Retired Okla. attorney makes case for unconstitutionality of tax

Journal Record, The (Oklahoma City),  Jul 16, 2008  by Janice Francis-Smith

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Only one lawmaker showed up to retired attorney Jerry Fent's hearing before a state Supreme Court referee on Tuesday. The same lawmaker cast the sole vote against Senate Bill 2034 when it was heard by the Legislature earlier this year.

But state Rep. Mike Reynolds, R-Oklahoma City, said he wasn't the only one who called Fent asking him to review the constitutional validity of SB 2034, known as the Voluntary Compliance Initiative, which implements a tax amnesty program this fall. Reynolds couldn't name any other lawmakers who called Fent, who is known for taking state government entities to court for constitutional violations.

Fent has had some measure of success with his lawsuits, causing the Oklahoma Supreme Court to strike down certain bond programs and the mechanism for expenditures from the Opportunity Fund. Fent did not disclose who called him, but noted there was only one vote cast against SB 2034.

Gov. Brad Henry requested the legislation, estimating more than $30 million could be gleaned by allowing delinquent taxpayers to pay whatever they owe between Sept. 15 and Nov. 14, 2008, without penalty.

"(SB 2034) was a poor way to add $30 million without having to redo the budget," said Reynolds. "As the revenues came in, they saw they needed another $30 million to make it work, but instead of renegotiating the budget, they did this."

Fent asked the Oklahoma Supreme Court to take up his case before the program goes into effect. He and representatives of the Oklahoma Tax Commission on Tuesday presented their arguments to Supreme Court referee Louise Helms.

The tax amnesty program was one of a handful of suggestions Henry had presented in his State of the State address at the beginning of the legislative session in February, anticipating revenues for the year would be lower than had previously been estimated.

The Oklahoma Constitution prohibits the Legislature from releasing liabilities owed to the state, including penalties and interest on overdue taxes, said Fent. His lawsuit also cites the Oklahoma Constitution's provisions that state the power of taxation shall never be surrendered, suspended or contracted away.

Guy Hurst from the Oklahoma Tax Commission said in previous cases tax penalties and interest have always been considered separate from the amount of tax owed. Penalties and interest on taxes are not defined as a liability in the law, Hurst said, though Fent presented other rulings that show that penalties and interest have been defined as liabilities in some cases.

The state has twice before implemented a tax amnesty program, in 1985 and 2002, Hurst said. But that doesn't mean it is legal to do so, said Fent. Fent agreed with Hurst that tax rebate programs do comply with constitutional law.

"I don't see the difference in a rebate and a waiver," said Hurst. "Seems the same way of getting there."

If the Supreme Court takes up the case, it will be assigned to a September docket, Helms said.

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