Pubdate: Sun, 02 Jan 2005
Source: Elizabethton Star (TN)
Copyright: 2005 Elizabethton Newspapers, Inc.
Contact:  http://www.starhq.com
Details: http://www.mapinc.org/media/1478
Author: Rozella Hardin
Bookmark: http://www.mapinc.org/af.htm (Asset Forfeiture)

STATE TO TAX ILLEGAL DRUGS

With the new year, the tax man is coming after drug dealers in Tennessee. 
Drug dealers will be required to pay state excise taxes on illegal 
substances - from marijuana to moonshine, from cocaine to the often 
illegally obtained prescription painkiller OxyContin - under a new law that 
went into effect Jan. 1.

A 10-person tax agency has been created at a one-time cost of $1.2 million 
to assess the taxes and collect them. The annual cost to enforce the drug 
tax will be $800,000.

Tennessee joins at least 22 other states in taxing illegal drugs. Its law 
was modeled after North Carolina's which has collected $83 million in the 
14 years it has been on the books. Last fiscal year, the drug tax brought 
in $8.5 million and $4.9 million since July 1, according to the state's 
Unauthorized Substances Tax Division.

According to the state Web site, of the 72,000 taxpayers North Carolina has 
assessed, only 79 people voluntarily brought stamps. According to 
information posted on the Tennessee Department of Revenue Web site, the new 
tax would be collected in two ways:

* Drug dealers can go to any of the state revenue offices within 48 hours 
of coming into possession of unauthorized substances. They pay the tax and 
get a "stamp" to put on the drugs showing they have paid up. They would not 
be required to give their name, address, Social Security number, or other 
identifying information. State tax collectors would be constrained by 
taxpayer privacy laws from reporting them to police. Still, state officials 
say voluntary payment is unlikely to happen often.

* The most probable way the tax will be collected is when police make drug 
busts. Law enforcement agencies are required to call tax officials within 
48 hours detailing the drugs found.

Tax collectors then assess the tax on the drug suspects, as well as 
additional fines for not paying the tax in the first place. If the suspects 
cannot make immediate payment, the state seizes and sells any assets, such 
as cars, homes and personal belongings, to pay off the liability. Paying 
the tax does not immunize a drug dealer from criminal prosecution, not does 
nonpayment result in harsher jail sentences or fines, other than a tax 
penalty. Typical tax penalties are 5 percent of the unpaid tax liability. 
According to the Dept. of Revenue, three-fourths of the tax money collected 
will go to the law enforcement agency that initiated the arrest, and 
one-fourth will go the state's general fund.
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