*1 review, acknowledged this Court present directly
State could matter regardless grand jury of the order prior opin- In an expunging records. Craig ion authored Justice Martha ex- Daughtrey, Court ruled punction legal efficacy” order had “lost its proceedings when the State continued the defendant. The State was “free ... prosecute the case as if the entered,”
order had never been regardless failure to object appeal State’s expunction proceeding. the initial Id. at
Conclusion circumstances, Under these the trial judicial court took properly notice of its prior proceedings. own Because the first timely indictment was pending at the grand jury time the returned the second indictment, one-year statute of limita- applicable tions to misdemeanors was expunction tolled. The order of should not have been entered and is of no effect. The is, therefore, judgment the trial court appeal affirmed. Costs of this as- are appellant, sessed to the Mack Neddie Law- son, surety, and his for which execution necessary. if issue al.
Steven WATERS et FARR, Reagan Commissioner of Revenue for the State
of Tennessee. Tennessee, Supreme Court of at Knoxville. 7,May 2008 Session.
July *4 Farr,
gan Commissioner of Revenue the State of Tennessee.1 Lomonaco, Knoxville, A. Philip Tennes- see, for appellee, Steven Waters.
OPINION WADE, J.,
GARY R. delivered the court, opinion of the in which M. JANICE HOLDER, C.J., and WILLIAM M. BARKER, J., joined. WILLIAM C. KOCH, JR., separate J. filed a opinion concurring part dissenting part, in which CLARK, J., A. CORNELIA joined. 1, 2005, January
Effective the Tennes- *5 Assembly see General enacted a tax on the possession of unauthorized substances for purpose the generating of as- revenues to state local agen- sist and law enforcement cies in their to drug efforts combat crimes. Subsequently, Steven Waters was assessed taxes, penalty, and interest in the $55,316.84 by total amount of the Tennes- Department see of Revenue after purchas- nearly kilogram ing a of cocaine a from declaratory confidential informant. In a judgment Chancery suit the of Court County, challenged Loudon Waters the constitutionality of grounds the statute on self-incrimination, of jeopardy double and process. The due chancellor the declared statute unconstitutional and set the aside On assessment. direct appeal, the Court affirmed, Appeals holding of that the en- Assembly’s the actment exceeded General Appeal from by Permission of Court II, taxing power under article section 28 of Appeals, Chancery Eastern Section Court the Tennessee Constitution. we Initially, 10710; County, for Loudon No. Frank V. hold that the statute imposing III, Williams, Chancellor. does unauthorized substances not violate Jr., Cooper, Attorney Robert E. General protections against the constitutional self- Moore, Reporter; Michael E. Solicitor jeopardy incrimination and double General; Buchanan, H. abridge procedural and Brad Assistant due guarantee of General, Because, however, Attorney appellant, process. for the Rea- the tax cannot Ap- appeal 1. In party place accordance with Tennessee Rule of a stituted as Farr, 19(c), pellate Reagan cur- Procedure predecessor, Chumley. of his Loren L. Revenue, rent Commissioner of sub- been merchants, ters, use of been unaware of his a tax on had as either classified illegal substance. as privileges, a tax on peddlers a tax constitution, the by our state authorized morning of April On the Wa- Appeals is af- judgment telephone a from an indi- ters call received year firmed. known a vidual he had for about half, he used cocaine and with whom had informed past. in the individual Wa- Facts “nearly had kilograms ters that she nine (‘Wa- 25, 2005, Steven Waters April On from and that pure” cocaine Miami she ters”), fifty-one-year-old resident “trying get was to move it and out town County, pur- was arrested after Loudon the cocaine at a fast.” She offered sell nearly kilogram of cocaine from chasing $17,000 per price kilogram arranged part of a “re- informant a confidential lot parking of a meet Waters in the sting” officers verse conducted trying a small bakery in Knoxville. After Knox County Sher- Narcotics Unit of sample, the cocaine as a Waters amount of posses- Based Waters’ iffs Office. high acknowledged quality cocaine, the De- Tennessee purchase. sion Later that but eve- declined (“Department again of Revenue of- partment ning, telephoned the woman Revenue”) price the cocaine at a reduced issued an assess- fered subsequently $12,000 Waters, kilogram. per believing newly enacted tax on un- ment under the greater value far than the street then authorized substances.2 Waters At consented the terms. price, constitutionality of the tax challenged *6 planned explained he that he had hearing, judgment filing declaratory action cocaine little at a time” and to use the “a the Commissioner Revenue against that he had intention to either claimed no (“Commissioner”). Tennessee give anybody it to sell the substance arrest, Waters, a By the time of his else. in trim specializing and interior carpenter Waters, to the individual Unbeknownst homes, in new had worked in and work purchase he had agreed from whom to for his County twenty around Loudon was a confidential informant work- cocaine in the trade. evi- thirty-five years ing cooperation with the Narcotics Unit in the indicates at dence record that some (“Sher- County Sheriffs Office the Knox time, during point period Waters Office”). Captain Lyon, iffs Bernie “[wjeekend began to use cocaine on a ba- twenty-seven-year veteran Sheriffs that sis.” He claimed substance Office, acquain- that testified he had been “[kjind better,” feel [him] made approximately ted with the informant for him to him “feel gave “a little burst” make that years, he had known her to twenty explaining better about work.” While he drugs past, use in the and that had purchased regularly he his cocaine in an try her to to sell the cocaine to instructed area off of Western Avenue” in “down Captain Lyon further testified Waters. County, Knox he insisted that he had nev- “going price” gram for a of co- drug anyone. er sold the to He believed the street” per caine “on was about $100 arrest, wife, After on the gram.3 agreed that until his his Naomi Wa- Waters had 1, 2005, (codified January 2. 2004 Tenn. Pub. Acts 1840 stances became effective on prior four months to Waters' arrest. less than §§ Tenn.Code Ann. 67-4-2801 -2811 (Supp.2004)). tax on unauthorized sub- explained Captain Lyon that street dealers they can stretch often dilute cocaine "so price, Captain Lyon Office, and Ser- purchase technician at the Sheriffs complet- Hammond, the geant supervisor James of ed a form Department for the of Revenue Unit, provided the Narcotics the informant documenting the arrest and the amount of with brick of cocaine from the vault cocaine provided seized. The form the Sheriffs Office. The package money 75% of the collected from the tax weighed grams, indicating 999.2 that the on the cocaine that possessed Waters had estimated street value of the cocaine Wa- was to be distributed to the Sheriffs Of- $12,000 agreed purchase ters had fice, with the remaining payable 25% $99,200. high could have been as as the Department of Revenue.4 On or about 20, 2005, May Eugene Johnson of the De- The officers followed the informant to partment of Revenue’s Unauthorized Sub- parking lot of a restaurant near the stance Tax Reports intersection office in Knoxville Springs of Walker Road and Knoxville, hand-delivered Kingston Pike in to the where Waters Waters residence a $12,000 Notice of paid drugs. for the Assessment When and Demand for (“Assessment”) informant respec- Payment and Waters drove their in the sum of scene, $55,316.84, away tive vehicles from the Captain $49,940 which included in tax Lyon followed the informant liability5 $5,376.84 retrieve plus in penalty and in- money Sergeant Hammond sev- later, terest. One week Department eral other officers followed Waters. After Revenue notified Waters mail that it mile, quarter about a of a the officers had filed a lien the residence he Waters, truck, apprehended searched his jointly owned with his wife in order to and recovered the cocaine. Waters was payment secure Further, of the tax. trial, then jail. arrested and taken to At Department of Revenue sent a Levy Noti- Captain Lyon both and Sergeant Ham- fication and Notice of Levy to several acknowledged mond that there was no evi- banks in East Tennessee in an attempt to dence suggesting that had ever Waters recover assets that those might banks drugs sold or intended to sell any drugs, have holding been for Waters. After- including the cocaine he purchased had wards, *7 the Department of Revenue re- from the informant. $3,800 ceived approximately from the policy accordance with a developed checking account Waters had at First Ten- January of Karen Phillips, drug nessee Bank.6 powder
their out a little bit further.” He also amended § at Tenn.Code Ann. 67-4- 2803(a)(4) (2006)). knowledge stated that purity he had no of the Although the cocaine that Waters, level of the cocaine sold to purchased weighed and that grams, Waters 999.2 the substance was not tested the Tennessee amount of the apparently Assessment was Investigation prove Bureau of grams other than to based on the Phillips 998.8 had was, fact, that it cocaine. Waters registration testified written on the tax form that that the Department informant told him the cocaine she faxed to the of Revenue. "nearly pure.” Depart- 6.Waters testified that the Tennessee -4—2809(b)(2) § Safety possession See Tenn.Code Ann. ment of took of his truck 67— (Supp.2004). gave option purchasing him the it back $5,000. from the state for its value of Coun- 5. "An excise tax is levied on any unauthorized sel for the Commissioner stated that tak- possessed, actively ing substances either satisfy con- of Waters’ truck "was not to assessment," structively, by following dealers at the Department rates: and that the (3) ($50.00) Fifty ... gram, knowledge dollars for each taking. Revenue had no of such thereof, fraction representative Department Safety cocaine.” Tenn.Code No 67-4-2803(a) (codified § (Supp.2004) Ann. testified. unauthorized sub- ruling that the tax on History
Procedural the state and federal stances violated wife, and his Waters July On against com- prohibitions constitutional par- as a subsequently dismissed who was self-incrimination, crimi- imposed in the a pelled filed suit Chan- ty litigation, to the County against the Loudon cery Court for penalty, and au- nal rather than a civil Commissioner, declaratory and in- seeking a tax far in excess of thorized The Office of the Attor- junctive relief.7 drugs. paid amount Waters a copy served with ney General was De- The trial court further held that the on behalf of the appeared complaint, partment procedures of Revenue’s for as- Commissioner, represented Com- of the tax on un- sessment and collection the course of these throughout missioner satisfy failed to authorized substances alleged that Ten- proceedings.8 Waters process requirements of procedural due unauthorized substances nessee’s tax on the state and federal constitutions. Be- and federal constitution- violated state jury empaneled a had not been cause self-incrimination al protections the trial prosecution, failed to Waters’ criminal jeopardy also and double of law. process afford due yet had court found that Waters not been allega- An exposed jeopardy. to double proceeding, At the conclusion assessment, tion was not addressed.9 entrapment the trial court abated Office, proce- Attorney perhaps in an asserts that the General's effort 7. The Commissioner ruling in Tennessee Code Annotated dure outlined to facilitate a on the merits of claim 1—1801(a)(1)(B) provides § an indi- any procedural deficiency, rather than 67— opportunity challenge fair vidual with a challenged joinder party. the lack of as a possession of unauthorized Beeler, assessment for Cummings v. 189 Tenn. See Tenn.Code Ann. 67-4- See substances. (1949) (indicating S.W.2d that the (2006 agree, Supp.2008). While we a & Attorney party General be named "a defen- option presenting a taxpayer has the also any proceeding dant in where the constitu- challenge constitutionality a to the facial tionality legislature of the Act of the is before filing declaratory judgment a tax statute declaratory judgments proceed- the Court on Pipeline Morgan, Co. v. action. Colonial circumstances, ing”). Under all of these (Tenn.2008). S.W.3d joinder issue as to has been waived. See 36(a). R.App. P. opinion upon Nothing in this casts doubt long-standing requirement this state 25, 2005, April the events of a 9.Based challenge parties who statute’s consti- County grand jury Knox indicted Waters for through declaratory judgment tutionality ac- grams of more than three hundred their tion must serve notice of suit on deliver, intent A of cocaine with Class *8 Attorney General. Office of the Tenn.Code felony providing prison for a sentence of be- 14—107(b)(2000); Cummings § v. Ann. 29— sixty years up fine tween fifteen and and a 595, Shipp, Tenn. 3 S.W.2d 1063 156 $500,000. § Tenn.Code Ann. 39-17- (1928); (ex- see also Tenn. R. Civ. P. 24.04 417(j)(5) (Supp.2004); § Tenn.Code Ann. 40- requirement beyond panding de- the notice 35-111(b)(1) (2003). pursued While Waters actions). claratory judgment Waters com- declaratory judgment in his action the trial gave plied requirement proper with this and court, proceedings the criminal were held in notice federal and state constitutional of his 29, 2008, abeyance. January On Waters by serving copy complaint challenges a of his guilty pleaded to the lesser-included offense of Attorney General's Brad H. on the Office. cocaine, Buchanan, with intent to deliver a attorney in the Office's Tax Division, felony, B Class Tenn.Code Ann. 39-17- complaint filed the answer to the 417(a)(4), (b) placed (Supp.2004); he on appeared and on the Commissioner’s behalf Thus, eight years probation a term of and or- during appeal. for at trial this and fines, costs, $3,427 ably represented pay dered to court people’s have been interests Moreover, throughout proceeding. fees. this appeal, Appeals Appeals, On direct Court of holding while ruling the trial but affirmed court based its the tax on unauthorized substances violat- upon Ap- grounds. different The Court of ed legislature’s powers taxing under held that on peals unanimously constitution, the tax our state did not address self- substances unauthorized exceeded or process protections, incrimination due Assembly’s power Tennessee General to the grounds upon which trial court had impose provided a tax arti- privilege as Because relied. this case impor- involves II, cle section 28 of Tennessee Consti- tant questions of constitutional authority Chumley, tution.10 v. E2006- Waters No. statutory interpretation, this Court 02225-COA-R3-CV, 2007 WL at granted application the Commissioner’s 2007). *2 (Tenn.Ct.App. Sept.6, In an permission appeal. (now Justice) opinion Judge written Lee,
Sharon G. the Court of de- Appeals Standard of Review the legislature’s power privi- scribed to tax When called to construe a leges “extremely broad” but entire- not statute, we must first ascertain and then unlimited, ly observing that the General give full effect to the General Assembly’s Assembly may levy a privilege tax that purpose. intent and v. Waldschmidt Reas “arbitrary, is or unrea- capricious, wholly Co., sure Am. Ins. 271 S.W.3d Carson, (quoting Id. Hooten Life sonable.” v. (Tenn.2008). Our chief concern is to (1948)). 186 Tenn. 209 S.W.2d carry the legislature’s out intent without levy “Because Legislature] [the seeks to a broadening either restricting the statute engage tax privilege an activi- beyond scope. Houghton its intended v. ty that ... previously has [been] declared Res., Inc., Aramark Educ. 90 S.W.3d crime, be a privilege,” not a the Court (Tenn.2002) (quoting Owens Appeals “necessarily conclude[d] that (Tenn.1995)). 908 S.W.2d Drug arbitrary, Every Tax capricious, and un- word in reasonable, therefore, presumed a statute “is to have invalid under meaning purpose, given and should be the Constitution state.” Id. at *3. full if so doing effect does not violate The Court of also Appeals determined that tax obvious intention of the Legislature.” unauthorized substances was not C.K.G., (Tenn.2005) re “consistent with the rationale S.W.3d supporting Henderson, imposition tax, privilege (quoting which Marsh (1968)). 193, 196 holds that recompenses such a S.W.2d When the statutory language state for the secure and nurturing unambigu environ- clear and ous, provided ment it has the activity apply plain meaning or occu- we its without pation upon which the tax is Id. complicating levied.” the task. Eastman Chem. Johnson, (Tenn. opinion characterized the prop- state’s Co. 151 S.W.3d deterrence, 2004). role er as one of rather than ambiguous, When statute is how sustenance, ever, of protection one of individ- we reference the broader statu scheme, possess uals who tory legislation, Tennessee sub- the history of the *9 stances. Id. or other to its meaning. sources discern (3) generally only judicial 10. “Review will prevent prejudice pro- extend to to to the review,” presented those issues 13(a). but an R.App. cess.” Tenn. P. We believe appellate "may court in its discretion consid- appropriate that was an circumstance for order, among er other issues in other reasons: Appeals the of Court to exercise such discre- (1) (2) prevent litigation, pre- to needless to tion. injury vent to the of public, interests the 882 Salerno, 739, 745, 2095, 107 at 836. 481 U.S. S.Ct. 263 S.W.3d We Pipeline,
Colonial
(1987).
Assembly
the state
the
of
Owens,
Substances
legislation.
908 S.W.2d
the
constitutionality
the
challenges
Waters
interpre
of constitutional
Issues
taxing statute on unautho-
of Tennessee’s
law,
of
which we
questions
tation are
re
substances,
valid-
rized
both as
its facial
without any presumption
view de novo
of
application
and as to the
of the statute
ity
to the
given
legal conclusions
correctness
specific
to these
circumstances.
In consid-
Pipeline,
the
courts below. Colonial
claims,
examine
ering
helpful
his
it is
It
well-settled in
883
Sullivan,
Code]”);
274 this
States v.
area was the Harrison Narcotic Act of
United
1914,
259, 263,
1970),
47
preme Court
ramifica-
consider its constitutional
the Marihuana Tax Act to be unconstitu-
again
Timothy Leary,
tional,
a former Har-
Dr.
it
the ... Act a crippling
tions.
“dealt
notorious advocate for
professor
vard
and
in holding
requirement
blow
its order form
self-incrimination”).
drugs, was convicted of know-
psychedelic
amounted to
Since
concealing and facilitat-
ingly transporting,
effective,
the 1970 Act became
the federal
transportation and concealment of
ing
laws,
government has used the criminal
paying the transfer tax
marijuana without
code,
regulate
rather than the tax
by
Leary
the Marihuana Tax Act.
required
possession
illegal drugs.
trade
States,
6, 11,
v.
395 U.S.
89 S.Ct.
United
illicit
Although the taxation of
sub-
(1969).
1532,
Leary chal-
885
subsequently repealed legislation requiring
and state
protections,
constitutional
most
twenty-three
drug stamps.14
commonly
Of
other
the Fifth Amendment
rights
drug stamp
state
taxes
have been
self-incrimination or double jeopar-
courts,
by
appellate
state
dy
considered
elev-
equivalents.16
their state
Four
upheld
en have been
considered,
as constitutional.15 states have recently
but reject-
taxes,
ed,
Twelve of the state
stamp
how-
the idea of a tax on unauthorized sub-
ever,
stances,17
have been found to violate federal
while the remaining fifteen
(2006);
2577,
1092,
§§
Code Ann.
453B.1-.16
Kan. Stat.
S.Ct.
135 L.Ed.2d
on re
aff’d
(1997
§§
Supp.
mand,
Ann.
79-5201 to -5212
&
Servs.,
Covelli v. Comm'r
Revenue
2008); Ky.Rev.Stat.
§§
Ann.
138.870-.889
257,
(1996),
239 Conn.
will
receive 75%
tax
when
Analysis
made,
report
remaining
such a
is
with the
paid
general
be
25% to
into the
fund.
Some
commentary
initial
is in order be-
67-4-2809(b)(2).
§Ann.
Tenn.Code
we begin
analysis.
use,
fore
our
The
pos-
session,
illegal
and
drugs
sale of
place an
According to a
for
spokesperson
the De-
enormous
our
burden
state and na-
Revenue,
of
partment
the enactment of the
The
tion.
Office of
Drug
National
Control
tax
required
on unauthorized substances
Policy estimated that between 1988 and
ten-person
agency
the creation of a
at
2000, Americans
between
spent
billion
Cruz,
$54
a one-time cost of
million.
Ten-
$1.2
annually
billion
on
drugs.22
$154
illicit
Dealers,
Targets
nessee
with
Users
New
crime,
In
effort
to deter
our
Tennessean,
29,
General
Levy,
2004,
The
Dec.
Assembly
prescribed
lengthy sen-
Department
1A. The
of Revenue forecast
tences and
for
hefty fines
individuals con-
the annual costs of
enforcement
be
manufacturing,
victed of
$800,000.
delivering, or
Department
Id. Data from
sell-
the
ing illegal drugs,
possessing
or
illegal
of Revenue indicates
total
collec-
drugs
manufacture,
for the
of
purpose
tions made under Tennessee’s unautho-
de-
livery,
§
or sale.
rized substances tax were
in
Tenn.Code Ann.
fiscal
39-17-
$298.30
(“FY”)
(2006
2005,20
year
$884,851.49
2006, 417(b) (j)
Supp.2008).
FY
&
For exam-
—
$1,578,182.26
$1,794,808.47
2007,
ple,
possession
in FY
or
grams
of 300 more
2008,
$756,819.59
FY
with
through the first
cocaine
the intent to sell is a Class A
felony
$500,000.
half of FY 2009. See
up
Collections Summar-
a fine of
Tenn.
§
ies
June
17—417(j)(5).
June
June
Ann.
posses-
Code
The
for
39—
&
June 2008 Dec.
http://
twenty-six
available
sion
or
grams
more of co-
www.tennessee.gov/revenue/statistics/
caine with the
to sell
intent
is a
B
Class
felony,
arehives.htm# summariesarch.
The total
subjecting the offender to a fine of
$200,000.
amount of
collections over
first four
toup
TenmCode Ann.
39-17-
was,
417(1).
years
therefore,
tax’s
existence
The
grams
0.5
year begins
Finance,
July
McNally,
20. Tennessee’s fiscal
Statement of Sen.
Senate
through
following
Committee,
and extends
June
2004;
Ways
Apr.
& Means
see
year. Because the tax on unauthorized sub-
Cruz,
Dealers,
Targets
also
Tennessee
Users
1, 2005,
January
became
stances
effective on
Tennessean,
Levy,
with New
The
Dec.
Department
of Revenue made collections
2004, at 1A.
only
under
tax for
six
the last
months of
FY 2005.
Drug
Policy,
22.Office
of National
Control
Spend
Illegal Drugs:
What America’s Users
fiscal
The
note on the Senate version of the
1988-2000,
(Dec.2001),
http://
at 3
available at
(S.B.2419)
legislation
projected that annual
www.whitehousedrugpolicy.gov/publications
under
collections
the unauthorized substances
/pdf/american_users_spend_2002.pdf.
approximately $3.6
tax would be
million.
The Fifth Amendment
to the
to sell is a
with the intent
more of cocaine
provides,
States Constitution
much
United
a fine of as
felony with
B
Class
... shall
com
person
part,
“[n]o
§ 39-17-
TenmCode Ann.
$100,000.
to be a
criminal case
witness
pelled
417(c)(1).
prisons,
for
jails,
cost
Const, amend. V.
against himself.” U.S.
substantial, and
law enforcement
privilege against
Fifth Amendment
care and social services
expense
health
to the
applies
states
self-incrimination
enormous,
tragedy
lies in
but
real
through
Fourteenth Amendment.
life and
loss
human
its
waste
Rogers,
n. 4
188 S.W.3d
upon family
effect
inevitably deleterious
(Tenn.2006)
Hogan,
Malloy
(citing
context,
legisla-
our
friends.
L.Ed.2d 653
U.S.
S.Ct.
its
worthy
commendation
ture is
(1964)). The Tennessee Constitution simi
incident
defray
costs
effort to
in all
guarantees
criminal
larly
“[t]hat
Even
drugs.
un-
against
struggle
... shall not be
prosecutions, the accused
however,
circumstances,
it is our
der these
give
him
compelled
evidence
rule
dispassionately apply
duty to
Const,
I, § 9.
art.
re
*15
self.”
With
manner,
impartial
uns-
in a fair
law
self-incrimination, this
gard to
Court has
concerns,
public
parti-
wayed by genuine
I,
“traditionally
article
9 to
interpreted
interests,
fear
or
of criticism.
san
Fifth
be no broader than the
Amendment.”
3(B)(2).
10,R.
Canon
Sup.Ct.
20,
(Tenn.
Martin,
v.
State
950 S.W.2d
1997). Both
and state provi
the federal
and State Constitutional
I. Federal
from
“protect
being
sions
the accused
com
Issues
provide
to
of a
pelled
evidence
testimonial
might
that
later
or communicative nature”
the consti-
complaint contested
Waters’
against
in a
be used
him
criminal case.
of the unauthorized substances
tutionality
States,
Id.; see also
Fisher
United
right against
the
self-incrim-
light
tax
408,
1569,
391,
96 S.Ct.
L.Ed.2d
U.S.
ination,
jeop-
against double
protection
the
(1976);
Walton,
State
S.W.3d
guarantee
procedural
due
ardy, and the
(Tenn.2001).
the evidence
Where
is not
trial
on each
process. The
court ruled
nature,
a testimonial or communicative
issues,
Appeals
but
did
these
Court
protection
self-incrimination is in
As means of avoiding
not
them.
address
Cole,
State v.
155 S.W.3d
applicable.
litigation
further
any delay occasioned
(Tenn.2005).
898-99
issues,
involving the same
we will consider
noted,
As
States Supreme
United
challenges.
constitutional
these
previously
found certain taxes
illegal
violate
activity
to
the Fifth
A. Self-Incrimination
protection against
Amendment
self-incrim
that the tax on unau-
Waters contends
Marchetti,
In
ination.
the Court ad
right
violates his
thorized substances
applicability
privilege
dressed
against compelled self-incrimination under
registration
the context of an extensive
state
the federal and
constitutions. The
requirement
occupa
related to a federal
that
agreed, holding
statutory
trial court
tax
tax on
wagering.
tional
himself.
“requires
expose
required
It
[Waters]
scheme
bookmakers
submit a
say
take
that he
some action to
Internal
requires
registration form to the
Revenue
(“IRS”),
I am in
way
process
some
have
also served
a tax
Service
which
as
indicated,
return,
they
crime.”
were
indicating
engaged
committed a
As
wagers
accepting
did
in the business of
Appeals
Court of
not address
issue.
including
personal
both their
information
ihuana Tax Act
‘real
“created a
and appre
agents
employees.
of their
and that
ciable’ hazard of incrimination” because
Marchetti,
697.
390 U.S.
88 S.Ct.
compliance with
provisions
those
would
The IRS made this information available have
Dr.
required
Leary
identify him
federal law enforcement au
state and
self
a member of a “selective group
thorities,
regularly
it in criminal
who
used
inherently suspect of criminal activities.”
prosecutions
gambling
for
offenses.
Id.
ments violated self- prove significant in a link a chain of 697; incrimination. Id. at 88 see S.Ct. tending guilt. evidence establish Grosso, 65-67, also 390 U.S. 88 S.Ct. Sisson, Similarly, 709.23 in Leary, the Court held 428 (quoting N.W.2d 571 Mar chetti, 697). that provisions 47-48, the transfer tax of the Mar U.S. at 88 390 S.Ct. “Taking language” cue wagering its from in Mar- tax information. United States v. Grosso, Congress Sahadi, Cir.1977). chetti and (2d made several 555 F.2d 25 “The changes to wagering the federal tax on in wagering 1974 revisions of the federal tax (1) including: deleting requirement change Treasury laws and concomitant registrants conspicuously display that their Department practices ... eliminated 'real demand; (2) stamp produce upon tax or it no appreciable’ and hazards of self-incrimination longer requiring IRS provide local offices to prior that existed under law.” United wagering tax information to local law en- (6th Currency, States v. U.S. 626 F.2d 13 agencies; enacting specific forcement Sahadi, Cir.1980) 27). (quoting 555 F.2d at restrictions disclosure use 890 Department improp that the information specific either these three applying
When
“central
is
it is
erly
the broader
stan
discloses
inadmissible unless
elements
source”);
with the tax
compliance
dard” of whether
obtained from another
State
in
and real hazards of
Durrant,
substantial
creates
769 P.2d
Kan.
crimination,
courts have held
some state
(1989); Sisson,
428 N.W.2d at
taxpayers were re
the information
(Minn.1988);
Garza, 242
Neb.
drug
quired to
under their states’
provide
(1993); White,
496 N.W.2d
privilege against
violated
stamp taxes
988-91;
Tax
Zissi v. State
P.2d at
See, e.g.,
Dep’t
Fla.
self-incrimination.
1992).
(Utah
Comm’n,
P.2d
(Fla.
Herre,
618, 620
634 So.2d
Revenue
Assembly
The Tennessee General
1994)
pro
(holding
confidentiality
that the
specific language
included
this state’s
tax statute were un
drug
visions
on unauthorized substances
an effort
tax
De
provision allowing
dermined
privilege
violative of the
process
to avoid a
taxpayers’
Revenue to release
partment of
self-incrimination. By the terms
against
en
“to state
federal law
information
information
legislation,
regarding
all
long
officials as
as those offi
forcement
of unauthorized substances
subpoena”);
State v. Rob
present
cials
volun
obtained
connection with the
(S.D.1986) (“We
erts,
384 N.W.2d
tary payment of the tax must remain “con
import
clear
of [the
believe
and,
ob
independently
fidential
unless
incriminate,
is to
statute]
tax
stamp
tained, may
in a
not be used
criminal
unconstitutional.”);
chapter
thus
Ann.
67-4-
prosecution.” Tenn.Code
Hall,
(holding
557 N.W.2d at
Either
(Supp.2004).24
disclosure
require
and affixation
purchase
statute’s
improper inspection
information
unconstitutionally compelled
ments both
by Department
employee
of Revenue
self-incrimination).
Conversely,
other
a criminal
constitutes
offense. Tenn.Code
upheld
drug stamp
state
taxes
have
courts
(c)
67-l-1709(a),
§§
Finally,
Ann.
challenges
face of constitutional
in the
required
give
are
their
“[d]ealers
*17
privilege
self-incrimi
based
the
number,
name, address,
security
social
determining that the informa
after
nation
identifying
other
information on the form”
by revenue
as a
obtained
authorities
tion
to
they
request
stamps,
fill out
the
and
(1)
payment
the tax
result
may
paid
stamps may
be
be
“[t]axes
(2)
confidential,
not
divulged
could
be
by
person.”
either mail or in
issued
authorities,
law
the
enforcement
67-4-2805(a).
compari
Ann.
Our
Code
not
used in
criminal
subsequent
be
could
provisions
of these
with those enacted
son
except those
prosecutions
for violations
in other states leads us to conclude that
See, e.g., Briney,
the tax statute itself.
stamp tax is more close
Tennessee’s
(observing
at 122-23
that the
594 So.2d
aligned
statutory provisions
with
“nothing
ly
less than an
those
statute contained
rule,
exclusionary
whereby any that have survived constitutional chal-
absolute
expressed
perhaps
court
his own home
a friend
person,
24. The trial
about
in
concerns
obtained,”
phrase
independently
community,
the
"unless
re-
or someone
the
who then
stating
argument
"the
that
that
can
[Waters]
that
ports it.” Of note is
the General Assem-
consequences,
and suffer
the
do this
no
unless
bly
exception
the
removed
confiden-
this
about
he
information
what
has done
inde-
tiality
by deleting
requirement
in 2007
obtained, always
pendently
that
runs
risk
phrase
2007 Tenn. Pub.
from the statute.
by
... it’s obtained
who’s
... an
someone
not
(codified
§Ann. 67-4-
Acts
at Tenn.Code
employee
engaged
of the state or
en-
law
(Supp.2008)).
forcement,
private
but obtained from some
fix
privilege against
stamp,
in the
the revenue
lenges grounded
may
state
use the presence
stamp
self-incrimination.
as evidence
in a criminal prosecution
possession
for the
upon the Wisconsin Su-
Waters relies
Hall,
or sale of illegal drugs. Contra
opinion
support
in Hall as
preme Court’s
N.W.2d at 786 (characterizing Wisconsin’s
tax on
for his contention that Tennessee’s
requirement
affixation
as “an incriminating
right
violates
unauthorized substances
his
testimonial communication that the dealer
case,
In that
against self-incrimination.
knowingly
intentionally
possesses a
highest
Wisconsin’s
court held that both
particular quantity
drugs”).
of unlawful
purchasing
stamps
the act of
In
requirements
stamps
summary,
that the
be af-
Tennessee’s tax on unau-
displayed upon
fixed to and
thorized substances
acqui-
ensures that the
drugs
privilege against
violated the
self-
sition of drug stamps
anonymous,
Hall,
incrimination.
892 all sanc Jeopardy imposition hibit the additional Double
B.
could,
parlance,’
that
‘in common
tions
that Tennessee’s
also asserted
Waters
v.
punishment.”
described as
Hudson
violated
substances
tax on unauthorized
States,
93, 98-99,
522-
118
United
U.S.
protections
constitutional
federal
state and
(1997)
(quoting
450
S.Ct.
139 L.Ed.2d
At the conclu-
jeopardy.
against double
United,
Hess,
ex rel. Marcus v.
States
hearing
declaratory
on the
sion
537, 549,
63 S.Ct.
893 (7)“whether criminal civil in This it appears state is or nature. excessive in re- is, lation to initially, “at a mat purpose least alternative as- determination signed.” is, statutory construction.” That we ter of ‘in legislature,
must ascertain “whether
Hudson,
99-100,
522
at
U.S.
Id.
at
915,
Gulledge,
State v.
1995);
Kan.
stamp
only hinge[d]
257
896
drug
tax “not
tana’s
crime,”
v.
378,
(1995);
Commonwealth
but also
of
P.2d
389
on the commission
Bird,
of
State
only
915,
the arrest
the
(Ky.1998);
after
917
was exacted
979 S.W.2d
that
436,
the
conduct
Stubblefield, 249 Neb.
taxpayer
precise
“for
v.
543
N.W.2d
in the
obligation
to the tax
first
Ballenger,
gives
(1996);
rise
v.
743,
State
123
748
Second,
Id.
imposed
tax was
place.”
179,
572,
(1996),
575
N.C.App.
472 S.E.2d
longer
no
goods
of
that
‘possession’
“on
626, 481 S.E.2d
per curiam 345 N.C.
aff'd
never
taxpayer
law-
exist[ed]
(1997);
Dep’t
McMullin v. S.C.
Reve
84
of
783, 114 S.Ct.
Id. fully possessed.”
Taxation, 321 S.C.
475,
nue and
469
none of the four features was
1937. While
600, 602-03
S.E.2d
dispositive,
their combination
necessarily
The Hudson
case,
which was decided
tax that
“a concoction of
created a
Ranch,
Kurth
overruled United
after
anomalies,
crucial
too far-removed in
re-
435, 109
Halper,
v.
States
490 U.S.
S.Ct.
from a standard tax assessment
spects
(1989),
1892,
however, expressly indi- because Court high rate of taxation cated that “neither a Analysis 2. Kurth Ranch automat- purpose nor an obvious deterrent tax turn to whether Tennessee’s We now of punish- this tax as form ically marks sufficiently on unauthorized substances fact, “many pre- ment.” In taxes are Montana tax that distinguishable from the valid, cigarettes such as taxes on sumed alcohol, in Kurth Supreme Court invalidated high [in amount] are also both and by an inter- taxing motivated to some extent Ranch. If our statute contains 780-81, 114 est in deterrence.”33 Id. at present in the Montana “unusual features” Discussion, Reg. J. Chattanooga 14 Yale Department Police at a Rational Sheriff’s nearly Department $47 million. Brian were Hickman, noted, from A. & J. Bureau of the total amount of revenues Reaves Matthew As Statistics, Manage- on unauthorized substances over Justice Law the tax Enforcement Statistics, years just ment Administrative 2000: four of the tax’s existence was first Agencies Data and Local $5 Individual Stale over million. for 58-59, (2004), with or More Officers By way comparison, raised 33. Tennessee http://www.ojp.usdoj.gov/bjs/pub/ available cigarettes $0.20 tax on from http://www.ojp.usdoj. state excise pdl71ema002a.pdf its l, July per pack $0.62 effective 2007. 2007 "State and lo- gov/bjs/pub/pdf/Iema002b.pdf. Considering drug Acts 488-89. all such government expenditures Pub. cal en- 1, 2009, July tax taxes as of Tennessee’s more difficult to state forcement are substantial but among fifty thirty-ninth states and Juan R. Torruel- ranks precision.” determine Columbia, la, half and is less than Drugs”: Judge's Attempt the District The "War One “Thus, high only upon goods while a tax rate that the taxpayer neither S.Ct. 1937. possessed to the owned nor purpose support lend at the time it and deterrent punish- imposed. tax Id. as characterization S.Ct. themselves,
ment, features, in and of Court observed that tax on ‘posses- “[a] these necessarily puni- goods longer render the tax sion’ of that no exist do not and that 781,114 taxpayer lawfully never possessed tive.” Id. at S.Ct. punitive unmistakable character.” Id. features” that led the The two “unusual The Court also found it “curious” that one Danger- the Montana to invalidate of the two alternative measures of the right Tax violative of the Drug ous Montana tax was the market value of mari- great- are of even jeopardy double that, course, juana, a substance could of taxation or significance er rate lawfully not be sold. Id. at 783 n. First, the Mon- purposes. deterrent S.Ct. 1937. only hinge[d] tana tax “not on the commis- crime,” of a but also was “exacted Because sion Tennessee’s on unautho *25 only taxpayer after the been arrest- rized substances ha[d] was modeled after the precise g[ave] drug stamp conduct that rise tax in neighboring ed for the our state of Carolina,34 place.” in the first obligation experience to the tax North that state’s Ranch, at Kurth U.S. S.Ct. its statute the wake of Kurth is, taxpayer particularly 1937. That the Montana had Ranch is instructive. The pay any to file a return or North obligation drug stamp “no Carolina tax was first arrested,” tax unless and until he Id. enacted in 1989. The Fourth [was] Circuit Ranch, meaning Appeals, invoking 114 S.Ct. that those Court of Kurth possessing marijuana original “arrested for consti- held that version of North taxpayers drug the entire class of sub- tax tute[d] Carolina’s statute was criminal Montana tax.” Id. at rather ject penalty Lynn to the than a civil tax. West, (4th Cir.1998), 1937. The second “unusual feature” 134 F.3d S.Ct. 589-93 only applied of the Montana tax was that it cert. denied 525 U.S. 119 S.Ct. (1998).35 that had been seized after an L.Ed.2d 36 The tax drugs has since Moreover, consequence, arrest. the tax was levied been amended three times.36 average per average pack price per $1.27 of the state excise tax of of the retail 22% Kids, cigarettes pack. Campaign for Tobacco-Free Tennessee. Cigarette Rankings Excise Tax Rates & 28, 2009), 19; Cruz, (updated May http:// Supra available 34. note Bonna de la Tennes- Dealers, rg/research/fact Levy, Targets www.tobaccofreekids.o with New see Users Tennessean, 29, 2004, sheets/index.php?CategoryID=18. The aver- Dec. at 1A. age price cigarettes per pack retail in Ten- included, including nessee with all Lynn drug taxes addressed North Carolina’s tax, per pack $1.01 $4.36. federal Cam- stamp claiming tax in the context of a suit Kids, paign deprivation rights for Tobacco-Free State Excise and civil under U.S.C. Cigarettes: § Taxes Per Pack Total 134 F.3d at The Fourth Sales 583-84. May holding Rankings (updated ultimate was that because Amounts and State Circuit's 28, 2009), http://www.tobaccofree penal- available at North Carolina’s tax is a criminal ty, proceedings kids.org/researcb/factsheets/index.php? all to enforce it must include Cate- Thus, safeguards the constitutional that attach to goryID=18. compar- even Tennessee’s proceedings. criminal Id. at 593. atively cigarette tax amounts to small excise average price per pack. over retail 14% (as §§ When one takes into account the Tennessee 36. N.C. Gen.Stat. 105-113.105 to. 113 8.5%, Laws, applies ciga- sales tax of which also ch. amended 1995 N.C. Sess. Id., 1, 1995; rettes, responsible for eff. Oct. 1997 N.C. Sess. Laws see state taxes are distinguished courts have dealers. Because the North North Carolina Carolina’s drug stamp tax from the Mon payable their state’s within forty-eight becomes in Kurth tana tax invalidated Ranch: taxpayer hours after the into pos- comes substance, session of the it is not a tax Sub- The North Carolina Controlled Tax, goods, as it was effect at all confiscated as was case stance tax, to this ... pertinent times case contains with the Montana which became due upon of the “unusual features” only upon taxpayer’s pos- neither arrest Supreme which the relied in session substance....
nor is it assessed on
Kurth Ranch to conclude that Montana’s
whether the
stance Tax
ed or
ment
The North
dangerous drug
controlled
for double
charged
Carolina Controlled
taxpayer
is not
substance has been arrest-
with criminal
tax constituted
jeopardy purposes.
property
predicated
that nec-
conduct,
punish-
Sub-
ble
We hold that the North Carolina Con-
the same offense contained in the Dou-
tics as to
bition
trolled Substance Tax does not have
such
[*]
* *
Jeopardy
fundamentally
against multiple
render
Clause.
it
violative
punitive characteris-
punishments for
prohi-
Ballenger,
(emphasis
S.E.2d at 574-75
essarily has been
or de-
confiscated
added)
(internal
omitted);
citations
see
...
stroyed.
obligation
The tax
is not
Shields,
(dis-
also
2008 WL
at *6
contingent upon the dealer’s arrest
cussing
interpretation
of the North
which,
events,
in the normal course .of
*26
tax). Subsequent opinions
Carolina
have
in
would result
the confiscation and de-
Ballenger
reaffirmed
and indicated that
struction of
substance. The dealer
the Fourth Circuit’s characterization of the
satisfy
obligation by
can
his tax
paying
drug stamp
North Carolina
tax
a crimi-
acquisition
tax
as
upon
the substance
penalty
nal
by
permanently
binding
then
is not
on them state’s
affixing
there-
by
recently,
courts.37 Most
a
stamps
Secretary
to
issued
federal district
court
payment.
Revenue to indicate
held
the amended North
long
So
Car-
affixed,
tax,
stamps
as the
remain
olina statute
a civil
no addi-
is
not a criminal
tax
thereafter
though
penalty. Hough
tional
is
due even
v. Mozingo, No. 1:04 CV
(M.D.N.C.
may
609,
1168462,
substance
be handled
other
2005 WL
at *7-8
292,
1,
1, 1997;
§
ch.
eff. Oct.
1998 N.C.
manner consistent with the law as inter-
31, 1998).
Sess. Laws ch.
eff. Oct.
preted by the federal courts.
Assembly designed
North Carolina General
N.C. Sess. Laws 1998-218.
amendments to the statute in both 1995 and
Moore,
specifically
to
address the concerns of
N.C. Sch. Bds. Ass’n v.
N.C.
(2005) (reaffirm-
Supreme
Court and the Fourth Circuit
614 S.E.2d
515-16
punitive
Creason,
and make the
ing
statute less
Ballenger)',
for dou-
State v.
jeopardy purposes.
ble
preamble
(1996),
to the
N.C.App.
473 S.E.2d
states,
part:
1998 amendments to the law
in
per curiam 346 N.C.
903 incorrect,” his exercise unjust, illegal taxing power to be or of ment exclusive tax file “pay are to either remedies to the legislature. Waterhouse Bd. of or for tax” “file suit a claim refund & Schs., President Dirs. Cleveland Pub. ... challenging the commissioner (1876); Sears, 68 Tenn. 400 see also any portion all assessment Woods, Roebuck & Co. v. 708 S.W.2d tax, including any penal- such interest and (Tenn.1986); 383 Bank Commerce & ty with the tax.” associated Tenn.Code Senter, Trust Co. 149 Tenn. (a)(l)(A)(B). §Ann. 67-1-1801 he Because (1924). S.W. pro Because taxes presented challenge a facial to the consti- duce the revenue which the govern tutionality of the tax on unauthorized sub- ment operates, legislature has wide stances, had the option, Waters also which adoption measures, discretion of tax exercised, declaratory he filing judg- judgment and its must great be accorded chancery ment action in the court. Colo- Genesco, Woods, respect. Inc. v. Pipeline, nial at 840. S.W.3d (Tenn.1979), S.W.2d superseded dispute Waters not does grounds by on other 1980 Tenn. Pub. Acts argument process State’s that the for chal (codified at Tenn.Code Ann. 67-1- an lenging assessment under Tennessee 801(a)(2) (2006)); see also Vertrees v. Code Annotated sections 67-4-2807 and Elections, State Bd. 141 Tenn. complies process 67-1-1801 the due with (1919) (“[A] S.W. constitutional McKesson, requirements East outlined power limitation taxation will Co., Brewing their progeny. Tennessee never be inferred implied.... [T]he contrary, To the procedural pro his due power legislative respect in this only can argument entirely holding cess relies positive restrained a distinct and ex that the tax a criminal penalty. constitutes law.”). pression in the fundamental Having rejected already the foundation for argument, we statutory legislature’s power tax, however, his hold that the is not procedure imposition appealing unrestrained, altogether as in courts the tax on unauthorized substances does validate tax if statute it runs afoul of the not due process violate the clauses of the Sears, federal or state constitution. Roe federal and state constitutions. Co., 383; buck & 708 S.W.2d at Evans v. we
While have concluded that the tax on McCabe, 164 Tenn. 52 S.W.2d unauthorized substances does violate rights against
Waters’ self-incrimination jeopardy and double and is otherwise com- History II, A. of Article Section pliant procedural process, due fully question does not resolve the of con- determining Before whether the determine, stitutionality. We also must unauthorized substances ais valid exercise did, Appeals the Court of whether the tax power, Assembly’s taxing General Assembly’s taxing the General exceeds we must first history scope review the *29 II, power under article section 28 the of II, the power granted by of article section Tennessee Constitution. Constitution, of spe- 28 the Tennessee and cifically provision per- the in that section Assembly’s Taxing II. The General merchants, taining peddlers, privi- to and II, Power Under Article leges: Section 28 Legislature power The shall have to tax power belongs The to tax to merchants, the in sovereign capacity, peddlers, privileges, State its the in and no higher be to farmland could taxed they from time tile may as manner such may direct, Legislature the than non-arable land. Constitu- rate time fundamentally merchants receipts tax on of gross tional Convention levy a ad valorem in lieu of Ten- the of taxation in and businesses altered structure II, of merchandise inventories Specifically, on the article section taxes nessee. and businesses such merchants held of pro- of the Tennessee Constitution portion of a exchange. The or for sale as follows: vides pur- used the Capital Merchant’s deed, taxation, held by to All lands liable to sold him of merchandise chase stock, lots, town bank grant, entry, or the beyond and sent non-residents of ages the twelve slaves between higher at a rate than not be taxed shall property such other as fifty years, and on property. tax the ad valorem time time Legislature may from to Const, II, § This language art. All expedient, shall be taxable. deem days of our origin in the earliest its finds according to its shall be taxed property statehood, legislature per- first when value; to that value be ascertained potential a source of as ceived commerce Legislature shall manner as such Assembly the General In revenue. direct, equal so that the same shall be alia, inter “retail upon, a tax imposed throughout the State. No and uniform stores, and hawkers within pedlers from species property of which other Pub. Acts Before state.” 1803 Tenn. collected, taxed tax be shall be merchandize,” of these “any article selling species proper- than other higher twenty- required pay were taxpayers equal Legislature ty of value. But one-year license to the five dollars for merchants, ped- power have to tax shall they county in which were clerk of lars, and in such manner as privileges, Id. 28-29. doing business. time, A may, time to direct. they from the license Assembly increased General laid, in polls tax on white shall be such fifty “any pedlar” tax on hawker amount, may manner and of such an they should and determined dollars by law. prescribed wag- tax for each fifty-dollar the same pay they used in their busi- carriage Journal the Convention Pub. Acts 61-62. 1819 Tenn. ness.42 Tennessee, the Purpose Convened for 1830s, Revising Amending the Constitution And beginning of the contro- By the (Nashville, Hasell Hunt & W. brewing Ten- was versy over taxation Thereof ' 1834) Journal”) (“1834 Convention Co. I, 26 of Ten- Article section nessee. added). change to taxation (emphasis required land nessee Constitution value, its in- property of real based uniform manner based on be taxed in a result, only productive acreage, fer- stead of its acreage.43 As al., II, Lyons et Poli- article section 28 that 43.William Government and 41. The version (2001); Replacement of Ten- Robert E. Cor- appears in the 2007 tics Tennessee lew, (2d erroneously History ed. Annotated substi- A Short nessee Code Tennessee: ("For 1990) "pur- many years "purpose” for the word taxation clause— tutes the word provided equal land which for taxation of all chase.” lots, might (except taxes be as town which land) later, high as those for acres Assembly years 42. Three General —had flesh who a thorn in the of small farmers peddlers twenty-five been reduced occupied oth- *30 carriage. land less valuable than that of per wagon or 1822 Tenn. dollars areas."). ers, valley basin especially in the and Pub. Acts 10-11. prohibited citizen, significant ap- modification Tennessee’s as to other proach to taxation in the 1834 Constitution. perceive. subscribers cannot well by An A. amendment offered John McKin- Proceedings Journal the Conven- of of ney expressly authorizing legislature (Nashville, Delegates Jones, tion of merchants, privileges, to “tax pedlars, and 1870) (“1870 Co., Purvis & Convention may, in as from they such manner time to Journal”) added). (emphasis See also time, eco- growing direct” reflected Mathes, (8 Friedman Bros. v. 55 Tenn. diversity nomic in state.45 The 1834 Heisk.) 488, (1872) (“[TJhis proviso was Constitution made the of “[c]ontinuance palpable intended discrimination ‘merchants, the practice taxing ped- of against the occupations and classes therein dlers, ... privileges’ permissive,”46 mentioned, power of [ ] taxation as subject requirement rather than to the them, is left to the sound discretion of in elsewhere the section that property the legislative department.”); Adams equal taxed at an rate based value. (2 Somerville, Head) Mayor 39 Tenn. of Although taxation was not one of the (noting key 365-66 distinc- driving forces for the Constitutional Con- tion in the 1834 Constitution between taxa- vention of modify convention did tion of property and taxation of privileges). the General Assembly’s taxing power The 1870 Convention declined to extend II, article delegates, section 28. Several principle equality the taxation of representing the concerns of commercial merchants, peddlers, privileges. See interests, aggressively challenged the ex- Logan’s Supermarkets, Atkins, Inc. v. emption principle from the equality (1957) (cit- 304 S.W.2d II, taxation that was embodied article ing cases for the proposition that “the section 28 of the Constitution of 1834. Legislature is not bound the rule of argu- Their concerns are reflected by the uniformity prescribed in cases of taxes on Joseph ments of B. Heiskell:47 did, however, property”). It propose to We think that the principles constitu- II, amend article section 28 to address the government tional require every expressed by concerns Heiskell and oth- class men shall be entitled to the Journal, ers. 1870 Convention at 369-70. protection same against oppression and ratified, II, As finally adopted and article against unequal burthens which are empowered section 28 the General Assem- guaranteed other provi- classes. The bly to Convention, sion inserted bor- Peddlers, Merchants, privileges, rowed from the Constitution of they declares all such manner as from men shall be time taxed equally to time except peddlers. portion merchants and direct. of Mer- Why they singled Capital should be out and used in the purchase chant’s subjected absolutely to a rule of taxation himby Merchandise sold to non-resi- McClure, McKinney, delegate from Hawkins Coun- 46. Wallace State Constitution-Mak- ty, driving ing Especial was also a force in the debate over With to Tennessee 53 Reference modifying (1916). acreage- the taxation land from based taxation to value-based taxation. 1834 4; Journal, Stanley Convention J. Folms- delegate Shelby 47. Heiskell was a from Coun- ah, (1960). History bee et Tennessee ty. Attorney He served as General and Re- porter Riley from to 1878. of Tennessee Laska, Darnell, Secretary Lewis L. Tennessee Consti- C. Tennessee Blue tution 7 Book 2007-2008 508. *31 (1971). noted, cur As the beyond the shall Convention sent and
dents II, explic the ad of article section higher rate than rent version at a taxed tax Assembly to itly empowers on the General property. valorem in “merchants, peddlers, privileges, and Journal, A at 421-22. Convention may to they from time such manner as of years after the Convention mere two past, this Court direct.” the time work, this ad- completed its the phrase the inclusion of observed that significance of the amend- the dressed they from to “in as time such manner II, to section 28: ments article the framers’ intent reflected time direct” 1870, a of There was the Convention Assembly dis the General broad give opposition engrafting very energetic merchants, peddlers, and to tax cretion Constitution, the clause of New upon the Dwyer, 75 Tenn. privileges. Kelly which seemed the Old Constitution Bros., (1881); Friedman 188-89 harshly invidiously so and operate (8 493; Ewin, 55 Tenn. Jenkins community. We the commercial Heisk.) question pre The which excludes mer- refer to that clause case, course, of is whether sented this chants, from privileges, and peddlers, falls the tax on unauthorized substances equali- the protection principle the taxing power as legislature’s the within When, however, finally it was ty. by constitution.48 defined our state protest presented was adopted, a solemn by representatives large against it Merchants and Peddlers B. Taxes on shortly constituencies. And
commercial thereafter, question the clause now in argues The Commissioner And brought adopted. forward and was by focusing only erred Appeals Court of upon intended as a limitation this was authority to tax a lack of constitutional general power Con- conferred aas possession of unauthorized substances 182k, regarded and was stitution of thereby failing to address privilege, triumph in the merchant. great behalf of Assembly, General possibility that the (em- Bros., Tenn. at 496-97 Friedman tax, properly exer- the enactment added). phasis power mer- corresponding its to tax cised II, peddlers.49 28 remained chants Commissioner
Although article section equates statutory definition of “deal- years, one it unchanged for over hundred ers” in Tennessee Annotated section 1982 and 2006. The Code was amended 67-4-2802(8) with the “merchants” slightly altered ratified amendment II, “peddlers” language of article section regarding the taxation of language commonly defined or merchants, 28 as those terms are peddlers, privileges. interpreted by prior deci- have been and Debates the Constitutional Journal II, leges” provision part is a of article 48. Because Tennessee's tax unauthorized existing 28 of the Tennessee Constitution. upon tax in section based substances Carolina, noting none it is worth North upholding argument law the decisions that tax ad- raises The Commissioner this noted, Carolina dress whether it exceeds the North first time in Court. As the trial Assembly's taxing power upon under that was based the self-incrimi- General court's order issues, process Neither article II of the and the Court state's constitution. nation and due Constitution, requesting party either Appeals, North Carolina which concerns without issue, II, powers legislature, fully V of that article section 28 nor article brief the document, taxes, legislature’s pow- its decision which addresses finance based "merchants, described in that section. privi- privileges er to tax peddlers and include the *32 907 Assembly’s taxing power claims that eral article He further under sions of this Court. target II, was to those legislative purpose if section 28 it can be classified as in illic- peddlers who traffic merchants and peddlers either a merchants and tax or a and “ensure that this unfor- it substances tax on privileges. commerce is
tunately expansive sector of Traditionally, peddlers merchants and escape the sort of and thus does not taxed have been treated as two distinct classes of by placed that is on and borne tax burden traders, stationary, “the one the other mi legitimate commerce.” (7 gratory.” v. Sprinkle, 26 Tenn. Indeed, legislature au Hum.) (1846). 36, 39 A “merchant” is peddlers tax merchants and thority to buying selling whose business is and “[o]ne power and from its separate distinct goods profit.” for Black’s Law Dictionary II, Article section 28 rec privileges. (8th ed.2004). seems the busi “[I]t authority to tax ognizes legislature’s buying selling ness of be should merchants, if those merchants are not even pursuit party, by and avocation of a which Jenkins, exercising privilege. a 55 Tenn. living, he makes his that he order shall Jenkins, made the at 474. In this Court regarded as a merchant.” State v. following observation: Smith, (5 Hum.) 394, (1844); 24 Tenn. Upon principles well settled of constru- Memphis Dwyer, see also Tenn. Club statutory provi- constitutional or ing (1883); Lovell, 79 Tenn. Simons v. sions, the enumeration of “merchants” (7 Heisk.) Ped tax- objects as distinct “peddlers” have an occupation dlers similar to mer ation, generally be taken as ex- would chants, the chief being with difference embracing the intention of them cluding goods a merchant sells at a fixed and “privileges,” under the term which is business, permanent place ped while subject a distinct designated also as itinerant doing dler has more mode of to tax “merchants” power taxation. 38-39; Sprinkle, business. 26 Tenn. at distinctly recog- “peddlers” is as (1 Bumpass, 8 Tenn. Mart. & Greer objects of taxa- nized these terms as Yer.) (describing “the station “privileges,” in the term and the tion as merchant, ary with merchandise on his fact that the framers of the Constitution pedler, “the hawker or shelves” and specified peddlers merchants and as dis- pack”). peddler person them in his A is a to indicate objects, tinct would seem for the place place who travels from they “privi- did not use the word goods. 1819 Tenn. purpose selling his definition, in its ei- leges” including (referring Pub. to “itenerant Acts. 61-62 “peddlers,” ther “merchants” or but that State, pedlars”); & 165 Tenn. Co. they might be taxed as they intended Swift (1932) (“[T]he 55 S.W.2d dis and not as peddlers, merchants and peddling tinctive is the concur feature privileges. selling delivering.”); rence of Wool Later, Kelly, 75 Tenn. at Id. at 473-74. (2 Swan) man v. 32 Tenn. 189-90, the held that a merchant (1852) (“By ‘peddler,’ the term we under who at retail and alcoholic groceries sells country, travels stand one who about beverages at wholesale be taxed as a vehicle, kind of or in on foot or some merchant, having for the privilege manner, goods other and sells or small license to sell alcoholic bever- wholesaler’s retail.”); Dic commodities Black’s Law The unauthorized sub- ages, both. ed.1990). (6th tax, therefore, within the Gen- tionary stances falls dissent, “pivotal we do not believe the ordinary meaning Given *33 “peddler,” question” statutory analysis “merchant” and we can in this “is terms to Appeals failing fault the Court among possess- not whether all the individuals the tax on unauthorized whether consider ing quantity a substantial of cocaine there tax ped substances is a on merchants and sell, barter, any are individuals who dlers, runs interpretation because such barter, sell, trade or intend to or trade the taxing counter to the statute’s definition of Instead, dispositive cocaine.” issue legislation “dealer.” The defines “dealer” under this section of the Tennessee Consti- only in terms of actual or constructive tution is whether there is credible pur not in terms of the possession, and interpretation plain language of the of the goods. chase and sale of TenmCode Ann. pos- statute that could the tax sustain 67-4-2802(3). Moreover, § the statute peddlers session as a merchants and tax. only a tax levies “on unauthorized sub Although required every we are to make stances Tenn.Code Ann. possessed.” in favor of the presumption statute’s con- added). (emphasis plain 67-4-2803 stitutionality, language employed statute, therefore, language places of the a 67-4-2802(3) section defining subject those only upon possession tax the control or requires ques- to the tax us to answer this upon substances and not their negative. tion in the transfer or sale. There is no reference in By readily acknowledging that the stat- to either statute sale those expressly anticipate ute “fails to that an sell, or the intent to substances whether at possession individual in of a large quantity a fixed location or in an itinerant capacity. of an might unauthorized substance not be “dealer,” Thus, the term as defined peddler a merchant or of the substance” legislation, not fall does within the tradi II, under article section the dissent meaning peddler tional of a merchant or a and, therefore, concedes the conflict between the taxing exceeds the broad statute authority the General and our state Assembly. afforded constitution. The dissent remedy problem by effectively would carefully legisla- We have reviewed the amending the to statute create a rebutta- tive history associated with the passage of presumption ble pos- individuals who the unauthorized sug- substances tax. As quantities sess the of unauthorized sub- dissent, gested by the some members of 67-4-2802(3) specified stances in section Assembly the General express did a desire barter, purposes do so for sale or trade. impose to a tax on illicit drug transactions The dissent’s rationale is that section 67- however, opposed possession; as mere to 4-2807, permits taxpayer which to seek cardinal of statutory interpretation rule review of provided the assessment as precludes legislative the consideration of Tennessee Code Annotated section 67-1- commentary interpret statutory lan- seq., requires et the taxpayer guage when that language is clear and either to the tax See, Waldschmidt, pay and file a claim for unambiguous. e.g., refund or file instance, suit S.W.3d at 176. In this Commission- specif- chancery ic er in court. A showing terms of the statute that the levy only upon taxpayer the possession merely possessed unauthorized unautho- sub- use, stances and not rized personal seller or one who substances for the dis- possesses with the intent sent argues, to sell. would indicate that More- the tax- over, the specific purpose of the payer statute is is neither a merchant nor a peddler enforcement, to raise revenue for law and that the not statute is unconstitutional as to tax the illegal drug trade. applied. approach Unlike the This ignore would tra-
9Q9 principles statutory construc- his requisite ditional amount of tion, “amendments” prohibit qualify which to a cocaine to aas “dealer” as the term by judicial directive. Ten- legislation. statute Under is defined in the An individual Annotated section subject nessee Code 67-1- to the unauthorized sub- 1801(a)(1), tax, objective challenge written, in a stances even if the evi- an assessment determine whether it dence does establish that he or she “unjust, illegal, qualifies or incorrect.” The dis- aas merchant or a peddler of the *34 approach open sent’s would the door for a substances. as-applied challenges, slew of in which analysis Our of the applicability of the required courts would be to consider merchants peddlers provision and of arti- taxpayers, including
whether those who II, cle might section 28 be different if the clearly are in violation of the statute’s legislature statutorily had defined “deal- plain language, avoid should assessment ers” as those who sell or intend to sell upon based a lack of evidence of either a substances, unauthorized rather than those or an intent sell. In summary, any sale in possession of illegal drugs.51 As remedy the taxing for statute’s constitu- written, however, the statute does not au- deficiency tional for the legislature, is not persons sell, barter, thorize a tax on who branch, judicial to develop. exchange or unauthorized substances for Instead, value. opinion today solely upon plain Our based language places a tax on those who principles statutory merely possess well-established construction, drugs. In consequence, the not the facts of this case. tax does not Nevertheless, fall within the the record below merchants peddlers does illus- and II, classification difficulty trate the under article classifying the un- section 28. authorized a proper levy substances tax as Privilege C. Taxes under the merchants peddlers provi- and proof sion. The introduced at trial estab- it Because is not a tax on merchants and lished Waters’ livelihood as carpentry, peddlers, and the tax on unauthorized sub- not, possession absent inferences from his may only sustained, all, stances if at as large drug, a amount of the as a “mer- privileges II, a tax on under article section chant” “peddler” Indeed, or of cocaine.50 Waters the tax on unauthorized sub- subject however, stances, written, was tax liability, as is more defensible as a Although pleaded guilty January "producing, cultivating, manufacturing, Waters im- felony 2008 to the Class B porting, transporting, distributing, acquiring, deliver, plea cocaine with intent to was purchasing, storing, selling, using, or other- thirty-two entered months after Waters was possessing” marijuana wise or a controlled assessed with the tax and seventeen months substance). appear Other states to have fo- hearing declaratory judgment after the on his drug stamp cused their tax statutes exclusive- action. ly drugs. sale or transfer of the See 35 Comp. (defining Ill. Stat. “dealer” as "a 520/2 Tennessee, 51. Unlike a number of other states manufactures, person produces, ... who have included individuals who sell or transfer ships, imports, transports, sells or transfers or See, drugs among subject as those to the tax. possesses with intent to deliver to another 40-17A-l(3) e.g., (defining § Ala.Code "deal- person” the cannabis or controlled sub- manufactures, person er” as ... “[a] who stance); 372A.070(1) (impos- § Nev.Rev.Stat. sells, uses, distributes, produces, ships, trans- “sell, ing tax on those who offer to sell or ports, imports any ... or or in manner ac- possess quires possesses” with intent to sell a controlled marijuana sub- or a con- substance); registering Ky.Rev.Stat. stance” without first trolled Ann. as dealer 138.870(4) (defining tax). activity” paying prescribed "taxable business, a license from require which a tax on mer- than as privileges
tax on authority, designated by language proper some peddlers. chants law, all, in- legislature open suggests general statute privileges.52 one, power to be one license. It is a the tax without such tended under Title First, was codified privi- the statute alone to create Legislature 4; of the Tennes- chapter Chapter forbid their exercise without leges, and “Privilege Annotated is entitled see Code license. designation Taxes.”
and Excise
Mayor
(quoting
What
Whitice,
Hill
149 Tenn.
H.G.
Co.
dependent upon
general
construction
(1924);
e.g.,
see
Kurth v.
law.
have defined it in several cases
258 S.W.
We
(1887)
be,
exercise of an
or
86 Tenn.
occupation
S.W.
contrast,
By
generate
law en-
neither the word "merchant”
revenue for state and local
"peddler” appears anywhere
nor the word
agencies....”);
Tenn.Code Ann.
forcement
the statute.
67-4-2803(a) ("An
§
excise tax is levied on
possessed,
substances
either ac-
unauthorized
("The
Tenn.Code Ann.
53. See
67-4-2801
dealers....”).
constructively, by
tively or
part
levy
purpose of this
is to
an excise tax to
(“A
legislature
pensation
taxpayers
is whatever the
from the
privilege
to the state
in return
the protective
for
tax
environment
privilege,
and to
choose to declare
provided
state has
(“[T]he
activity
Jenkins,
such.”);
ty taxing a completely illegal statute taxing possession statute of un- privilege powers. acts under the Because authorized substances does not violate the Assembly may impose General federal and state protections constitutional privilege activity tax on an it has against self-incrimination and double jeop- unlawful, declared the tax otherwise ardy abridge guarantee procedur- on unauthorized even substances exceeds reasons, al process. due For different taxing authority the broad of the General however, statutory scheme cannot be II, Assembly under article section 28. characterized as imposing either tax on stated, Our charge, uphold the merchants, peddlers, a tax on or a tax on constitutionality pos- of a statute whenever privileges, as authorized under our state sible, and to that we have that if end held Obviously, prohib- constitution. this state unconstitutional, partially statute is “it possession its the of cocaine. As observed duty provision would be our to elide the our Court of Appeals, objected to rather than to strike down the substance is no privilege. Fur- taxing statute.” Int’l Harvester Co. ther, legislation only issue taxes Carr, 225 Tenn. 212- S.W.2d possessors and makes no reference to one circumstances, however, These or, by virtue quantity who sells broad, have generally involved omnibus factors, the cocaine other displays the taxing provision statutes in which one Finally, intent to we are sell. not inclined unconstitutional, but the remainder augment a statute an effort to make cases). statute is sound. Id. at (citing it within the fit framework the constitu- situations, In these typically courts have responsibility tion. That falls within the *38 statute, chosen to invalidate the entire capable Assembly. hands of the General but have “a more taken reasonable view judgment The Appeals ... part providing that the law for affirmed. are taxed to Reagan Costs Fain improper the exemption should be de- capacity in his the as Commissioner of instance, clared void.” Id. In this howev- Tennessee, Revenue for the State of for er, way there is no for us to strike down which execution issue if necessary. any particular offending provision within the invalidating statute without the entire KOCH, JR., J. WILLIAM C. filed tax. cannot a tax on posses- We transform in separate part and opinion concurring sors of substances a tax on dissenting part, into merchants in in which CORNELIA CLARK, J., peddlers, classify illegal activity joined. and A. suggests identify any specific, objec-
57. opera- The dissent the that “delicate does dissent might legislation portion might tion" save the from the state tionable of the statute that be legislature's bring constitution’s limitations on the removed in order to the statute within Nowhere, however, II, taxing powers. broad the boundaries of article section agencies enforcement KOCH, JR., J., local law and C. WILLIAM expendi- dramatically in increased dissenting part. resulted part and concurring per- for law enforcement additional tures the invalidates Unau- today The Court defenders, sonnel, prosecutors public and Tax on the ground Substances thorized courts, to and correction facilities Assembly’s the General that it exceeds drug-related convicted of persons house II, Article Section under taxing power crimes. The Court Constitution. of the Tennessee despite prece- conclusion reaches this society coun- question of how should statutes in interpret us to requiring dents illegal drugs the harmful effects teract sustains, de- rather than that a manner illegal drug in the engaged those and deter feats, though Even constitutionality. their that presents complex policy issues trade conclusions I with the Court’s concur de- legislative for particularly suited are Tax does not Substances the Unauthorized regard to mer- and action. With bate and federal constitu- of the state run afoul illegal drugs, peddlers and chants jeopardy double prohibitions tional Assembly, like Con- General Tennessee it is and that consis- and self-incrimination has tra- legislatures, state gress other process, of due requirements tent with ditionally emphasized through deterrence its that this concur with decision I cannot prosecution and incarceration.1 criminal imposed a constitutional tax cannot significant possess who persons however, manner recently, As- More General drugs illegal purpose quantities to sembly additional tools ad- has created of resale. em- illegal drug trade. It has dress law enforcement authorities
powered
I.
personal
real
and confíscate
seize
illegal drug
trade or
used
property
hydra-headed
drug trade is a
illegal
proceeds
from the
obtained
society.
It
preys
our
monster
proper-
then to forfeit this
drug trade and
lives and tears families
destroys individual
proceeds
from its
use it
ty
undermines our economic well-
apart.
It
law
defray
drug-related
the costs of
sale
impairing productivity, requiring
being by
activities.2 It enacted the
enforcement
treat-
expense
to bear
taxpayers
Act of
to facil-
Drug Court Treatment
abus-
drug
ment and social services for
courts for
families,
specialized
the creation of
itate
forcing
pub-
ers and their
reducing the incidence of
purpose of
drug-
expenses
lic to
the collateral
bear
use,
addiction, and
com-
drugs”
drug
drug
crimes
The “war on
cur-
related crimes.
state,
and addic-
federal,
mitted
a result of
use
being waged by many
rently
felony
up
17—417(b)—(j)(Supp.
carries with it
fine of
Ann.
Tenn.Code
39—
*39
$200,000.
2008)
§
for
prescribes the fines and sentences
39-17-
Tenn.Code Ann.
manufacturing,
persons
deliver-
convicted of
§
Ann.
417(j)(5). Tenn.Code
39-17-418
drugs
ing,
illegal
selling,
possessing
for
(2006) prescribes
fines and
sentences
manufacturing, delivering,
purpose of
or sale.
posses-
simple
of
persons who are convicted
Possessing
grams
0.5
of cocaine with intent to
exchange of
sub-
or the casual
controlled
sion
felony that carries with it a
sell is a Class B
stances.
$100,000.
up
fine
Tenn.Code Ann.
of
17—417(c)(1). Possessing
grams
§
of
39—
53-11-201,
§§
-204
2.
Tenn.Code Ann.
See
felony
a Class B
with intent to sell is
cocaine
-
53-11-451,
§§
Tenn.Code Ann.
and
$200,000.
up
a fine
that carries with it
17—417(i)(5).
§Ann.
Possess-
Tenn.Code
39—
A
ing
grams of
is a Class
300 or more
cocaine
Accordingly,
Assembly
governments.
en-
the General
In
tion.3
Assembly
the State with
provided
Act
to General
Liability
Dealer
Drug
acted the
weapon against
illegal drug traf-
by illegal drugs
another
injured
provide persons
damages
ficking when it enacted the Unauthorized
of action for
a civil cause
purpose
Tax.6 The
of this tax
Substances
knowingly participate
who
against persons
tax-exempt
was to end the
status of mer-
market
in Tennessee.4
illegal drug
in the
illegal drugs
and to
peddlers
chants and
Assembly
recognized
The General
a tax on their
require
pay
profits.
them to
that drive
drugs
products
are
illegal
that
enormous,
legis-
busi-
The Unauthorized Substances Tax
illegal underground
many
patterned
legisla-
lation was
after similar
in Tennessee
enterprises
operating
ness
recognized
already
tion that had
been enacted
other
It has also
and elsewhere.5
As a result of the General Assem-
illegal
merchants of
states.
peddlers
action,
joined nineteen
bly’s
their
Tennessee
long
operate
been able to
drugs have
taxes,
a tax on the
impose
pos-
de-
other states
paying
without
illegal businesses
illegal drugs.7
or sale of
Some
financial burdens their
session
significant
spite
other states’ statutes
local
earlier versions of
impose on the State and
enterprises
2006”).
16-22-101,
Drug
report
December
This
§§
-114
Prices:
Tenn.Code Ann.
3. See
price
powder
also stated that the
(Supp.2008).
midlevel
$28 and
cocaine in Knoxville was between
per gram,
price
retail
$53
and that the
street
29-38-101,
§
-116
4.
Tenn.Code Ann.
See
powder
gram.
$100
Na-
per
cocaine was
(Supp.2008).
Drug
tional Illicit
Prices: December
at
Thus,
considering
tbl. 3.
without
either the
the United Nations estimated
5.
engaging
other costs of
business
drug
generates
$300
more than
bil-
trade
diluting
profit derived from
or the additional
gross
in retail sales which exceeds
lion
drug
purity
to increase the amount
product of
of the world's coun-
domestic
88%
sold,
drug
kilogram
purchasing a
dealer
States
It also estimated that
United
tries.
expect
at
could
powder cocaine wholesale
drug
of all retail
sales.
accounted for 44%
$76,000
$80,000
profit
from
of between
Crime,
Drugs
United Nations Office of
selling powder
in Knoxville in 2006.
cocaine
127-28,
2.2,
Drug Report
§
World
http://www.unodc.org/pdf/WDR_
available at
20, 2004,
May
ch.
6. Act of
(last
2005/volume_l_web.pdf
visited June
(codified at Tenn.Code Ann.
Pub. Acts 1840
("World
2009)
drugs
Drug Report”).
Illegal
67-4-2801,
(2006
Supp.2008)).
§§
&
-2811
they
profitable
move from
become more
January
effect on
These statutes took
Drug Report
producers to consumers. World
2.2,
trade,
§
In the
the “[t]otal
at 127.
(Ala.
§
include Alabama
Code 40-
7. The states
is,
average,
producer income
4%
(2003)),
through §
Con-
17A-1
40-17A-16
highest profits
"the
final retail value” with
(Conn.
through
§
Gen.Stat.
12-650
necticut
[being]
the wholesale and re-
made between
(Ga.Code
(2000)), Georgia
Ann.
§ 12-660
2.2,
Drug Report §
World
tail level.”
(2005)),
through §
Idaho
§
48-15-11
48-15-1
illegal drugs
price
(Idaho
The increase in the
through
§
§ 63-
Code Ann.
63-4201
(2007)),
(Ind.Code
the wholesale to the retail level holds
§
from
6-7-3-1
Indiana
(2007)),
(Iowa
States
true in Tennessee. In
United
through § 6-7-3-20
Iowa
Code
(2006)),
reported that
Department
through
§
§
of Justice
453B.16
Kansas
453B.1
(Kan.
through §
Decem-
price
powder
§
cocaine in
79-
wholesale
Stat. Ann.
79-5201
$20,000
(1997
Kentucky (Ky.Rev.
Supp.2007)),
between
ber 2006 Knoxville was
&
$24,000
equates
through §
per kilogram
which
138.889
Stat. Ann.
138.870
Justice,
(La.Rev.Stat.
(2006)),
gram.
Dep’t
Ann.
per
$20
$24
U.S.
Louisiana
*40
2006,
through
(Supp.2008)),
§
Drag
§
December
47:2601
47:2610
National Illicit
Prices:
64K,
(Mass.
(Feb.2007),
http://
Gen. Laws ch.
10 tbl. 3
available
Massachusetts
(2001)),
(Minn.
DrugPrices.pdf
through
§
§
Minnesota
www.methadonesupport.or^
(2007)),
10, 2009) ("National
through
(last
§
§
297D.01
297D.13
Illicit
Stat.
visited June
drugs
adequate-
passed unanimously by
had failed to
the General
taxing illegal
As-
against self-incrimination or
ly safeguard
sembly,
facially
unconstitutional. A de-
protections
double
had run afoul
facially
cision
declare a statute
unconsti-
However,
judicial
jeopardy.
through the
tutional requires extraordinary caution to
testing process,
understanding
a coherent
avoid short-circuiting
pro-
the democratic
constitutionally
permissible approach
by preventing
embodying
cess
laws
illegal drugs developed,
to the taxation of
will of
people,
expressed through
and the statutes were
and re-
amended
representatives,
their elected
being
from
Iowa,8 Kansas,9
present,
At
fined.
implemented in a manner consistent with
Minnesota,11 Nebraska,12
Kentucky,10
the federal and state constitutions. See
Carolina,13
North
and South Carolina14 Su-
Grange
State
v.
Repub.
Wash.
Wash. State
Courts,
preme
the Oklahoma Court of
442,-,
1184,
Party, 552 U.S.
128 S.Ct.
Appeals,15
Criminal
and the Alabama
(2008).
1191,
II.
rules of construction that
this Court has
today
traditionally
adjudicating
concludes that
followed when
the Un-
Tax,
authorized Substances
a statute
challenges
constitutional
to statutes.
(Neb.Rev.Stat.
through
(Minn.
§
Nebraska
Triplett,
77-4301
11. Sisson v.
917 II, gin strong Section 8 of the Tennessee with the presumption Article that the legislative power challenged vests all statute Constitution constitutional. Assembly. Penn., Included in this v. the General McCarver Ins. Co. State 208 of of 380, explicitly recognized (Tenn.2006); in Article 384 power, and S.W.3d Lynch v. 28, Jellico, (Tenn. II, power City 384, is the of taxation. 205 Section S.W.3d 390 matter, 2006); (2 power As a constitutional to State Cooper, v. 10 Bank Tenn. Yer.) 599, exclusively J.). levy assigned taxes has been 622-23 (Kennedy, Sears, Assembly. presumption places the General Roebuck & This heavy burden (Tenn. Woods, 374, person Co. v. 708 S.W.2d 383 on the challenging the statute. 1986). Elam, Accordingly, 455, the General Assem v. Gallaher 104 S.W.3d 459-60 (Tenn.2003); bly’s legislative power, E.N.R., exercise of its in Adoption In re 42 taxation, 26, (Tenn.2001); cluding power is limited S.W.3d 31 State ex rel. Leech, only by 534, the state and federal constitutions. Maner v. 588 S.W.2d 540 (Tenn.1979). v. Perry County Laurrence Election Comm’n, 548, 551, 219 Tenn. 411 S.W.2d Consistent with the presumption of a 538, (1967); Carr, 539 v. 218 Williams validity, statute’s we must resolve every 564, 578, 522, (1966); 404 S.W.2d 529 doubt in favor of a statute’s constitutionali McCabe, 675, 672,
Evans v.
164 Tenn.
52
Pickett,
ty.
696,
State v.
211 S.W.3d
700
(1932).
159, 160
S.W.2d
(Tenn.2007); Bailey v. County
Shelby,
539,
(Tenn.2006).
Because the Tennessee
ex
Constitution
188 S.W.3d
543
Because
pressly assigns
legislative power
all
to the we
uphold
must
a statute
possi
whenever
ble,
Pickett,
Assembly,
separa
700;
General
the doctrine of
S.W.3d
II,
powers,
County
117, 121,
tion of
reflected in Article
Sec
v. Frye,
Unicoi
197 Tenn.
Constitution,
381,
(1954),
tion 2 of the Tennessee
con 270 S.W.2d
adopt
we must
power
strains this
to invalidate the
Court’s
reasonable construction of a statute
Assembly’s
General
legislative
preserve
actions.
that will
the statute and avoid
Nolan,
222, 233-34,
Peay
157 Tenn.
7 constitutional conflict.
Jordan v. Knox
(1928).
815,
(Tenn.
751,
respect County,
S.W.2d
We must
213 S.W.3d
780-81
2007);
Assembly’s
the General
Taylor,
exercise
its
State v.
70 S.W.3d
(Tenn.2002).
matters,
legislative discretion in all
broad
As the
States
United
Su
including
Logan’s preme
seventy years
matters of taxation.
noted over
Court
Atkins,
Supermarkets,
ago,
Inc. v.
202 Tenn.
cardinal principle
statutory
“[t]he
(1957);
destroy.”
S.W.2d
construction is to save and not to
Mayor
Adams v.
& Aldermen
Somer NLRB v.
Laughlin
Corp.,
Jones &
Steel
(2
ville,
Head) 363,
(1859).
1, 30,
39 Tenn.
366-67
301 U.S.
57 S.Ct.
unless it is
unconstitu
ty
give
does not
Court
license
Perry
tional.
v. Lawrence County Elec
second-guess
Assembly’s
the General
poli-
Comm’n,
tion
When this ative inquire asked address into the motives of the statute, constitutionality of Assembly. Cosmopolitan we must be- General Life *42 918 541, that constitutional issues must Northington, by holding 201 Tenn. v.
Ins. Co. (1957). 911, be raised in the trial court “unless the 558, 918 Nor first 300 S.W.2d obviously unconstitu wisdom,18 statute involved so expedi- we review the statute’s face to obviate the necessi reasonableness,20 tional on its desirability.21 ency,19 ty for discussion.” Lawrence v. Stan matters entrusted to the These are 927, (Tenn.1983); ford, 655 929 S.W.2d electorate, not the courts. See State ex County, v. 204 City Elizabethton Carter 625, Lindsay, Tenn. rel. v. 103 Robinson (1958). 452, 463, 822, 321 827 Tenn. S.W.2d (1899); 640, 950, Henley 954 v. 53 S.W. patently in the absence of a Accordingly, 665, 679-82, 352, State, 41 98 Tenn. S.W. defect, obvious facial constitutional this (1897); State ex rel. v. 354-55 Coleman consistently declined to consider Court (Shannon) 355, 366 Campbell, 3 Tenn.Cas. challenges to statutes that constitutional (1875). trial have not first been asserted have an parties III. court where the would had to introduce evidence that opportunity Both this and the General Assem- material “might pertinent consid bly developed jurisprudential princi- have validity Law ering the statute.” to constitutional ples applicable challenges. 929; Stanford, v. rence 655 S.W.2d see principles assure that These time-tested M.L.P., 394; In re 281 also S.W.3d parties joined, are proper Valentine, 539, n. re 79 S.W.3d 544 3 clearly properly issues are focused (Tenn.2002). drawn, and that State has full and opportunity fair to defend the constitution- jurisprudential principle, A second em ality challenged Many statute. 29-14r-107(b) of the § bodied in Ann. Tenn.Code principles these have not been followed (2000), 24.04, Tenn. R. P. Civ. and Tenn. this case. 32, R.App. requires parties challenging P. constitutionality notify of a statute to
A.
Attorney
Reporter
General and
principle
appellate prac
challenge by serving copy
papers
One cardinal
of their
Attorney
tice
who fails
party
purposes
is that
to raise
General. The
trial court
right
requirements
issue
waives its
these
are
two-fold.
M.L.P., First,
appeal.
raise that issue on
In re
the notice enables the Office of the
387,
(Tenn.2009); Dye
Attorney
discharge
responsi
281 S.W.3d
394
v.
General to
its
(Tenn.
Corp.,
bility
constitutionality
216 S.W.3d
to defend the
Witco
2007);
Reg’l
Med.
Ann.
Cookeville
Ctr. v. Hum
state statutes. Tenn.Code
8-6-
109(b)(9)
(Tenn.2004);
Second,
phrey,
(Supp.2008).
joinder
126 S.W.3d
905-06
Blount,
Attorney
Black v.
938 S.W.2d
General assures that the
(Tenn.1996). This
expressly ap
vigorously
Court has
statute will be
defended. Com
plied
principle
involving
pliance
in cases
chal
and the related
this statute
Beeler,
lenges
constitutionality
mandatory. Cummings
to the
of a statute
rules is
v.
Johnson,
290;
Draper Westeifield,
18. Green v.
249 S.W.3d
v.
parties thoroughly must brief the issues 13(b) Tenn. RApp. signals P. also they appellate expect courts to consid- the appellate courts should limit their dis- er. principle This is reflected in Tenn. to cretion consider by issues not raised 13(b) that, RApp. P. which provides parties to extremely important circum- the exception involving of issues the sub- stances, (1) prevent such as to needless ject jurisdiction of matter the trial and (2) litigation, prevent to injury to the inter- courts, appellate appellate “gener- review ests of the public, and to prevent preju- ally only will extend to those pre- issues dice the judicial process. to This Court Thus, appellate sented for review.” courts has never specifically invoked Tenn. may properly decline to consider issues 13(b) RApp. P. in proceeding by- a civil to have been raised and briefed in pass the requirement that constitutional accordance with the applicable rules. See issues must be raised in the trial court Melton, State rel. ex D’Amore v. 186 Tenn. the first instance.22 S.W.2d This principle judges enables to be “more confi- B. dent in the results of their deliberations” II, Mr. never Waters asserted an Article “they
because have heard the issues ar- Section 28 challenge in the trial court. gued by attorneys duty-bound that are he While complied with Tenn.Code Ann. fully develop opposing positions.” their 29-14-107(b) R. Tenn. P. 24.04 Civ. Northern, State v. 262 S.W.3d 766 by serving Attorney with pa- General (Tenn.2008) (Holder, J., concurring and pers raising constitutional challenges dissenting). self-incrimination, based jeopar- double appellate dy,
The current
permit
rules
re-
and due process,
complaint
neither his
viewing
mentioned,
courts to exercise their
nor
other
papers
discretion
his
plain
22. While the doctrine of
error is fre-
research ... where counsel has made no at-
quently
by appellate
issue,
used
courts to consider
tempt to address the
we will not reme-
issues
criminal cases that were not raised
defect,
dy
especially
'important
where ...
courts,
in the
no
lower
there is
doctrine anal-
questions
far-reaching significance'
are in-
ogous
"plain
proceedings.
error” in civil
Northern,
volved."
S.W.3d at 767
13(b)
This
R.App.
Court has invoked Tenn.
P.
(Holder, J., concurring
dissenting) (quot-
plain
and the
error doctrine in a criminal
ing
Regan,
Carducci
F.2d
case to consider
issue
that had been raised
(D.C.Cir.1983)). The 2009 amendment
in the trial court but had not been raised in
36(b)
R.App.
plain
P.
that codifies
Appeals.
the Court of Criminal
State v.
not,
terms,
error doctrine does
its own
Northern,
dissent,
The Commissioner to objectively coming in without the con- all the issues raised case respond to Chumley opinion, taxpayer v. had 8 of its the Court 25. Robbins 23. In footnote to that the tax on unauthorized sub- Mr. Waters’s failures assert asserted brushes aside II, Assembly’s stances exceeded the General Article Section claim the trial an II, Attorney power Article Section but the provide the General under court and to rejected argument. by observing had this Rob- required notice that the trial court with the 63-IV, Chumley, Attorney challenged v. No. 05-23 Memoran- "has not the lack bins General (Davidson Opinion quite clearly p. and Order joinder party.” The State dum Chan, 10, 2006). July filed points its brief filed in this Court that out in challenged never the Unautho- Mr. Waters Tax in the trial court based rized Substances generously Even if 26. one were construe II, to raise a on Article Section Failure incorpo attempt an Mr. Waters's brief as is, facto, ipso II, issue a failure to constitutional argument in the rate Article Section 28 29-14-107(b) comply §Ann. with Tenn.Code Chumley v. into his brief filed brief, Robbins Any 24.04. other inter- and Tenn. R. Civ. P. improper permit it would have been requirements pretation these undermines 27(j) R.App. him to do so. Tenn. P. allows salutary purpose which is to ensure the their adoption “any part of the brief another vigorous of statutes whose constitu- defense involving multiple parties. party” in cases challenged. tionality juris- However, been These appellate I am "unaware of prudential principles exist for the benefit of incorporate by whereby procedure one can courts, and thus the invoke courts in reference a brief from unrelated case parties not. them when have volving even parties parties who are not Lunati, appeal.” v. 665 S.W.2d State Del Chumley, (Tenn.Crim.App.1983); No. v. M2006-01730- Robbins cf. (Tenn.2002). linger, S.W.3d 462 n. COA-R3-CV. Attorney elusion that the General lenges); 845 S.W.2d Burford (Tenn.1992) given opportunity (upholding full and fair in either the facial con- stitutionality of trial appellate court or the court to Post-Conviction Proce- dure Act’s statute of defend the limitations while in- Unauthorized Substances Tax validating application its particular to a challenge a constitutional based on fact, prisoner). we have entertained II, Article Section 28. The result is that types both of constitutional challenges to being Court is pass asked to See, tax statutes. e.g., FMC Corp. v. constitutionality of a statute based on a Woods, (Tenn.1981), 618 S.W.2d flawed incomplete I record. cannot superseded by recognized statute as but help believe that the outcome of this Olsen, Kellogg Co. 675 S.W.2d 708- case has been influenced these proce- (Tenn.1984). dural irregularities.
A facial challenge to a statute involves a
claim that the statute fails an applicable
IV.
constitutional test and should be found in
Despite procedural
irregularities
applications.
valid
all
United States v.
normally
would
a
scuttle
challenge to a
Salerno,
739, 745,
481 U.S.
2095,
107 S.Ct.
constitutionality,
statute’s
the Court has
(1987).
lenger must
(1936) (Brandeis, J., concurring)
anyone. L.Ed. 688
constitutionally applied to
not be
Tribe,
Liverpool, N.Y. & Phila. S.S. Co.
(quoting
Constitu
H.
American
1 Lawrence
(3d ed.2000)
33, 39,
3-31,
Emigration,
U.S.
at 611
v. Comm’rs
tional Law
(1885)). Third,
(hereinafter
Constitutional
923 (2d 167,174-75 Cir.2006); Suffolk, Redmond v. 463 F.3d (Colo.Ct.App.2006); City of 875, Ana, 664, Moore, City Cal.Rptr.2d P.3d 878 Tobe v. Santa 40 Wash.2d 91 290, 402, 1152-53; Konrath, (2004); Napleton 218 Wis.2d 892 P.2d at v. (1998); Hinsdale, Village n. see also 322 Ill.Dec. 577 N.W.2d 3-31, Upholding ap Law at N.E.2d 845-46. an “as American Constitutional circumstances, plied” challenge constitutionality the courts to the In some 610-12. addressing intent a statute obviates the need for legislature’s fulfill the can best appli- challenge City a facial to the statute. only the unconstitutional prohibiting Res., LLC, statute, allowing the Knoxville v. Entm’t of a while S.W.3d cations (Tenn.2005) (Drowota, C.J., in other cir- 659-60 enforce the statute State to concurring). cumstances. applied” challenge presumes
An “as Mr. other Waters’s constitutional chal- valid. See Tobe v. generally lenges the statute to the Unauthorized Substances Ana, City phrased Santa Cal.4th Tax were in the broad terms of a However, Cal.Rptr.2d 892 P.2d challenge. facial because he nev- Ritter, (1995); Developmental Pathways v. er challenged constitutionality of the (Colo.2008); 524, 533-34 In re 178 P.3d Unauthorized Substances Tax based on D.L.C., II, (Tex.App. 124 S.W.3d Article Section it would be useless 2003); 165 P.3d attempt Sanderson to characterize Mr. Waters’s II, (Wyo.2007). merely specif It asserts challenge based on Article Section 28 as are applications ic of the statute unconstitutional. challenge applied” either a facial or an “as City Jeffersonville, Dow dell challenge. The appellate intermediate (Ind.Ct.App.2009); 907 N.E.2d 564-65 opinion court’s the reasoning tracks associ- Request Advisory Opinion In re Re challenge. ated with a facial The brief Mr. *47 Constitutionality 2005 PA garding Waters filed in this tracks the rea- Court of (2007); 479 Mich. soning Appeals. N.W.2d of the of In its Court Moore, at City Redmond v. 91 P.3d 878. opinion, goes great lengths the to to Court of Thus, applied” challenge only re “as expressly any reasoning analy- eschew or that quires challenger the to demonstrate normally ap- sis associated with an “as operates unconstitutionally the challenge. Accordingly, statute the plied” Court challenger’s particular when to the applied only addressing in this case can be circumstances. Lochsa Falls v. constitutionality L.L.C. facial of the Unauthorized State, 971-72; v. 207 P.3d Gillenwaters Tax. Substances (Tex.Crim. 205 S.W.3d 536 n. 3 App.2006); Comp. Tex. Workers’ Comm’n V. (Tex. Garcia, n. 16 893 S.W.2d today holds that While 1995). II, taxing power under Article Section 28 the General challenges require enough permit courts is broad to applied”
“As Assembly impose persons a tax on who constitutionality to of statutes to consider basis, that City illegal drugs, sell it also holds case-by-case on a Tobe of Ana, Substances Tax enacted Cal.Rptr.2d Santa 892 P.2d Unauthorized Assembly facially in 2004 is analyze partic to the facts of the the General inquiry upon which appli unconstitutional. The ular case to determine whether constitutionality facial of this tax turns challenged deprived cation of statute as much constitutionally question requiring is a at least challenger protect of a legal analysis. piv- County common sense as right. Day, ed Field LLC question among large enough quantities all the “with otal is whether uals quanti- possessing a been drugs prove they individuals substantial to that have sell- ty cocaine there are individuals who drugs they or that ing planning are sell, sell, barter, or trade or intend that drugs.”28 He selling indicated barter, If or trade the the answer cocaine. “trigger[ illegal “selling drugs tax’s was ]” question “yes,” to the is the Unauthorized Represen- in the Tennessee.”29 facially Tax unconstitu- Substances somebody tative added that “once Curtiss because it can constitu- applied tional be pre- with a it is caught fixed amount tionally to those individuals. they that purpose have it for the sumed Johnny Representative resale.”30 “analysis that of the
The Court states its Shaw indicated under the Unautho- applicability peddlers of the merchants anyone going Tax into rized Substances II, might of article provision section lay “that business needs to a little [mon- legislature statutorily if the different had ey] aside taxes.”31 ‘dealers’ as sell or in- defined those who substances, to sell rath- tend unauthorized During the floor House of debate in the than er those Curry Representatives, Representative illegal drugs.” My with the disagreement pointed Todd out that “the of this intent analysis upon this precisely Court’s turns legislation drug is those that are out there sell, barter, point. Individuals who trafficking and continue to this and do sell, barter, or who trade intend to profit, way actually make a this is are trade unauthorized substances includ- impose they their profits Assembly’s within the ed General defini- making regard are fact, they precise- tion “dealer.” In are M. Representative Lynn trade.”32 Susan ly the individuals at whom the General placed the tax in a noted that the State Assembly aimed this tax. position “appearing from the profit illegal drugs;” accordingly, sale of she clar- A. (cid:127) taxation not an thereupon ified was legislative history Unautho- trade illegal drug endorsement but rized Substances Tax unam- demonstrates money “using” drug instead was trade biguously Assembly that the General “taking money back” from en attempting *48 impose a tax on the mer- terprise order to counteract this illicit peddlers chants and sub- of unauthorized activity.33 by taxing possess stances who individuals When the bill quantities was considered substantial of these substances. Finance, During Ways consideration bill in Senate Commit- of the and Means Committee, tee, Judiciary Representa- House Randy McNally, sponsor Senator Curtiss, bill, explained “gets tive Charles of the that sponsor the tax bill, noted that the tax to individ- applied profits drugs.”34 During Curtiss, Shaw, Representative Representative Johnny 28. Charles House Ju- 31. House Judi- Committee, Committee, diciary ciary May May 2004. 2004. Todd, Curry Representative 32. House Ses- Curtiss, Representative 29. Charles House Ju- sion, May 2004. Committee, diciary May 2004. Lynn, Representative 33. Susan M. House Ses- Curtiss, sion, Representative May 30. Charles House Ju- 2004. Committee, diciary May Finance, Randy Ways McNally, 34. Senator Senate, floor debate in the Senator Steve Similarly, the Tennessee Pattern Jury In- Cohen, addressing quantities structions following: include the substances included the definition of a It be inferred from the amount of “dealer,” “I think that probably stated controlled possessed substances by an appropriate an amount because that does offender, along with other relevant facts ... somebody probably indicate that has arrest, surrounding the that the con- personal possession.”35 more than [for] trolled substance or substances were Senator Cohen also noted the existence of possessed with the purpose of selling or a presumption drugs of intent to sell otherwise dispensing them. existed the criminal context and asked 31.04, T.P.I.—Crim. 7 Tenn. Practice: support for for an amendment he was of- Tennessee Pattern Jury Instructions fering to a different bill that same legisla- Criminal The Tennessee tive provide conformity session so as to for Court of Criminal Appeals rejected has presumed between the amounts for intent argument that the inferential link between to sell under the Unauthorized Substances possession large amounts of drugs Tax and the criminal law measure.36 and the intent to sell drugs is irration- al.38
B. Assembly’s The General definition of a In accordance with statutory infer- “dealer” possession individual in ence and the accompanying jury instruc- quantities substantial of an unauthorized tion, the Appeals Criminal rationally substance is connected with the repeatedly relied the inference aris- legislative purpose of the Unauthorized ing from the possession of a large quantity taxing Substances those profiting of controlled uphold substances to Tax— criminal fact, from the sale of these substances. In convictions and sentences for § Ann. TenmCode 39-17-419 ex- with intent to sell or distribute those sub- pressly provides that instances, many stances. the quantity may be inferred from the
[i]t amount of of cocaine found to be support sufficient to a controlled substance or substances an inference that it possessed for the offender, possessed by an along with purpose selling or distributing has been other surrounding relevant facts the ar- less than required imposition rest, the controlled substance or the Unauthorized Substances Tax far possessed substances were pur- less than Mr. Waters had in posses- his pose selling or otherwise dispensing.37 sion.39 Committee, Apr. and Means purpose selling not with the or otherwise dispensing." Tenn.Code Ann. 39-17-419. *49 Cohen, Session, 35. May Senator Steve Senate 38. Williams v. 506 S.W.2d (Tenn 1973). App. Crim. Cohen, Session, May
36. Senator Steve Senate 20, 2004. grams 39. Mr. Waters had 999.2 of cocaine in possession his when he was arrested. For the Thus, Tax, possession purpose grams the mere of the Unauthorized 0.5 Substances exposes possessor Assembly cocaine to a B General has defined a Class “dealer” felony charge. Alternatively, possession "a casual ex- as an individual in of more than 7 change among grams of a individuals small amount of cocaine. Tenn.Code Ann. 67-4- 2802(3)(A) (2006). of a following controlled substance" lead to the are a few "possessed examples inference that the substance many pos- defendants who c. history of the Unautho- legislative sup- unambiguously Tax rized Substances Assembly enacted Un- The General As- that the General ports the conclusion impose Tax to a tax authorized Substances impose a tax endeavoring sembly was sale profit who from persons on peddlers of unautho- merchants and The statute is of controlled substances. Assembly The General rized substances. that individuals assumption on the based of unauthorized the tax on “dealers” levied quantities of con- possessing substantial a “dealer” as and defined substances legal without authoriza- trolled substances of a substantial possession in individual sell, barter, these intend to or trade tion substance. an unauthorized quantity of therefore, and, are merchants substances possession of between The connection This is peddlers of these substances. of an unauthorized quantity substantial that draws consider- assumption a rational ped- merchant and being a substance and applied from the inferences support able a rational one. dler of that substances has, prosecutions. the context of criminal fact, Assembly by stat- General ute, inference criminal cases created an constitutionality of the Unau- The facial quantities of certain possession that the hinges Substances Tax on wheth- thorized the con- support can controlled substances are circumstances under er there possessing those that the individual clusion application which its would be constitution- purpose for the had them substances reasonably con- al. If there is no set of distributing them. Tennessee’s selling the tax ceivable circumstances which consistently affirm criminal convic- courts constitutionally applied, then it could be with intent to sell possession tions If, however, be down. there must struck possession by heavily upon relying in which it can be con- are circumstances quantities of controlled sub- defendant of then the tax stitutionally applied, must than that possessed much less stances challenge. a facial upheld in this case. Mr. Waters possessed speci- who more than the amount quantities of cocaine smaller than that sessed required for assessment Unauthorized Tax fied in the Unauthorized Substances but and whose have Substances Tax convictions and whose convictions less than Mr. Waters appeal against sufficiency been affirmed appellate when the court simi- were affirmed based, challenges part, on the evidence drugs they pos- larly the amount of relied on statutory large inference that of a (30.1 grams), sessed: Joshua J. McKissick quantity provides a for con- of cocaine basis (20.2 grams), Kendrick D. Rivers Marvin cluding defendant intended to that the sell (9 grams), Wilkerson and Jermaine R. Wise- Bradley Haynie, Justin deliver the cocaine: McKissick, (66.9 grams). v. No. man State Morris, Anthony and Judson F. Jonathan M2006-01996-CCA-R3-CD, WL (2.7 grams), Reginald Anthony Laye Ouzts Oct.l, 2007), (Tenn.Crim.App. *4at (5 (2.7 Hyon grams), Wilfred Warren (Tenn. 28, 2008); perm. app. Jan. State denied Haynie, grams). v. No. State W2006-01840- Rivers, W2006-01120-CCA-R3-CD, No. CCA-R3-CD, 2007 WL at *14-16 (Tenn.Crim.App. 2008 WL at *2-3 Dec.7, 2007), (Tenn.Crim.App. perm. app. de- Jan.7, 2008) (No R.App. applica- Tenn. P. (Tenn. 2008); May Laye, nied State v. No. Wilkerson, filed); E2006- tion State No. M2006-02020-CCA-R3-CD, 2007 WL 01743-CCA-R3-CD, WL at *3 Dec.13, (Tenn.Crim.App. at *3-4 Oct.9, 2007), perm. app. (Tenn.Crim.App. de- 2007) (No R.App. application P. 11 Wiseman, 2008); (Tenn. Mar. State v. nied Warren, filed); No. E2007-02304- *50 M2006-00400-CCA-R3-CD, 2007 WL No. CCA-R3-CD, WL at *3-4 Oct.31, (Tenn.Crim.App. June 2008) (No at *3-4 (Tenn.Crim.App. Tenn. 2007) (No filed). R.App. application P. application following R.App. P. 11 The filed). many examples are a few defendants manner, a Assembly’s The General definition of tutional Mr. Waters’s facial chal- lenge Ann. fail. in Tenn.Code 67-4- to tax must “dealer” 2802(3) assumption on the rational rests presumption that a statute is consti- persons quanti- possessing that substantial applies greater tutional with even force in to ties of unauthorized substances intend the face of a challenge. facial constitutional today’s opinion, them. In the Court sell Elam, 459; Gallaher 104 S.W.3d at appears disregarded assump- to have this Burson, re S.W.2d 775. Mr. Waters by concluding tion that there are no mer- has failed to rebut this presumption by those peddlers among pos- chants who demonstrating tax obviously that this is so quantities substantial unauthorized sess unconstitutional on its face as to obviate that there no substances or exists rational necessity for any discussion. Because possession of relationship between the burden, Mr. Waters has not carried his large quantities of unauthorized sub- Court has no concluding basis for that the intent stances and the to sell them. Unauthorized Substances Tax facially is particularly Court’s conclusion unconstitutional. light many in of the fact that surprising VI. lengthy
Tennesseans have prison received Where the Assembly sentences and substantial fines based on General erred was not, Court, possessing by the inference that an found in drafting individual its quantity a substantial of an unauthorized definition of too narrowly “dealer” possesses thereby substance that substance with the missing ped- merchants and intent substances, to sell distribute it. Given dlers of rath- unauthorized but proof heightened by drafting standard of er ap- the definition of “dealer” too context, plies broadly. the criminal law I am With one exception,40 narrow perplexed as to how Tennessee courts can Unauthorized Substances Tax to ex- fails pressly anticipate sustain those convictions and sentences on pos- individual in hand, one on the large while other hand deter- session of a quantity of an unautho- mine that is not there even rational rized substance not be a might merchant relationship possession peddler between of sub- or example, substance. For quantities essentially stantial of unauthorized Mr. sub- Waters asserts in this case being peddler only stances and a merchant or ishe a bulk consumer of cocaine considering thereof when personal tax assessments. for his use and that he is neither a merchant nor a of cocaine. If peddler who possess Individuals substantial true, Mr. impos- Waters’s assertion then quantities of unauthorized substances for ing the Tax Unauthorized Substances purpose selling, bartering, or trad- him Assembly’s would exceed the General ing unquestionably them are merchants II, power under Article Section 28 II, peddlers purpose for the of Article peddlers. merchants and Accordingly, Section 28. the Unautho- rized Tax may applied provides adequate, Substances be law a plain, Current persons them without offending speedy remedy possessing the Tennessee Constitution. Because the a substantial of an quantity Unauthorized unauthorized can applied Substances Tax for their personal consti- substance use who have part apply possession "The tax levied does not the time the of the sub- dealer’s substance of a dealer stance is law." authorized Tenn.Code possess who is authorized law 2804(a) the sub- §Ann. 67-4— exemption only during applies stance. This *51 taxes, fran- variety notably of most Sub- wide Unauthorized erroneous received an and use taxes.41 chise and excise and sales Tenn.Code Ann. assessment. stances Tax legal busi- operators the of these Unlike provides that a (Supp.2008) § 67-4-2807 enterprises, peddlers merchants and ness of the assessment review may seek “dealer long able illegal drugs have been to 18, of part this chapter in provided as engage profit-making in their illicit en- Thus, taxpayers, a dealer like other title.” Thus, taxation. escaping deavors while in his or her assessment may challenge enterprises im- though even their business manner: following the on the and on pose significant costs State against whom the as- taxpayer [I]f ped- governments, merchants and local assess- believes the is made sessment been, essence, illegal drugs have dlers incorrect, unjust, illegal or ment to tax-exempt on operating in Tennessee be as fol- remedies shall taxpayer’s Assembly The General addressed basis. lows: it problem 2004 when enacted the (A) taxpayer may the tax pay Tax. Substances Unauthorized of the tax a claim for refund and file Notwithstanding “wide-reaching ef- provided part; in this proceed striking on their fects” of down statutes or Booksellers, face, Inc. v. Davis-Kidd (B) against taxpayer file suit McWherter, the Court S.W.2d chancery court in the commissioner Assembly’s today General finds state, county in this appropriate effort address the enormous costs im- any portion of all or challenging taxpayers as a result posed on Tennessee’s tax, including any of such assessment drug uncon- illegal facially trade penalty associated interest stitutional. Whether Unauthorized the tax. Tax is is not for Substances wise foolish 67-l-1801(a)(l) § Ann. Tenn.Code Accepting this Court to decide. the fact quanti- of a possessor Where a substantial Assembly that the General decided unani- actually ty is not a merchant or of cocaine mously not dealers should es- cocaine, peddler it would be unconsti- taxation, cape only our task is to measure tutional, illegal, apply hence the Unau- requirements this tax Tax that individual. thorized Substances state and federal constitutions. If Mr. the merchant or Waters While Unauthorized Substances Tax Assembly, peddler that General constitutionally per- imposed cannot be officials, Depart- law enforcement and the peddlers, sons who are not merchants or it presumed him ment of Revenue have imposed persons can be who are. be, prevail he on his constitutional should Among persons included in the defini- the tax assessment on an challenge to “as- possess persons tion “dealer” are who applied” basis. large drugs without illegal amounts le- VII. sell, authority and intend to bar- gal who ter, trade, distribute Legitimate businesses Tennessee— otherwise these persons are mer- drugs. from to multi-national cor- These proprietors sole peddlers who can be porations paying chants and taxed responsible —are Advisory Taxes A Fiscal Primer III generally 41. See Tennessee Commis- in Tennessee: Intergovernmental (2003), & http://cber.utk.edu/pubs/ sion on Relations Uni- available at versity 2009). (last Tennessee Center for Business and tacir203.pdf visited June Research, The Economic Structure *52 II, peddlers). consistent Article Section 28. As or It has healthy removed stat- ruling today, result the Court’s (the these utory application tissue of the tax to and peddlers illegal drugs merchants persons who are merchants peddlers) cannot be though they may taxed even By as well. finding that the Unauthorized criminally prosecuted Substances Tax facially unconstitutional, drugs same with intent to sell. the Court has effectively prevented the pre-
This Court’s exclusive constitutional enforcing State from the tax in circum- rogative constitutionality to assess the stances where it would be clearly constitu- weighty state statutes is a responsibility tional to so. do extraordinary that demands caution and I am authorized to state that Justice precision. Like a surgeon performing a Clark concurs in opinion. operation delicate to remove diseased tis- sue from a vital organ, we must no remove
more nor no less necessary. tissue than
By deciding the Unauthorized Sub- unconstitutional, Tax is facially
stances gone Court has than removing farther dis- (the statutory eased tissue application of persons the tax to who are not merchants