No Arrest Needed for Taxing Illegal Drugs

By PenguinPhreak · Jun 7, 2005 ·
  1. PenguinPhreak
    No Arrest Needed For State To Tax Illegal Drugs

    by Sheila Burke, Staff Writer, (04 Jun 2005)

    Tennessean Tennessee

    Defense Lawyers Say Tennessee's New Law Is Ripe For Abuse

    Police suspect that Michael Garcia used his car in April to run
    interference for a drug dealer who was later caught transporting 10
    pounds of marijuana through Springfield, a town 35 minutes northeast of
    Nashville. Garcia said he merely found himself driving behind
    another motorist while in town to visit a girl and was mysteriously
    pulled over by an officer.

    He wasn't arrested, but six days later the 30-year-old landscaper from
    Nashville received a letter from the state Department of Revenue
    demanding that he pay $17,592 in taxes he owed for his role in drug
    trafficking. He figured it was a mistake or maybe a joke.
    "The revenue guys showed up with the bulletproof vests and the guns and
    stuff, and that's when I knew it was for real," Garcia said.
    Garcia is among the first targets of a new state law that requires
    people who profit from illicit drugs to pay their fair share of taxes.

    In January, Tennessee became one of 23 states that tax illicit drugs,
    according to the National Conference of State Legislatures. Since
    the law took effect in January, Tennessee's Department of Revenue has
    collected nearly $400,000 in taxes.

    An additional $11 million in taxes has been levied but not collected,
    often because the debtors are in jail or can't afford to pay.
    Some defense attorneys say the new law is quickly becoming an example
    of government running amok, with innocent residents who have not been
    convicted of crimes, or even charged, being bullied into paying
    thousands of dollars in taxes. "That's the biggest beef the
    attorneys and citizens have with this is that you're guilty until
    proven innocent," said Nashville attorney Erik Herbert, who represents
    Garcia. Under the law, drug traffickers must go to any of the
    state revenue offices within 48 hours of coming into possession of
    illegal drugs.

    They pay a tax on the value of the illegal drugs and get a stamp to
    show they have paid. Taxpayer privacy laws keep Department of
    Revenue officials from reporting these people to police agencies, state
    officials said. After drug arrests, local authorities are
    required to notify the state Department of Revenue within 48 hours.

    Drug-trafficking suspects who haven't obtained the stamps are then
    assessed the taxes and additional fines and interest. Those who
    can't make immediate payments can have their cars, homes and other
    personal property seized. Taxed, but not convicted After stopping
    Garcia on the night of April 6, police questioned him about whether he
    knew the man suspected of drug smuggling.

    Garcia, of Nashville, said he knew of the man, as he knew of many
    Springfield residents because of his frequent trips there. Garcia
    denied any involvement in drug trafficking. According to an
    arrest affidavit filed against John Jernigan, the motorist Garcia was
    suspected of following, a confidential informant told Springfield
    police that the suspect's vehicle would be followed by a second vehicle
    of an "unknown color, make and model." Garcia and Jernigan were in
    different areas when police stopped them. Jernigan said last
    night that he did not wish to comment without his lawyer present.
    The Department of Revenue has sent a notice of lien on Garcia's
    property while he appeals. "( Garcia ) wasn't in possession of
    anything," his lawyer said. Springfield police said this week
    that they were investigating the case and had submitted reports to the
    Robertson County grand jury for possible indictment. They said
    they had nothing to do with the decision to levy taxes against
    him. "We submit our paperwork to them, and then they determine
    who needs to be taxed," Springfield Police Lt. William Watkins
    said. Even if the grand jury decides there is not enough evidence
    to indict a suspect, such as in Garcia's case, taxes can still be
    collected, state officials said. "It's two completely separate
    issues," said Sam Chessor, an assistant commissioner for the Department
    of Revenue. "The tax is a civil matter, and the other is a
    criminal matter.

    They may very well possess the substance and owe the tax and yet be
    acquitted later in a criminal court." Difficult to prove tax isn't owed
    To convict someone of a criminal charge, a judge or jury must find that
    the defendant is guilty beyond a reasonable doubt.

    But in a civil case, there exists a lower legal standard for finding
    someone liable, known as "a preponderance of evidence." "When we go out
    and our auditors determine that a tax is owed, then it's on the
    taxpayer to show that the tax is not owed," Chessor said. Chessor
    declined to discuss Garcia's case specifically, citing laws protecting
    the confidentiality of taxpayers. People who think they have been
    assessed the drug tax unfairly have 30 days to file an appeal to the
    Department of Revenue. Lawyers for the state tax department hear
    the appeals. "That's like the fox guarding the henhouse," said
    Herbert, Garcia's attorney. Garcia's meeting is scheduled later
    this month. If the department denies his appeal, he can file a
    lawsuit against the Department of Revenue in Chancery Court.
    Garcia has been paying for an attorney to handle his tax case.
    Some critics say that many people who are assessed the tax cannot
    afford to hire private lawyers. "This law is tailor-made for
    governmental abuse," said Nashville criminal defense attorney Glenn
    Funk. Funk has sued the Department of Revenue over the tax
    assessment on behalf of a number of clients. One case making its
    way through the court system involves Harold Steven West of Nashville,
    who was arrested Feb. 28 on suspicion of drug possession.
    West, 52, has maintained his innocence and is scheduled to appear in
    court on the criminal charges in August. But two weeks after his
    arrest, agents from the Department of Revenue went to West's home and
    demanded that he immediately pay $834 in drug taxes or his boat would
    be seized, according to the lawsuit filed in Davidson County Chancery
    Court. In their response to the lawsuit, Department of Revenue
    lawyers confirmed that West "went to his bank accompanied by ( a tax
    officer ) and procured a cashier's check in order to pay the full
    amount of the assessment." Drug tax could face more legal challenges
    Tennessee's drug tax is modeled after a similar law in North
    Carolina. That state has collected more than $89 million in the
    15 years since it was put on the books.

    The drug taxes are intended as a way to generate money that can be used
    to offset the cost of drug trafficking to law enforcement. In
    both states, the bulk of the taxes that are being collected have been
    levied after the drugs were seized, not before. The controversial
    nature of drug tax laws has resulted in legal challenges throughout the
    country. In some states, the drug laws have become so watered
    down after the legal battles that they are seldom used, said Allen
    St. Pierre, executive director of the National Organization for
    the Reform of Marijuana Laws ( NORML ). He acknowledged that
    North Carolina's law, the model Tennessee used, had withstood legal

    But he doesn't expect criminal defendants to accept the new law lying
    down. "The Tennessee Supreme Court will absolutely, positively,
    be litigating a case having to do with these drug taxes," St.
    Pierre said. The drug tax is an attempt to circumvent laws
    designed to protect people not yet convicted of crimes, said Funk, the
    Nashville defense lawyer. "The burden is on the citizen to
    initiate the lawsuit and get their money back, and not everybody will
    be able to do that," he said. "There has to be in America some
    responsibility for the government to prove the citizen did something
    wrong before it punishes the citizen."

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