88-2547 - Illegal Drug Stamp





Petitioner, : FINDINGS OF FACT,





Respondent. :



This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Paul F. Iwasaki, Presiding Officer, heard the matter for and in behalf of the Commission. Present and representing the Petitioner was XXXXX, Attorney at Law. Present and representing the Respondent was XXXXX, Assistant Attorney General.

Based upon the memoranda submitted and oral arguments of the parties, the Tax Commission hereby makes its:


1. The tax in question is the illegal drug stamp tax.

2. The date in question is XXXXX.

3. As a result of a search conducted of the motor vehicle driven by the Petitioner, members of the XXXXX County Sheriff's Office and XXXXX seized XXXXX grams of marijuana and XXXXX grams of cocaine.

4. No drug stamps were affixed to the controlled substances.

5. A tax deficiency in the amount of $$$$$ and a penalty in an equal amount were assessed for the failure to have the required drug stamps affixed to the controlled substances.

6. As a result of criminal charges arising out of the possession of the controlled substances, the District Court ruled that the search of the Petitioner's vehicle was lawful.

7. Individuals who purchase the drug stamps are not required to identify themselves by name, social security number, nor address when purchasing the stamps.

8. No evidence was presented which would indicate that the information obtained from the individuals purchasing the drug stamps is provided to law enforcement agencies.


A tax of $$$$$ per gram of marijuana and a tax upon cocaine at $$$$$ per gram is imposed pursuant to the Illegal Drug Stamp Tax Act. (Utah Code Ann. 59-19-103.)

The evidence of tax paid is a stamp affixed to the controlled substance. (Utah Code Ann. 59-19-104.)

Failure to affix the stamp shall result in the assessment of a tax plus a 100% civil penalty. (Utah Code Ann. 59-19-106.)

The Tax Commission is not a judicial body established under the Constitution of the State of Utah, nor is it empowered nor authorized to determine the legality or constitutionality of legislative enactments. (Shay v. Utah State Tax Commission, 120 P.2d 274 (Utah 1941); State Tax Commission v. Wriqht, 596 P.2d 634 (Utah 1979); and Belco Petroleum Corporation v. State Board of Equalization, 587 P.2d 204 (Wyoming 1978).


The Petitioner has presented four issues to be decided by the Commission:

1. Does the Illegal Drug Stamp Tax Act violate the Petitioner's right against self-incrimination?

2. Does the Exclusionary Rule apply in proceedings before the Tax Commission?

3. Does the assessment of taxes under the Act violate the Petitioner's right to procedural due process under the Fourteenth Amendment of the United States Constitution and Article I, Section 7 of the Utah Constitution?

4. Is the Act void because it is impermissibly vague under the due process clause of the Fourteenth Amendment of the United States Constitution and Article I, Section 7 of the Utah Constitution?

Taking the above listed issues in reverse order, the Tax Commission finds that with respect to issue numbers 3 and 4, the Tax Commission is not a court of law empowered to determine the constitutionality of the statute. Therefore, the Tax Commission must assume the constitutional validity of the Illegal Drug Stamp Tax Act.

With respect to the first issue, the Utah Court of Appeals in the case of State of Utah v. Davis, (case number 89-0009-CA, Court of Appeals, February 17, 1990) directly addressed the issue of whether the Act violated a person's right against self-incrimination. The Court of Appeals held that it did not.

The Court found that by construing the Act to prohibit the use of any information gained as a result of a purchaser's compliance with the Act to establish a link in the chain of evidence in a subsequent drug prosecution provides the same protections provided by the Fifth Amendment, thus upholding the Acts constitutionality. In the present case, there was no showing that any information obtained by the Tax Commission regarding the purchase of the drug stamps was provided to law enforcement agencies or became a link in the chain of evidence in subsequent criminal proceedings.

The remaining issue, the applicability of the Exclusionary Rule to proceedings before the Tax Commission, is one of first impression.

In holding that the Exclusionary Rule does not apply in proceedings before this body, the Tax Commission adopts the balancing test set forth by the U. S. Supreme Court in the cases of United States v. Janis, 428 U.S. 433 (1976) and INS v. Lopez-Mendoza, 468 U.S. 1032 (1984). That test requires the weighing of the benefits in deterring unlawful police conduct against the loss of probative evidence and the secondary costs that flow from the less accurate adjudication that therefore occurs.

The primary purpose of the Exclusionary Rule is to deter unlawful police conduct. There is no showing that application of the Exclusionary Rule in Tax Commission proceedings would serve to meet that purpose. Additionally, if the Tax Commission were to apply the Exclusionary Rule in its proceedings, inconsistent results could be found between those hearings and criminal proceedings in the District Court. Therefore, the societal interest in deterring police conduct in these cases does not outweigh the societal interests in facilitating the accuracy of the fact finding process in these hearings.

Based upon the foregoing, the Tax Commission finds that the determination of the Collection Division's assessment against the Petitioner for tax and penalties per the Illegal Drug Stamp Tax Act is affirmed. It is so ordered.

DATED this 20 day of June, 1990.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner