Appendix — Hall v. Indiana Department of Revenue

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~ FILED

(2) 95 158 OMAR 26 19%

OFEME OF THE GLERK

Case No.:

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1995

KEITH and MARY HALL,

Petitioners,

INDIANA DEPARTMENT OF STATE REVENUE

and KENNETH L. MILLER, Commissioner,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE

SUPREME COURT OF INDIANA

APPENDIX

Andrew C. Maternowski Stephen L. Laudig

Ind.Sup.Ct. Bar #14901-49 Counsel of Record

3601 North Pennsylvania Street 600 Inland Building

Indianapolis, IN 46205-3435 156 East Market Street

Tel.: (317) 923-4441 Indianapolis, IN 46204

Tel.: (317) 637-6071

TABLE OF CONTENTS

Page

Hail v. indiana Dept. of State Revenue

660 N.E.2d 319 (ind. ee 1

Bryant v. State

660 N.E.2d 290 (ind. SSS a a 13

Clifft v. Indiana Dept. of State Revenue

660 N.E.2d 310 (ind. NEES 83

Hall v. indiana Dept. of State Revenue

641 N.E.2d 694 (ind. Tax _ esubtlliar 114

Clifft v. indiana Dept. of State Revenue

641 N.E.2d 682 (ind. Tax ET ee 120

ete, NERS eee Ae 167

cig Bg TT ROT eee ET tee 169

Petition to Set Aside Final Determination

I 171

Partial Motion for Summary Judgment ............cc..c........ 173

Since Sop ich ce ce, IE Se aA 175

Constitutional Provisions and Statutes........................ 177

PUM TITTIIN vscicshestseiidincusiesthncasehisinnhcizeninadicesanenseeesieseciescecse 187

internal Revenue Service Form 8300

ae hints ldciscidcasasitrenensstncininassnictenitsass secievernansesiacecn coe. 189

IN THE

SUPREME COURT OF INDIANA

KEITH AND MARY HALL,

Petitioners,

Vv.

INDIANA DEPARTMENT OF STATE

REVENUE and KENNETH L. MILLER,

COMMISSIONER,

me ee ee ee ee ee ee”

Respondents.

Cause No. 49S10-9503-TA-336

APPEAL FROM THE INDIANA TAX COURT

The Honorable Thomas G. Fisher, Judge

December 27, 1995

SHEPARD, Chief Justice.

The Indiana Department of State Revenue assessed

over eleven million dollars in drug taxes against a couple who

illegally possessed some 300 pounds of marijuana. The couple

now seeks to avoid that tax liability by claiming the assessment

TIO rt meen tise

was a second jeopardy for the same offense. We conclude that

they may not.

|. History of the Case

On February 12, 1993, police entered and searched the

home of petitioners Keith and Mary Halil. During their

inspection of the Halls’ property, police discovered a bale of

marijuana weighing approximately 300 pounds. They arrested

the Halls and charged them with felony possession of

marijuana.

Four days later, appellee Indiana Department of State

Revenue assessed the Controlled Substances Excise Tax

(CSET) against the Halls in the amount of $5,691 ,320.' The

Department also assessed a 100 percent penalty because

the Halls' did not pay the CSET when they first possessed

‘The Department calculated the CSET by multiplying the

weight of the marijuana, roughly 142,283 grams, by the

statutorily prescribed amount of $40 per gram. Ind. Code Ann.

§ 6-7-3-6 (West Supp. 1994).

the drug. Ind. Code Ann. § 6-7-3-11(a) (West Supp. 1994).

The Halls' total CSET liability was thus $11,382,640. On

the same day, the Marion County Sheriffs Department

garnished Mary's wages and seized the Halls' property as

partial payment of their CSET liability. Appellant's Petition to

Set Aside Final Determination, ¥ 2.

Subsequent to the assessment, Keith pled guilty to the

charge of possessing marijuana and was convicted of a class D

felony. The State dismissed the criminal charge against Mary.

The Halls sent a letter of protest to the Department,

contesting their tax liability. The Department held a hearing

and denied the Halls’ protest. | Subsequently, the Halls

petitioned the Indiana Tax Court for review of the assessment,

claiming the CSET violated their privileges against self-

incrimination, as well as their double jeopardy, due process and

“Interest immediately began accruing at the rate of

$1,091.49 per day.

equal protection rights afforded by the United States and

Indiana Constitutions.°

On October 11, 1994, the Tax Court issued its opinion in

this action and three companion cases addressing the same

issues. Hall v. Indiana Dep't of State Revenue (1994), Ind. Tax,

641 N.E.2d 694: Bailey v. Indiana Dep't of State Revenue

ili i tty ete DOR NC ea OP AON m “

(1994), Ind. Tax, 641 N.E.2d 695; Clift v. Indiana Dep't of State

Revenue (1994), Ind.Tax, 641 N.E.2d 682; Hayse v. Indiana

Dep't of State Revenue (1994), Ind. Tax, 641 N.E.2d 698. The

| court ruled that the CSET did not violate the Halls’ privileges

against self-incrimination or their rights to equal protection and

procedural due process. The court did conclude, however, that

the CSET was Keith's second jeopardy, imposed in violation of

the Fifth Amendment, and set aside his tax liability. It held

>The Halls do not question the constitutional validity of the

CSET under the Indiana Constitution in their appeal to this

Court. Moreover, they presented no cogent state constitutional

/ claim before the Tax Court.

further that no violation of Mary's right against double jeopardy

occurred because she had suffered no criminal sanction before

or after her CSET assessment.

Both the Halls and the Department petitioned this Court

for review, which we granted. The following issues are

presented:

1. Whether the CSET assessment was a second

jeopardy in violation of the Halls’ double jeopardy rights under

the Fifth Amendment to the U.S. Constitution;

2. Whether the CSET compels self-incrimination in

violation of the Fifth Amendment to the U.S. Constitution; and,

3. Whether the CSET assessment abrogated the

Halls' procedural due process rights afforded by the Fourteenth

Amendment to the U.S. Constitution.

ll. Constitutionality of the CSET

Like the taxpayer in today's case of Bryant v. State

(1995), Ind, _. =-NE2d ___, the Halls claim their CSET

‘aieaicinececaiaiiimaaul

het Os ag at ee

assessment was the second jeopardy imposed against them for

the same offense. In Bryant, we followed the U.S. Supreme

Court's recent analysis in Montana Dep't. of Revenue v. Kurth

Ranch, 114 S.Ct. 1937 (1994), and concluded that a CSET

assessment is a jeopardy. We reached this decision only after

evaluating the CSET's deterrent purpose, high rate of taxation,

prerequisite of the commission of a crime and penal nature

objectives. Ultimately, we concluded that, when combined with

the CSET's criminal sanction, Bryant had indeed been twice

placed in jeopardy.

Because the nature of the Halls’ claim mirrors that of

Bryant, our Bryant analysis is applicable. We note that Mary

was subjected to neither criminal prosecution nor punishment,

and therefore conclude the CSET was her only jeopardy. Her

Fifth Amendment rights were not offended. By contrast, Keith

was convicted for felony drug possession after the

Department's CSET assessment. The CSET was therefore his

first jeopardy and the criminal action a second jeopardy in

violation of the Double Jeopardy Clause.“

The Halls also argue that the CSET unconstitutionally compels

self-incrimination and that the tax assessment denied their

rights to procedural due process. We addressed issues

identical to these in today's decision in Clifft v. Indiana State

Dep't. of Revenue (1995), Ind, = N.E.2d__. _—The analysis

emerging from Clifft leads us to hold that the CSET violates

neither the Halls’ privilege against self-incrimination nor their

“Keith lost his $40,000 in the wake of a jeopardy

assessment just as Bryant suffered seizure of assets including

his home in the immediate aftermath of the jeopardy

assessment issued to him. Such is characteristic of the

jeopardy assessment. It constitutes a civil judgment and may

lead to seizure as payment just as a conviction in criminal court

may lead to fines and incarceration. It is this similarity that

leads us to conclude that assessment is the point at which

jeopardy attaches for Fifth Amendment purposes.

rights to procedural due process afforded by the Fifth and

Fourteenth Amendments.

il. Conclusion

We affirm the decision of the Tax Court with respect to

the Halls’ self-incrimination and due process claims. We affirm

the Tax Court’s denial of Mary's double jeopardy claim. We

reverse as to Keith's double jeopardy claim and reinstate the

CSET assessment.”

Dickson and Selby, JJ., concur.

DeBruler, J., concurs in result and dissents with separate

opinion to follow.

Sullivan, J., concurs and dissents with separate opinion.

SULLIVAN, Justice, concurring and dissenting.

As explained in part Il of my dissent today in State v.

Bryant (1995), Ind., N.E.2d (Sullivan, J., dissenting),

‘Keith's criminal conviction is not before us in this tax

appeal therefore not subject tc disposition here.

| believe the majority errs in holding that an administrative

assessment of a tax can constitute a first punishment for double

jeopardy purposes.° As such, | believe that Keith Hall's criminal

conviction is not contrary to the Double Jeopardy Clause.

However, payment of the CSET assessed would constitute a

second punishment of Keith Hall and would therefore be barred

by De

S.Ct. 1937 (1994) (tax on the possession of illegal drugs

assessed after the state has imposed a criminal penalty for the

same conduct violated Double Jeopardy Clause).

| agree with the majority that no second jeopardy

occurred in Mary Hall's case and that the CSET violates neither

"if we were to proceed under the alternative approach |

describe in part Ill of my Bryant dissent, | would remand to the

Tax Court for determination of when jeopardy attached, (.e.,

when evidence was first presented to a trier of fact in the Halls’

contest of the assessment. If that occurred prior to jeopardy

attaching in Keith Hall's criminal prosecution, then the result

would be the same as the majority reaches here.

the Halls’ privilege against self-incrimination nor their due

process rights.

DeBRULER, Justice, concurring and dissenting.

| would affirm the entire decision of the Tax Court in

this case. Mary's double jeopardy claim is properly denied in

light of the fact that she was not subjected to a first jeopardy

in the criminal prosecution which was initiated and then

dismissed. Keith's double jeopardy claim, however, has

merit. At the time the Tax Court ruled, Keith had been

punished as a result of the criminal proceeding against him,

and property of Keith and Mary worth roughly $40,000 had

been seized by the Marion County Sheriff pursuant to the tax

warrant the Department issued with its jeopardy assessment.

| agree with the Tax Court that the holding in Department

of Revenue v. Kurth Ranch, __ U.S. _, 114 S.Ct. 1937,

428 L.Ed.2d 767 (1994), commands the conclusion reached

by the Tax Court that further tax collection efforts by the

Department would subject Keith to a second punishment

prohibited by the Double Jeopardy Clause. | find this case

different from today's case of Bryant v. State (1995), Ind.,

660 N.E.2d 290, in which the taxpayer, while being first

subjected to a punishment in a criminal prosecution, had at

no time paid any of the tax nor had the taxpayer been

subject to any collection efforts by revenue agents.

eS ee ee

IN THE

SUPREME COURT OF INDIANA

ROSS BRYANT,

Appellant (Defendant Below),

Vv.

STATE OF INDIANA,

me ee ee ee ee eee

Appellee (Plaintiff Below).

Cause No.: 27S04-9409-CR-865

December 27, 1995

SHEPARD, Chief Justice.

We confront several questions of first impression

involving Indiana's new drug tax. The State imposed both civil

and criminal sanctions on appellant Ross Bryant for his failure

to pay the Indiana Controlled Substance Excise Tax (CSET).’

He appealed the criminal penalty, claiming he was twice

punished for the same offense. We hold that the civil and |

"Ind. Code Ann. §§ 6-7-3-1 to 6-7-3-17 (West Supp. 1994).

criminal penalties were each jeopardies, and that both cannot

be imposed without violating the Double Jeopardy Clause of

the United States Constitution.

i. Statement of Facts

In August 1992, Grant County Sheriffs deputies

responded to an alarm at Bryant's home. Discovering an open

door with fresh pry marks on it, they entered the dwelling and

searched it. There was no one in the home, but police found

over 250 marijuana plants in the basement, outhouse and

garden. Officers then obtained a warrant and completed a

more thorough search which uncovered marijuana seeds, dried

marijuana and other drug paraphernalia. When police

questioned Bryant upon his return, he confessed that the

marijuana was his and that he was growing it for

his own use. Police then arrested Bryant and transported him

and the objects seized to the Grant County Jail.

The deputies next contacted the Indiana Department of

Revenue to report their findings. The Department dispatched a

special agent to the jail to determine the amount of Controlled

Substance Excise Tax owed by Bryant.° The agent weighed

the marijuana and assessed a tax of $83,680." The agent then

met with Bryant and demanded payment. Because Bryant did

not immediately pay the CSET, the agent served him with a

"Record of Jeopardy Findings and Jeopardy Assessment

Notice and Demand" which required payment of the CSET plus

Ind. Code Ann. §§ 6-7-3-8, 11 (West Supp. 1994). The

CSET, which went into effect on July 1, 1992, imposes a tax on

the delivery, possession or manufacture of a controlied

substance in Indiana in violation of Ind. Code ch. 35-48-4 or 21

U.S.C. §§ 841-852. Ind. Code Ann. § 6-7-3-5 (West Supp.

1994).

The marijuana seized from Bryant weighed 2092 grams.

The CSET prescribes that schedule |, |i, and II! controlled

substances (including marijuana) are taxed at a rate of $40 per

gram and a proportionate amount for each fraction of a gram.

Ind. Code Ann. § 6-7-3-6 (West Supp. 1994). Schedule |, I!

and ||| substances are identified at Ind. Code Ann. §§ 35-48-2-

4, -6, and -8 (West Supp. 1994).

a 100 percent penalty for nonpayment of the tax.'° Bryant's total

obligation to the State was thus $167,360. The very next day,

the Department levied on Bryant's "checking and/or savings

accounts, contents of safe deposit boxes, money market

accounts, certificates of deposit, . . . [and] any other evidence of

indebtedness" as payment on this obligation. (R. 455.)

Counsel informed us at oral argument that the Department also

seized Bryant's home.

The State next charged Bryant with failure to pay the

CSET. aclass D felony;'’ growing and cultivating more than 30

1144 Code Ann. § 6-7-3-11(a) (West Supp. 1994) provides:

"A person may not deliver, possess or manufacture a controlled

substance subject to the tax under this chapter unless the tax

has been paid. A person wo fails or refuses to pay the tax

imposed by this chapter is subject to a penalty of one hundred

percent (100%) of the tax in addition to the tax."

‘ind. Code Ann. § 6-7-3-11(b) (West Supp. 1994) declares:

“A person who knowingly oF intentionally delivers, possesses,

or manufactures a controlled substance without having paid the

grams of marijuana, a class D felony;'* maintaining a common

nuisance, a class D felony;’° and, possession of less than 30

grams of marijuana, a class A misdemeanor.“

In April 1993, Bryant was convicted on all four counts.

The court sentenced him to two and a half years in prison on

each of the four felony counts and one year for misdemeanor

possession. His sentences were to run concurrently, with one

year suspended to probation.

Bryant subsequently appealed to the Indiana Court of

Appeals. After briefing was completed, | transferred the case to

tax due commits a Class D felony. This subsection does not

apply to a person in violation of |C 35-48-4-11, if the violation is

a misdemeanor." (The second sentence of this subsection |

exempts first-time offenders involving no more than thirty

grams of marijuana, or two grams of hash oil or hashish.)

"ind. Code Ann. § 35-48-4-11(2) (West 1986).

"Sind. Code Ann. § 35-48-4-13 (West Supp. 1994).

‘ind. Code Ann. § 35-48-4-11(1) (West 1986).

this Court pursuant to the authority granted me by Ind.Appeliate

Rule 4(D).

Bryant raises the following issues on appeal:

1. Whether the State violated the Double Jeopardy

Clause by assessing both the CSET's civil and criminal

sanctions against Bryant;’°

a: Whether the trial court erroneously convicted

Bryant for failure to pay the CSET based on evidence that he

grew and cultivated marijuana;

3. Whether the trial court erred when it admitted

evidence obtained in the search of Bryant's home;

4. Whether the trial court erred by admitting

evidence of Bryant's prior convictions; and,

‘Bryant also alleges that the CSET violates the federal and

state prohibitions against excessive fines and the state

prohibition against imprisonment for a debt. U.S. Const.

amend 8: Ind. Const. art. |, §§ 16, 22. Because we reverse

Bryant's CSET conviction, we need not address these issues..

5. Whether there was sufficient evidence to convict

Bryant of possessing marijuana and maintaining a common

nuisance.

We hold the Department's assessment of the CSET

against Bryant was a jeopardy. His criminal prosecution for

failure to pay the CSET constituted a second jeopardy in

violation of his double jeopardy rights under the United States

Constitution as did his_criminal prosecutions for growing and

possession marijuana. Accordingly, we vacate his conviction

on that count."° We affirm his convictions on the three

remaining counts.

ll. The nd le r

Bryant claims that because the State assessed the

CSET and its 100 percent penalty for nonpayment against him

and later convicted him of a felony for nonpayment, it violated

his double jeopardy rights under the United States and Indiana

‘°Thus, we need not address the second claim listed above.

ee ———— ——— - - “pes.

Constitutions.” U.S. Const. amend. V; IND. Const. art. I, §

14,"°

The Double Jeopardy Clause provides that no person

shall "be subject for the same offense to be twice put in

jeopardy of life or limb." U.S. Const. amend. V. This clause is

applicable to the states through the Fourteenth Amendment.

Benton v. Maryland, 395 U.S. 784 (1969). It protects a person

from suffering (1) a second prosecution for the same offense

after acquittal, (2) a second prosecution for the same offense

after conviction and (3) multiple punishments for the same

offense. North Carolina v. Pearce, 395 U.S. 711 (1969).

'7Bryant characterizes the tax and civil penalty for

nonpayment as one punishment or jeopardy Accordingly, we

consider these provisions in tandem.

'Sarticie |, § 14 provides: "No person shall be put in

jeopardy twice for the same offense.” Bryant has presented no

cogent argument with respect to his Indiana claim. He thus

presents no viabie state constitutional basis for his appeal. St.

John v. State (1988), Ind., 523 N.E.2d 1353, 1355

Jeopardy is, in its constitutional sense, a technical term

which has traditionally applied only to criminal prosecutions.

Browns v. Evans, 190 U.S. 180 (1983). Departing from this

historical rule, however, the U.S. Supreme Court has held in

recent years that particular forfeitures, civil fines and financial

exactions can be "jeopardies." Montana Dep't of Revenue v.

Kurth Ranch, 114 S.Ct. 1937 (1994); United States v. Halper,

490 U.S. 435 (1989). Cf. Austin v. United States, 113 S.Ct.

2801 (1993). In determining whether a jeopardy has occurred,

the Court has said that the sanction's label of "criminal" or "civil"

is not controlling. Halper, 490 U.S. at 447; see also United

States v. Haywood, 864 F.Supp. 502, 506 (W.D.N.C. 1994)

(description of sanction as "civil" does not foreclose possibility it

is a jeopardy). Rather, the test is whether the civil sanctior

constitutes a "punishment." Kurth Ranch, 114 S.Ct. at 1946.

Vhen the sanction serves the goals of punishment rather than

the remedial purposes of compensating the government for its

loss, it is a "punishment" and thus a "jeopardy" within the

Double Jeopardy Clause. Id. The sanction's essence as 4

punishment can be identified “only by assessing the character

of the actual sanctions imposed on the individual by the

machinery of the state." Halper, 490 U.S. at 447.

A. Is the CSET's Civil Sanction a Punishment?

e LOE SUN Oath“ See

The Supreme Court recently delineated the analysis for

determining whether a tax is a punishment in Kurth Ranch, 114

S.Ct. 1937, a case bearing strong resemblance to the one

before us. In Kurth, the Montana Department of Revenue

sought to impose both criminal and tax penalties for the same

possession of marijuana. in determining whether the tax was a

"punishment" and thus a jeopardy under double jeopardy

analysis, the Court examined four factors: the tax’s deterrent

purpose (as opposed to revenue purpose), its high rate, its

prerequisite of the commission of a crime before assessment,

and the nature of the tax Ultimately, the Court found that when

considered in tandem these factors revealed that the Montana

tax was a punishment and thus a second jeopardy imposed on

the taxpayer in violation of the Double Jeopardy Clause.

To apply the Kurth analysis, we examine first the

purpose and rate of the CSET."® it is apparent that the CSET

is aimed at least partly towards deterrence. One who pays the

CSET receives a receipt that admonishes him that delivery,

sale, possession or manufacture of a controlled substance is a

crime. Ind. Code Ann. § 6-7-3-10(a) (West Supp. 1994). The

"ind. Code Ann. § 6-7-3-13 (West Supp. 1994)

Characterizes the initial assessment of the tax as a “jeopardy

assessment." The Department claims the “jeopardy” label

does not connote a “jeopardy” for double jeopardy purposes.

Based on our conclusion that the CSET is a jeopardy, it is

unnecessary to evaluate this delineation. Moreover, we will not

address here whether the assessment of the tax itself was a

jeopardy independent of the 100 percent penalty and criminal

charge, as that issue was not raised on appeal. Rather, for

today's purposes we consider the tax and civil penalty

assessed by § 6-7-3-11(a) as one sanction.

taxpayer is required to show this receipt to officials to prove he

has paid the tax, but the receipt is valid for only forty-eight

hours. Ind. Code Ann. § 6-7-3-10(b) (West Supp. 1994). A

taxpayer who possesses the same drug for over forty-eight

hours must therefore repay the tax every forty-eight hours to

continue to possess a valid receipt and thereby avoid the

CSET's additional sanctions. Both the receipt's admonition and

the limited period for which it is valid suggest a deterrent

purpose.

Second, just as the Kurth Court found the high rate of

the Montana tax demonstrated its punitive character, we find

the CSET's rate similarly revealing. The Montana tax was

imposed at the rate of $100 per ounce, roughly eight times the

market value of the marijuana taxed. Kurth Ranch, 114 S.Ct. at

1943. n.12. Indiana's CSET imposes a tax of $40.00 per gram,

or $1,133.96 per ounce. This is a rate of over ninety times the

market value and more than eleven times the rate imposed in

Kurth.” It indicates a punitive character.

The third factor the Kurth Court found suggestive of the

tax's punitive nature was the fact that it was conditioned on the

commission of a crime and was exacted only after the

possessor was arrested. The Court found these conditions

“significant of [the tax’s] penal and prohibitory intent rather than

the gathering of revenue." Kurth Ranch, 114 S.Ct. at 1947

(quoting United States v. Constantine, 296 U.S. 287, 295

(1935)). The CSET is similarly conditioned on the commission

of a crime. It is imposed only on individuals who deliver,

possess or manufacture controlled substances “in violation of

*°The Kurth Court identified the market value of marijuana

as $200 per pound, which equals $12.50 per ounce or $.44 per

gram. Kurth Ranch, 114 S.Ct. at 1943, n.12. We use this

same market value to compare the rate of the CSET with the

street value of Bryant's marijuana. There is no contrary

evidence in the record.

IC 35-48-4 or 21 U.S.C. 841 through 21 U.S.C. 852." Ind. Code

Ann. § 6-7-3-5 (West Supp. 1994).

Moreover, while the plain language of the statute does

not limit the imposition of the CSET to a time after arrest, this is

its effect. The law does say that a taxpayer owes the tax

regardiess of whether she is arrested. The Department

assesses the tax, however, only when police contact it to report

an individual who is in custody for the delivery, possession or

manufacture of a controlled substance. The resemblance

between the two schemes seems more compelling than the

difference.

Finally, the Kurth Court found that because the Montana

tax was characterized as a “property” tax but was assessed

only after the controlled substance was confiscated, the tax

possessed none of the indicia of "a species of a property tax”

Kurth Ranch, 114 S.Ct. at 1948. Likewise, the CSET is so far

removed from a normal excise tax that it must be classified as a

punishment. An excise tax is one which is imposed upon the

performance of an act or the enjoyment of a privilege. Black's

Law Dictionary 506 (Sth ed. 1979). As in Kurth, however, the

Department routinely imposes the CSET only after a taxpayer's

drugs have been confiscated. The taxpayer neither enjoys a

privilege nor performs an act at the time

of taxation. The CSET cannot therefore be classified as a

normal excise tax.”"

The CSET differs from a traditional excise tax in another

respect. The rate of the tax so significantly outreaches that of

other excise taxes in this state that its classification as a normal

excise tax is impossible. No other Indiana excise tax imposes

such a severe civil penalty for nonpayment. See. e.g.,

"Unless the Department independently finds and assesses

drug possessors without police intervention, this will always be

the case. Evidence at trial suggested that the Department

does not conduct such independent investigations and it did not

do so in Bryant's case.

ind. Code Ann. § 6-7-1-24(a)(2) (West Supp. 1994) (failure to

pay cigarette tax can result in fifty percent penalty).

The CSET is not identical to the Kurth tax in every

respect, but the factors outlined in Kurth do not create a bright

line. After evaluating the CSET as a whole, like the Court in

Kurth, we conclude that “this drug tax is a concoction of

anomalies, too far-removed in crucial respects from a standard

tax assessment to escape characterization as punishment for

the purpose of Double Jeopardy analysis." Kurth Ranch, 114

S Ct. at 1948. Accordingly, the assessment of the CSET and

its 100 percent penalty against Bryant was a punishment and

thus a jeopardy.

B Were the CSET's Civil and Criminal Sanctions Multiple

Punishments for the Same Offense?

Having concluded the CSET's civil sanction was a

jeopardy, we must now determine whether the imposition of the

CSETs civil and criminal penalties constituted multiple

punishments for the same offense. Because the CSET

imposes its civil and criminal penalties in two separate

proceedings, we are not required to address the permissibility

of "multiple punishments" imposed in the same proceeding.

See, e.g., Kurth Ranch, 114 S.Ct. at 1947, n. 21; cf. North

Carolina v. Pearce, 395 U.S. 711, 717 (1969). Rather, we must

address whether the CSET's criminal and civil punishments

violate the double jeopardy prohibition against a second

prosecution for the same offense after conviction or acquittal

because it imposes separate sanctions in successive

proceedings.~

In determining whether the two offenses are the same,

we apply the test first announced in Blockburger v. United

“Even though the tax proceeding against Bryant began at

the same time as the criminal prosecution, this does not make

it a single proceeding raising the issue of “multiple

punishments" for the “same offense." As in Kurth, the fact that

the two were pending contemporaneously is not determinative.

Kurth Ranch, 114 S.Ct. at 1947, n. 21.

States, 284 U.S. 299 (1932), and recently revived in United

States v. Dixon, 113 S.Ct. 2849 (1993). Where the same act

or transaction constitutes a violation of two distinct statutory

provisions, "the test to be applied to determine whether there

are two offenses or only one is whether each provision requires

proof of a fact that the other does not. If each statute requires

proof of an additional fact which the other does not,” the

offenses are not the “same offense” for double jeopardy

purposes. Blockburger, 284 U.S. at 304. For example, a state

Five justices of the U.S. Supreme Court expanded the

“same offense” analysis of Blockbuster in the 1990 decision of

Grady v. Corbin, 495 U.S. 508 (1990). Grady established a

second prong to the traditional Blockburger test under which

courts were required to analyze whether the “conduct”

underlying the offenses was the same, in which case a

subsequent prosecution would be barred notwthstanding

differences in the required elements This decision was

overruled by United States v. Dixon, 113 S.Ct. 2849 (1993),

violates double jeopardy protection when it punishes a

defendant for a greater offense and a "lesser included offense."

That is, if the lesser included offense requires no proof beyond

that required for the greater offense, the two are the "same

offense" for purposes of the Double Jeopardy Clause.“ There

are, however, similar offenses which do not violate the "same

elements" test. Crimes which possess overlapping proof are

when the Court reestablished the primacy of the traditional

Blockburger analysis.

**See, e.g., Brown v. Ohio, 432 U.S. 161, 167-68 (1977),

mere the U.S. Supreme Court applied this "lesser included

offense" analysis to the crimes of joyriding and auto theft. The

Court concluded that a prosecutor who has established auto

theft necessarily has established joyriding as well. Accordingly,

they were the "same offense." The Court expanded this

analysis in Harris v. Oklahoma, when it evaluated whether one

offense was a species of a lesser-included offense of the other.

Haris v. Oklahoma, 433 U.S. 682 (1977) (finding robbery a

lesser-included offense when felony murder conviction required

proof of robbery).

not conclusively double jeopardies. The conduct proved may

be "one and the same” so long as each offense possesses

“an element not embraced in the other." Dixon, 113 S.Ct. at

2860 (quoting Gavieres v. United States, 220 U.S. 307, 345

(1911)).

Employing the “same elements" analysis, we find that

the CSET's civil and criminal sanctions are punishments for the

same offense. Both punishments require that a person deliver,

possess or manufacture a controlled substance without having

paid the CSET to be subject to prosecution. The only

distinction between the punishments is found in the criminal

sanction imposed for nonpayment in subsection (b) of § 6-7-3-

11. This provision requires a mens rea of “knowingly or

intentionally" for criminal conviction. The CSET's civil sanction

requires no mens rea. However, its elements are identical to

the criminal sanction's elements in all other respects. Because

the civil penalty invoked by subsection (a) of the statute

requires no elements other than those included in the criminal

penalty found in subsection (b), these subsections are two

punishments for the same offense.

_ Whi a

The determination of when jeopardy attaches is the

lynchpin for concluding which jeopardy is barred as a second

jeopardy. Crist v. Bretz, 437 U.S. 28, 38 (1978). Consequently,

we turn to the question of which CSET sanction was Bryant's

first jeopardy and which was the second jeopardy prohibited by

the Fifth Amendment. To resolve this question we must settle

when jeopardy attaches in a civil proceeding. Of course, the

U.S. Supreme Court has not considered this question since its

decision just last year in Kurth. Thus, we write on largely a

clean siate.** The Court has, however, enumerated factors and

*5\n fact, only a few courts have addressed when jeopardy

attaches in a civil proceeding. See, e.g., United States v.

Sanchez-Escareno, 950 F.2d 193, 201 (Sth Cir. 1991) (until

government attempts to collect or does collect civil fines, mere

imposition of fines aoes not constitute punishment for double

policies underlying attachment which will help identify the point

when jeopardy attached in this action.

Although the Fifth Amendment declares that no person

shall be twice put in jeopardy of life or limb, this constitutional

prohibition is not against being twice punished, but is against

twice being put in jeopardy. Abney v. United States, 431 U.S.

651 (1977). The Double Jeopardy Clause thus refers to the

risk that a person will, for a second time, be convicted of the

same offense. Id. The notion that "jeopardy" is “risk" is the

very core of double jeopardy jurisprudence. Breed v. Jones,

421 U.S. 519 (1975). Where a risk of a determination of guilt

exists, for example, jeopardy attaches. See, e.g., Serfass v.

United States, 420 U.S. 377 (1975); see also Price v. Georgia,

jeopardy purposes); United States v. Park, 947 F.2d 130 (Sth

Cir. 1991) (jeopardy attaches when forfeiture proceeding

begins); United States v. Torres, 28 F.3d 1463 (7th Cir. 1994)

(holding jeopardy did not attach in drug forfeiture proceeding

where defendant asserted no claim to seized drug money).

398 U.S. 323 (1970) (jeopardy is the risk of trial and conviction,

not punishment). Tees cases are consonant with the well-

known rule that jeopardy attaches when a jury has been

impaneled and sworn. United States v. Martin Linen Supply

Co., 430 U.S. 564 (1977).

Using the point at which there is a risk of conviction as

the moment when jeopardy attaches for Fifth Amendment

purposes assures that a person is not forced to endure the

personal strain, public embarrassment, and expense of a trial

more than once for the same offense. The Double Jeopardy

Clause achieves this result by effectively dictating that the

government cannot make multiple attempts to convict an

individual for an alleged offense, “thereby subjecting him to

embarrassment, expense and ordeal and compelling him to live

in a continuing state of anxiety and insecurity, as well as

enhancing the possibility that even though innocent he may be

found guilty." Benton v. Maryland, 395 U.S. 784, 796 (1969);

see also Breed, 421 U.S. at 530. Accordingly, it is essential to

determine the time of attachment to protect promptly the

accused's rights to finality of judgment, to minimization of

exposure to the ordeals of trial and to continue with a chosen

jury. Crist, 437 U.S. at 38; see also United States v. Jorn, 400

U.S. 470 (1971) (constitutional policy of finality inherent in Fifth

Amendment). A court's conclusion that jeopardy attached at a

specific point reflects its judgment that the constitutional

policies underpinning the Double Jeopardy Clause are

implicated at that stage of the proceeding. Jorn, 400 U.S. at

480.

We conclude that jeopardy first attached when the

Department served Bryant with its Record of Jeopardy Findings

and Jeopardy Assessment Notice and Demand. At that

moment, Bryant faced more than a risk of being found guilty; he

had actually been found guilty. The assessment itself was a

judgment against Bryant for the CSET and its 100 percent

nonpayment penaity. This judgment enabled the Department to

levy on Bryant's property immediately, and the Department

exercised that authority the day after it issued Bryant's jeopardy

assessment. To hold jeopardy attached at any point later than

assessment would give the Department latitude to subject the

taxpayer to the ordeal of assessment and levy multiple times for

the same offense.” That would be contrary to the constitutional

policies underlying the Double Jeopardy Clause.

The dissent suggests that finding jeopardy attached at

assessment forecioses prosecution. This is correct so long as

**The only other options for attachment are the time of

actual collection or when a taxpayer appeals the assessment.

Attachment cannot be said to occur on appeal or at collection

because the taxpayer is inherently at risk of a determination of

guilt and of losing his property from the moment of

assessment. Furthermore, if we were to find it attached when a

taxpayer appeals the assessment, the defendant would

possess the luxury of choosing which jeopardy was his first; he

would initate his appeal only where his tax liability was minor

compared to his potential criminal penalty and would demand a

speedy trial when his tax liability was significant compared to

his potential criminal liability.

the State prosecutes the defendant after the Department

assesses the CSET. We know from oral argument on this

cause, however, that the Department does not conduct

independent investigations, searching for drug offenders.

Rather. it learns of an offense only when contacted by the

police or prosecutor. This situation creates the opportunity for

discussion between the Department and law enforcement

authorities as to who will proceed first. Moreover, it seems

plain enough for Fifth Amendment purposes that, from the

citizen's point of view, it is irrelevant whether penalties imposed

by one branch of the government foreclose penalties by

another branch.

In any event, if there is any problem of coordination

between the Department and law enforcement authorities (and

what we were told at oral argument suggests there is none), the

General Assembly may simply amend the statute to require the

Department and prosecutor to consult with one another about

who should go first.

The CSET assessment was Bryant's first jeopardy. The

moment the jury was sworn in his criminal trial for nonpayment

of the CSET a second jeopardy attached. Crist, 437 U.S. at 38.

Accordingly, the Double Jeopardy Clause barred Bryant's

criminal prosecution for nonpayment. We vacate the conviction

for failure to pay the CSET.

Moreover, having concluded the CSET is a jeopardy,

Bryant's convictions for growing more than 30 grams of

marijuana and possessing less than 30 grams of marijuana

were also subsequent jeopardies barred by the Double

Jeopardy Clause. As we explain today in Clifft v. Indiana Dep't

of State Revenue (1995) Ind, __— N.E.2d ___, subsequent

prosecutions under the criminal law for the same drug offenses

twice places a defendant in jeopardy. We therefore vacate

Bryant's criminal convictions. -

lil. The a :

This case presents another novel issue unrelated to the

CSET and double jeopardy. Bryant contends the trial court

committed reversible error when it admitted evidence obtained

in the police search of his home, saying it was illegally obtained

in violation of the Fourth Amendment to the U.S. Constitution.”

The State contends that exigent circumstances justified the

warrantless search because officers reasonably believed a

person inside Bryant's home may have been in need of aid and

because the deputies possessed probable cause to believe a

burglary was in progress.

The Fourth Amendment provides each person the right

to be secure in his or her person, houses, papers and effects

against unreasonable searches and seizures. U.S. CONST

amend. 4.: IND. Const. art. |, § 11. Generally, a search or

27Police did not possess a warrant for the initial search of

the home, but they obtained one before the second search,

during which they seized the marijuana and drug effects

Bryant aiso contends that admission of this evidence violated

Articie |, § 11 of the indiana Constitution, but does not present

any cogent argument conceming this claim. Accordingly, the

claim is waived. St. John, 523 N.E.2d at 1355

seizure may only be conducted pursuant to a lawful warrant.

Arkansas v. Sanders, 442 U.S. 753 (1979); Taylor v. State

(1992), Ind., 587 N.E.2d 1293. The cardinal principle in search

and seizure jurisprudence therefore is that “searches

conducted outside the judicial process, without prior approval

by judge or magistrate, are per se unreasonable .. . - subject

only to a few specifically established and well-delineated

exceptions.” Fair v. State (1993), Ind., 627 N.E.2d 427, 430

(quoting Mincey v. Arizona, 437 U.S. 385, 390 (1978)). Exigent

circumstances compelling quick action before a warrant can be

obtained are recognized as such an exception. Michigan v.

Tyler, 436 U.S. 499 (1978) (building on fire). The State bears

the burden of proving the existence of exigent circumstances

sufficient to justify the lack of formalities. Coolidge v. New

Hampshire, 403 U.S. 443 (1971).

The State initially argues that its warrantless search was

justified because a person inside Bryant's home may have been

in need of aid. The U.S. Supreme Court and this Court have

recognized a limited exception to the warrant requirement

where an officer reasonably believes such circumstances exist.

Warden, Maryland Penitentiary v. Hayden, 387 U.S. 294

(1967); Tata v. State (1986), Ind., 486 N.E.2d 1026. In cases

employing this exception, however, police possessed objective

evidence that a violent crime had or was about to occur.

Hayden, 387 U.S. 294; Tata, 486 N.E.2d at 1028. There was

no such evidence in this case. Officers did not find any

evidence outside the home and did not hear any sound from

the home which could reasonably lead them to conclude a

person inside was in need of aid.” The warrantless search of

Bryant's home cannot be justified on these grounds.

Until today, this Court had not considered the State's

second argument: that police may enter a home when they

reasonably believe a burglary may be in progress or has

28yWhen police arrived at Bryant's home, no one told them

that a violent crime against a person had occurred or was

imminent. Cf. Tata, 486 N.E.2d at 1028.

recently been committed. Numerous state and federal courts,

however, agree that these are exigent circumstances excusing

warrantless entry. See, e.g., Reardon v. Wroan, 811 F.2d

1025 (7th Cir. 1987); State ex rel. Zander v. District Court, 591

P.2d 656 (Mont. 1979) (warrantless entry necessary to protect

property and determine whether suspect was hiding inside

where police believed burglary was in progress); United States

v. Salva, 978 F.2d 320 (7th Cir. 1992).

Our own Court of Appeals has also recognized this

exception. B.P.O.E. #576, Elks Club v. State (1980), Ind.App.,

413 N.E.2d 660. These courts and other authorities generally

agree that such an entry and search does not offend the Fourth

Amendment because the emergency circumstances

surrounding a potential burglary justify the action. See 2

Wayne R. LaFave, Search and Seizure: A Treatise on the

Fourth Amendment, § 6.6(b), at 706-707 (2d ed. 1987). We

agree that police may enter private property to protect that

property when they reasonably believe the premises have

recently been or are being burglarized.

Of course, any search conducted because police

reasonably believe a burglary is in progress or has just

occurred is limited to areas in which an intruder could

reasonably conceal himself. Officers may not use the situation

as an excuse to conduct a general search for evidence. State

v. Crabtree, 655 S.W.2d 173 (Tenn.Crim.App. 1983). A search

beyond the exigencies presented would violate the Fourth

Amendment.

In Bryant's case, Grant County Sheriffs deputies

entered the home after receiving an emergency call from a

neighbor who reported that a home alarm was sounding. VVhen

deputies arrived at the scene, they observed fresh pry marks on

an open door. They entered the house and conducted a

protective sweep of the residences.

The totality of these circumstances reveals that exigent

circumstances justified the search. The sounding alarm, fresh

pry marks and open door led police to a reasonable belief that

a burglary was in progress or had recently occurred. The

Officers searched no more area than was reasonably

necessary, but still discovered hundreds of marijuana plants in

plain view. Admission of evidence found during the search was

therefore not error.

IV. Admissibility of nt's Prior ictions

During Bryant's trial, the State cross-examined him |

regarding his convictions for robbery and armed burglary thirty-

five and forty years prior to his arrest. Bryant contends these

convictions were too remote to be admissible.

The trial court has considerable latitude in admitting or

rejecting evidence. Error in admitting evidence is not a basis

for setting aside a conviction unless the erroneous admission

was inconsistent with © substantial justice or affects the —

substantial rights of the parties. Ind.Trial Rule 61; Fleener v.

State (1995), Ind., 656 N.E.2d 1140.

Under our common law evidentiary rules,” a prior

criminal conviction may be used for impeachment if it involved

dishonesty or false statement or constituted what is commonly

referred to as an “infamous crime" which would have rendered

the witness incompetent to testify. Ashton v. Anderson (1972),

258 Ind. 51, 279 N.E.2d 210, 217. Bryant's convictions for

robbery and burglary fall squarely within the Ashton “infamous

crimes" which the trial court could rightfully admit for

impeachment purposes. A question regarding the lapse of time

between the conviction and the testimony to be impeached

does not affect the admissibility of the conviction. Robinson v.

State (1983), 446 N.E.2d 1287. Rather, the lapse of time from

We adopted the Indiana Rules of Evidence on January 1,

1994. Because Srveite offense senate in 1992, we will not

evaluate his claim under Indiana Rule of Evidence 609 which

bars the use of a prior conviction for impeachment purposes if

the conviction is more than ten years old. Instead, we evaluate

it under common law evidentiary principles.

the defendant's prior conviction is a matter for the jury to weigh

in assessing the weight of the evidence and the credibility of

the witness. Id. The trial court properly admitted evidence of

Bryant's prior convictions.

V._ Sufficiency of the Evidence

We do not reweigh the evidence or judge the credibility

of the witnesses when considering a sufficiency question on

appeal. Alfaro v. State (1985), Ind., 478 N.E.2d 670. These

are matters exclusively within the province of the jury. Rather,

we consider the evidence most favorable to the verdict, along

with any reasonable inferences therefrom, to determine

whether a reasonable trier of fact could have found the

defendant guilty beyond a reasonable doubt. Moore v. State

(1987), Ind., 515 N.E.2d 1099. We affirm if each element of the

crime is supported by substantial evidence. Loyd v. State

(1980), 272 Ind. 404, 398 N.E.2d 1260, cert. denied, 449 U.S.

881.

Bryant challenges his misdemeanor conviction for

possession of marijuana, claiming he was not in exclusive

possession of the property in which officers found two bags of

dried marijuana and over 300 marijuana plants. We need not

address this issue based on our conclusion that the conviction

was a second jeopardy barred by the Double Jeopardy Clause.

We note, nonetheless, that Bryant owned the home in which

the marijuana was found and confessed to police that the

marijuana was his. Various other drug paraphernalia found in

Bryant's home compounded the evidence of his guilt. We

conclude there was no evidence which could reasonably lead

the court to believe someone other than Bryant possessed the

drugs.”° There was sufficient evidence to support Bryant's

conviction.

%at trial, Bryant claimed a former girlfriend had access to

the home and that she could have been growing and using the

marijuana. Based on the lack of substantive evidence of this

Bryant also challenges his conviction for maintaining a

common nuisance, contending the State failed to prove he

committed a continuous or recurring violation sufficient to

constitute the "maintenance" of a common nuisance. The Code

required the State to prove Bryant knowingly or intentionally

maintained a building that was used for unlawtully keeping,

offering for sale, selling or delivering a controlled substance

described in § 35-48-4-8.5 to convict him of maintaining a

common nuisance. Ind. Code Ann. § 35-48-4-13(b)(2) (West

Supp. 1994). We have not previously addressed whether § 35-

48-4-13 requires the State to prove continuous or recurring

possession. VVe did conciude, however, that continuous or

recurring possession was an element under 2 former statute on

the grounds that the "maintains" or “maintaining” language of

the act implicitly required proof of a continuing or recurring

violation. Keeth v. State (1923), 193 Ind. 549, 550, 139 N.E.

use or possession, we find, as did the trial court, that this

contention has no merit.

589, 590.°’ Because § 35-48-4-13(b) contains this same

language in its body and title, we hold the State must have

proven Bryant's recurring or continuous violation.

At trial, the State presented evidence which proved

Bryant possessed substantial amounts of marijuana, a complex

growing system and a variety of drug paraphernalia employed

to cultivate, preserve and use marijuana in his home. When

coupled with Bryant's confession that he was growing the

marijuana for his own use, this evidence was sufficient to prove

continuing possession of a common nuisance.

Vi. Conclusion

For the foregoing reasons, we vacate Bryant's

convictions for failure to pay the CSET, growing and cultivating

*'The Indiana Court of Appeals reached the same

conclusion under our current statute. Plowman v. State (1992),

Ind.App., 604 N.E.2d 1219 (evidence of isolated or casual

occurrence insufficient to sustain conviction for maintaining

common nuisance).

marijuana and misdemeanor possession. We affirm his

conviction for maintaining a common nuisance.

Dickson and Selby, JJ., concur.

DeBruler, J., concurs and dissents with separate opinion tc

follow.

Sullivan, J., dissents with separate opinion.

SULLIVAN, Justice, dissenting.

In Department of Revenue of Montana v. Kurth Ranch.

114 S.Ct. 1937 (1994), the United States Supreme Court held

that a proceeding initiated by the state of Montana to collect a

tax on the Kurth family's marijuana crop was prohibited by the

Double Jeopardy Clause where the Kurths had already been

convicted in criminal court for possession of those drugs.

Today our court holds that the mere assessment of a similar ta

by the Indiana Department of State Revenue prior to trial for a

related drug possession or dealing offense cuts off the ability o'

county prosecutors to obtain drug convictions and courts tc

impose sentences. | believe the majority today extends the

protection of the Double Jeopardy Clause further than the

United States Supreme Court requires.*

While | do not agree in all the particulars, | do agree that

the Indiana CSET bears enough resemblance to the Montana

dangerous drug tax at issue in Kurth Ranch to implicate the

Double Jeopardy Clause. While the courts of several other

states have found their drug tax statutes sufficiently distinct

"1 AJn increasingly popular tactic of those criminally

charged wth violating state and federal drug laws and

correlatively subjected to forfeiture proceedings is to concede

in the forfeiture proceedings at the earliest opportunity and,

thereafter, seek to avoid criminal sanctions by moving to

dismiss pending criminal charges on double jeopardy grounds."

People vy. Hellis, 211 Mich.App. 634, 536 N.VW.2d 587, 592

(1995). The majority opinion goes further by proscribing

criminal sanctions once drug tax administrative proceedings

are initiated; the accused need not concede anything to avoid

prosecution.

from the Montana tax to withstand scrutiny under Kurth Ranch,

e.g. State v. Gulledge, 896 P.2d 378 (Kan. 1995); State v.

Lange, 531 N.W.2d 108 (lowa 1995); Milner v. State, 658 So.2d

500 (Ala.Civ.App. 1994); | find the majority's analysis

persuasive that the CSET has punitive characteristics that

subject it to the constraints of the Double Jeopardy Clause.

Kurth Ranch, 114 S.Ct. at 1945. Accord, Stennett v. State, 905

S.W.2d 612 (Tex.Ct.App. 1995).

Concluding that the Indiana CSET is sufficiently similar

to the Montana dangerous drug tax to subject it to the

constraints of the Double Jeopardy Clause does not mean,

however, that this is the same case as Kurth Ranch. Indeed,

this case is different from Kurth Ranch in at least one very

important way - in Kurth Ranch, the taxpayer had first been

convicted of the underlying drug offense and sought to avoid

the subsequent imposition of the drug tax on double jeopardy

grounds; here the taxpayer has first been assessed the drug

tax and seeks to avoid punishment for the underlying drug

offense on double jeopardy grounds

The majority contends that the order in which the state

seeks to impose the criminal and tax punishments makes ro

difference - that the tax carn be either a first or a second

punishment, but in either case it is considered punishment for

double jeopardy purposes. There is certainly authority for this

position.’ But | think we should tread cautiously in this area

First, the Montana tax could be imposed only after a criminal

Skurth Ranch, 114 S.Ct. at 1958 (Scalia, J., dissenting)

United States v. $405,089, 23, 33 F 3d 1210 (9th Cir 1994)

amended by order, 56 F.3d 41 (1995) United States y.

Sanchez-Escareno, 950 F 2d 193 203 (61h Cir 1001) F

Anthony Paganelli, "Constitutional Anulyaie of Indiana's

Controlled Substance Excise Tax" 70 ind Ld 1901 10904

n.217 (1995). But see United Slates $400,009.29, 0 F da a

41 (opinion of Ryner, J., dissenting from denial of rehearing an

banc, joined by six other judges), United States y Newny |!

F 3d 1143, 1145 (3d Cir. 1999)

conviction and the Kurth Ranch majority expressly noted that it

was not faced with "the question whether an ostensibly civil

proceeding that is designed to inflict punishment may bar a

subs equent proceeding that is admittedly criminal in character.”

Kurth Ranch, 114 G.Ct at 1947.21, Second, the Supreme

Court seems to emphasize the sequence in Kurth Ranch,

several times making explicit reference to the fact that the

imposition of the tax followed the imposition of the criminal

sanction.” Third, as Justice DeBruler points out, the effect of

“The Supreme Court's emphasis on the tax punishment

constituting the second punishment is seen in the following

passages

This Case presents the question whether 4 tax on the

possession of legal drugs assessed afier the State has

imposed @ criminal penalty for ihe same conduct may violate

ihe CONnsIIUiOnal prohibilion against successive punishinents

for the same offense

Kurth Ranch, 114 S.Ct, at 1941 (footnote omitted) (emphasis

supplied),

The third proceeding involved the assessment of ihe new

lax on dangerous drugs

id, at 1942 (ernphasis supplied) (the first proceeding was the

criminal prosecution ard the second was a civil forfeiture

action).

This drug tax is not the kind of remedial sanction that may

follow the first punishment of a criminal offense. Instead it is a

second punishment within the contemplation of [the Double

Jeopardy Clause] and therefore must be imposed during the

first prosecution or not at all,

id, at 1046 (emphasis supplied), While | acknowledge that this

last sertence lends support to the majority's view that the drug

lax Can constitute a first punishment, it did net in Kurth Maneh

and, for ihe reasons discussed in the text of my dissent, | do

not think it prudent to extend this principle in the absence of the

Supreme Court explicitly so holding.

holding that the tax can constitute a first punishment for double

jeopardy purposes is to interdict @ "power of the highest

essential order,” namely the power of the state to prosecute

criminal behavior, In the absence of clear Mandate from the

Supreme Court, | think it highly inadvisable for us to hold

that an administrative assessment of @ tax Can constitute a first

punishment for double jeopardy purposes.”

**Several altematives are available. First, we could hold

that the tax becomes a first punishment only when ordered by a

court, L.e., only when the taxpayer has exercised his or her right

to protest the assessment in court or the department of

revenue has obtained judicial assistance in enforcing it.

Second, we could hold that sentencing on the underlying

criminal offense extinguishes any previously established CSET

liability Pither of these approaches would bé 6orisistent with

ine outcome of Kurth Rangh and would not interfére with the

power of our prosecutors to seek to bring 4fUG POSsessors and

dealers to justice.

The majority takes the position that Kurth Ranch

requires that when a civil or administrative proceeding or

sanction has the punitive characteristics that subject it to the

constraints of the Double Jeopardy Clause, the established

principles of Double Jeopardy jurisprudence apply regardiess

of whether the criminal prosecution and sentencing or the civil

or administrative proceeding and sanction come first. Even ff |

agreed with the majority that Kurth Ranch prevents the state

from prosecuting drug offenders if CSET has already been

imposed - and | do not; see part Il, supra - | can not agree with

the way the majority seeks to implement this principle. The

majority says that jeopardy attaches when the revenue

department issues its assessment notice and demand. This

cannot be right - the mere issuance of an administrative order

cannot be sufficient to shut down completely the state's ability

to prosecute drug offenders.

The Double Jeopardy Clause is violated by (i) a second

prosecution for the same offense after acquittal or conviction

(which | will refer to as “prosecution jeopardy”), or (ii) multiple

punishments for the same offense (which | will refer to as

"punishment jeopardy"). North Carolina v. Pearce, 395 U.S.

711, 717 (1969). And the factual patterns in this and the other

*in United States v. Dixon, 113 S.Ct. 2849 (1993), Justice

Scalia, witing for the majority, takes issue wth Justice Souter

who, in dissent, distinguishes between what | refer to as

prosecution jeopardy and punishment jeopardy. Justice Scalia

writes that “there is no authority, except Grady [v. Corbin, 495

U.S. 508 (1990)], for the proposition that [double jeopardy] has

different meanings in the two contexts." Dixon, 113 S.Ct. at

2860. Dixon overruled Grady. However, the Scalia-Souter

debate addressed substantive principles of double jeopardy

law. | distinguish between prosecution jeopardy and

punishment jeopardy only for what | think are obvious

procedural differences in when jeopardy in respect of a

prosecution attaches and when jeopardy in respect of

punishment attaches.

cases before the court today generally involve three types of

state actions: (i) a criminal prosecution for a drug possession or

dealing offense; (ii) a criminal prosecution for the failure to pay

the CSET; and (iii) an administrative (non-criminal) action to

collect CSET due. Prosecution jeopardy arises or attaches in

the first two types of actions at the time the jury is sworn or, in

an action tried to the bench, at the time the fact finder begins to

take evidence. Crist v. Bretz, 437 U.S. 28, 35 (1978) (jury trial);

Serfass v. United States, 420 U.S. 377, 388 (1975) (bench

trial); Maddox v. State (1952), 230 Ind. 92, 98, 102 N.E.2d 225,

228 (jury trial); State v. Proctor (1984), Ind.App., 471 N.E.2d

707, 708 (bench trial). See generally Joseph G. Cook, 3

Constitutional Rights of the Accused 2d §§ 23:17-23:25 (1986

& Supp. 1995). The cases are not so clear as to precisely

when punishment jeopardy attaches but | have found no

authority for holding that it attaches before an offender has

commenced to serve a valid sentence. See generally United

States v. DiFrancesco, 449 U.S. 117, 134 (1980); Coleman v.

State (1986), Ind., 490 N.E.2d 711, 715; Williams v. State

(1986), Ind.App., 494 N.E.2d 1001, 1004, cert. denied 481 U.S.

1054 (1987); Arthur W. Campbell, ntenci d

§§8:14-8:17 (1991 & Supp. 1994).

But because the concept of administrative or civil

sanctions in general, and a tax in particular, constituting

jeopardy is so new to the law,” there is little guidance as to

when prosecution jeopardy or punishment jeopardy attach in

such context. Indeed, the majority's analysis on this point is

quite abbreviated.” Yet if we are to hold that at the moment of

*’The United States Supreme Court held for the first time

that civil fines, forfeiture, and financial exactions styled as a tax

can be penalties for crime in 1989, 1993, and 1994,

respectively. Montana Dep't of Rev. v. Kurth Ranch, 114 S.Ct.

1937 (1994) (tax); Austin v. United States, 113 S.Ct. 2801

(1993) (forfeiture); United States v. Halper, 490 U.S. 435

(1989) (civil fines).

*The majority's only analysis on this point is that, at the

point the department of revenue served the taxpayer with an

Psu - ae OS. °

attachment, the state is interdicted from pursuing a criminal

prosecution, ascertaining that moment of attachment becomes

a vital inquiry.

| think we start with the basic principles that the mere

filing of charges or conduct of pre-trial proceedings are not

enough to implicate prosecution jeopardy and that the mere

assessment notice and demand, "Bryant faced more than a risk

of being found guilty; he had actually been found guilty." The

majority offers no authority for this proposition and | reject it. It

seems to me tantamount to saying that when a prosecutor files

Criminal charges, a criminal defendant has actually been found

guilty. In both instances, the assessment and filing of charges

merely represents the first step in a statutorily-prescribed

regime. That the department is authorized to seize the

taxpayer's property immediately does not change the analysis

for me. | discuss this issue in greater detail in part |II-C-2,

infra. And to continue my analogy to criminal procedure, the

State is also entitled to impose substantial infringements on the

criminally accused's liberty and property following the filing of

criminal charges.

pronouncement of sentence is not enough to implicate

punishment jeopardy. As noted above, prosecution jeopardy

does not attach, in a jury trial, until the jury is sworn, and, in a

bench trial, until the fact finder begins to take evidence. | would

analogize the administrative procedure for enforcing the CSET

to the criminal bench trial and would find the imposition of the

CSET to constitute a prosecution jeopardy at the point, but not

before, the taxpayer exercises his or her rights to appeal an

assessment, a hearing has been convened, and the fact finder

has begun to take testimony. Similarly, | would not find the

imposition of the CSET to constitute a punishment jeopardy

unless and until the taxpayer has begun to pay the

assessment.”

**| make this point because there wil be cases mere the

taxpayer will not contest the assessment. See part Ill-C-1,

infra.

2 Leen

Indiana Code §6-7-3-13 (1993) provides that the

Department of Revenue shall proceed to assess and collect

CSET due under Ind.Code §6-8.1-5-3 (1993). Under 45

Ind.Admin.Code §15-5-8 (1992), the taxpayer may protest the

assessment within a prescribed period of time and request a

hearing. lf a hearing is requested, the department is required to

follow the hearing procedures specified in 45 Ind. Admin.Code

§15-5-3. In contrast to the majority which holds that

prosecution jeopardy attaches at the time the department

makes its initial assessment, | would hold that no attachment

occurs until the hearing or alternative procedures contemplated

by 45 Ind. Admin.Code §15-5-3 are convened and the fact

finder has begun to take evidence.

The recent Colorado case of People v. Litchfield, 902

P.2d 921 (Colo.CtApp. 1995), cert. granted (Colo. Sep. 11,

1995), takes a similar approach to what | propose. Subsequent

to defendants’ arrests but prior to trial, the Colorado revenue

department assessed defendants with controlled substances

taxes and penalties. Defendants objected to the assessment

and requested an administrative hearing. At the time of trial,

the department had taken no action on the objections.

Defendants moved to dismiss the criminal charges on grounds

that the tax assessment was punishment and the double

jeopardy clauses prevented their being subjected to criminal

punishment for the same conduct. Id. at 924. Although the

majority today would grant such motions, the trial court in

Litchfield found that jeopardy had not yet attached to the

assessment because there had been "no final administrative

determination of defendants’ obligation to pay the tax and

penalty.” Id. The Colorado appellate court agreed. Assuming

that the tax was punishment under Kurth Ranch, the court

pointed out that:

[T}here has been no hearing and thus no final

determination of defendants’ liability for the

assessed tax in addition, defendants have not

paid any money to tne state nor has the state

taken any steps to collect the tax obligation

allegedly owed.

Accordingly, jeopardy has not yet attached

and there has been no punishment by imposition

of liability for the state tax See US. v.

Sanchez-Escareno, 950 F.2d 193 (5th Cir.1991)

cert. denied, — U.S. —, 113 S.Ct 123, 121

L.Ed2d 78 (1992) (no jeopardy attaches to

preclude the government from prosecuting

defendants for drug importation offenses until

defendants actually pay civil fines assessed

against them or until the government sues to

collect on notes executed by defendants for

payment of such fines).

Because defendants had not been

subjected to punishment by imposition of a civil

penalty for their alleged possession of marijuana,

the trial court did not err when it found that the

criminal prosecution did not subject them to

multiple punishment in violation of the double

jeopardy clauses.

id. at 925. Note that the Colorado court finds no jeopardy

attaching at least until a final determination of liability is made,“

“in fact, the Colorado court suggests that jeopardy might

not attach until the defendants actually paid money to the state

or the state had taken steps to collect the tax obligation.

Litchfield, 902 P.2d at 924. Cf. Ragin v. United States, 893

F Supp. 570, 574 (W.D.N.C. 1995) (holding in forfeiture

proceeding accompanying drug prosecution that "jeopardy

an even broader construction of attachment than | propose. |

think attachment at the time the fact finder begins to receive

evidence is a slightly better approach because it more closely

tracks its criminal procedure analog.“

attaches when the final judgment of forfeiture is entered, and

not when the claim or answer is filed or the property seized.")

“Additional support for this approach is found in the

following hypothetical offered by Judge Easterbrook in an

influential administrative forfeiture case:

Suppose the civil forfeiture gets to tral first. The United States

wil try to show that the money was used in an illegal drug

transaction. At the beginning of the hearing, when evidence is

first presented to the trier of fact in a proceeding seeking to

impose a penalty for cnme, jeopardy attaches.

United States v. Torres, 28 F.3d 1463, 1465 (7th Cir.. 1994)

(citations omitted).

The assessment &/ CSET raises two additional issues

First, what are the double jeopardy implications, if any, if the

CSET is not contested? And, second, what are the double

jeopardy implications if the revenue department, proceeding as

permitted under the statute and regulation, seizes, or levies on

and sells, the taxpayer's property?

C-1

In cases where the taxpayer does not contest the

assessment, | would find no prosecution jeopardy as nothing

analogous to prosecution has occurred.“ However, under

“See United States v. Baird, 63 F.3d 1213 (3d Cir. 1995)

where defendant Baird contended that a drug prosecution

subsequent to an uncontested administrative forfeiture

proceeding arising from the same incident subjected him to

double jeopardy, the court observed that "[wiithout nsk of a

determination of guilt, jeopardy does not attach Because

Baird failed to contest the forfeiture, Baird was not, and

could not have been, placed at nsk by that process." See also

United States v. Morgan, 51 F.3d 1105 (2d Cir. 1995), where

Kurth Ranch, | believe that CSET's punitive characteristics that

implicate the Double Jeopardy Clause would cause punishment

jeopardy to attach at the point the taxpayer began to pay the

tax. Perhaps the case best illustrating this situation is United

States v. Sanchez-Escareno, 950 F.2d 193 (5th Cir.1991) cert.

denied, 113 S.Ct. 123 (1992), cited by the Colorado court in

People _v. Litchfield, supra. In Sanchez-Escareno, three

individuals had been arrested and assessed large civil fines by

United States Customs officials for possession and attempted

in,2ortation of marijuana. Criminal indictments based on the

defendant Morgan contended that a bank fraud prosecution

subsequent to his settlement of civil proceedings brought by

the United States Department of Treasury's Office of Thrift

Supervision subjected him to double jeopardy, the court noted

that “Morgan cannot claim prosecution for the same offense

arising after an acquittal or conviction because the initial civil

proceeding did not result in either."

Contra, United States v. Ursery, 59 F.3d 568, 571 (6th Cir.

1995).

same conduct followed, The defendants did not protest the civil

fines but instead acknowledged them by executing promissory

notes. However, the notes had not been paid nor had the

government attempted to collect the notes. The district court

dismissed the indictments, concluding that punishment

jeopardy attached at the point the defendants executed the

promissory notes. Sanchez-Escareno, 950 F.2d at 194-95.

The Fifth Circuit reversed, reasoning as follows:

Here, the government has yet to subject the

defendants to trial at all or to exact any form of

punishment whatsoever. Defendants are

presently in the same position as someone who

has been charged in two criminal proceedings,

but has not yet been tried or punished in either. If

the defendants actually pay the civil fines, then

any subsequent criminal prosecution would be

double jeopardy. See Ex parte Lange, 18 Wall.

163, 85 U.S. 163, 21 Led. 872 (1873) (when

defendant "fully suffered one of the alternative

punishments to which alone the law subjected

him, the power of the court to punish further was

gone"). Likewise, if the government chooses to

go forward with its prosecution of the defendants,

jeopardy would attach when the jury is

empaneled and sworn, as it would in any criminal

case. See Serfass v. United States, 420 US.

377, 388, 95 S.Ct. 1055, 1062, 43 L.Ed.2d 265

(1975). Finally, i the government attempts to

collect on the notes, jeopardy would attach when

the court begins to hear evidence in that action.

See id, But at this point, defendants’ contentions

under the Double Jeopardy Clause are

misplaced.

Sanchez-Escareno, 950 F.2d at 202-203.

C-2

indiana statutes and regulations provide that if the CSET

is not immediately paid, the department "may levy on and sell

the person's property." Ind.Code §6-8.1-5-3 (1993); 45

Ind.Admin.Code §15-5-8. If the department exercises this

option, does punishment jeopardy attach? In People v. Krizek,

271 IIL App.3d 533, 648 N.E.2d 313 (1995), defendant appealed

the trial court's denial of his motion to dismiss drug charges on

grounds that the prior seizure of his home to commence civil

forfeiture proceedings constituted punishment jeopardy. The

Illinois court analyzed federal court decisions from Oregon and

Mlinois that concluded that the seizure of a defendant's property

does not, by itself, constitute punishment for purposes of the

double jeopardy clause:

[A]ithough the seizure of real property under the

Forfeiture Act marks the beginning of the civil

forfeiture process, the actual seizure itself has

limited legal significance. The act of seizure

neither extinguishes the ownership rights of

Claimants to the property, nor does it vest title in

the State. The respective ownership rights of the

parties remain unaltered until such time as the

trial court enters its final judgment. Until final

judgment is entered, the claimant has the

opportunity to retain his ownership rights in the

property. Common sense dictates that it is the

deprivation of ownership, not the deprivation of

the unencumbered use of the property, that

determines when punishment for double jeopardy

purposes occurs. The State's seizure of

defendant's property, therefore, does not

constitute punishment for double jeopardy

purposes (see (United States v.] Stanwood, 872

F.SUPP. [791,] 799 [(D.Or. 1994)]; nited

States v.] Messino, 871 F.SUPP. [1027,] 1032

[(N.D.Ill. 1994)]), and the State's attempt to

prosecute defendant under the Illinois Criminal

Code does not contravene the double jeopardy

clause.

Krizek, 271 lllApp. at 538, 648 N.E.2d at 316. | think this

reasoning is sound and would find that the seizure of a

taxpayer's property by the revenue department does not

constitute punishment. However, the sale of that property is a

more difficult question, one which should properly await a

specific case in which the issue is argued.

C-3

Lest we become so consumed in thinking about drug

taxes as punishment that we forget the gerieral rule, it is worth

recalling that the general rule is that a tax is not punishment

and only becomes so when, "“[t]aken as a whole,” it is “too far-

removed in crucial respects from a standard tax assessment to

escape characterization as punishment." Kurth Ranch, 114

S.Ct. at 1948. | mention this in the context of the two preceding

sections because it is altogether plausible to me that a taxpayer

may pay a portion of CSET assessed, or the revenue

department may levy upon and sell an amount of property,

which would merely reimburse the government for its actual

costs arising from the taxpayer's criminal conduct. See id. at

1945 (quoting United States v. Halper, 490 U.S. 435, 449-450

(1989)). Such a payment or levy and sale would not be

sufficient in my view to constitute punishment jeopardy. Only to

the extent that the amount paid or levied upon and sold in

excess of that deemed reasonably remedial should be

considered to be punishment. Cf. United States v. Morgan, 51

F.3d 1105 (2d Cir. 1995), cert. denied 116 S.Ct. 171 (1995)

(double jeopardy not implicated in Office of Thrift Supervision

accompanying bank fraud prosecution where defendant did not

make threshold showing that civil sanction was “overmelimingly

disproportionate to the government's damages and expenses’);

Ragin v. United States, 893 F.SUPP. 570 (double jeopardy not

implicated in civil forfeiture proceeding accompanying drug

prosecution where "the forfeiture was proportional to the

damages caused by Ragin's conduct, and the forfeiture was

essentially remedial").

If the majority is right that administrative imposition of a

tax which is a punishment for double jeopardy purposes can cut

off the state's ability to prosecute and sentence, then | think at a

minimum the notion that jeopardy attaches at the time of

assessment should be abandoned. Rather, | think analogies to

the criminal procedure and the newly emerging precedents in

the area of civil fines, forfeitures, and taxes indicate the

following: First, a first prosecution should not attach until the

accused contests the assessment and evidence is taken at an

administrative hearing. At this point, the ability of the state to

prosecute for the underlying criminal offense would be cut off.

Second, if the accused does not contest the assessment such

that no adjudicatory proceedings are commenced, there is no

prosecution jeopardy and the state is free to proceed with

criminal prosecution. Third, if the accused pays a portion of the

assessment in a sufficient amount to constitute punishment,”

punishment jeopardy attaches and the ability of the state to

sentence for the underlying criminal offense would be cut off.

Or, arguably, such an amount of property is levied upon

and sold, depriving the accused of his or her ownership thereof.

See part lll-C-2, supra.

Conclusion

| agree with the majority that the Indiana CSET has

punitive characteristics that subject it to the constraints of the

Double Jeopardy Clause. See part|, infra. But | find nothing in

Kurth Ranch that compels us to prohibit the prosecution of

alleged drug offenders merely because the revenue department

asserts a CSET

obligation on the part of the alleged offender first. See part Il,

infra.

Assuming the established principles of Double Jeopardy

jurisprudence apply regardiess of whether the criminal

prosecution and sentencing or the imposition of CSET comes

first, | would hold that (i) there is no prosecution jeopardy

unless the taxpayer contests the assessment and a hearing is

convened to adjudicate the protest, Litchfield, 902 P.2d at 925:

prosecution jeopardy attaches when evidence is first presented

to the trier of fact, Torres, 28 F.3d at 1465; and (ii) there is no

punishment jeopardy unless the taxpayer pays at least a

portion of the tax, Sanchez-Escareno, 950 F.2d at 202. See

part lil, infra. Certainly, there is nothing in Kurth Ranch that is

inconsistent with this approach. In that case, Montana's tax

authorities assessed the dangerous drug tax and the taxpayers

contested the assessments in administrative proceedings.

Kurth Ranch, 114 S.Ct. 1942-43. Thus more happened in

Kurth Ranch than the mere initiation of a drug tax assessment

proceedings — the taxpayers actually contested the

assessment in administrative proceedings.

Based on the foregoing analysis, | would affirm Bryant's

convictions. No claim is made that Bryant contested the

assessment such that an adjudication of liability was

conducted. As such, no prosecution jeopardy attached and the

state was free to prosecute him on the criminal charges. Nor is

any claim made that Bryant voluntarily paid a sufficient amount

of the tax to constitute punishment.“ As such, no punishment

“Bryant may be able to establish that the seizure of his

property following assessment constituted a change in

Pe ee ee eS ee Pe ee Oe ey Be es he ks | ee ees at -

‘

jeopardy attached and the state was free to punish him on the

criminal charges. | agree with the majority's analysis of the

non-CSET issues in Bryant's appeal.

DeBRULER, Justice, concurring and dissenting.

In U.S. v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104

L.Ed.2d 487 (1989) and Montana v. Kurth Ranch, __ U.S.

_, 114 §.Ct. 1937, 128 L.Ed.2d 767 (1994), the complaints

had already been punished as a result of a prior criminal

prosecution when the governments exercised their taxing

and sanctioning authority. The Supreme Court ruled in both

cases that the exercise of that authority could constitute a

second punishment in violation of double jeorardy. Here, by

contrast, the state exercised its taxing and sanctioning

authority before appellant Bryant was placed in jeopardy in

court. The manner in which that taxing and sanctioning

ownership such that he could argue punishment. That issue,

left open in part |Il-C-2, supra, is not before us.

authority was exercised by Indiana revenue agents was

normal for processes followed where controlled and

regulated substances are involved. In my view, case law

does not command the conclusion that those processes

constituted a first punishment under the Double Jeopardy

Clause. | would therefore affirm all of appellant's

convictions.

To be sure, the legal signposts do not all point in the

same direction. The large amount of the controlled

substance excise tax and the fact that the tax is upon an

illegal activity do tend to support the conclusion that it is a

first jeopardy punishment under the Double Jeopardy

Clause. However, those factors are lessened in value since

the tax promotes the legitimate tax purposes of deterring a

socially undesirable activity and raising revenue from what

we know can be a highly profitable, clandestine, commercial

enterprise. While the tax looks radically high as applied to

marijuana, it looks less radical when applied to other

controlled substances such as LSD and the opium

derivatives, which are lighter in weight and more expensive

on the black market.

In prosecutions of uniawtul possession of other highly

regulated substances such as liquor and cigarettes, it is

ordinary for the criminal prosecution for possession of

untaxed liquor or cigarettes to be viewed only as a first

jeopardy even though the tax with penalty was paid during

the pendency of the criminal proceeding. See Ind.Code

Ann. §7.1-5-4-1 (West 1982); Ind.Code Ann. §6-7-1-24

(West 1989). Such payment is a wise choice since it might

persuade a prosecutor not to pursue a conviction, or might

serve as a mitigator in the judicial determination of a proper

sentence. Such payment is not regarded as a first jeopardy

punishment.

Finally, an assessment issued from within the revenue

department operates under the majority opinion to foreclose

exercise of the police power expressed in the tax statute via

the local prosecuting attorney. That power is of the highest

essential order, and | am reluctant to embrace such a shift of

it, except in the clearest of circumstances.

IN THE

SUPREME COURT OF INDIANA

KEVIN AND MONICA CLIFFT,

Appellants,

Vv.

INDIANA DEPARTMENT OF STATE

REVENUE and KENNETH L. MILLER,

COMMISSIONER,

me ee ee ee ee ee ee eee eee”

Appellees.

Cause No. 49$10-9503-TA-331

APPEAL FROM THE INDIANA TAX CCURT

The Honorable Thomas G. Fisher, Judge

December 27, 1995

SHEPARD, Chief Justice.

A woman and her husband were arrested for criminal

drug possession. After their arrest, the State assessed the

indiana Controlled Substance Excise Tax (CSET) against them

and the wife pied guilty to misdemeanor drug possession. The

couple now contends the tax was a second jeopardy in violation

; of the Double Jeopardy Ciause.

|. Statement of Facts

In October 1992, police executed a search warrant for

the home of appellants Monica and Kevin Clifft. During their

t search, police discovered 927 grams of marijuana.

The police contacted appellee Indiana Department of

State Revenue and reported their findings. The Department

subsequently assessed the CSET against the Cliffts. Based on

the weight of the drug multiplied by the statutorily prescribed

rate of $40 per gram, the Department found the Cliffts owed

$37,080 in drug taxes. Ind. Code Ann. § 6-7-3-6 (West Supp.

1994). It also assessed a 100 percent penalty against the

couple for their failure to pay the tax when first possessing the

— oir

drugs. Ind. Code Ann. § 6-7-3-11 (West Supp. 1994). When

these sums were combined with administrative charges, the

Cliffts' total tax liability was $77,871. Interest immediately

began to accrue at the rate of $8.13 per day.

In January 1993, Monica pled guilty to possession of

marijuana, a class A misdemeanor. The court ordered her

driver's license suspended for six months and directed

imprisonment of 365 days, with 363 suspended. The State

dropped its charges against Kevin.

The Cliffts subsequently appealed the Department's

CSET assessment to the Indiana Tax Court. The couple

claimed the CSET violated their double jeopardy, due process

and equal protection rights, as well as their privilege against

self-incrimination. After a hearing on the merits, the court

concluded that the CSET assessment was Monica's second

jeopardy, but found Kevin had not twice been placed in

jeopardy. It therefore reversed the assessment against Monica.

The court further determined that the CSET did not violate the

couple's due process, equal protection and self-incrimination

rights. Clifft v. Indiana Dep't of State Revenue (1994), ind. Tax,

641 N.E.2d 682.

Tia ¢ on. ie eed ue

ered RRS OP LEBEN aS we Sr EY

The Cliffts' petitioned this Court for review of their due

process and seff-incrimination claims. The Department

petitioned for review of the double jeopardy issue. We held

oral argument and granted review as to all three issues.

Consequently, we now consider:

1. Whether the imposition of the CSET was a

second jeopardy in violation of the Cliffts' double jeopardy rights

afforded by the Fifth Amendment of the United States

Constitution:

2. Whether the CSET violates the privilege against

self-incrimination embodied in the Fifth Amendment to the U.S.

Constitution; and,

3. Whether the CSET violates the Due Process

Clause of the Fourteenth Amendment to the U.S. Constitution.

We hold that the CSET was Monica and Kevin's first

jeopardy. Monica's criminal conviction for possession was

therefore her second jeopardy, and it was barred by the Double

Jeopardy Clause. No second jeopardy occurred in Kevin's

case; therefore, his double jeopardy rights were not violated.

We further conclude that the CSET violates neither the Cliffts'

privilege against self-incrimination nor their due process rights.

ll. Standard of Review

Decisions of the Indiana Tax Court are entitled to a

presumption of validity on appellate review. USAir, Inc. v.

Indiana Dep't of State Revenue (1991), Ind., 582 N.E.2d 777;

Ind.Tax Court Rule 10. We affirm the Tax Court's decision

unless, after reviewing the record as a whole, this Court “is left

with the definite and firm conviction that a mistake was made,

even though there was some evidence to support the finding

below." USAir, 582 N.E.2d at 778. In such a case, the findings

of the Tax Court are clearly erroneous and are thus reversible.

Indiana Dep't of State Rev. v. Bethlehem Steel Corp. (1994),

639 N.E.2d 264.

lil. Double Jeopardy

Like the appellant in today's case of Bryant v. State

(1995), Ind., N.E.2d , the Cliffts argue that the CSET

assessment was their second jeopardy in violation of the

Double Jeopardy Clause. U.S. CONST. amend. V. Our holding

from Bryant thus applies: the CSET is a punishment and thus a

jeopardy for double jeopardy purposes which attaches at the

moment of assessment.

Because the State assessed the CSET and its 100

percent penalty against Monica and then convicted her in a

separate proceeding under the criminal law for the same drug

offense, she was twice placed in jeopardy. Accordingly, the

second jeopardy, Monica's criminal conviction, is contrary to the

Double Jeopardy Clause. Her CSET liability does not violate

the Double Jeopardy Clause.

Kevin did not suffer multiple jeopardies for the same

offense. The State assessed the CSET against him, but did not

follow that assessment with any criminal action. He therefore

cannot be said to have twice been placed in jeopardy.

IV. Self-incrimination

The Cliffts claim the CSET violates a taxpayer's privilege

against self-incrimination awarded by the Fifth Amendment to

the U.S. Constitution.“ The couple argues that by virtue of the

fact that a taxpayer must present herself in the Department's

office when paying the CSET, she is forced to incriminate

herself. We disagree.

The Fifth Amendment provides that no person shall be

compelled to be a witness against himself. U.S. CONST.

amend. V. This privilege is applicable to the states through the

Fourteenth Amendment Due Process Clause and is afforded

"in any proceeding, civil or criminal, administrative or judicial,

investigatory or adjudicatory."” Maness v. Meyers, 419 U.S.

449, 464 (1975) (quoting Kastigar v. United States, 406 U.S.

“Before the Tax Court, the Cliffts also claimed that the

CSET violated their privilege against self-incnimination under

the Indiana Constitution. IND. CONST., art. 1, § 14. They do not

raise this issue in their Petition for Review.

441, 444 (1972)). As a result of this privilege, our

jurisprudential system follows the maxim nemo tentur prodere:

No person is bound to accuse himself. Ann. L. lijima, The War

on Drugs: The Privilege Against Self-incrimination Falls Victim

to State Taxation of Controlled Substances, 29 Harv. C.R.-C.L.

L. Rev. 101, 103 (1994). This maxim unquestionably underlies

the foundation of our accusatorial judicial system, which

requires the state to pursue its prosecution by questioning

witnesses other than the defendant and dictates that the

defendant is not required to assist the prosecution in its case

against her. Id. |

Taxes like Indiana's CSET are not altogether novel and,

accordingly, neither are challenges to them under a seflf-

incrimination theory.” Defendants using the Fifth Amendment

““Numerous states have enacted CSET-like taxes. ALA

Cove §§ 40-17A-1 to -16 (Michie Supp. 1994) ("Drugs and

Controlled Substances Excise Tax"); ARIZ. REV. STAT. ANN. §§

42-1201 to -18 (West 1994) ("Luxury Privilege Tax"); COLo.

REV. STAT. ANN. §§ 39-28.7-101 to -9 (Bradford Supp. 1994)

("Controlled Substances Tax"); FLA. STAT. ANN. § 212.0505

(West Supp. 1995); GA. CODE ANN. §§ 48-15-1 to -11 (Harrison

Supp. 1994); IDAHO CODE §§ 63-4201 to -11 (Michie Supp.

1994) ("Illegal Drug Stamp Tax Act"); ILL. ANN. STAT. ch. 35

ILCS 520/1 to -26 (Smith-Hurd 1995) ("Cannabis and

Controlled Substances Tax Act"); KAN. STAT. ANN. §§ 79-5201

to -12 (1994) ("Marijuana and Controlled Substances Tax");

Me. REv. STAT. ANN. tit. 36 §§ 4433 to -6 (West 1994) ("Illegal

Drug Tax"; imposed only after a conviction for illegal

possession); MINN. STAT. ANN. §§ 297D.01 to .14 (West 1995)

(“Marijuana and Controlled Substance Taxation"); MONT. CODE

ANN. §§ 15-25-101 -23 (1993) ("Dangerous Drug Tax"); NEB.

REV. STAT. §§ 77-4301 to -16 (1993) ("Marijuana and

Controlled Substances Tax"); OKLA. STAT. ANN. tit. 68 §§ 450.1

to .9 (West Supp. 1994) ("Controlled Dangerous Substance

Tax"); R.I. GEN. LAWS §§ 44-49-1 to -15 (Michie Supp. 1994)

("Taxation of Marijuana and Other Controlled Substances");

TEX. TAXCODE ANN. §§ 159.001 to .301 (West Supp. 1995)

(“Controlled Substances Tax"); UTAH CODE ANN. §§ 59-19-101

to -7 (Michie Supp. 1994) (“Illegal Drug Stamp Tax Act"); Wis.

STAT. ANN. §§ 139.87 to .96 (West Supp. 1994) ("Tax on

privilege against self-incrimination have challenged CSET-style

taxes in Minnesota,“’ Florida,’ South Dakota,“ Kansas,”

Utah*’ and elsewhere. These courts rightly evaluate their drug

taxes under the self-incrimination analysis developed by the

U.S. Supreme Court in the Marchetti/Grosso series of cases.

This analysis requires courts to consider:

(1) | Whether the activity being taxed is in an area

“permeated with criminal statutes" and whether the tax is aimed

at individuals who are "inherently suspect of criminal activities”:

Controlled Substances"); Wyo. STAT. § 39-6-405(a)(xix) (1994)

("Sales Tax").

*’Sisson v. Tripplett, 428 N.W.2d 565 (Minn. 1988).

“Florida Dept of Revenue v. Herre, 634 So.2d 618 (Fla.

1994).

“State v. Roberts, 384 N.W.2d 688 (S.D. 1986).

State v. Durrant, 769 P.2d 1174 (Kan. 1989), cert. denied,

492 U.S. 923.

*'State v. Davis, 787 P.2d 517 (Utah App. 1990).

(2) | Whether the procedure requires the individual to

give information which would reasonably be expected to be

available to police; and,

(3) | Whether the data provided by the individual

would constitute a significant link in the chain of evidence

helping to establish guilt.

See Marchetti v. United States, 390 U.S. 39, 47-48 (1968)

(quoting Alb

U.S. 70, 79 (1965)); Leary v. United States, 395 U.S. 6 (1969)

(conviction for failure to pay tax under Marijuana Tax Act

violates privilege); Grosso v. United States, 390 U.S. 62 (1968)

(conviction for failure to pay wagering excise tax violated

privilege).

There are two final considerations which this Court must

consider when applying the Marchetti test. First, the privilege

may only be invoked when the threat of incriminating oneself is

“real and appreciable" and not merely “imaginary and

unsubstantial." Marchetti, 390 U.S. at 48. Second, where

available statutory protection is broad enough to encompass

the same protection afforded by the Fifth Amendment, an

individual cannot successfully assert the Amendment's

privilege. Id. at 58 (citing Counselman v. Hitchcock, 142 U.S.

547, 585 (1892)("[Llegislation cannot abridge a constitutional

privilege... unless it is so broad as to have the same extent and

scope and effect."))."*

Through applying the Marchetti test to various taxes on

illegal activities, the U.S. Supreme Court has voided CSET-

“The issue examined today was long ago noticed by this

Court when it decided Wilkins vy. Malone (1860), 14 Ind. 153.

an opinion relied upon by the U.S. Supreme Court in resolving

Counseiman. in Wilkins, we said: “Literally, this provision

extends to criminal prosecutions only, and not to civil actions:

but we think its spirit and intent go much farther, and protect a

person from a compulsory disclosure, in a civil suit, of facts

tending to criminate the party, wherever his answer could be

given in evidence against him in a subsequent criminal

prosecution.”

style assessments on wagering, illegal firearms, and controlled

substances on the grounds that they violate a taxpayer's

privilege against self-incrimination. Grosso, 390 U.S. 62 (1968);

Haynes v. United States, 390 U.S. 85 (1968); Leary, 395 U.S.

6. In each of these cases, the Supreme Court found the

Marchetti test was satisfied because a real and substantial risk

of self-incrimination existed. Information required to be

disclosed in Grosso, Haynes, and Leary included various

combinations of a taxpayer's name, home and business

addresses, social security number, admissions that the

taxpayer is conducting an illegal activity, names and addresses

of patrons, an income return disclosing the illegal activity, and a

record of the taxpayer's felony convictions. The Supreme Court

found these statutes compelled self-incrimination because they

required the disclosure of identifying and_ incriminating

information that was then made available to law enforcement

authorities. Grosso, 390 U.S. at 65-66; Haynes, 390 U.S. at

96; Leary, 395 U.S. at 14-15.

State courts applying the identical rationale to drug tax

cases have reached an identical conclusion. See, e.g., Briney

v. State Dep't. of Revenue, 594 So.2d 120 (Ala Civ. App. 1991).

Application of the Marchetti test to the CSET therefore directs

our focus to the disclosure of information compelled at the time

of payment and whether that information is, or could be.

distributed to police.

The CSET easily meets the first prong of Marchetti

because it is imposed in an area permeated with criminal

Statutes and is aimed at individuals who are inherently

suspected of illegally possessing, manufacturing and

distributing controlled substances. The question thus becomes

whether the information disclosed when a taxpayer pays the

CSET is turned over to police and whether that information

constitutes a "significant link" in the chain of evidence to

establish guilt.

The second prong of the Marchetti test is satisfied by the

CSET because information disclosed by a taxpayer is not and

cannot be revealed to law enforcement authorities for any

purpose other than tax collection. Ind. Code Ann. § 6-8.1-7-1

(West Supp. 1994). Section 6-8.1-7-1 prohibits the Department

and its agents from divulging the amount of tax paid, any

investigative reports or records or any other information

disclosed by the reports filed under the provisions of law

relating to the CSET when it is agreed that the information is to

be confidential and to be used solely for official purposes. Id.

Any such divulgence is a class C misdemeanor and grounds for

immediate dismissal. Ind. Code Ann. § 6-8.1-7-3 (West Supp.

1994).

The Cliffts allege that § 6-8.1-7-1 does not apply to the

CSET and that, even if it did, information disclosed by the

CSET payor cannot fall within its confidentiality requirement

because the CSET does not "generate information which could

be disclosed on reports or obtained from federal returns ... ."

Memorandum in Support of Summary Judgment, p.10. We

cannot agree. Because the legislature included the CSET as a

listed tax within § 6-8.1-1-1, information disclosed when paying

the CSET is subject to § 6-8.1-7-1's confidentiality provision.

Moreover, § 6-8.1-7-1's sweeping language prohibiting

disclosure of "any other information" inherently includes any

information a CSET payor discloses to the Department. As

such, information disclosed when paying the CSET is strictly

confidential.

Ultimately, it is evident that the legislature recognized

the CSET's potential self-incrimination violations and sought to

avoid them by requiring that the data collected by the

Department be kept confidential. The legislature went out of its

way to ensure this confidentiality by ordering a punishment for

disclosure, Ind. Code § 6-8.1-7-3, and by simultaneously

removing any incentive to disclose the information by providing

that it cannot be used to "initiate or facilitate" the taxpayer's

prosecution, Ind. Code Ann. § 6-7-3-9. We believe the

privilege against self-incrimination requires no more.

The larger issue is therefore whether information

required to be disclosed when paying the CSET could

constitute a significant "link in a chain of evidence" to establish

the taxpayer's guilt. Marchetti, 390 U.S. at 48. The Cliffts claim

that the statute requires taxpayers to present themselves

physically before Department authorities when paying the

CSET. They contend this presence is, in and of itself,

compelled self-incrimination. We cannot agree.

We determine what must be disclosed when paying the

CSET by looking at the statute's plain language. Our objective

is to determine and effect legislative intent. Spaulding v.

International Bakers Serv. (1990), Ind., 550 N.E.2d 307. We

ascertain and implement legislative intent by "giving effect to

the ordinary and plain meaning of the language used in the

statute.” Helton v. State (1993), Ind.App., 624 N.E.2d 499. The

statute is examined and interpreted as a whole and the

language itself is scrutinized, including the grammatical

structure of the clause or sentence at issue. Foremost Life Ins.

Co. v. Department of Ins. (1980), 274 Ind. 181, 409 N.E.2d

1092. Within this analysis, we give words their common and

ordinary meaning, without “overemphasizing a strict literal or

selective reading of individual words.” Spaulding, at 307

(quoting Foremost, 274 Ind. at 186, 409 N.E.2d at 1096).

The language of the CSET reveals the fallaciousness of

the Cliffts' claim that the statute compels self-incrimination by

requiring a taxpayer's presence before Department employees.

On the contrary, the statute does not require a taxpayer's

presence because the CSET may be paid by an agent of the

taxpayer. The CSET's grant of this authority occurs in § 6-7-3-8

which provides that the tax is due when, "the person receives

delivery of, takes possession of, or manufactures a controlled

substance in violation of IC 35-48-4 or 21 U.S.C. 841 through

852," but also explains that, "[a] person may not be required to

reveal the person's identity at the time the tax is paid." Ind.

Code Ann. § 6-7-3-8 (emphasis added). As the Tax Court

correctly explained, this language does not state who is

100

required to tender the tax due but, rather, states when the tax is

due. Moreover, "the juxtaposition of an indefinite article ("a") to

modify who 'may not be required to reveal,’ and a definite article

("the") to modify whose ‘identity may not be revealed,"

necessary includes the possibility that anyone can pay the tax.

Clifft, 641 N.E.2d at 687 (quoting Ind. Code § 6-7-3-8). A drug

possessor may, accordingly, empower another to pay the tax

on his behalf and thereby disclose nothing to Department

authorities.

It is also "just as important to recognize what the statute

does not say as it is to recognize what it does say" when

evaluating whether the tahun required to be disclosed

under the CSET constitutes a "significant link." Irmscher v.

McCue (1987), ind.App., 504 N.E.2d 1034, 1037 (citing Charles

W. Smith & Sons, INc. v. Lichtefeid-+Uasaaro (1985), Ind.App..,

477 N.E.2d 308, 310)(emphasis added). The CSET does not

require the payor to disclose the identity of the person in

possession of drugs, nor does it require the disclosure of the

101

address or telephone number of the possessor. Ind. Code Ann.

§ 6-7-3-8 (West Supp. 1994). Furthermore, it does not require

the payor to reveal his driver's license or other identification,

social security number, details of the possession, manufacture

or sale of drugs, location of the controlled substances or any

other incriminating information. The only data the taxpayer

must reveal is the particular amounts of specific drugs listed

within the statute which he or his agent possesses. This is

required because it is the means by which the CSET may be

calculated. Ind. Code § 6-7-3-6. Aside from this divulgence,

however, the taxpayer is required to do no more than pay the

CSET by some means. This is markedly different from the strict

disclosure requirements found in Marchetti, Grosso, Haynes

and Leary.

Because the CSET satisfies the three prongs of the

Marchetti test, there is no "real and appreciable" risk of self-

incrimination in violation of the Fifth Amendment. If such a risk

did exist, Marchetti would require this Court to evaluate whether

102

some other protection existed which was broad enough to

encompass the Fifth Amendment protection. Marchetti, 390

U.S. at 58. We conclude, as did the Tax Court, that the CSET

provides this equivalent protection by affording taxpayers both

use and derivative use immunity. Ind. Code Ann. § 6-7-3-9.

Because our conclusion is identical to that of the Tax Court, we

summarily affirm its opinion on the immunity issue.

Ind.Appellate Rules 11(B)(3) & 18(H)(2).

IV. Due Process

The Cliffts next argue that the CSET does not provide

the procedural due process demanded by the Fourteenth

Amendment to the U.S. Constitution. They claim the CSET

unconstitutionally allows the Department to seize property

before providing notice or an opportunity for a hearing.”

The Department assessed the CSET against the Cliffts on

November 9, 1992. The couple protested this assessment and

received an administrative hearing on March 5, 1993. Asa

result of this proceeding, the Department affirmed the

103

The Department's CSET assessment is a "jeopardy

assessment." Ind. Code Ann. § 6-7-3-13 (West Supp. 1994).

Consequently, the Department may immediately utilize

collection efforts normally available only after providing notice

and an opportunity for the taxpayer to be heard. Id. (cross-

referencing Ind. Code Ann. § 6-8.1-5-3 (West Supp. 1994)).

The Department may, for example, demand payment of the

CSET and, where payment is not instantly rendered, may

immediately levy on and seize the taxpayer's property. It may

then sell the property to satisfy the CSET liability, even where

an appeal is pending. Ind. Code § 6-8.1-5-3.

assessment in its May 12 findings and the Cliffts appealed to

the Tax Court. The Tax Court found no evidence that the

Department had ever attempted to collect the CSET owed by

the Cliffts. As such, the Cliffts "received an administrative

hearing and judicial review prior to suffering any deprivation of

their property..." Clifft, 641 .N.E.2d at 691. This lack of

collection is not, however, determinative of their due process

Claim.

104

On the other hand, the CSET does provide due process

opportunities after the Department has issued an assessment.

Once assessment occurs, a taxpayer may protest his CSET

liability to the Department. It, in tum, conducts an

administrative hearing within which the taxpayer may present

evidence and make his case. Ind. Code Ann. § 6-8.1-5-1 (West

Supp. 1994). Some time after the hearing, the Department

issues its findings, upon which a dissatisfied taxpayer may base

his appeal to the Tax Court. Because the Department has the

authority to begin its collection efforts immediately after

assessment, however, these administrative and _ judicial

hearings normally occur after the taxpayer has been deprived

of his property.

The taxpayer also possesses a _ simultaneous

opportunity to seek the equitable remedy of injunctive relief.

Ind. Code Ann. § 33-3-5-11 (West Supp. 1994). Through this

remedy, the taxpayer may enjoin the Department from its

collection of her property pending her original tax appeal. See,

105

e.g., Keller v. Indiana Dep't. of State Revenue (1988), Ind. Tax,

530 N.E.2d 787.

The question of whether the CSET affords a taxpayer

procedural due process depends directly on the scope of the

Due Process Clause. "The fundamental requirement of due

process is the opportunity to be heard ‘at a meaningful time and

in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319,

333 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552

(1965)). This requirement is imposed in judicial, governmental

and agency actions. Withrow v. Larkin, 421 U.S. 35 (1975).

Accordingly, the Due Process Clause ensures that, in different

situations entailing different procedures, individuals are

guaranteed government proceedings which are fair and

impartial. Id.

Traditional notions of due process enunciated by the

U.S. Supreme Court required notice and a hearing before a

creditor's seizure of disputed property. Fuentes v. Shevin, 407

U.S. 67 (1972). Today, however, courts frequently conclude

106

that liberty and property interests are adequately protected by

procedures imposed after the government deprivation acts

against the property. See, e.g., Commissioner v. Shapiro, 424

U.S. 614 (1976) (levy on assets to secure payment of jeopardy

assessment permitted when taxpayer given prompt hearing for

injunctive relief against levy); Sisson v. Triplett, 428 N.W.2d

565 (Minn. 1988). This shift is presumably due to the Supreme

Court's conclusion that due process is not "a_ technical

conception with a fixed content unrelated to time, place and

circumstances,” but rather is a principle which should be flexibly

applied, depending on the particular situation. Mathews, 424

U.S. 334. As such, where property rights are involved, mere

postponement of the opportunity to be heard is not a denial of

due process if the opportunity ultimately given is adequate.

Shapiro, 424 U.S. 614, 631-32 (citing Phillips v. Commissioner,

283 U.S. 589, 595, 596-97).

By including the CSET in the category of assessments

which the Department may immediately collect, the legislature

107

has classified this area as one in which the magnitude of the

government's need to take action without administrative delay

justifies the temporary deprivation of property which may occur.

We agree with this conclusion and the Cliffts have presented

no evidence upon which we may base a contrary assertion.

Moreover, the CSET does not deny, but merely postpones, due

process opportunities by providing a full and fair eppertunty to

be heard post-deprivation, when the taxpayer protests his

assessment. The Department's subsequent hearing on the

protest is the taxpayer's opportunity to challenge the validity of

the tax and to have property wrongly taken returned or to be

refunded its value if it has been sold. The taxpayer receives a

further opportunity to be heard when she seeks judicial review

of the assessment through an original appeal to the Tax Court.

All the while, from the moment of assessment to final appeal,

the taxpayer also possesses the right to block collection efforts

by seeking injunctive relief.

108

We conclude that these procedures afford review in a

meaningful time and in a meaningful manner which comports

with the Fourteenth Amendment. The Cliffts' due process rights

were not violated.

IV. Conclusion

We therefore affirm the decision of the Tax Court in all

respects except its conclusion that Monica's CSET liability was

barred as a second jeopardy. Ve reverse as to this issue and

reinstate the civil penalties assessed against her.

Dickson and Selby, JJ., concur.

DeBruler, J., concurs in result and dissents with separate

opinion to follow.

Sullivan, J., concurs and dissents with separate opinion.

SULLIVAN, Justice, concurring and dissenting.

As explained in part Il of my dissent today in State v.

Bryant (1995), Ind., N.E.2d (Sullivan, J., dissenting),

109

| believe the majority errs in holding that an administrative

assessment of a tax can constitute a first punishment for double

jeopardy purposes. As such, | believe that Monica Clifft's

criminal conviction is not contrary to the Double Jeopardy

Clause. However, payment of the CSET assessed would

constitute a second punishment of Monica Clifft and would

therefore be barred by Department of Revenue of Montana v.

Kurth Ranch, 114 S.Ct. 1937 (1994) (tax on the possession of

illegal drugs assessed after the state has imposed a criminal

penalty for the same conduct violated Double Jeopardy

Clause).

“if we were to proceed under the altemative approach |

describe in part Ill of my Bryant dissent, | would remand to the

Tax Court for determination of when jeopardy attached, i.e..

when evidence was first presented to a trier of fact in the Cliffts’

contest of the assessment. If that occurred prior to jeopardy

attaching in Monica Clifft's criminal prosecution, then the result

would be the same as the majonty reaches here.

110

| agree with the majority that no second jeopardy

occurred in Kevin Clifft's case and that the CSET violates

neither the Cliffts' privilege against self-incrimination nor their

due process rights .

DeBRULER, J., concurring in result and dissenting with

opinion.

| concur in sections Il, IV, and V. | cannot agree with

section Ill, which states the court's holding that the jeopardy

assessment for tax and penalty which preceded Monica

Clifft's guilty plea to illegal possession of marijuana

constituted a first punishment jeopardy under the Double

Jeopardy Clause and that her conviction upon a plea of

guilty violated the Double Jeopardy Clause. See Bryant v.

State (1995), Ind., 660 N.E.2d 290 (DeBruler, J., concurring

and dissenting). As | understand the record, the Cliffts have

to date been subject to no collection efforts and have paid

none of the tax. In light of the conclusion of this appeal, this

111

case will now continue in the Tax Court for consideration of

the other constitutional claims made by the Cliffts. | concur

in that result.

113

IN THE

INDIANA TAX COURT

KEITH AND MARY HALL,

Petitioners,

Vv.

INDIANA DEPARTMENT OF STATE REVENUE

and KENNETH L. MILLER, COMMISSIONER,

ee eee ee eee ee ees es

Respondents.

Case No. 49T10-9306-TA-00036

October 11, 1994

APPEAL FROM A FINAL DETERMINATION OF THE

INDIANA DEPARTMENT OF STATE REVENUE

FISHER, J.

The petitioners, Keith and Mary Hall (the Halls),

appeal the final determination of the respondent, the Indiana

Department of State Revenue (the Department), assessing

controlled substance excise tax (CSET) against the Halls.

Like the petitioners in the other three decisions the court

114

hands down today, Clifft v. Indiana Department of State

Revenue (filed Oct. 11, 1994), Ind. Tax No. 49T10-9308-TA-

00064, Bailey v. Indiana Department of State Revenue (filed

Oct. 11, 1994), Ind.Tax No. 49T10-9302-TA-00009, and

Hayse v. Indiana Department of Sate Revenue (filed Oct. 11,

1994), Ind.Tax No. 49T10-9308-TA-00063, the Halls

challenge the constitutionality of the CSET.

On February 12, 1993, police entered the Halls’

Indianapolis residence. In a locked basement storage room,

they discovered a bale of marijuana weighing roughly 300

pounds or 142,238 grams. Both Mr. and Mrs. Hall were

arrested, and Mr. Hall was later convicted of Class D felony

marijuana possession. All charges against Mrs. Hall were

dropped.

On February 16, the Department presented the Halls

with a CSET assessment of $5,691,320.00, representing a

tax of $40 per gram on the 142,283 grams assessed.

Because the Halls had not paid the CSET when it was due,

115

the Department. also assessed a 100 percent penalty of

$5,691,320.00, for a total assessment of $11,382,640.

Interest began accruing immediately at a daily rate of

$1,091.49.

Acting pursuant to the tax warrant the Department

issued with its jeopardy assessment,” the Marion County

Sheriff began levying on the Halls' property. Ultimately, the

Sheriff seized property and garnished wages worth roughly

$40,000, enough to pay five to six weeks' worth of interest

charges. The Sheriff ceased collection efforts several

months ago.

The Halls are represented by the same counsel as the

Cliffts, and procedurally, this appeal is on a par with the

Cliffts': it is before the court on the parties' cross motions for

Summary judgment. Because the motions raise the same

questions as the motions in Clifft, the court reiterates its

holding that the CSET does not violate the Fifth Amendment

* See IND. CODE 6-7-3-13; 6-8. 1-5-3.

116

privilege against self-incrimination or the Fourteenth

Amendment rights to equal protection and procedural due

process. Clift, slip op. at 15, 19, 21.

The court also reiterates its holding that the CSET is

2a punishment within the meaning of the Fifth Amendment

cromibiticn against double opardy uncer Desarment of

Peverue vy Kurt Rarer 1334). US , 1%

Sc 1937. 13 Laas 7. COR die oo a SBS

Secause Wr: “al ne: sufieet 2° Cimma@ posecio o

pumishment, the assessment against her s therefore

unaffected by this opinion.“ Mir. Halll, on the other hand, has

already been convicted on felony possession charges. Like

the petitioners in Bailey and Hayse, and one of the

petitioners in Clifft, Mr. Hall was arrested, assessed with

CSET liability, and convicted with all or almost all of his

* Mrs. Hall retains for trial, however, her challenge to

possession of the maryuana. as well as her claims under the

Fouw'th and Eighth Amendments. and 42 USC § 1983

117

CSET liability outstanding. He has been punished once, and

the Department cannot punish him again by collecting the

CSET from him. See Ciifft, slip op. at 25-26.

Accordingly. the court GRANTS the Department's

motion for partial summary judgment in part and GRANTS

the Halls’ motion for cartial summary judgment im cart ~The

‘ral cetermiraticr of te Oecarmert assesarg te CSET

agars: Wr Hail s REVERSED Tre dsgostion of te ira

Getermmaiion assessmg the CSET agamst Wrs Hall willl

awar ra.

118

IN THE

INDIANA TAX COURT

KEVIN AND MONICA CLIFFT.

Petitioners

’

MDIAMA DEPARTMENT OF STATE REYEMUE

ans KENNETH L MILLER COMMISSIONS

Respondents

Cause No. 45T10-9308-TA-00064

October 11, 1994

APPEAL FROM A FINAL DETERMINATION OF

THEINDIANA DEPARTMENT OF STATE REVENUE

FISHER, J.

Indiana levies a tax on the delivery, possession, and

manufacture of controlled substances (the controlled

substance excise tax or CSET)” The present appeal,

IND. CODE 67-345

120

before the court on the parties’ cross motions for partial

summary judgment, challenges the constitutionality of the

CSET. Specifically, the petitioners, Kevin and Monica Cilifft,

raise the following issues:

l. Whether the CSET violates the privilege

against self-incrimination under the Fifth Amendment to the

United States Constitution.

i. Whether the CSET violates the Cliffts' equal

protection rights under the Fourteenth Amendment to the

United States Constitution.

Hil. Whether the CSET violates the Cliffts' due

process rights under the Fourteenth Amendment to the

United States Constitution.

121

IV. Whether the CSET violates the double

jeopardy clause of the Fifth Amendment to the United States

Constitution.®

** in their motion for summary judgment, the Cliffts also

claim the CSET violates their corresponding rights under

Article |, §§ 14 and 23 of the Indiana Constitution.

A movant for summary judgment under Ind. Trial Rule

56(C) bears the burden to prove both the absence of a genuine

issue of material fact and entitlement to judgment as a matter

of law. C & C Oil Co. v. indiana Dep't of State Revenue

(1991), Ind. Tax, 570 N.E.2d 1376, 1378. Regardiess of the

existence or absence of a genuine issue of material fact on

their state constitutional claims, the Cliffts have not attempted

to show they are entitied to judgment as a matter of law.

Indeed, they have made no argument to support their bare

allegations, and therefore are not entitled to summary

judgment. Consequently, the court will not consider the Cliffts’

State constitutional claims further within the context of the

present motions.

122

BACKGROUND

AND

PROCEDURAL POSTURE

The CSET, which went into effect on July 1,

1992,is imposed on controlled substances that

are:

(1) delivered;

(2) possessed; or

(3) manufactured;

in Indiana in violation of IC 35-48-

4 or 21 U.S.C. 841 through 852.

The tax does not apply to a

controlled substance that is

distributed, manufactured, or

dispensed by a person registered

under IC 35-48-3.

123

I.C. 6-7-3-5. Thus, a person becomes liable for the CSET

“when the person receives delivery of, takes possession of.

or manufactures a controlled substance in violation of IC 35-

48-4 or 21 U.S.C. 841 through 852." IND. CODE 6-7-3-8.

Failure to, . the tax when due gives rise "to a penalty of

one hundred percent (100%) of the tax in addition to the tax."

IND. CODE 6-7-3-11(a).

The amount of tax is based upon the weight and class

of the substance. IND. CODE 6-7-3-6. Schedule |, II, and Il!

substances are taxed at $40 per gram, while Schedule IV

and V substances are taxed at $20 per gram and $10 per

gram, respectively. id. THC, the active ingredient in

marijuana, is a schedule | substance. IND. CODE 35-48-2-

4(d)(22).

On October 8, 1992, indianapolis and Speedway

police executed a search warrant for the Cliffts’' home. in

their search, the police discovered and confiscated six

marijuana plants, baggies containing marijuana, and

124

marijuana growing equipment. The Marion County Forensic

Crime Laboratory weighed the marijuana, finding a total of

927 grams.

After law enforcement authorities shared their

information with the Indiana Department of State Revenue

(the Department), the Department assessed the Cliffts with

CSET liability of $37,080, a 100% nonpayment penalty of

$37,080, a 10 percent collection fee of $3,708," and a

clerk's charge of $3.00, for a total of $77,871.00. Interest

began accruing immediately at the rate of $8.13 per day.

On January 14, 1993, the Marion Municipal Court

accepted a plea agreement between Mrs. Clifft and the

Marion County Prosecutor. Mrs. Clifft pled guilty to

possession as a Class A misdemeanor and received a six

month driver's license suspension plus 365 days of

incarceration, with 363 days suspended. The charges

against Mr. Clifft were dropped. At the time of the hearing

% IND. CODE 6-8. 1-8-2(b).

125

before this court in November 1993, the Cliffts had made no

payments toward their CSET liability.

DISCUSSION AND DECISION

Because this is an appeal from a final determination

of the Department, the court hears the case de novo and is

bound by neither the issues nor the evidence presented

during the administrative proceedings. Indiana Waste

Systems of Indiana, Inc. v. Indiana Dep't of State Revenue

(1994), Ind. Tax, 633 N.E.2d 359, 362 (citing Maurer v.

Indiana Dep't of State Revenue (1993), Ind. Tax, 607 N.E.2d

985, 986). In reviewing the parties’ cross motions for partial

summary judgment, the court is not to enter summary

judgment unless there is no genuine issue of materia! fact

and a party is entitled to judgment as a matter of law. Id.

(citing Harlan Sprague Dawley v. Indiana Dep't of Revenue

(1992), Ind. Tax, 605 N.E.2d 1222, 1225).

Because the Cliffts challenge the constitutionality of

the CSET, they face a difficult burden. They must rebut the

126

strong presumption that statutes are constitutional. See

State Line Elevator, Inc. v. State Bd. of Tax Comm'rs (1988),

Ind. Tax, 528 N.E.2d 501, 503.

SELF-INCRIMINATION

The Cliffts first claim the CSET violates the privilege

against self-incrimination under the Fifth Amendment to the

United States Constitution. They maintain that the simple act

of paying the CSET subjects taxpayers to “real and

substantial" risks of incrimination. Counsel's argument is well

made, but it cannot prevail.

A. Case Law

It is well settled that, standing alone, the illegality of

an activity, such as the unauthorized possession of

marijuana or other controlled substances, does not preclude

taxation of the activity. Department of Revenue v. Kurth

Ranch (1994), U.S. , 114 S.Ct. 1937, 1945,

128 L.Ed.2d 767, 778 (and cases cited therein). Instead,

127

when a state or the federal government seeks to tax illegal

activity, the inquiry focuses on whether the relevant

imposition and collection methods are consistent with the

privilege. See Marchetti v. United States (1968), 390 U.S.

39, 44, 88 S.Ct. 697, 700, 19 L.Ed.2d 889, 895. See also

Leary v. United States (1969), 395 U.S. 6, 12, 89 S.Ct. 1532,

1535, 23 L.Ed.2d 57, 68; Haynes v. United States (1968),

390 U.S. 85, 90, 88 S.Ct. 722, 726, 19 L.Ed.2d 923, 928;

Grosso v. United States (1968), 390 U.S. 62, 65, 88 S.Ct.

709, 712, 19 L.Ed.2d 906, 910-11. To violate the privilege

under Marchetti and its progeny, the taxing obligations must

* That the statutes at issue in this appeal are taxing

Statutes is irrelevant to the availability of the privilege. The

privilege "can be asserted ‘in any proceeding, civil or criminal,

administrative or judicial, investigatory or adjudicatory.""

Maness v. Meyers (1975), 419 U.S. 449, 464, 95 S.Ct. 584,

594, 42 L.Ed.2d 574, 587 (quoting Kastigar v. United States

(1972), 406 U.S. 441, 444, 92 S.Ct. 1653, 1656, 32 L.Ed.2d

212).

128

create "real and appreciable,’ and not merely ‘imaginary and

unsubstantial,, hazards of self-incrimination.". Marchetti at

48, 88 S.Ct. at 702, 19 L.Ed.2d at 898 (citing Regina v.

Boyes, 1 B&S 311, 330).

Each of the cited cases involved the taxation of illegal

activity: gambling in Marchetti and Grosso; possession of

sawed off shotguns in Haynes; possession of marijuana in

Leary. In all of them, the United States Supreme Court held

the tax imposition and collection methods subjected the

individuals involved to “real and appreciable" hazards of

self-incrimination.

In Marchetti, the Internal Revenue Code created a

wagering occupational tax for professional gamblers.

People liable for the tax were required to register each year

with the director of their local Internal Revenue district. The

registration required disclosure of the registrant's name,

residence and business address, a statement indicating

whether the registrant was in the business of accepting

129

wagers, and a list of the names and addresses of the

registrant's agents and employees. Marchetti, 390 U.S. at

42, 88 S.Ct. at 699, 19 L.Ed.2d at 894. Upon paying the

occupational tax, registrants received revenue stamps, which

they were obliged to post conspicuously at their principal

place of business. In the absence of a principal place of

business, registrants were to carry the stamps on their

person subject to inspection on demand by Treasury officers.

Registrants were also to maintain daily records and keep

them available for inspection by Treasury officers. In turn,

each principal Internal Revenue office was required to

maintain a publicly available list of all registrants and to

share certified copies of the list on request with any state or

local prosecutor. Id. at 43, 88 S.Ct. at 700, 19 L.Ed.2d at

895.

In Grosso, a companion case to Marchetti, the issue

was the status of the wagering excise tax, not the wagering

occupation tax. People engaged in the wagering business,

130

and only those people, had to pay the wagering excise tax

and file a return, disclosing “in the most direct fashion the

fact of the taxpayer's wagering activities." Grosso at 65, 88

S.Ct. at 712, 19 L.Ed.2d at 910. There was no prohibition on

the use of the information in the return, and the IRS, under

no direct command either to disclose or withhold information,

shared return information with law enforcement officials. Id.

at 65-66, 88 S.Ct. at 712-13, 19 L.Ed.2d at 910-11.

In Haynes, the petitioner was convicted of failure to

as required by the National Firearms Act (the NFA). The

NFA was designed to impose a tax on weapons used

principally by people engaged in crime. Haynes at 87, 88

S.Ct. at 725, 19 L.Ed.2d at 926-27. Registration of sawed-

off shotguns and other generally illegal weapons was

required only if the registrant acquired the weapon

unlawtully. The registration form required disciosure of the

registrant's birth date, social security number, and record of

131

”

felony convictions. The Court stated the registration

requirement was “directed principally at those persons who

have obtained possession of a firearm without complying

with the [NFA's] other requirements, and who therefore are

immediately threatened by criminal prosecution." Id. at 96,

88 S.Ct. at 730, 19 L.Ed.2d at 932.

Finally, in Leary, the Court analyzed the Marihuana

Tax Act, which had two main elements, a tax on transfers of

marijuana and an occupational tax on those who engaged in

marijuana dealing. Transfers of marijuana required an order

form, which was to contain the names and addresses of the

transferor and transferee, their registration numbers under

the occupational tax requirements, and the amount of

marijuana transferred. The IRS was required to keep the

information contained on order forms available to state and

local prosecutors. 395 U.S. at 14-15, 89 S.Ct. at 1536-37.

23 L.Ed.2d at 69-70.

132

The constitutional infirmities that plagued the statutory

schemes in the Marchetti line of cases do not exist in the

CSET. Indeed, the careful drafting of the CSET reveals that

the legislature expressly sought to erect safeguards against

self-incrimination.

B. The CSET

1. Disclosure of self-incriminating information

Simply put, the CSET does not require any self-

incriminating information. The Cliffts claim that the very act

of presenting oneself at a Department of Revenue office is

incriminating because government officials can observe a

taxpayer's appearance and «btain a description of the

taxpayer. This may well be true, but it is irrelevant. The

privilege against’ self-incrimination extends only to

testimonial evidence, not to physical evidence such as

appearance. See Pennsylvania v. Muniz (1990), 496 U.S.

582, 588-92, 110 S.Ct. 2638, 2643-45, 110 L.Ed.2d 528,

543-46 (and cases cited therein).

133

The Clifis are correct that a person who delivers.

possesses, or manufactures a controlled substance in

violation of relevant state or federal law would incriminate

himself by appearing at the Department of Revenue and

declaring, "| possess X grams of Y drug, a Schedule Z

controlled substance, and | wish to pay the CSET." The

CSET, however, does not compel any possessor to make

such an incriminating declaration.

The CSET "is due when the person receives delivery

of, takes possession of, or manufactures a controlled

substance in violation of IC 35-48-4 or 21 U.S.C. 841

through 852. A _persci may not be required to reveal the

person's identity at the time the tax is paid." |.C. 6-7-3-8

(emphasis added). When construing this language, the

court's foremost goal is to ascertain and give effect to the

true intention of the legislature. See Johnson County Farm

Bureau Co-op. Ass'n., Inc. v. Indiana Dep't of State Revenue

(1991), ind. Tax, 568 N.E.2d 578, 580, affd (1992), 585

134

N.E.2d 1336. "In determining the legislative intent [of a

statute], the language of the statute itself must be examined,

including the grammatical structure of the clause or sentence

in issue." Foremost Life Ins. Co. v. Dep't of Ins. (1980), 274

Ind. 181, 186, 409 N.E.2d 1092, 1096. See also Leehaug v.

State Bd. of Tax Comm'rs (1991), Ind. Tax, 583 N.E.2d 211.

|.C. 6-7-3-8 states when CSET liability arises against

“the person [who] receives delivery of, takes possession of,

or manufactures a controlled substance." It does not state

who is obligated to appear before a department official to

actually tender the tax due. Instead, the statute simply

states that “[a] person may not be required to reveal the

person's identity at the time the tax is paid." Two points

about this construction stand out in bold relief.

First, the juxtaposition of an indefinite article ("a") to

modify who “may not be required to reveal," and a definite

article ("the") to modify whose "identity" may not be revealed,

leads necessarily to the inference that anyone, ie. “a

135

person,” may pay the tax for "the person" who owes the tax.

In other words, the person liable for the tax may send an

agent, who may not be required to divulge the principal's

name, to pay the tax. Second, the prohibition against

requiring the payor to reveal the identity of the liable person

is written in the passive, rather than the active, voice. The

phrase “at the time the tax is paid" leaves open the question

“paid by whom?" and nowhere does the statute answer that

question. See William Strunk Jr. and E.B. White, The

Elements _of Style 18 (3d ed. 1979) (discussing the

uncertainty of passive constructions). Once again, the

inference from the plain meaning of this language is that an

agent may pay the tax.®"

* Moreover, when construing a statute, it is equally

important to note what the statute does not say, as well as what

it does say. inmscher v. McCue (1987), Ind. App., 504 N.E.2d

1034, 1037. |.C. 6-7-3-8 does not say "a person may not be

136

Further, 1.C. 6-7-3 lacks altogether any disclosure

requirements, whether express or implied, beyond the weight

and schedule of the controlied substance being taxed.

Nowhere does |.C. 6-7-3 require anyone to disclose an

address, a telephone number, a driver's license or other

photo identification, a social security number, data about a

transferor or transferee, details of an illegal transfer, the

location of controlled substances or an illegal manufacturing

facility, or any other information that might be subject to the

privilege against self-incrimination. Indeed, so devoid is the

CSET of any disclosure requirements that it is entirely

conceivable the person liable could send an agent to pay the

tax without even disclosing his or her name to the agent.

This is in stark contrast to the detailed statutory disclosure

schemes at issue in the Marchetti line of cases.

required to reveal his identity (or that person's identity) at the

time he (or that person) pays the tax."

137

The CSET does not require any person liable for the

CSET to give self-incriminating evidence. Instead, it allows

a person liable for the CSET to either pay in person or

through an agent, and it prohibits the government from

requiring the payor, whoever that payor may be, to divulge

the name of the liable person. Of course, the CSET allows

the scenario that the Cliffts postulate to occur, but it does not

compel that scenario. The privilege against self-

incrimination does not prevent a person from knowingly,

intelligently, and voluntarily choosing to make self-

incriminating statements; it prevents the government from

compelling a person to make self-incriminating statements.

See, e.g., Colorado v. Spring (1987), 479 U.S. 564, 107

S.Ct. 851, 93 L.Ed.2d 954. Assuming, arquendo, however,

that the CSET does indeed compel self-incriminating

Statements, the issue becomes whether the immunity the

CSET provides is sufficient to satisfy the Fifth Amendment.

2._ Immunity

138

The privilege against self-incrimination generally

prevents the government from compelling self-incriminating

evidence. A properly asserted claim of the privilege may

nonetheless be defeated if the government grants "an

immunity . . . coextensive with the privilege being

relinquished." State ex rel. Pollard v. Criminal Court of

Marion County, Division One (1975), 263 Ind. 236, 263, 329

N.E.2d 573, 591 (citing; Kastigar v. United States (1972),

406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212; Overman v.

State (1923), 194 Ind. 483, 143 N.E. 604). See also, e.g.,

United States v. North (D.C. Cir., 1990), 910 F.2d 843, 853-

54 (citing Kastigar), reh’a granted in part on other grounds

(1991), 920 F.2d 940, cert. denied (1991), Oe

111 S.Ct. 2235, 114 L.Ed.2d 477. To be valid, a grant of

immunity must be coextensive with the privilege. Murphy v.

Waterfront Comm'n (1964), 378 U.S. 52, 54, 84 S.Ct. 1594,

1596, 12 L.Ed.2d 678, 681. The question, then, is whether

139

the statutory immunity under the CSET is coextensive with

the privilege.

Three types of immunity may be

granted a witness in exchange for

his testimony: (1) transactional

immunity: which prohibits the

State from criminally prosecuting

the witness for any transaction

concerning that to which the

witness testifies; (2) use

immunity: where the testimony

compelled of the witness may not

be used at a subsequent criminal

proceeding; and (3) derivative

use__immunity: whereby any

evidence obtained as a result of

the witness’ compelled testimony

may not be admitted against him

in a subsequent prosecution.

In_ Re Caito (1984), Ind, 459 N.E.2d 1179, 1182-83

(emphasis in original) (citing Kastigar; In Re Contempt

Findings Against Schultz (1981), Ind.App., 428 N.E.2d

1284). The protections of the privilege are broadly

construed, Maness at 461, 95 S.Ct. at 592, 42 L.Ed.2d at

585, and the court is obligated to resolve all reasonable

doubts in favor of constitutionality. State Line Elevator, 528

140

N.E.2d at 503 (citing Bunker v. Nat'l Gypsum Co. (1982),

Ind., 441 N.E.2d 8, 11, appeal denied, 460 U.S. 1076, 103

S.Ct. 1761, 76 L.Ed.2d 338).

1.C. 6-7-3-9 contains two sentences and provides,

"(t]he payment of the tax under this chapter does not make

the buyer immune from criminal prosecution. However,

confidential information acquired by the department may not

be used to initiate or facilitate prosecution for an offense

other than an offense based on a violation of this chapter."

(Emphasis added). The first sentence of the statute denies

transactional immunity, but transactional immunity provides

broader protection than the privilege and is therefore not

necessary to satisfy the Fifth Amendment. See Kastigar at

453, 92 S.Ct. at 1660-61, 32 L.Ed.2d at 222.

The second sentence is addressed to the use of

"confidential information." The statute does not define

“confidentia!," but because the CSET is a listed tax, IND.

141

CODE 6-8.1-1-1, it is subject to IND. CODE 6-8.1-7-1, which

provides in pertinent part:

Unless in accordance with a

judicial order or as otherwise

provided in this chapter, the

department, its employees,

former employees, counsel,

agents or any other person may

not divulge the amount of tax paid

by any taxpayer, terms of a

settlement agreement executed

between a taxpayer and the

department, investigation records,

investigation reports, or any other

information disclosed by the

reports filed under provisions of

the law relating to any of the

listed taxes, including required

information derived from a federal

return .... (Emphasis added).

This language is sweeping in its scope and entails all the

information the Department acquires when a CSET payment

is made.

The confidential information the Department receives

cannot be used "to initiate or facilitate prosecution." To

“initiate” is "to begin or set going,” while to “facilitate” is "to

142

make easier or less difficult." Webster's Third New Int'l

Dictionary 1164, 812 (1981). This language prevents the

government from using confidential information either to

begin a prosecution (use immunity) or to ferret out additional

incriminating evidence to facilitate a prosecution (derivative

use immunity). It is therefore coextensive with the scope of

the privilege. See Kastigar at 453, 92 S.Ct. at 1660-61, 32

L.Ed.2d at 222.

The CSET does not compel a person liable for the

CSET to reveal any self-incriminating information. But even

so, the CSET grants use immunity and derivative use

immunity over all the confidential information the Department

* A state grant of immunity equally prevents a federal

prosecution. Murphy at 77-79, 84 S.Ct. at 1609, 12 L.Ed. at

694-95.

143

acquires. Therefore, the CSET does not violate the Fifth

Amendment's privilege against self- incrimination.

** The Cliffts' counsel has presented an affidavit regarding

the confidentiality provisions of the CSET. He paid $10.00 to

the Department at the Indiana Govemment Center Offices in

Indianapolis as payment for 1 gram of a Schedule 5 substance.

He avers he informed no one outside his office of his plan to

Pay the tax, but within two hours of the time he left the

Department, a television reporter contacted him to discuss the

payment. Affidavit of Andrew C. Matemowski. The inference

counsel draws is that Department personnel, ignoring the

confidentiality provisions, informed the reporter of counsel's

acts.

The court need not enter into any speculation on this matter.

Our supreme court and the United States Supreme Court have

taken into account the possibility of improper prosecutorial use

of immunized testimony. If evidence is revealed under a grant

of immunity, the prosecution in related matters "bears the

affirmative duty to prove that the evidence it proposes to use is

derived from a legitimate source wholly independent of the

144

The Cliffts next claim the CSET violates their equal

protection rights under the Fourteenth Amendment by

creating an unconstitutional exemption from the tax. They

are mistaken.

"When determining whether state legislation violates

the Fourteenth Amendment's equal protection guarantee, the

compelled testimony." In Re Caito, 459 N.E.2d at 1184

(quoting Kastigar at 460, 92 S.Ct. at 1665, 32 L.Ed.2d at 226).

* For other decisions analyzing and upholding state

controlled substance taxes against self-incrimination

challenges, see State v. Durrant (1989), 244 Kan. 522, 769

P.2d 1174, cert. denied (1989), 492 U.S. 923, 109 S.Ct. 3254,

106 L.Ed.2d 600; Sisson v. Triplett (1988), Minn., 428 N.W.2d

565, State v. Davis (1990), Utah App., 787 P.2d 517. In each

of these cases, the state statutory scheme was similar to

Indiana's, and the courts noted the differences between the

statutes under consideration and the statutes in the Marchetti

cases.

145

level of scrutiny applied depends upon the classification

made in the challenged legislation." Pazzaglia v. Review

Bd. (1993), Ind.App., 608 N.E.2d 1375, 1377, trans. denied.

If the classification does not involve either a suspect class or

a fundamental right, the legislation will pass constitutional

muster if the classification is “rationally related to a

legitimate government purpose." Id. (citing Gary Community

Mental Health Center, Inc. v. Indiana Dep't of Pub. Welfare

(1987), Ind.App., 507 N.E.2d 1019, 1023). Suspect

Classifications include, among others, race and national

origin, while fundamental rights concern matters such as

freedom of speech and the right to vote. See Regan v.

Taxation with Representation of Washington (1983), 461

U.S. 540, 547, 103 S.Ct. 1997, 2001-02, 76 L.Ed.2d 129.

137-38; Thomas _v. Greencastle Community School Corp.

(1992), Ind. App, 603 N.E.2d 190, 192. "Legislatures have

especially broad latitude in creating classifications and

146

distinctions in tax statutes." Regan at 547, 103 S.Ct. at

2002, 76 L.Ed.2d at 138.

People who possess controlled substances are not a

suspect class and no fundamental right is at issue.

Therefore, the court will set- aside the legislative

classification only if the Cliffts can show that no "state of

facts may reasonably be conceived to justify it." Kleiman v.

State (1992), Ind.App., 590 N.E.2d 660, 663 (citing Parker v.

State (1980), Ind.App., 400 N.E.2d 796).™ IND. CODE

6-7-3-5 provides:

® The Cliffts suggest their arguments warrant the

intermediate level of scrutiny generally applicable to sex or

legitimacy based discriminatory classifications. See, €.9.,

Clark v. Jeter (1988), 486 U.S. 456, 461, 108 S.Ct. 1910, 1914,

100 L.Ed.2d 465, 471-72 (discussing intermediate scrutiny).

They point to no authority however, and the court declines their

suggestion. The rational basis test is applicable here.

Pazzaglia, 608 N.E.2d at 1377.

147

The controlled substance excise

tax is imposed on _ controlled

substances that are:

(1) delivered;

(2) possessed; or

(3) manufactured;

in Indiana in violation of IC 35-48-

4 or 21 U.S.C. 841 through 852.

The tax does not apply to a

controlled substance that __is

distributed. manufactured, or

dispensed by a person registered

under IC 35-48-3.

(Emphasis added). 1.C. 35-48-3 contains the registration

requirements and limitations for physicians, pharmacists,

dentists, pharmaceutical manufacturers, and others to legally

possess, manufacture, distribute, and dispense controlled

substances within Indiana. Specifically, IND. CODE 35-48-3-

3(c) provides that "[pJersons registered . . . to manufacture,

distribute, dispense, or conduct research with controlled

substances may possess, manufacture, distribute, dispense,

or conduct research with those substances to the extent

authorized by their registration and in conformity with the

148

Se Le

other provisions of this chapter." (Emphasis added). The

Cliffts argue that the CSET treats persons registered under

.C. 35-48-3 differently from the way it treats persons who

are not registered under |.C. 35-48-3 and, therefore, violates

equal protection. No detailed equal protection analysis is

necessary to resolve the issue, however, because IC 6-7-3-5

The court construes statutes dealing with the same

subject matter harmoniously. Caylor-Nickel Clinic, P.C. v.

Indiana Dep't of State Revenue (1991), Ind. Tax, 569 N.E.2d

765, 768 (citing Marion County Sheriifs Merit Board v.

Peoples Broadcasting Corp. (1989), Ind., 547 N.E.2d 235,

237), affd (1992), Ind., 587 N.E.2d 1311. Moreover, the

court must construe all statutes to support. their

* it is the court's duty to refrain from consideration of

constitutional questions if there are other grounds on which to

base a decision. Harlan Sprague Dawey, 605 N.E.2d at 1232.

149

constitutionality. Miller v. State (1987), Ind., 517 N.E.2d 64.

71.

In Tobias v. State (1985), Ind., 479 N.E.2d 508, our

supreme court affirmed the conviction of a pharmacist,

registered under |.C. 35-48-3, who had been convicted of

Class A felony narcotics dealing under |.C. 35-48-4-1. The

court expressly rejected the pharmacist's claim that his

registration precluded the possibility he could violate |.C. 35-

48-4. Id. at 511. Similarly, the United States Supreme Court

has stated that 21 U.S.C. § 822(b), which is almost identical

to 1.C. 35-48-3-3(c), "is a qualified authorization of certain

activities, not a blanket authorization of all acts by certain

persons." United States v. Moore (1975), 423 U.S. 122. 131.

96 S.Ct. 335, 340, 46 L.Ed.2d 333, 341. See also Alarcon v.

State (1991), Ind. App., 573 N.E.2d 477, trans. denied. The

lesson is clear: a person registered under |.C. 35-48-3 is no

more authorized to violate |.C. 35-48-4 or 21 U.S.C. 841

through 852 than a person who is not registered.

150

Because an |.C. 35-48-3 registration is a nullity as to

activities and controlled substances beyond its scope, any

person who delivers, possesses, or manufactures a

controlled substance in violation |.C. 35-48-4 or 21 U.S.C.

841 through 852, is simply not "registered under IC 35-48-3"

for purposes of the CSET. The CSET therefore does not

discriminate between |.C. 35-48-3 registrants and non-

registrants. There is no equal protection violation.

The Cliffts did not pay the CSET when it was due.

Instead, the Department learned of the Cliffts' possession

from law enforcement officials end assessed the CSET

against the Cliffts pursuant to |.C. 6-7-3-13 as a jeopardy

assessment under IND. CODE 6-8.1-5-3. If the Department

issues a jeopardy assessment, and the assessment is not

paid immediately, |.C. 6-8.1-5-3 authorizes the Department,

without notice or hearing, to levy on and sell the property of

the person against whom the assessment was made. The

151

Cliffts contend these procedures deprive them of their

property in violation of their Fourteenth Amendment

procedural due process rights.

"The fundamental requirement of due process is the

opportunity to be heard ‘at a meaningful time and in a

meaningful manner.” Matthews v. Eldridge (1976), 424 U.S.

319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18. 32 (quoting

Armstrong v. Manzo (1965), 380 U.S. 545. 952, 85 S.Ct.

1187, 1191, 14 L.Ed.2d 62). See also City of Mitchell v.

Graves (1993), Ind.App., 612 N.E.2d 149. 152 “Due

process,’ unlike some legal rules, is not a technical

conception with a fixed content unrelated to time, place and

circumstances." Matthews at 334, 96 S.Ct. at 902, 47

L.Ed.2d at 33 (quoting Cafeteria Workers v. McElroy (1961),

367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230). It

"is flexible and calls for such procedural protections as the

particular situation demands." Id. (quoting Morrissey v.

152

Brewer (1972), 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33

L.Ed.2d 484).

The court need not tarry long on the Clifft's claim

because they have suffered no due process violation. The

Cliffts protested the Department's November 9, 1992.

jeopardy assessment. The Deaprtment held a hearing on

March 5, 1993 and entered its letter of findings denying the

protest on May 12, 1993. The Cliffts bring this appeal

pursuant to IND. CODE 6-8.1-5-1 from that letter of findings.

They have presented no evidence that the Department took

any measures to collect on the jeopardy assessment,

whether between November 9, 1992, and May 12, 1993, or

since. Therefore, the Cliffts received an administrative

hearing and judicial review prior to suffering any deprivation

of their property: due process can require no more.

Furthermore, although the Department may proceed

on a CSET or other jeopardy assessment without providing

the taxpayer pre-deprivation notice or opportunity to be

153

heard, this court has the jurisdiction and authority to enjoin

the Department's collection activities pending the initiation of

an original tax appeal. IND. CODE 33-3-5-11(b); American

Trucking Ass'n v. State (1987), Ind. Tax, 512 N.E.2d 920.

The right to a meaningful hearing contemplates review in a

court of competent jurisdiction. See McCallip v. State

(1991), Ind.App., 580 N.E.2d 278, 279.

The moment a person receives a jeopardy

assessment with its concomitant payment demand, and

before a tax warrant is issued and collection efforts begin,

the person assessed has the ability to seek injunctive relief

from this court. This procedure allows for review in a

meaningful time and a meaningful manner before a court of

competent jurisdiction and satisfies due process.

Finally, the Cliffts argue that the tax constitutes

double jeopardy under the United States Supreme Court's

recent decision in Department of Revenue v. Kurth Ranch

154

————_eree

(1994), __- US. , 114 S.Ct. 1937, 128 L.Ed.2d 767."

In Kurth Ranch, the Court for the first time subjected a tax

statute to double jeopardy analysis, holding that Montana's

Dangerous Drug Tax (DDT) was “a second punishment

within the contemplation of [the Fifth Amendment]... ." Id.,

114 S.Ct. at 1948, 128 L.Ed.2d at 782. Like the Cliffts, the

Kurths cultivated marijuana. Like the Cliffts, the Kurths'

marijuana was confiscated and the Kurths were arrested and

prosecuted. Id., 114 S.Ct. 1942-43, 128 L.Ed.2d 774-75.

The case reached the Supreme Court in the context of the

Kurths' Chapter 11 bankruptcy proceedings.

®” The Fifth Amendment states that "No person shall . . . be

subject for the same offence to be twice put in jeopardy of life

or limb ...." Through the Fourteenth Amendment, the

prohibition against double jeopardy applies to the states.

Benton v. Maryland (1969), 395 U.S. 784, 89 S.Ct. 2056, 23

L.Ed.2d 707.

155

The Court analyzed the Montana scheme and found

several features that led the majority to conclude the DDT

was actually a punishment for double jeopardy purposes.

First, the Court noted that taxes “are usually motivated by

revenue-raising rather than punitive purposes." Id. 114

S.Ct. at 1946, 128 L.Ed.2d at 779. The DDT. however, while

denominated as a tax, also had a strong deterrent purpose.

Id. Second, the Court characterized the rate of the DDT

applicable to marijuana (roughly eight times then current

market value) as "remarkably high... ." Id. The DDT

assessed on marijuana is the greater of $100 per ounce or

10 percent of market value. MONT. CODE ANN. § 15-25-

Sy ae Third, the DDT was "conditioned on the commission

** The Court acknowledged that "while a high tax rate and

deterrent purpose lend support to the characterization of the

drug tax as punishment, these features, in and of themselves,

do not necessarily render the tax punitive.” Kurth Ranch, 114

S.Ct. at 1947, 128 L.Ed.2d at 779. The presence of additional

156

rere

of a crime. . . . [which is] ‘significant of penal and prohibitory

intent rather than the gathering of revenue." Kurth Ranch,

114 S.Ct. at 1947, 128 L.Ed.2d at 779-80 (quoting United

States v. Constantine (1935), 296 U.S. 287, 295, 56 S.Ct.

223, 227, 80 L.Ed. 233).

Fourth, although the DDT was imposed on "the

possession and storage of dangerous drugs," MONT. CODE

ANN. 15-25-111, the enforcement scheme did not mandate

assessment, filing, and payment until arrest. Kurth Ranch,

114 S.Ct. at 1941-42, 1947, 128 L.Ed.2d at 773-74, 780. In

other words, the DDT was “exacted only after the taxpayer

has been arrested for the precise conduct that gives rise to

unusual factors, however, persuaded the Court the DDT was a

punishment.

*° Not all taxes on controlled substances are conditioned on

the commission of a crime. See id., 114 S.Ct. at 1947, n.19,

20, 128 L.Ed.2d at 780, n.19, 20. The DDT, and as wil be

seen infra, the CSET, however, are conditioned expressly and

solely on the violation of criminal statutes.

157

the tax obligation in the first place." Id., 114 S.Ct. at 1947,

128 L.Ed.2d at 780. Finally, the Court questioned the

imposition of a tax based on possession when, in actuality,

taxpayers were deprived of possession by the time of

assessment. Because assessment occurred only after

arrest, the authorities would have confiscated, and likely

destroyed the drugs for which the DDT was due before

assessment even occurred. Id., 114 S.Ct. at 1948, 128

L.Ed.2d at 780-81.

The CSET contains many of the same elements as

Montana's DDT. First, the CSET has a deterrent purpose.

The Department is required to give all CSET payors a

receipt with the following language: "THIS EVIDENCE OF

PAYMENT DOES NOT LEGALIZE THE DELIVERY, SALE.

POSSESSION, OR MANUFACTURE OF A CONTROLLED

SUBSTANCE. THE UNAUTHORIZED DELIVERY, SALE,

POSSESSION, OR MANUFACTURE OF A CONTROLLED

SUBSTANCE IS A CRIME." IND. CODE 6-7-3-10(a)

158

(emphasis in original). The Kurth Ranch court viewed similar

admonitory language in the DDT's preamble as evidence of

a deterrent purpose. Kurth Ranch, 114 S.Ct. at 1946, n.18,

128 L.Ed.2d at 779, n.18. Further, like revenue raised by

the DDT, revenue from the CSET is to be channeled into

drug abuse prevention and criminal investigation. See IND.

CODE 6-7-3-16; MONT. CODE ANN. § 15-25-122.

Second, the Montana taxing authorities imposed the

DDT against the Kurths at the rate of $100 per ounce, a rate

roughly eight times the market value of a substantial portion

of the marijuana taxed. Kurth Ranch, 114 S.Ct. at 1943,

n.12, 128 L.Ed.2d at 775, n.12. The CSET on marijuana is

$40 per gram, or $1,133.96 per ounce.” Therefore, using

the same figures the Kurth Ranch court used, the CSET

’° One ounce equals 28.349 grams. Websters, supra, at

1424.

159

taxes marijuana at a rate of over ninety times market value.’

As in Kurth Ranch, both of these factors “are at least

consistent with a punitive character." Id., 114 S.Ct. at 1946,

128 L.Ed.2d at 779.

Third, like the DDT, the CSET is conditioned on the

commission of a crime. The CSET "is imposed on controlled

Substances that are: (1) delivered: (2) possessed; or (3)

manufactured; in Indiana in violation of IC 35-48-4 or 21

U.S.C. 841 through 852." 1.C. 6-7-3-5 (emphasis added).

Therefore, the only people subject to the CSET are those

who, by definition, have engaged in criminal conduct.

Fourth, the CSET allows. assessment after

confiscation of the controlled substances on which the

” In Kurth Ranch, the Court stated the rate of the DDT

“appear{ed] to be unrivaled." Id., 114 S.Ct. at 1946, n.17, 128

L.Ed.2d at 779, n.17. The DDT has met its rival in the CSET,

however, which has a rate per ounce of manjuana more than

eleven times greater than the DDT's.

160

assessment is made. Indeed, this is precisely what occurred

in the case at bar. After law enforcement authorities

arrested and charged the Cliffts and confiscated the

marijuana, they informed the Department of the Cliffts’

identity and the number of grams of marijuana. At that point,

the Department made its assessment, notwithstanding that

the Kurths no longer possessed the marijuana at issue.

Unlike the DDT, however, CSET assessment may also occur

prior to arrest because the obligation to pay the tax arises on

delivery, possession, or manufacture, and is not necessarily

related to arrest.

Like the DDT, the CSET is an unusual tax, with

elements of both taxation and punishment. It is not exactly

like the DDT: assessment does not require arrest. The

Kurth Ranch court, however, did not hold that a tax must

contain each of the DDT's "punishment" aspects, or only the

DDT's "punishment" aspects, to constitute a punishment

within the meaning of the double jeopardy clause. Instead,

161

the Court held, "[t]laken as a whole, this drug tax is a

concoction of anomalies, too far-removed in crucial respects

from a standard tax assessment to escape characterization

as punishment for the purpose of Double Jeopardy analysis."

Id., 114 S.Ct. at 1948, 128 L.Ed.2d at 781. Indeed, it could

hardly be otherwise since each state and federal tax on the

possession of controlled substances will differ from the next,

as the CSET differs from the DDT.

Given the strong similarities between the DDT and the

CSET, coupled with the Kurth Ranch court's decision not to

lay down a definitive test, the court views Kurth Ranch as

controlling. Therefore, the court holds the CSET is a

punishment, which "must be imposed during the first

prosecution or not at all." Id. 114 S.Ct. at 1948, 128

L.Ed.2d at 782.

CONCLUSION

The CSET does not violate the privilege against self-

incrimination, the right of equal protection, or the right of due

162

process. Because there is no genuine issue of material fact

on these questions and the Department is entitied to

judgment as a matter of law, the court now GRANTS the

Department's cross motion for partial summary judgment in

part.

The CSET, however, is a punishment for double

jeopardy purposes. Therefore, the Department may not

collect the tax from Mrs. Clifft, who has already pled guilty to

Class A misdemeanor possession.” On the other hand,

This appeal, like Kurth Ranch, “does not raise the

question whether an ostensibly civil proceeding that is designed

to inflict punishment may bar a subsequent proceeding that is

admittedly criminal in character.” Kurth Ranch, 114 S.Ct. at

1947, n.21, 128 L.Ed.2d at 780, n.21. See also id., 114 S.Ct.

at 1958-59, 128 L.Ed.2d at 794 (Scalia, J. dissenting).

The date of the tax assessment, however, does not control.

The Kurths were arrested in October 1987, and the Montana

Department of Revenue assessed the DDT against the Kurths

on December 7, 1987. See In re Kurth Ranch (1990), Bankr.

163

because jeopardy has not attached in any criminal action

against Mr. Clifft, double jeopardy does not bar collection of

the tax from him. There is no genuine issue of material fact

on this question, and Mrs. Clifft is entitled to judgment as a

D. Mont., 145 B.R. 61, 67. The Kurths did not plead guilty on

the criminal charges related to the DDT until July 1988. See

Kurth Ranch, 114 S.Ct. at 1942, 128 L.Ed.2d at 774: In re Kurth

Ranch (1993), 9th Cir., 986 F.2d 1308, 1310. In this case, Mrs.

Clifft was arrested on October 8, 1992 and assessed on

November 9, 1992. The municipal court accepted her plea

agreement on January 14, 1993.

The court notes that related issues have begun working

their way through the courts. A few weeks after the Kurth

Ranch decision, in an opinion not yet released for publication, a

divided Texas Court of Appeals panel held double jeopardy

barred a criminal tral after a pretrial civil forfeiture was

assessed from the defendant. Fant y. State (filed July 31,

1994), No. A14-94-00013-CR, Tx.App. Houston (14th Dist.).

1994 WL 377748.

164

matter of law. The court therefore GRANTS the Cliffts' cross

motion for partial summary judgment in part.”

’® In addition to their state constitutional claims, the CLiffts

also raised issues regarding the Fourth and Eight Amendment

Claims, as well as a Claim under 42 U.S.C. § 1983. These were

not included within the summary judgment motions, however,

and remain for trial.

165

February 22, 1993

Attn.: Jim Riley

Director of Protest Review Board

Indiana Department of State Revenue

Tax Policy and Appeals Div.

100 N. Senate Ave., Room N248

Indianapolis, IN 46204

Re: Protest of Jeopardy

Finding;

Jeopardy Assessment Notice

and Demand

File # L93-0215-49-41

Keith A. Hall and Mary C. Hall

Dear Mr. Riley:

Keith A. Hall and Mary C. Hall hereby make their

formal written protest of the Jeopardy Finding; Jeopardy

Assessment Notice and Demand issued on February 16,

1993, in the above-listed number and respectfully request an

evidentiary hearing and opportunity to be heard, and further,

that any tax levy on their wa

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