State is pressed to reexamine antidrug tax

Constitutionality in question

By JOHN W. GONZALEZ
Copyright 1997 Houston Chronicle Austin Bureau

AUSTIN It was heralded the "Al Capone Tax," an innovative and lucrative
way for the state to heap torment on Texas drug traffickers by requiring
them to pay taxes on their illicit merchandise.

But almost a decade after it was approved by the Legislature in a fervent
antidrug climate, officials have been forced to take a fresh look at the
law taxing illegal drugs.

While $2.3 million has been collected from 140 defendants and more than
9,000 others have been billed for $13.2 billion in taxes, penalties and
interest, questions have arisen about the constitutionality and
effectiveness of the antidrug tax.

Collections amount to a tiny percentage of assessments, but more
significantly, the U.S. Supreme Court has called the levy an
unconstitutional form of punishment when coupled with criminal sanctions.
In 1994, the court ruled on a similar law in Montana, saying that such a
tax which, in effect, makes an offender pay for his crime twice
amounts to a violation of the doublejeopardy prohibition clause of the
U.S. Constitution.

Since then, state lawmakers have done nothing to modify the 1989 law,
putting the state's chief tax collector in a quandary.

Comptroller John Sharp said he wants to enforce the law "to the fullest
extent possible," but he currently issues assessments to drug dealers only
at the request of prosecutors.

In a letter in July to Attorney General Dan Morales seeking a formal
opinion, Sharp said he fears the tax has become "a cheap 'get out of jail'
card used by sinister drug dealers with highpriced criminal defense lawyers."

Some lawyers have urged clients to pay drug taxes to preclude prosecution.
However, the comptroller has declined to accept payments under those
circumstances, insisting on prosecutors' approval before doing so.

Prosecutors routinely use the tax liability threat as leverage in
pleabargaining with drug dealers. Some accused and convicted Texans have
had their bank accounts frozen after being hit with huge tax liens that
also prevent them from making purchases or inheriting money.

At the same time, several convicted defendants are demanding refunds of
taxes already paid, citing the doublejeopardy rulings. Their demands are
part of the reason Sharp is seeking the attorney general's opinion.

In 1995, the 14th Court of Appeals in Houston cited the earlier U.S.
Supreme Court decision in ruling in favor of marijuana defendant Mark
Stennett of Houston. The appeals court told prosecutors that henceforth
they must decide between seeking tax payments or jail time from drug
defendants.

That ruling was upheld in 1996 by the Texas Court of Criminal Appeals,
which earlier this year refused to reconsider its decision.

Yet the Legislature took no action in this year's session, leaving Sharp
wondering how to apply the law.

In his letter to Morales, Sharp wrote that "a number of taxpayers and their
attorneys have contacted my office demanding the immediate release of state
tax liens or the refund" of drug taxes already collected.

The comptroller said he recognized that the court had created serious
questions about the validity of the law, "but I also recognize that the
court did not declare the tax unconstitutional and am aware of my
responsibility to enforce the state's tax laws."

One criminal defense expert said Morales is the wrong person to ask for an
opinion because he already is on record defending the law in previous appeals.

Attorney Stan Schneider of Houston, who represents Stennett, also said
officials appear reluctant to admit the tax is a punishment.

"I have a client who has a $400,000 lien against him. He can't buy a car,
he can't do anything until he pays off that note," Schneider said of his
client, whose conviction has since been set aside.

"That is serious economic punishment and he spent over a month in jail,"
said the lawyer, who has several other such clients.

"The politicians are embarrassed because they didn't foresee that the law
could affect the rights of individuals," Schneider said. "They wanted the
tax assessed to punish them economically. Plus they wanted to lock them up.
And they don't like the fact that they can't have it both ways."