BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
Petitioner :
: FINDINGS
OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
COLLECTION
DIVISION OF THE :
UTAH STATE TAX COMMISSION : Appeal
No. 89-1623
Respondent :
_____________________________________
STATEMENT OF CASE
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 evidence and testimony presented at the hearing, the Tax Commission
hereby makes its:
FINDINGS OF FACT
1.
The tax in question is illegal drug stamp tax.
2.
The period in question is XXXXX.
3.
Pursuant to a consent search of the residence occupied by the Petitioner and
her husband, members of the XXXXX County Metro Narcotics Strike Force seized
XXXXX grams of cocaine.
4.
The Petitioner and her husband maintained separate closets in their
bedroom. The cocaine was located in the
husband's closet within that bedroom.
5.
The Petitioner's husband admitted to the police officers that the cocaine
belonged to him and also that he had been engaged in distributing the cocaine
for value.
6.
Neither the Petitioner nor her husband made any statements to the police
officers which indicated that the Petitioner had any knowledge nor control over
the cocaine found in the husband's closet.
7.
No drug stamps were affixed to the cocaine.
8.
A set of scales was found in the home.
The use of scales is consistent with the weighing and packaging of
cocaine for sale.
9.
The scales had been obtained by the Petitioner from XXXXX High School where the
Petitioner had been a school teacher.
The Petitioner testified that the scales had been broken and she had
brought them home to repair them.
10.
A tax deficiency in the amount of $$$$$ and a penalty in an equal amount were
assessed against the Petitioner and her husband for the failure to have the
required drug stamps affixed to the controlled substances.
CONCLUSIONS OF LAW
A
dealer may not possess any marijuana or controlled substance upon which a tax
is imposed by Title 59, Chapter 19, of the Utah Code unless the tax has been
paid on the controlled substance as evidenced by a stamp or other official
indicia. (Utah Code Ann. §59-19-104(2)).
"Dealer"
means a person who, in violation of Utah law, manufactures, produces, ships,
transports, or imports into Utah or in any manner acquires or possesses more
than 42-1/2 grams of marijuana, or seven or more grams of any controlled
substance. (Utah Code Annotated §59-19-102(2)).
DECISION AND ORDER
In
the present case, the Petitioner presented three issues to be decided by the
Commission:
1.
Whether the illegal drug stamp tax is unconstitutional in that it violates an
individual's right against self-incrimination under the United States and Utah
constitutions;
2.
Whether the Illegal Drug Stamp Tax Act violates the due process clause of the
United States and Utah constitutions; and
3.
Whether the Petitioner is a "dealer" within the meaning of the
Illegal Drug Stamp Tax Act.
The
issue as to whether the Petitioner was a dealer within the meaning of the
Illegal Drug Stamp Tax Act is dispositive of this matter and therefore, will be
discussed first.
The
requirement to purchase and affix drug stamps is imposed only upon
"dealers" as that term is defined in the Act. Section 59-19-102(2)
defines dealer as "a person who, in violation of Utah law, manufactures,
produces, ships, transports, or imports into Utah or in any manner acquires or
possesses more than ... seven or more grams of any controlled substance
..." (emphasis added). Thus, under
the Act, mere possession of the controlled substance is not sufficient in and
of itself to be a violation of the Act.
The possession must be one which is unlawful under Utah law. It must, therefore, be determined whether
the Petitioner's actions in the present case were sufficient so as to find her
in violation of Utah law.
Under
Utah Code Ann. §58-37-8(2)(a)(i) it is unlawful for any person to knowingly and
intentionally unlawfully possess or use a controlled substance. Possession need
not be actual possession, but may also be constructive possession.
In
determining the factors that constitute constructive possession, the Utah
Supreme Court in State v. Fox, 709 P.2d 316 (Utah 1985), stated that "to
find that a defendant had constructive possession of a drug or other
contraband, it is necessary to prove that there was a sufficient nexus between
the accused and the drug to permit an inference that the accused had both the
power and the intent to exercise dominion and control over the drug." Id.
at 319. That test presupposes, of
course, that the accused had knowledge of the presence of the controlled
substance. The Court went on to state
that whether a sufficient nexus exists is dependent upon the facts and
circumstances of each case, and that although ownership and/or occupancy of the
premises in which the drugs are found are important, that fact alone is not
sufficient to establish constructive possession particularly where the
occupancy is not exclusive, as is the situation in the present case.
In
the present case, there has not been a sufficient showing of evidence to
establish the necessary nexus between the Petitioner and the controlled
substance in question. The Respondent
argued that an inference could be drawn that the Petitioner exercised dominion
and control over the cocaine from the disputed facts that she was aware of the
drug trafficking activities, that she admitted to regular cocaine use, and that
she benefitted from the use of the illegal drug sale proceeds. Those "facts", however, were based
upon the hearsay statements contained in police reports written by the
investigating officer.
Although
hearsay evidence is regularly admitted in these proceedings, findings of facts
may not be based solely on contested hearsay.
In this case, the Petitioner testified under oath that she was not aware
of the presence of the cocaine in her home, that she was not aware of her
husband's trafficking in cocaine, and denied that certain items were purchased
with proceeds from the cocaine sales.
Based
upon those statements, made under oath with no testimony to the contrary, the
Commission is not persuaded to accept the hearsay statements contained in the
police reports as evidence to support the inference that the Petitioner was
aware of the existence of the cocaine in the home and that she was in a
position to exercise dominion and control over it.
Based
upon the foregoing, the Tax Commission finds that the Petitioner did not
unlawfully possess the controlled substances in question and therefore was not
subject to the requirements of the Illegal Drug Stamp Tax Act.
To
the extent that the determination of the Collection Division assesses a
deficiency against XXXXX, such a determination is reversed and the Petitioner's
request to release the Petitioner, XXXXX, of liability is granted. It is so ordered.
DATED
this 26th day of June, 1990. BY ORDER OF THE UTAH STATE TAX
COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
ABSENT
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner