TAX ON ILLEGAL DRUGS IS UNCONSTITUTIONAL

A Utah federal judge has declared the state's Illegal Drug Stamp Tax Act
unconstitutional, ruling it does not safeguard the rights of Utahns accused
of failing to pay steep taxes on cocaine, marijuana and LSD.

A 1997 Utah Supreme Court decision had already limited the use of the tax,
and state tax officials had all but abandoned it.

The new decision by U.S. District Judge Dale Kimball halts all use of the
law, although it has not been decided whether the state will appeal, said
Assistant Atty. Gen. Dan Larsen.

The act required Utahns who possessed the drugs to buy tax stamps for their
stash. The state charged $3.50 in taxes for each gram of marijuana, $200 per
gram of cocaine and $2,000 for 50 doses of LSD. When dealers were caught
with drugs and without the stamps, the law was used to seize cash and
property to satisfy the tax.

But the Utah Supreme Court decided the tax act could not be used if separate
criminal charges were filed. Adding the tax to charges amounted to double
jeopardy, or illegal double punishment for the same crime, the justices
said.

Kimball ruled in a challenge brought by Mindy K. and Jeffery C. Dunn, now of
Salt Lake City, who were arrested by the FBI in March 1994. The criminal
case against Mindy Dunn was dismissed, but Jeffery Dunn pleaded guilty to
selling cocaine.

The Utah Tax Commission assessed $4,287,960 in drug stamp taxes against the
Dunns, based on evidence they possessed 11,000 grams of cocaine between 1992
and 1994, Kimball's decision said.

Double jeopardy protections did not apply to Jeffery Dunn because he was not
facing two cases from the same level of government, Larsen explained. The
state pursued the tax case while the federal government filed the criminal
case.

Money and belongings were seized from the Dunns to satisfy the tax,
including their Park City home, its furniture, and inventory from Mindy
Dunn's Animal Crackers toy store. The home was sold at a loss, the Dunns
contend. A 1995 inventory said the state held $340,000 in cash belonging to
the Dunns, plus personal possessions.

The Dunns sued in federal court, arguing the drug tax amounts to a criminal
punishment -- which entitled them to the same constitutional protections
provided in a criminal prosecution.

Kimball agreed, finding Utahns facing tax assessments under the act have the
right to have the case against them proved beyond a reasonable doubt; the
right to an attorney; the right to trial by jury; and the right against
self-incrimination.

However, the act does not provide those rights. Under the law, taxes and
penalties are assumed to be valid, Kimball observed. Taxpayers have the
burden to show the taxes were incorrectly assessed. Hearings are held by
administrative law judges, and final decisions are entered by the tax
commissioners.

Kimball ordered the state to halt the tax proceedings against the Dunns and
return their money and property. The tax commission believes the Dunns' case
was the final drug stamp tax case pending, said spokeswoman Janice Perry
Gully.

But the judge dismissed the Dunns' claims that their rights were violated
during searches and seizures. The couple has endured financial hardship
during the five years their assets have been held, and they may appeal that
portion of Kimball's ruling, said their attorney, Rod Snow.

"We think Judge Kimball is an excellent judge, but we will have to seriously
consider with our clients the dismissal of the claims for violations of our
clients' constitutional rights," Snow said.

Jeffrey Dunn has not yet been sentenced in the criminal case.