From: dudley@matt.ksu.ksu.edu (D U D L E Y)
Newsgroups: alt.drugs,talk.politics.drugs
Subject: Drug Tax READ THIS
Date: 22 Apr 1993 07:24:44 -0500
Message-ID: <1r62qcINNm1h@matt.ksu.ksu.edu>
If you are unfamiliar with the term "Drug Tax", I've include a pamphlet
that I stumbled upon recently. It's kinda long so I'll give my quick
and dirty version, then the actual pamphlet, then my opinions and
questions.
--------------------- quick and dirty summary ----------------------------
If law enforcement officials find you in possession of 28 grams or more
of marijuana (or 1 gram or more of a controlled substance), and you do
not have the appropriate tax stamps affixed to the drugs, you are
subject to additional civil and criminal penalties including:
payment of taxes on the drugs as well as a 100% penalty
imprisonment of up to five years
a fine of up to $10,000
immediate seizing and selling of real and personal property
These additional penalties can be avoided if the appropriate amount of
unexpired drug stamps are affixed to the drugs upon acquisition. This
should exclude you from the tax penalties, however, you still are
subject to criminal penalties and forfeitures associated with the sale
of illegal drugs.
Drug stamps may be purchased anonymously from the Department of
Revenue's Business Tax Bureau and are valid for 3 months after the date
of issuance. The current drug tax rates should be in the neighborhood
of:
Marijuana
Processed: $3.50/Gram
Wet Plant: $0.40/Gram
Dry Plant: $0.90/Gram
Controlled Substance
Processed: $200/Gram
Dosage Unit: $2,000/50
Half of Kansas' drug tax collections goes to local law enforcement
agencies, and the other half is allocated to the State's General Fund.
--------------------------- the pamphlet ---------------------------------
"Kansas Tax On Illegal Drugs"
Why Tax Illegal Drugs?
- Attacking the Profit Motive of Dealing Drugs
With the ability to seize real and personal property to satisfy drug
tax liabilities, the State can penalize drug dealers financially as
well as criminally. Criminal penalties alone have not been successful
as a disincentive to entering the business of selling illegal drugs.
- Assisting Law Enforcement in its battle against drugs
Half of all drug tax collections are distributed to the local law
enforcement agency which conducted the investigation which led to the
seizure of the drugs.
- Additional Tool for the Prosecution of Drug Cases
Possession of 28 grams of marijuana or 1 gram of a controlled substance
without tax stamps is a felony punishable by imprisonment for up to 5
years and/or a fine of up to $10,000.
- Taxing the Underground Economy
The fact that the business of dealing marijuana and controlled
substances is illegal does not exempt it from taxation. Legitimate
business transactions are taxed. Dealing drugs is a large part of a
previously untaxed underground economy.
- Providing a Source of Revenue
Half of drug tax collections are allocated to the State's General
Fund.
Drug Tax Answers
Who is Liable for the Drug Tax?
An individual is classified as a drug dealer and is liable for the
payment of drug taxes if he/she manufactures, produces, ships,
transports or imports into Kansas or possesses more than 28 grams of
marijuana (processed or marijuana plants) 1 gram of controlled
substance or 10 or more dosage units of a controlled substance (K.S.A.
79-5201)
How is Tax Paid?
Drug Dealers, as defined above, are required by law to purchase tax
stamps from the Department of Revenue's Business Tax Bureau (K.S.A.
79-5204). In order to protect against any possible violation of the
self-incrimination constitutional protection, a dealer is not required
to give his/her name or address when purchasing stamps and the Business
Tax Bureau is prohibited from sharing any information relating to the
purchase of drug tax stamps with law enforcement or anyone else. The
stamps must be affixed to the drugs when they are seized to prevent tax
liability. Payment of the drug tax (the purchase and affixation of
stamps) is due immediately upon acquisition or possession by the
dealer. The stamps are valid for 3 months from the date of issuance. If
drugs are seized without stamps or the stamps which are affixed have
expired, the possessor is liable for payment of the tax as well as a
PENALTY OF 100% of the assessment.
What are the Tax Rates?
Marijuana
Processed: $3.50/Gram
Wet Plant: $0.40/Gram
Dry Plant: $0.90/Gram
Controlled Substance
Processed: $200/Gram
Dosage Unit: $2,000/50
(K.S.A. 79-5202).
Example
Assessment: 10 grams of cocaine * $200/gram = $2,000
Penalty: $2,000 * 100% = $2,000
Ttl Liability: $2,000 + $2,000 = $4,000
What Happens to a Drug Dealer not Possessing Stamps?
Criminal Penalties
Failure to pay the drug tax is a felony punishable by imprisonment of
up to five years and/or a fine of up to $10,000 (K.S.A. 79-5208).
Civil Penalties
Failing to affix tax stamps to illegal drugs may result in the issuance
of a jeopardy tax assessment and tax warrant by the Department of
Revenue against the drug dealer based upon the amount of the drugs
seized (K.S.A. 79-5205 & K.S.A. 79-3229). The fact that the assessment
is a "jeopardy assessment" allows for the initiation of collection
activities immediately. Execution of the tax warrant may involve the
seizing and selling of the drug taxpayer's real and personal property
to satisfy the drug tax liability. In other words, the drug taxpayer
subjects his/her property to possible seizure by failing to purchase
the necessary drug tax stamps. In addition, the tax warrant, once,
filed by clerk of the district court, serves as a lien against the drug
taxpayer's real estate. This prevents the drug taxpayer from selling
his/her real estate without first satisfying the drug tax liability.
Does Purchasing Drug Tax Stamps Make Possession of Drugs Legal?
NO. Purchasing drug tax stamps prevents criminal prosecution for the
charge of failure to affix the stamps on the drugs and prevents the
Department of Revenue from assessing the 100 percent penalty for
possession of illegal drugs without tax stamps.
Does the Drug Taxpayer Have an Opportunity to be Heard?
YES. The drug taxpayer has 15 days from the date of assessment to
request a hearing before the Director of Taxation to determine the
validity of the assessment (K.S.A. 79-5205). The assessment is
statutorily presumed to be valid and correctly determined. The burden
is on the taxpayer to prove otherwise. The taxpayer must prove that the
drugs in question weren't in his/her possession, or that what was
seized was not drugs, or that he/she had tax stamps affixed to the
drugs.
The criminal prosecution for failure to pay the drug tax and the civil
tax assessment are separate actions. What occurs with the criminal
case, for instance, does not necessarily affect the Department of
Revenue's tax assessment.
Who Administers and Enforces the Drug Tax Law?
The Criminal prosecution for the drug tax is handled by the local
district or county attorney.
The Department of Revenue's Criminal Fraud Unit, organizationally
placed within the Alcoholic Beverage Control Division, is responsible
for administration and enforcement on the civil side. After receiving
information from the law enforcement community, the CFU represents the
Director of Taxation in issuing jeopardy assessment notices and tax
warrants. The CFU assists local law enforcement in identifying assets
of drug taxpayers for satisfaction of drug tax liability. Execution of
the tax warrants, which may include seizure and storage of property is
performed by the county sheriff's departments.
What About Assets Seized Under the Forfeiture Law?
Kansas law provides for forfeiture of property used for or gained
through the dealing of illegal drugs. No assets seized by law
enforcement under this law are targeted for satisfaction of drug tax
liability.
Is the Tax on Illegal Drugs Unique to Kansas?
Not by any means. Although Kansas was one of the first states to enact
a tax on illegal drugs, there were as of May, 1991, 27 states which now
have such a tax.
Most of the states (18) with a drug tax use the drug tax stamp system
utilized in Kansas. The tax rates imposed by Kansas are common among
the states which use the stamp system. An excise tax system is used by
6 states while the remaining 3 state apply income taxes to the business
of dealing illegal drugs.
Alcoholic Beverage Control Division
Kansas Department of Revenue
512 West 6th
Topeka, KS 66603
Telephone: 913-296-3946
----------------------- my opinions/questions ----------------------------
Could this be a step in the legalization direction? What if the State
begins to like the extra tax monies, and wants more, and realises it's
only scraping the top?
A friend said she could envision the tax stamps to be a way of giving
those who are unchangeably pro-legalization (obviously not selling just
for the money in it) a way to "work within the system". I don't agree
that this is their intention, but the drug tax _does_ decrease the
penalties for those who use the stamps.
I find it hard to think most drug dealers would want to contribute any
money toward the people that are trying to nab him/her. And as we
recall, half of all drug tax collections go to local law enforcement
agencies. Might as well sell your soul to the devil while you're at
it.
My understanding is (at least for Kansas) that anyone can walk into the
A.B.C.D. in Topeka, purchase the drug stamps, and walk out. No name, no
cameras (or so they say), nothing. You can also order by mail with the
assurance that your address will be kept in confidentiality (or so they
say). I would be a bit hesitant if I was a dealer to even _walk_ into
the building. However I can envision a representative (from the local
NORML group) purchasing the tax stamps for several parties at once.
The first justification for this tax is to financially penalize drug
dealers, "Criminal penalties alone have not been successful as a
disincentive to entering the business of selling illegal drugs." And
then in the next breath they are saying that you should buy stamps to
avoid the tax penalties, "[Drug Dealers] are required by law to
purchase tax stamps from the Department of Revenue's Business Tax
Bureau." Paraphrased, we're trying harder to stop drug dealers, but if
you _do_ deal drugs, pay our tax. Do I smell something funny?
Where does double jeopardy fall into this whole scheme?
When they say, "Execution of the tax warrant may involve the seizing
and selling of the drug taxpayer's real and personal property to
satisfy the drug tax liability," is this a part of or separate from the
"normal" forfeiture law? In other words, could property be seized by
law enforcement officials according to the forfeiture laws before it
can be applied toward the unpaid taxes?
What are your thoughts on the drug tax?
p.s.
As an aside I personally think legalization and education is the only
way to approach drug controls. The alternatives are; the losing War On
Drugs (fueled with taxpayer's money), the fostering underground
(untaxed) market, the increasing drug [gang] related violence, the ever
growing power of the government, and the gentle trickling away of all
of our personal rights.
--
J "Dudley" Hunkins
dudley@matt.ksu.ksu.edu
