By ROBERT T. ROCHELLE
A current topic of discussion in Nashville involves former state Commissioner of Revenue Reagan Farr and his actions in resolving tax disputes between the state and businesses. Various news reports have indicated that Farr was acting at the urging of Gov. Phil Bredesen to be more business friendly.
The Governor has publicly supported Farr and has announced an intention to go into business with Farr in January. The whole thing is being investigated by the TBI and FBI.
The crux of the dispute lies in the state’s statutory scheme allowing civil settlements of tax disputes. The statutes place great emphasis on confidentiality and protecting the records of the business. That supposedly encourages businesses that innocently made mistakes in computing their taxes to privately pay the disputed amount. The businesses can then avoid the cost and consequences of public disclosure and criminal proceedings.
However, should a business which intentionally violates the law and gets caught be allowed to hide behind a civil settlement? I think not.
Historically, Tennessee governors have appointed knowledgeable “non-political” types as Commissioners of Revenue. They must argue for fiscal sanity. It is often said that the Revenue Commissioner has to be smarter than the lawyers and lobbyists seeking to cut their clients’ taxes, and independent enough to tell the boss “No!”
Because civil settlements are confidential, the process allows a Commissioner of Revenue to give big breaks to businesses who will certainly be indebted to him after he returns to the private sector. Worse consequences are easily imagined.
The present revenue dispute settlement procedure offers too great an opportunity for favoritism and self-serving actions.
The right way to fix it is to require a good dose of transparency. It would go a long way in restoring confidence in the system.
Civil settlements of tax disputes should be open for the public to see and decide for themselves whether everything is on the up and up.
Editor’s Note: Robert T. Rochelle is a Lebanon attorney in the firm of Rochelle, McCulloch and Aulds and a former state senator.