In late May, Stan Howland took a stand. The veteran tax auditor spent two months writing a detailed report on what he calls "illegal audit settlements" at the Idaho Tax Commission where he works. Howland alleges the commissioners have engaged in rampant, shady tax deals offered to large, out-of-state corporations. Names of the companies and dollar figures have not emerged because these details are top secret, known only to two or three people in the state.
Since May, there have been three reviews of this practice with predictable results. An additional review ordered by Gov. C. L. "Butch" Otter is still ongoing.
Howland has been critical of all of these reviews and calls for a real investigation by out-of-state or bipartisan investigators.
"They want to have this secret environment and they refuse to conduct an investigation of the Tax Commission," Howland said.
No one really wants to see you walk in the door ... why did you become an auditor?
It's just the way my world went. For about eight or 10 years I was an air traffic controller and I had a vision problem that was getting worse. So I went back to school at BSU and got an accounting degree and it just went from there. For 28 years, I've been at the state tax commission. I get to meet a lot of interesting people throughout the country doing these audits. I should have gone public a long time ago.
How long have you been concerned about these secret deals?
My concerns started about 16 years ago. Up until that time, we had a commission that handled these protests in a very efficient manner, and in a very fair manner. About 16 years ago, we had a commissioner that was appointed that started this compromise approach to settling audits. We've always had the ability to do it, but he expanded it to a point that was out of control. I fought it for a year or two after he came to work here. When it got bad, I started fighting it internally. I continued to fight internally up until a couple of months ago when I realized I had to go public.
Why is this a big deal?
It is absolutely, totally unfair to 99 percent of the taxpayers in this state, the people that pay taxes. We pay those taxes according to the laws the state Legislature has written ... We don't get a break on our taxes, nor should we. When I see, year after year, a very small group of these large corporations that come in here that know how to work the system ... They come in here, a commissioner simply compromises the audit and they give them a deal. And so they'll come in and they'll settle up with a comp[romise] and close agreement, which might cut 50 percent off a deficiency.
What would justify a compromise?
There is a provision that allows a commissioner to settle a case with a compromise and close agreement. There has to exist a doubt as to the liability. That was put in there as a restriction, so if there's not a doubt as to liability, a commissioner cannot compromise\ that case. There are occasions when there's a doubt as to liability, particular situations where the law may not have anticipated this situation. In the last three years, 70 percent of all of the cases that have gone up there have been settled with a comp and close. It's a piece of paper, maybe two pieces of paper that just simply says the two parties can't agree so we're going to settle for a certain dollar amount. It's secret. Nobody gets to see that. Nobody knows what's going on, nobody gets an explanation.
Why is it secret?
The tax commissioners will tell you it's to protect the taxpayer. The theory behind that is we do not have a right in this state to go out and put things in public that could put the taxpayer in a difficult position. For example, trade secrets, the way they run their business. Over the years, what the commissioners have done is they've expanded that to mean no names, no nothing. Part of that is by statute; part of it's by rule. And those are a couple of things I'm trying to get changed.
So who knows about it?
The audit staff, the auditor that worked on it will know about it. The commissioner knows about it. If the comp and close agreement gives away more than $50,000, they'll go and get another commissioner to sign it. The deputy attorney general knows about it. The attorney general may or may not.
Has it been difficult to deal with this?
It may take six months to a year to complete an audit, so it's a tremendous amount of work. I've got one that I've been working on for two and a half years. When we go out there and we talk to them, ask for records, they just say, "we're not going to give you those records, you just write me up, I'll come into the commission and I'll get my deal." They tell us that to our faces. And you ask how do we deal with that. We don't deal with it well, but we deal with it because we have a job to do. You try and argue with the deputy attorney generals and the commissioner.
So it's not just you?
Anybody with any experience out there has been fighting this as long as I have, internally. It's almost part of the system now. We just cut deals.
With Idaho companies, too?
Idaho companies, individual taxpayers, income tax, sales tax ...
If you're a millionaire in Idaho and you don't agree with your tax bill ...
You fight it and you'll get a deal.
What will come out of this?
My prime goal is to effect legislative changes. What I would like to see is a system of internal controls installed at the tax commission to prevent this. The No. 1 thing that would help would be if you remove the secrecy from the program. If you keep a deal secret using the excuse that you're protecting the taxpayer, what you're not doing is not protecting all the other citizens in this state. They could come up with a second or third party review of these comp and closes. There has to be something done to stop this process. Let's make these four commissioners fully, publicly accountable.
Do you consider yourself a whistle blower?
I guess I would fit the definition. There's something about that word, I guess, that's probably a term that should be held in high esteem, but for some reason it has a negative connotation to me. I guess it's because of the derogatory way so many people use it if you blow the whistle on them.