Source: https://case-law.vlex.com/vid/511-u-s-767-605229170
Timestamp: 2019-04-24 03:57:24+00:00

Document:
Party Name: DEPARTMENT OF REVENUE OF MONTANA v. KURTH RANCH et al.
Montana law enforcement officers raided the farm of respondentsmembers of the extended Kurth familyarrested them, and confiscated and later destroyed their marijuana plants. After the Kurths pleaded guilty to drug charges, petitioner revenue department attempted, in a separate proceeding, to collect a state tax imposed on the possession and storage of dangerous drugs. That tax is collected only after any state or federal fines or forfeitures have been satisfied, and taxpayers must file a return after they are arrested. In bankruptcy proceedings filed by the Kurths, they objected to petitioner's proof of claim for the tax and challenged the tax's constitutionality. The Bankruptcy Court held, among other things, that the assessment on harvested marijuana, a portion of which resulted in a tax eight times the product's market value, was a form of double jeopardy invalid under the Federal Constitution, and the District Court affirmed. In affirming, the Court of Appeals determined that the central inquiry under United States v. Halper, 490 U.S. 435, is whether the sanction imposed is rationally related to the damages the government suffered, that the Kurths were entitled to an accounting to determine if the sanction constituted an impermissible second punishment, and that the tax was unconstitutional as applied to them because the State refused to offer any such evidence.
The tax violates the constitutional prohibition against successive punishments for the same offense. Pp. 776-784.
(a) Although deciding in Halper that a legislature's description of a statute as civil does not foreclose the possibility that it has a punitive character, and that a defendant convicted and punished for an offense may not have a nonremedial civil penalty imposed against him for the same offense in a separate proceeding, the Court did not consider whether a tax may similarly be characterized as punitive. However, the Court's recognition that the extension of a so-called tax's penalizing feature can cause it to lose its character as such and become a mere penalty, A. Magnano Co. v. Hamilton, 292 U.S. 40, 46, together with Halper's unequivocal statement that labels do not control in a double jeopardy inquiry, indicates that a tax is not immune from double jeopardy scrutiny simply because it is a tax. Pp. 776-780.
(b) While taxes are usually motivated by revenue-raising rather than punitive purposes, Montana's tax departs far from normal revenue laws. Its high rate and deterrent purpose, in and of themselves, do not necessarily render it punitive, but other unusual features set it apart from most taxes. That it is conditioned on the commission of a crime is significant of penal and prohibitory intent rather than the gathering of revenue. It is also exacted only after the taxpayer has been arrested for the precise conduct that gives rise to the tax obligation in the first place. Since the taxed activity is completely forbidden, the legitimate revenue-raising purpose that might support the tax could be equally well served by increasing the fine imposed upon conviction. In addition, it purports to be a property tax, yet it is levied on goodshere, the destroyed marijuana plantsthat the taxpayer neither owns nor possesses. Pp. 780-783.
Paul Van Tricht, Special Assistant Attorney General of Montana, argued the cause for petitioner. With him on the briefs was David W. Woodgerd, Special Assistant Attorney General.
Montana's Dangerous Drug Tax Act took effect on October 1, 1987. The Act imposes a tax "on the possession and storage of dangerous drugs," Mont. Code Ann. § 15-25-111 (1987), and expressly provides that the tax is to be "collected only after any state or federal fines or forfeitures have been satisfied." § 15-25-111(3). The tax is either 10 percent of the assessed market value of the drugs as determined by the Montana Department of Revenue (DOR) or a specified amount depending on the drug ($100 per ounce for marijuana, for example, and $250 per ounce for hashish), whichever is greater. § 15-25-111(2). The Act directs the state treasurer to allocate the tax proceeds to special funds to support "youth evaluation" and "chemical abuse" programs and "to enforce the drug laws." §§ 15-25-121, 15-25-122.
In one of those proceedings, the State filed criminal charges against all six respondents in the Montana District Court, charging each with conspiracy to possess drugs with the intent to sell, Mont. Code Ann. § 45-4-102 (1987), or, in the alternative, possession of drugs with the intent to sell, § 45-9-103. Each respondent initially pleaded not guilty, but subsequently entered into a plea agreement. On July 18, 1988, the court sentenced Richard Kurth and Judith Kurth to prison and imposed suspended or deferred sentences on the other four family members.
The third proceeding involved the assessment of the new tax on dangerous drugs. Despite difficulties the DOR had in applying the Act for the first time, it ultimately attempted to collect almost $900,000 in taxes on marijuana plants, harvested marijuana, hash tar and hash oil, interest, and penalties. The Kurths contested the assessments in administrative proceedings. Those proceedings were automatically stayed in September 1988, however, when the Kurths initiated the fourth legal proceeding triggered by the raid on their farm: a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. See 11 U.S.C. § 362(a).

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