On January 1, 2005, the State of Tennessee implemented a tax on unauthorized substances -- illegal drugs. Other states have similar laws, many of which have been declared unconstitutional for various reasons.
On January 6, 2005, after reading this article in the Crossville Chronicle, I contacted the Tennessee Department of Revenue via telephone in an attempt to pay this new tax. I was told I could only pay this tax at the Nashville office of the Tennessee Department of Revenue; I could not pay this tax via mail, telephone, internet, or at any other Tennessee Department of Revenue office.
Since my attempt to pay this tax failed, I was led to believe this is not truly a tax, rather a penalty, which makes this law unconstitutional. I began communicating with the Tennesseee Department of Revenue via email in order to create a paper trail that may be useful in future court challenges to this law.
On July 10, 2006, the law was declared unconstitutional by Tennessee court. See the ruling (pdf).
Date: Thu, 6 Jan 2005 09:47:00 -0800 (PST)
From: Ben Livingston <ben@inwa.net>
To: TN.Revenue@state.tn.us
Cc: chronicle@volfirst.net, normlutk@utk.edu, norml@norml.org
Subject: Purchasing Tennessee illegal drug stamps
Tennessee Department of Revenue
500 Deaderick Street
Nashville, TN 37242
To whom it may concern:
I am interested in purchasing the new illegal drug stamps that Tennessee now offers. I called this morning to purchase some of these, but I was told I could not buy them without travelling 2500 miles to Nashville.
You would generate more revenue if you sold these stamps without requiring purchasers to travel to Nashville. It is likely that this tax is not legal and is instead double jeopardy punishment, especially given that the State of Tennessee will not sell these stamps unless a purchaser physically stands before the Department of Revenue, incriminating themselves in the process. Supposedly the DOR keeps no identifying information on the purchaser, but this additional burden is proof that these stamps are not easily acquired and thus isn't really a tax but a penalty, which is disallowed by the Supreme Court decision Montana Department of Revenue v. Kurth Ranch, et al.
I am also inquiring on behalf of a disabled friend who would like to buy these stamps. It is possible that your refusal to sell stamps to this person without their physical presence is a violation of the Americans with Disabilities Act. It seem unreasonable to require a wheelchair-bound patient to travel to your office in order to pay their taxes. I am cc'ing W. Alan Beckelheimer of the Crossville Chronicle, where I read about these tax stamps. I am also cc'ing NORML, a marijuana legalization group that was mentioned in some articles I read about the drug tax; I believe your refusal to sell me stamps may help them get this new law ruled unconstitutional.
Please reconsider your decision. Sincerely,
Ben Livingston
PO Box 95227
Seattle, WA 98145
206-781-8307
Date: Thu, 06 Jan 2005 12:27:34 -0600
From: TN Revenue <TN.Revenue@state.tn.us>
To: ben@inwa.net
Subject: Re: Purchasing Tennessee illegal drug stamps
Good morning,
Thank you for your letter and your input.
Section 2 of Public Chapter 803, Acts of 2004, under which the tax on unauthorized substances was enacted, states that the purpose of the act is to levy an excise tax to generate revenue for state and local law enforcement agencies that will allow those agencies to investigate, combat, prevent, and reduce drug crimes in Tennessee.
Section 6 of that same act states that the Commissioner of Revenue shall issue stamps to affix to unauthorized substances to indicate payment of the tax. The tax is to be collected from dealers in these unauthorized substances. At no time and in no place in the act does the legislature state that the stamps are to be generated for sale to stamp collectors nor does the statute require the Department to sell such stamps to recreational stamp collectors.
Section 6 also states that stamps may be sold either by mail or in person. However, Section 12 of the act gives the Commissioner of Revenue the authority to promulgate rules by which the tax will be implemented, administered, and enforced. The Commissioner has determined that the stamps will be sold only over-the-counter to persons who appear in person to purchase the stamps.
I suggest that your argument regarding this requirement that a person purchase the stamps in person is a violation of the Americans with Disabilities Act is not relevant as, again, it is made from the standpoint of out-of-state stamp collectors who do not wish to make a personal appearance at the Department to purchase the stamps. As I previously stated, the tax was levied for the specific purpose of collecting tax revenue from dealers of unauthorized substances in Tennessee. The sale of such stamps to stamp collectors is a public relations privilege that the Department is willing to extend to such collectors; there is no statutory mandate that we provide collectors with stamps and, therefore, no violation of law in requiring them to make purchases in person.
John Harvey, Taxpayer Services Division
Any opinion from tax law or regulations given herein is believed to be a correct interpretation. However, the opinions cannot constitute a revenue or letter ruling pursuant to the provisions of Tenn. Code Ann. Sect. 67-1-109.
Date: Thu, 6 Jan 2005 10:32:22 -0800 (PST)
From: Ben Livingston <ben@inwa.net>
To: TN Revenue <TN.Revenue@state.tn.us>
Subject: Re: Purchasing Tennessee illegal drug stamps
At no point did I say I was a stamp collector.
-- Ben
Date: Thu, 06 Jan 2005 12:43:24 -0600
From: TN Revenue <TN.Revenue@state.tn.us>
To: ben@inwa.net
Subject: Re: Purchasing Tennessee illegal drug stamps
You are correct, sir. At no point did you state that you were a stamp collector. If I inferred that you are, it is because all of the requests to purchase stamps via the mail that we have received have been from collectors. If I have offended you, I apologize. However, the fact remains that the Department's policy is that stamps be purchased by personal appearance, regardless of the reason for purchase.
John Harvey, Taxpayer Services Division
Any opinion from tax law or regulations given herein is believed to be a correct interpretation. However, the opinions cannot constitute a revenue or letter ruling pursuant to the provisions of Tenn. Code Ann. Sect. 67-1-109.
Date: Thu, 6 Jan 2005 11:21:50 -0800 (PST)
From: Ben Livingston <ben@inwa.net>
To: TN Revenue <TN.Revenue@state.tn.us>
Cc: chronicle@volfirst.net, normlutk@utk.edu, norml@norml.org, sen.randy.mcnally@legislature.state.tn.us
Subject: Re: Purchasing Tennessee illegal drug stamps
John, no offense taken, it was an honest mistake. I see from your web site that I can pay most taxes without travelling to Nashville, many of them online. Are there other taxes that must be paid in person? My thought is that the cigarette tax is most similar to a tax on illegal drugs, and the cigarette tax can be payed via postal mail.
They say death and taxes are the only certainties, so it seems odd that the Tenessee Department of Revenue would refuse tax payments unless the taxpayer travels to the department's Nashville office.
I am cc'ing, once again, W. Alan Beckelheimer of the Crossville Chronicle, and NORML. I am also cc'ing Senator Randy McNally, sponsor of the illegal drug tax bill.
Senator McNally, I attempted to pay this new tax, but was refused by the Department of Revenue. They require I travel to their Nashville office to pay this tax, which is unduly burdensome and prohibitively expensive. You should look into this matter; the illegal drug tax treads on questionable legal ground and I believe DOR's refusal to accept my payment without my physical presence easily throws it into unconstitutional territory.
Sincerely,
Ben Livingston
Date: Thu, 06 Jan 2005 13:33:35 -0600
From: TN Revenue <TN.Revenue@state.tn.us>
To: ben@inwa.net
Subject: Re: Purchasing Tennessee illegal drug stamps
Persons registered for all other taxes administered by the Department of Revenue receive periodic tax returns in the mail from the Department and may remit the tax due via the mail or, for some taxes, online through the state's web portal.
John Harvey, Taxpayer Services Division
Any opinion from tax law or regulations given herein is believed to be a correct interpretation. However, the opinions cannot constitute a revenue or letter ruling pursuant to the provisions of Tenn. Code Ann. Sect. 67-1-109.
Date: Thu, 6 Jan 2005 11:48:49 -0800 (PST)
From: Ben Livingston <ben@inwa.net>
To: sen.randy.mcnally@legislature.state.tn.us
Cc: TN Revenue <TN.Revenue@state.tn.us>, chronicle@volfirst.net, normlutk@utk.edu, norml@norml.org
Subject: Re: Purchasing Tennessee illegal drug stamps
Sen. McNally, as you can see from Mr. Harvey's email below, the Department of Revenue accepts mailed or online payments for every tax but the illegal drug tax. This serves only to intimidate and unduly burden the taxpayer, discouraging them from paying this tax. Thus I believe this is not truly a tax, rather a penalty, which is unconstitutional.
Any assistance you can provide is most appreciated.
Sincerely,
Ben Livingston