No Arrest Needed For State To Tax Illegal Drugs
by Sheila Burke, Staff Writer, (04 Jun 2005)
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
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
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."