BEFORE THE UTAH STATE TAX COMMISSION
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 91-0977
UTAH STATE TAX COMMISSION, :
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent was XXXXX, Assistant Utah 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. On XXXXX, Petitioner was arrested in XXXXX Utah by officers of the XXXXX.
4. At the time of his arrest, Petitioner was found in possession of XXXXX grams of cocaine.
5. Petitioner was subsequently indicted on federal charges relating to possession of cocaine. He moved to suppress evidence of the cocaine seized at the time of his arrest on the grounds such evidence resulted from an unlawful search and seizure. Petitioner's motion to suppress was denied, and he was convicted in U.S. District Court of possession of cocaine with intent to distribute.
6. The drug stamps required by the Utah Illegal Drug Stamp Tax Act (Utah Code Ann. §59-19-1 et seq.) were not affixed to the cocaine in Petitioner's possession on XXXXX, nor had any drug stamps been purchased with respect to that cocaine.
7. On XXXXX, Respondent assessed Petitioner with illegal drug stamp tax of XXXXX plus penalty in the same amount. Petitioner received written notice of the foregoing assessment on approximately XXXXX. Through his attorney, Petitioner filed a timely appeal of the assessment.
CONCLUSIONS OF LAW
A tax of $200 per gram of cocaine is imposed pursuant to the Illegal Drug Stamp Tax Act. (Utah Code Ann.59-19-103.)
A dealer may not possess any marijuana or controlled substance upon which a tax is imposed by the Illegal Drug Stamp Act unless the applicable tax has been paid, as evidenced by a stamp or other official indicia. (Utah Code Ann. 59-19-1004(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 Ann. §59-19-102(2).)
Failure to affix the stamp required by the Illegal Drug Stamp Act shall result in the assessment of the tax due plus a 100% civil penalty. (Utah Code Ann. §59-19-106.)
DECISION AND ORDER
Under Utah's Illegal Drug Stamp Tax Act, dealers in possession of a controlled substance must purchase and affix drug tax stamps to the controlled substance. Failure to do so renders the dealer liable for the amount of the tax plus a penalty in an amount equal to the tax. In this case, Petitioner has been assessed drug stamp tax and penalty totalling $$$$$ arising from his possession of XXXXX grams of cocaine.
Petitioner challenges the assessment on three points: First, that the cocaine upon which the assessment is based is the fruit of an unlawful search and seizure, and therefore cannot be used as evidence against him. Second, that assessment of the tax violates Petitioner's right to due process because the assessment was made without adequate notice and hearing. Finally, Petitioner contends he is not a 'dealer" within the meaning of the Illegal Drug Stamp Tax Act. Each of Petitioner's arguments will be discussed below, in the order of their presentation.
Petitioner contends that the evidence of his possession of cocaine results from an unlawful search and seizure and should be excluded from consideration by the Commission. In other similar cases, the Commission has ruled as follows:
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 (other courts). 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.
After review of the parties' arguments in this case, the Commission reaffirms its conclusion that the exclusionary rule is inapplicable in these proceedings.
Even if the Commission were to find that the exclusionary rule is applicable in this proceeding, the Petitioner has previously litigated the search and seizure issue in federal district court. That court held that the officers' search of Petitioner and seizure of the cocaine were lawful. The Petitioner is bound by that determination in this proceeding as well, under principles of collateral estoppel. Finally, if the exclusionary rule were applicable in this proceeding and the search and seizure issue had not been decided in federal court, the Commission would conclude on the merits of the issue that the search and seizure was valid and that evidence so obtained was admissible.
Petitioner next argues that his right to due process was violated by lack of notice and opportunity for hearing prior to the assessment of tax and penalty in this matter. However, the Commission is not authorized to rule upon such constitutional claims. Shea et al. v. State Tax Commission, 120 P.2d 274 (Utah 1941); State Tax Commission v. Wright, 596 P.2d 634, 636 (Utah 1979). As Respondent complied with the provisions of the Illegal Drug Stamp Tax Act in assessing tax and penalty against Petitioner, the Commission must assume the constitutional validity of the assessment.
Finally, Petitioner argues he is not a "dealer" and therefore not subject to the Illegal Drug Stamp Tax Act. However, §59-19-102(2) of the Act 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 42 1/2 grams of marijuana, or seven or more grams of any controlled substance, or ten or more dosage units of any controlled substance which is not sold by weight. (emphasis added)
As the Petitioner possessed more than seven grams of cocaine, he falls within the Act's definition of dealer and is subject to the Act.
In summary, the Commission concludes that Petitioner possessed XXXXX grams of cocaine on XXXXX without having purchased or affixed the drug stamps required by Utah's Illegal Drug Stamp Tax Act. The Commission therefore affirms Respondent's assessment of tax of $$$$$ and penalty in an equal amount, for a total assessment against Petitioner of $$$$$. It is so ordered.
DATED this 17th day of March, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes