ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
CHRISTOPHER F. POLE
ATTORNEY AT LAW
ATTORNEY GENERAL OF INDIANA
AMBER MERLAU ST.AMOUR
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
CHADD BARNEY, )
v. ) Cause No. 49T10-0103-TA-30
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ON APPEAL FROM A FINAL DETERMINATION OF
THE INDIANA DEPARTMENT OF STATE REVENUE
March 4, 2005
Chadd Barney (Barney) appeals the final determination of the Indiana Department of State
Revenue (Department) assessing him with controlled substance excise tax (CSET). The issues
for the Court to decide are: (1) whether the exclusionary rule bars the
use of Barneys admissions in a tax assessment proceeding; (2) whether those admissions
are sufficient evidence that Barney possessed the marijuana upon which the CSET assessment
is based; and (3) whether the Department properly allowed for the weight of
the marijuanas packaging when calculating the assessment.
FACTS AND PROCEDURAL HISTORY
On February 3, 2000, Barney was arrested in Grant County, Indiana after receiving
a parcel containing marijuana. During the post-arrest interview, Barney signed a United
States Postal Inspection Service Warning and Waiver of Rights. He then admitted
to receiving twelve other packages of marijuana at various addresses in Wabash and
Grant Counties. Based on these admissions, the Department assessed Barney with CSET
(and penalties) in the amount of $654,713.43.
Barney protested the assessment and the Department held an administrative hearing on August
23, 2000. In its Letter of Findings issued on September 29, 2000
(LOF), the Department determined that there was not sufficient evidence to show that
Barney actually possessed six of the parcels for which he had been assessed.
Accordingly, the Department sustained Barneys protest with respect to those parcels and
denied his protest with respect to the remaining six parcels.See footnote
Barney initiated an original tax appeal on March 26, 2001. The Court
conducted a trial on October 10, 2001, and heard the parties oral arguments
on February 25, 2002. Additional facts will be provided as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court reviews final determinations of the Department de novo. Ind. Code
Ann. § 6-8.1-5-1(h) (West 2005). Accordingly, it is bound by neither the
evidence nor the issues presented at the administrative level. Snyder v. Indiana
Dept of State Revenue, 723 N.E.2d 487, 488 (Ind. Tax Ct. 2000), review
The Exclusionary Rule
Barney first claims that his admissions may not be used as evidence that
he possessed the marijuana at issue because they were secured through coercion and
duress, i.e., in violation of Miranda v. Arizona, 384 U.S. 436 (1966).
More specifically, Barney contends that the police threatened his mother with a jail
sentence and that [t]his was a sufficient enough threat that [he] was willing
to do whatever the police said to protect his mother. (Petr Proposed
Findings of Fact, Conclusions of Law and Br. at 1.)
It is not necessary for this Court to determine whether or not a
Miranda violation has occurred here. This is because, even assuming arguendo that
Barneys admissions were obtained in violation of Miranda, it would not affect their
admissibility before this Court. Although the exclusionary rule bars the use of
illegally obtained evidence and confessions in criminal proceedings, it does not apply to
tax assessment proceedings. See State, Indiana Dept of State Revenue v. Adams,
762 N.E.2d 728, 729-730 (Ind. 2002) (holding that the purpose of the exclusionary
rule the deterrence of police misconduct is not served by applying
the rule to CSET assessment proceedings). Consequently, the exclusionary rule does not
bar the use of Barneys admissions in this appeal.
Sufficiency of the Evidence
Barney next argues that even if his admissions are allowable as evidence against
him, they are not, by themselves, sufficient evidence to show that he possessed
the marijuana at issue. The Department, on the other hand, argues that
it has met its evidentiary burden by using the best information available to
issue the assessment. (See Trial Tr. at 43.)
Indiana imposes the CSET on controlled substances that are: (1) delivered; (2) possessed;
or (3) manufactured; in Indiana in violation of IC 35-48-4 or 21 U.S.C.
841 through 21 U.S.C. 852. Ind. Code Ann. § 6-7-3-5 (West 2005).
CSET is a listed tax which the [D]epartment is required to collect
or administer. See Ind. Code Ann. § 6-8.1-1-1 (West Supp. 2004-2005).
Accordingly, if the Department reasonably believes that a person has not paid or
reported the proper amount of CSET due, it must make a proposed assessment
of the amount of the unpaid tax on the basis of the best
information available to it. See Ind. Code Ann. § 6-8.1-5-1 (West Supp.
Although statutes that impose a tax such as the CSET are
to be strictly construed against the State, it is well established in Indiana
that a taxpayer who claims he is not within the ambit of taxation
bears the burden of proof. Longmire v. Indiana Dept of State Revenue,
638 N.E.2d 894, 898 (Ind. Tax Ct. 1994) (internal citation omitted). To
meet this burden of proof, the taxpayer must present a prima facie case,
or one in which the evidence is sufficient to establish a given fact
and which if not contradicted will remain sufficient. Id. (internal quotation omitted).
Once the taxpayer has presented a prima facie case, the duty to
rebut the taxpayers evidence shifts to the Department. See id.
Barney has failed to meet his burden of proof. He has offered
no evidence to show that the parcels for which he was assessed did
not contain marijuana. Instead, Barney rests his argument almost entirely on the
claim that his admissions were made under duress. (See Oral Argument Tr.
at 4-5 (referring to the Miranda issue as the crux of his argument).)
However, as discussed above, his admissions are allowable as evidence against him
even if they were obtained in violation of Miranda. Because Barney has
presented no other evidence demonstrating his lack of possession, he has failed to
present a prima facie case. Since Barney did not make a prima
facie case, the burden never shifted to the Department to rebut Barneys evidence.
This Court finds that the Department based its CSET assessment against Barney on
the best evidence available. See A.I.C. § 6-8.1-5-1. Indeed, in issuing
its assessment, the Department relied on the parcel watch list showing that Barney
signed for the three packages at issue, Barneys admission that the parcels contained
marijuana, and the fact that he pleaded guilty with respect to receiving and
possessing marijuana on February 3, 2000.See footnote Whether this evidence would be sufficient
to sustain a criminal conviction for possession of marijuana is not for this
Court to decide. Rather, the Court must only find that the evidence
is sufficient to sustain a CSET assessment. Accordingly, the Departments
assessment will stand.
Finally, Barney claims that the Department did not properly account for the weight
of the marijuanas packaging when calculating its assessment. More specifically, Barney claims
that the Department, in its LOF, indicated that the parcels received on November
24, 1999 and January 21, 2000 contained marijuana weighing 14 pounds, 12 ounces
and 23 pounds, 8 ounces, respectively. (Petr Petition to Enjoin Collection of
Tax ¶ 4.) According to Barney, however, these numbers reflect the total
weights of the parcels, including packaging. (Petr Petition ¶ 4.) Consequently,
Barney has requested that the weight of each package be reduced by 1
pound, 4 ounces and that the assessment be adjusted accordingly. (See Petr
Petition ¶ 4.)
Upon review of the LOF, however, the Court finds no such discussion of
the weights of each specific package. Indeed, the only instance in
the record where the weights are listed individually is on the parcel watch
list. (See Stip. Ex. 1.) The agent in charge of preparing
the assessment has testified that he subtracted 1,300 grams per package from the
weights provided on the parcel watch list in order to account for the
weight of the packaging materials.
See footnote (
See Trial Tr. at 9.) Therefore,
in the absence of any other evidence to the contrary, the Court finds
that the assessment properly allows for the weight of each parcels packaging materials.
For the aforementioned reasons, the Court AFFIRMS the Departments final determination assessing Barney
This assessment was based on 93,530.49 grams of marijuana. Although the
marijuana itself was never recovered, the Department based its assessment on the parcel
watch list from which Barney identified the shipments he had received. The
list provided the weight of each parcel. In addition, the assessment did
not relate to the marijuana received by Barney on February 3, 2000, for
which he was criminally charged. Barney pleaded guilty to that charge, which
is not at issue in this case.
Footnote: In its Post-Trial Brief filed with this Court, the Department concedes that
there is no convincing evidence in the record that three of these packages
contained marijuana. (Respt Post-Trial Br. at 4.) Consequently, the Department has
agreed to further reduce the assessment; it is now based on only three
packages. (Respt Post-Trial Br. at 4.)
Footnote: Barney even concedes that the facts and circumstances are virtually identical between
what [Barney] was convicted for and  what the controlled substance excise tax
is being assessed [for]. (
See Petr Contentions, Witness List and Ex. List
The agent arrived at a packaging weight of 1,300 grams by taking
the net weight of the actual marijuana received on February 3, 2000 and
subtracting it from the gross weight of the entire package. (Trial Tr.
at 9.) The difference was 1,286.68 grams, which the agent rounded up
to an even 1,300 grams. (Trial Tr. at 9.)