From: email@example.com (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 firstname.lastname@example.org
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