthunder posted at 8:57 am on Fri, Jan 6, 2012.

    rollingthunder Posts: 339

    If you are going to be a tax protester, you have no right to be paid by tax money or be part of a legislative body that has any taxing authority.

  • Keven Johnson posted at 8:31 am on Fri, Jan 6, 2012.

    Keven Johnson Posts: 1260

    Those of you calling Representative Hart a "deadbeat" or "dishonest" while clearly not knowing the facts (and maybe not even caring) should be ashamed of yourselves.

    Rather than secretly 'cheating' or evading the payment of income taxes, Phil Hart openly challenged the system in court, because he believes it is unconstitutional. Upon losing his case in court, Mr. Hart filed tax returns and paid taxes for the years that he previously hadn't paid (while his case was going through the court system). The "back taxes" the IRS now claims Mr. Hart owes are the result of the IRS disallowing ALL of Mr. Hart's business expense deductions for an 8 year period! They are essentially saying that ALL of the revenue Phil Hart recieved from his engineering business and from his book sales was income to him, and that there were no legitimate deductions for business expenses to offset this income. This is ludicrous on its face! ALL businesses deduct their expenses from their gross income! But the IRS wants Phil Hart to pay taxes based on the total gross revenues he collected! They are trying to destroy this man to make an example of him, because he challenged them in the first place, and then would not cave in to their demands that he furnish the IRS with the names of everyone who purchased his book that the IRS didn't like!

    You may not agree with Mr. Hart's original challenge to the income tax; but he did it openly through the court system. It is EVERY American's right to challenge the government in court. When he lost he complied with the law even though he disagrees with it. How is that dishonest or being a deadbeat?

  • Why Not posted at 8:14 am on Fri, Jan 6, 2012.

    Why Not Posts: 4019

    FOP - Lawrence Denny who has in the past blocked any attempts to strengthen Idaho’s ethics laws, now says he is willing to at least consider an independent ethics commission to ride rough-shod over our oh so ethical legislators..cough…cough. Kind of odd how these two stories came out 24 hours apart. Oh boy another Phil Hart Conspiracy. Apparently old Larry has had a change of opinion since he ripped this concerned citizen over Mr Hart and his past position on the tax committee.

    As for Hart, same old same old story, he’s right the IRS and the courts are wrong. He wants to be treated differently because he’s a legislator and because he doesn’t want to submit the proof for the $300,000 in business deductions he tried to claim, Well Duh.

  • ancientemplar posted at 7:45 am on Fri, Jan 6, 2012.

    ancientemplar Posts: 1136

    It seems to me that Hart has a legal right to argue with the IRS over these issues and they, the IRS, agree otherwise he would be in jail. The obligation may grow over time with interest and legal fees but as I see it, it's his choice.

  • mister d posted at 7:41 am on Fri, Jan 6, 2012.

    mister d Posts: 1531

    hart appears to be a very dishonest man who works hard to manipulate the system. Why anyone would vote for him is a mystery. Birds of a feather flock together, I guess.

  • Flash Gordon posted at 6:59 am on Fri, Jan 6, 2012.

    Flash Gordon Posts: 1219

    Hart is a deadbeat "citizen" who used his legislative position to benefit himself personally. Athol voters should be ashamed of themselves.

  • immortal posted at 4:26 am on Fri, Jan 6, 2012.

    immortal Posts: 258

    It seems to me that the Federal govt had less trouble, with less justification and evidence, convicting Al Capone than this sleaze. More importantly though is how the idaho legislature can talk ethics out of one side of their mouth but turn a blind eye to all the apparent crooked dealings one of their own is engaged in. And then, of course, there is also the fact that the Cda Resort Press feels obliged to offer Hart a free public forum to 'splain how it's all a conspiracy to punish him for his honest opinions. The one thing I do understand however is how this scofflaw continually gets reelected. It is the Athol area after all. Dumb and Dumber wouldn't deign to live there.

default avatar
Welcome to the site! Login or Signup below.
Not you?||
Logout|My Dashboard