Kеvin and Monica CLIFFT, Appellants, v. INDIANA DEPARTMENT OF STATE REVENUE and Kenneth L. Miller, Commissioner, Appellees.
No. 49S10-9503-TA-331
Supreme Court of Indiana
Dec. 27, 1995.
660 N.E.2d 310
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 rаising 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 unlawful 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
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 I am reluctant to embrace such a shift of it, except in the clearest of circumstances.
Pamela Carter, Attorney General, David A. Arthur, Deputy Attorney General, Indianapolis, for appellee.
ON PETITION FOR REVIEW
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 pled guilty to misdemeanor drug possession. The couple now contends the tax was a second jeopardy in violation of the Double Jeopardy Clause.
I. Statement of Facts
In October 1992, police executed a search warrant for the home of appellants Monica and Kevin Clifft. During their search, police discovered 927 grams of marijuana.
The police contacted appellee Indiana Department of State Revenuе 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.
In January 1993, Monica pled guilty to possessiоn 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
The Cliffts’ petitioned this Court for review of their due process and self-incrimination claims. The Department petitioned for review of the double jeopardy issue. We held oral argument and granted review as to all three issuеs. Consequently, we now consider:
- 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;
- Whether the CSET violates the privilege against self-incrimination embodied in the Fifth Amendment to the U.S. Constitution; and,
- 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 jeоpardy, 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.
II. 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 cоnviction 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.
III. Double Jeopardy
Like the appellant in today‘s case of Bryant v. State (1995), Ind., 660 N.E.2d 290, the Cliffts argue that the CSET assessment was their second jeopardy in violation of the Double Jeopardy Clause.
Because the State assessed the CSET and its 100 percent pеnalty 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.1 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
Taxes like Indiana‘s CSET are not altogether novel and, accordingly, neither are challenges to them under a self-incrimination theory.2 Defendants using the Fifth Amendment privilege against self-incrimination have challenged CSET-style taxes in Minnesota,3 Florida,4 South Dakota,5 Kansas,6 Utah7 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:
- Whether the activity being taxed is in an area “permeated with criminal statutes” and whethеr the tax is aimed at individuals who are “inherently suspect of criminal activities“;
- Whether the procedure requires the individual to give information which would reasonably be expected to be available to police; and,
- 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, 88 S.Ct. 697, 702-703, 19 L.Ed.2d 889 (1968) (quoting Albertson v. Subversive Activities Control Bd., 382 U.S. 70, 79, 86 S.Ct. 194, 199, 15 L.Ed.2d 165 (1965)); Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57 (1969) (conviction for failure to pay tax under Marijuana Tax Act violates privilege); Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968) (conviction for failure to pay wagering excise tax violated privilege).
There аre two final considerations which this Court must consider when apply-
Through applying the Marchetti test to various taxes on illegal activities, the U.S. Supreme Court has voided CSET-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, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968); Haynes v. United States, 390 U.S. 85, 88 S.Ct. 722, 19 L.Ed.2d 923 (1968); Leary, 395 U.S. 6, 89 S.Ct. 1532, 23 L.Ed.2d 57. 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 taxpаyer 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, 88 S.Ct. at 712-13; Haynes, 390 U.S. at 96, 88 S.Ct. at 730; Leary, 395 U.S. at 14-15, 89 S.Ct. at 1536-37.
State courts applying the identical rationale to drug tax cases have reached an identical conclusiоn. 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 whеther 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.
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 re-
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 confidеntial. The legislature went out of its way to ensure this confidentiality by ordering a punishment for disclosure,
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, 88 S.Ct. at 703. The Cliffts clаim 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 statutе 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
It is also “just as important to recognize what the statute doеs not say as it is to recognize what it does say” when evaluating whether the information 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. Lichtefeld-Massaro (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 address or telephone number of the possessor.
Because the CSET satisfies the three prongs of the Marchetti test, there is no “real and appreciable” risk of sеlf-incrimination in violation of the Fifth Amendment. If such a risk did exist, Marchetti would require this Court to evaluate whether some other protection existed which was broad enough to encompass the Fifth Amendment protection. Marchetti, 390 U.S. at 58, 88 S.Ct. at 707-708. We conclude, as did the Tax Court, that the CSET provides this equivalent protection by affording taxpayers both use and derivative use immunity.
V. Due Process
The Cliffts next argue that the CSET does not provide the proсedural 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.9
The Department‘s CSET assessment is a “jeopardy assessment.”
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 turn, conducts an administrative hearing within which the taxpayer may present evidence and make his case.
The taxpayer also possesses a simultaneous opportunity to seek the equitable remedy of injunctive rеlief.
The question of whether the CSET affords a taxpayer procedural due
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, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). Today, however, courts frequently conclude 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, 96 S.Ct. 1062, 47 L.Ed.2d 278 (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. at 334, 96 S.Ct. at 902. As such, wherе 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, 96 S.Ct. 1062, 1072-73, 47 L.Ed.2d 278 (1976) (citing Phillips v. Commissioner, 283 U.S. 589, 595, 596-97, 51 S.Ct. 608, 611, 611-12, 75 L.Ed. 1289 (1931)).
By including the CSET in the category of assessments which the Department may immediately collect, the legislature 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 opportunity 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 beеn 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.
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.
VI. 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. We 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 II of my dissent today in Bryant v. State (1995), Ind., 660 N.E.2d 290 (Sullivan, J., dissenting), I believe the majority errs in holding that an administrative assessment of a tax can constitute a first
I 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.
I concur in sections II, IV, and V. I cannot agree with section III, 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 I 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 case will now continue in the Tax Court for consideration of the other constitutional claims made by the Cliffts. I concur in that result.
Keith and Mary HALL, Petitioners, v. INDIANA DEPARTMENT OF STATE REVENUE and Kenneth L. Miller, Commissioner, Respondents.
No. 49S10-9503-TA-336.
Supreme Court of Indiana.
Dec. 27, 1995.
Concurring and Dissenting Opinion of Justice DeBruler Jan. 2, 1996.
Certiorari Denied May 20, 1996.
See 116 S.Ct. 1828.