Opinion ID: 2003427
Heading Depth: 2
Heading Rank: 1

Heading: Is the CSET's Civil Sanction a Punishment?

Text: The Supreme Court recently delineated the analysis for determining whether a tax is a punishment in Kurth Ranch, ___ U.S.___, 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. [13] 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 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, ___ U.S. at ___, n. 12, 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. [14] 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, ___ U.S. at___, 114 S.Ct. at 1947 (quoting United States v. Constantine, 296 U.S. 287, 295, 56 S.Ct. 223, 227, 80 L.Ed. 233 (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 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 regardless 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, ___ U.S. at___, 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 (5th 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. [15] 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., 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, ___ U.S. at ___, 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.