Topeka The Kansas Legislature passed a drug-tax law in the late 1980s that allows ABC to attack one part of the state's underground economy.
Jay M. Johnson was prepared two years ago to sell marijuana without obtaining appropriate Kansas drug tax stamps.
His inattention to K.S.A. 79-5204 turned out to be a serious mistake.
Alcoholic Beverage Control, a division of the Kansas Department of Revenue, assesses and collects more than $1 million annually from people who don't affix tax stamps to their containers of marijuana and controlled substances.
"The philosophy is, just because a certain type of business is illegal, it shouldn't be exempt from tax," said Dean Reynoldson, ABC enforcement manager.
Reynoldson said more than half the states have some sort of tax on illegal drugs. ABC has made enforcement of the Kansas drug tax big business. Only North Carolina collects more drug tax funds than Kansas.
Kansas dealers caught without stamps and without cash to pay fines and overdue taxes have their property confiscated by ABC. Cars, televisions, guns, boats, coin collections, stereos, motorcycles, furniture and tractors are sold at public auction to cover debts.
"Everything from whistles to missiles, almost," said ABC Director Bernie Norwood of Lawrence.
Law enforcement agencies collaborating with ABC on drug investigations receive 75 percent of the amount collected from drug-tax dodgers.
Annual collections in Kansas escalated from $2,000 in 1987-88 to $537,000 in 1992-93 and to a record $1.31 million in 1996-97.
The take this fiscal year is expected to drop slightly to $1.22 million. ABC agents were instructed by agency administrators to focus on cases in which the accused has the greatest potential to pay fines and taxes. Cases with little promise of generating revenue are to be ignored, ABC agents say.
"This tax is on drug dealers as opposed to casual users," Reynoldson said.
Johnson, 42, was charged in September 1996 with failure to have drug-tax stamps on his marijuana and methamphetamine as well as battery on a law enforcement officer.
The battery charge was a misdemeanor, while the tax stamp violation was a felony.
After pleading guilty to five crimes in Douglas County District Court, including the tax charge, Johnson was granted probation last March. The drug violation alone earned him six months probation.
Marketers of illegal drugs in Kansas need to know a few rules if they want to avoid tax problems.
The drug tax is assessed against anyone who produces, transports or possesses more than 1 ounce of marijuana, more than 1 gram of a controlled substance sold by weight, such as cocaine, or more than 10 units of a controlled substance sold by dosage, such as LSD.
Tax rates for drugs include: processed marijuana, $3.50 per gram; wet domestic marijuana plants, 40 cents per gram; dry marijuana plants, 90 cents per gram; controlled substances sold by weight, $200 per gram; controlled substances sold by dosage, $2,000 per 50 units.
No provisions in the law are made for drug quality. Pure cocaine is taxed at the same rate as cocaine diluted 50 percent. High quality, imported marijuana is taxed the same as wild Kansas ditchweed.
Tax stamps can be purchased from the state's Business Tax Bureau on the third floor of the Docking State Office Building in Topeka.
"Our tax examiners are prohibited from asking for names. It's completely confidential," Reynoldson said.
Reynoldson said anyone can buy a tax stamp with a minimum face value of $10. However, an attempt to buy a $10 stamp was rebuffed by revenue department staff who cited an unwritten policy limiting tax stamp purchases to $100 or more. Revenue officials changed their mind a week later and sold a single stamp for $10.
The revenue department accepts only cash, certified check and money orders for stamps.
Each stamp is valid for three months. Stamps must be affixed to containers immediately upon manufacture or possession of drugs.
A dealer caught with illegal substances and no stamps will be assessed the basic drug tax plus a 100 percent delinquency penalty. Drug tax assessment is a civil action, payable without regard to the outcome of criminal proceedings handled by the local district or county attorney. The maximum penalty is five years in jail and a $10,000 fine.
"You don't have to prove criminality (to collect taxes and fines)," Norwood said. "The tax is still due."
The accused can appeal tax assessments within 15 days to the state. Burden is upon the dealer to disprove the correctness of the information used in making the tax assessment.
Revenue officials can recall only a handful of cases in which drug dealers have actually had proper stamps.
In fact, most drug-tax stamps are sold to collectors.
-- Tim Carpenter's phone message number is 832-7155. His e-mail address is firstname.lastname@example.org.