PETITIONER APPEARING PRO SE:    ATTORNEYS FOR RESPONDENT:
LYNN A. CROUSE    KAREN M. FREEMAN-WILSON
Brownsburg, IN    ATTORNEY GENERAL OF INDIANA
    Indianapolis, IN
    
    DAVID A. ARTHUR
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN

_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

LYNN A. CROUSE,                                                           )
                                                                               )
    Petitioner,                                                                )
                                                                               )
    v.                                                                         )   Cause No. 49T10-9805-TA-52
                                                                               )
INDIANA DEPARTMENT OF                                                          )
STATE REVENUE,                                                                 )
                                                                               )
    Respondent.                                                                )    
 _____________________________________________________________________
     
                                                 

ON APPEAL FROM A FINAL DETERMINATION
OF THE INDIANA DEPARTMENT OF REVENUE


NOT FOR PUBLICATION
December 14, 2000


FISHER, J.

    Lynn Crouse challenges the Indiana Department of State Revenue’s (Department of Revenue) finding that Crouse owes controlled substance excise tax (CSET). Crouse raises two issues for this Court’s review:
whether he possessed the marijuana such that he is liable for the controlled substance excise tax (CSET) on it; and

whether the assessment should be set aside because the assessment period listed on the notice of jeopardy assessment was not the same date that the marijuana was confiscated. See footnote

FACTS AND PROCEDURAL HISTORY


In November of 1993, Crouse leased a storage unit to store equipment for his engraving business. In February of 1994, before the term of his lease expired, he moved his equipment from the storage unit. Thereafter, Crouse allowed Louis Rodriquez, an acquaintance, to store furniture there.
A few weeks later, Rodriquez called Crouse to tell him that his brother-in-law, Frank Lozano, would pick up the furniture. On March 16, 1994, Crouse picked up Lozano from the airport and arranged a motel and rental car for him. Crouse took Lozano to the motel. On the next day, March 17, 1994, Crouse picked up Lozano and took him to his house.
During the time when the above events were occurring, Detective James W. Creekbaum, the coordinator of a drug task force in Hendricks County, had Crouse under surveillance. Creekbaum had Crouse under surveillance because Creekbaum knew that Crouse owned a trophy shop in Brownsburg and Creekbaum had received information about a planned delivery of 118 pounds of marijuana to a trophy shop in Brownsburg. On March 17, 1994, Creekbaum and other officers followed Crouse and Lozano to Crouse’s house.
Upon arriving at Crouse’s house, the officers found both Crouse and Lozano inside and asked them where the marijuana was located. The officers executed a search warrant and found two grams of marijuana in the house. While Crouse and Lozano were in the officer’s presence, the officers permitted a conversation between the two of them. Thereafter, in exchange for an agreement that Crouse and Lozano would receive immunity from prosecution for their involvement with marijuana that the police sought, Crouse told the police that there were 2000 pounds of marijuana located in Crouse’s storage unit. (Resp’t Ex. A.)
The detectives, Crouse, and Lozano proceeded to the storage unit where they called the owner to open the gate. Once the gate was opened, Crouse took them to the unit and opened it with his key. Therein, they found the 2000 pounds of marijuana.
On December 2, 1996, the Department of Revenue filed a jeopardy assessment notice and a demand against Crouse alleging that he owed CSET and a penalty on 45,945.80 grams of the marijuana found in his storage shed on the night in question. (State’s Ex. B.) The Department of Revenue assessed Crouse with CSET liability of $160,810.30 and a 100% nonpayment penalty of $160,810.30 for a total of $321,620.60. (State’s Ex. B.) A warrant was also issued that added accrued interest in the amount of $154.20, a collection fee of $16,081.03, and a clerk’s charge of $3.00, for a total of $337,858.83. (State’s Ex. C.) Interest was accruing at the rate of $30.84 per day. (State’s Ex. C.) On January 15, 1997, Crouse filed a written protest challenging the Department of Revenue’s CSET assessment. (State’s Ex. D.) Following a hearing, the Department of Revenue issued its letter of findings denying Crouse’s protest. (State’s Ex. E.) Crouse filed a petition for rehearing and the Department of Revenue denied it. (State’s Ex. F & G.) On May 22, 1998, Crouse initiated an original tax appeal in this Court. Thereafter, this Court conducted a trial and heard arguments of counsel. Additional facts will be provided as necessary.
ANALYSIS AND OPINION
Standard of Review

    This Court reviews final determinations of the Department de novo and is bound neither by the evidence nor the issues raised at the administrative level. See Ind. Code Ann. § 6-8.1-5-1(h) (West 2000); Hall v. Department of State Revenue, 720 N.E.2d 1287, 1289 (Ind. Tax Ct. 1999). Although statutes that impose tax are to be strictly construed against the State, in Indiana, “[t]he burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” Ind. Code Ann. § 6-8.1-5-1(b); See also Horrall v. Indiana Dep’t of State Revenue, 687 N.E.2d 1219, 1221 (Ind. Tax Ct. 1997), review denied; Longmire v. Indiana Dep’t of State Revenue, 638 N.E.2d 894, 898 (Ind. Tax Ct. 1994). To meet his burden of proof, the taxpayer must present a prima facie case (one in which the evidence is sufficient to establish a given fact and which if not contradicted remains sufficient). Longmire, 638 N.E.2d at 898. Once the taxpayer has presented a prima facie case, the duty to go forward with the evidence may shift several times. Id. However, the burden of proof does not shift. Cf. Thorntown Telephone Co., Inc. v. State Bd of Tax Comm'rs 629 N.E.2d 962, 965 (Ind. Tax Ct. 1994).
Discussion
I. CSET


The first issue is whether Crouse possessed the marijuana such that he is liable for the CSET on it. Crouse asserts that he was not in possession of the marijuana because he did not know that it was in his storage unit until Lozano told him about it while the detectives were at his house on March 17, 1994. Therefore, Crouse argues that he is not liable for the CSET on the marijuana.
Credibility

This Court first notes that neither Crouse nor Creekbaum gave accounts of the events that were highly credible. For example, when Crouse was asked why he did not tell the police that he did not personally know where the marijuana was located and that he was merely relaying what Lozano had told him, Crouse answered that “the deal had been made” and he did not feel that he needed to protect himself. (Oral Argument Tr. at 18-19.) In addition, Crouse’s lack of suspicion when an acquaintance called him prior to Lozano’s arrival and told him to “keep [his] eyes out” does not weigh in favor of his credibility. (Trial Tr. at 32.) At the Oral Argument, Crouse testified that instead he was told “’[k]eep your eyes open and on ’em.’” (Oral Argument Tr. at 19.) His failure to question that directive bodes no better for his credibly than his failure to question the statement that he first asserted was made to him. Moreover, during that same conversation, the acquaintance told Crouse that “they” were coming into town and Crouse did not question who was coming other than Lozano. (Trial Tr. at 32.) In addition, Crouse’s trial testimony is inconsistent with his position in his Post-trial Reply Brief regarding whether he knew that there were other individuals at the motel with Lozano. Compare (Pet’r Post-trial Reply Br. at 2) (Crouse stated that the reason that Lozano was impeccably dressed was that three other individuals that were at the motel were supposed to do the loading and unloading of furniture for Lozano) with (Trial Tr. at 33, 42, 64) (Crouse testified that no one else was with Lozano at the motel). Finally, Crouse asserts that he did not know Lozano before his arrival prior to the day in question. (Trial Tr. at 57-58.) However, Crouse helped Lozano after they were both released by the police by giving Lozano money for a plane ticket and driving him to the airport in St. Louis, Missouri. (Trial Tr. at 40, 43, 59) This is suspect because according to Crouse, Lozano was the one who stored the marijuana in Crouse’s storage unit and nearly got Crouse arrested in connection therewith. (Trial Tr. at 41-42.) When asked about this at the oral argument, Crouse answered that he was under stress, wanted it to end, and that he took him to the airport “simply because he asked.” (Oral Argument Tr. at 21.) Neither Crouse’s nor Creekbaum’s See footnote testimony was overwhelmingly convincing. However, upon balancing the credibility of the witnesses, this Court finds overall that Detective Creekbaum’s testimony was more credible than Crouse’s testimony.
B. Possession

This Court now addresses whether Crouse possessed the marijuana found in his storage shed. The imposition of CSET is governed by Ind. Code Ann Section 6-7-3-5, which provides in relevant part that the tax
is imposed on controlled substances that are:

delivered
possessed; or
manufactured;

in Indiana in violation of IC 35-48-4 or 21 U.S.C. 841 through 21 U.S.C. 852.

When a taxpayer does not have actual possession in a CSET case, constructive possession can be shown when a taxpayer shows intent and the capability to maintain dominion and control over the controlled substance. Hurst v. Department of Revenue, 721 N.E.2d 370, 374 (Ind. Tax Ct. 1999); Hall v. Department of State Revenue, 720 N.E.2d 1287, 1290 (Ind. Tax Ct. 1999). “[P]roof of a possessory interest in the premises in which contraband is found is adequate to show the capability to maintain control and dominion over the contraband.” Carnes v. State, 480 N.E.2d 581, 585 (Ind. Ct. App. 1985)(original emphasis). The requisite intent to possess entails knowledge of the presence and character of the substance in question. Mills v. State, 379 N.E.2d 1023, 1029 (Ind. Tax Ct. 1978). In this regard, a showing of exclusive control over the premises on which the substance is found is adequate to sustain a finding of knowing possession. Id. Such exclusive control raises the inference that the owner had knowledge of the items' presence and character, since it was probably introduced onto the premises by his agency. Id. However, such knowledge may not be reasonably inferred where access to and control of the premises is non-exclusive. Id. In cases of non-exclusive possession, numerous additional circumstances have been deemed sufficient to allow a trier of fact to reasonably draw the requisite inference of the defendant's knowledge of the presence and character of the contraband. Carnes, 480 N.E.2d at 586. Generally, the additional circumstances tending to buttress such an inference include: 1) incriminating statements by the petitioner; 2) attempted flight or furtive gestures; 3) a drug manufacturing setting; 4) proximity of the petitioner to the drugs; 5) drugs in plain view; and 6) location of contraband in close proximity to items owned by the petitioner. Hall, 720 N.E.2d at 1290; Hurst, 721 N.E.2d at 375; Carnes, 480 N.E.2d at 586.
    In Hall and Hurst this Court resolved issues involving the taxpayers’ constructive possession of marijuana. In both of those cases, this Court concluded that the facts and evidence did not demonstrate that the taxpayer had dominion and control over the marijuana. In Hall, Keith Hall and his wife Mary were assessed with CSET for marijuana found in the basement of their home as a result of a search by the police. Hall, 720 N.E.2d at 1288, 1291-92. On appeal to this Court the issue was whether Mary had possessed the marijuana. Id. at 1291. The police found the marijuana in a basement room that was locked and to which Mary did not have a key. Id. This Court noted that the evidence, which showed that Mary constructively possessed the marijuana, included: Mary co-owned the residence where the marijuana was found; Mary washed laundry near the room where the marijuana was found, and the smell of marijuana emanated through the house. Id. at 1292. Nonetheless, this Court held that Mary did not have knowledge of the marijuana because it was kept behind a closed door that was locked. See Id. at 1291. Moreover, this Court held that Mary did not have the ability to maintain dominion or control over the marijuana. Id. at 1291-92. In Hall, this Court based much of its decision upon the fact that the door was locked and the taxpayer did not have a key; thus, she did not have the ability to access the marijuana.
In Hurst, a truck driver carrying a load of marijuana called the taxpayer, after which the taxpayer met the truck driver and led the truck driver back to his house. Hurst, 721 N.E. at 372. After the truck driver arrived at the taxpayer’s home, but before the truck driver could exit the truck, the taxpayer exited his vehicle and started to walk toward the truck. Id. While the taxpayer was on his way to the truck, the police arrested him. Id. The driver of the truck did not have an opportunity to communicate with the taxpayer. Id. This Court held that there was no evidence that the taxpayer intended to maintain dominion and control over the marijuana because the taxpayer could only guess that the truck contained marijuana as he was arrested before he could communicate with the truck driver and he did not lease or drive the truck. Id. at 375-76. In both Hall and Hurst this Court indicated that possessory interests in property were important factors in determining whether there was constructive possession. See Hurst, 721 N.E.2d at 376; Hall, 720 N.E.2d at 1292.
First, this Court looks to whether Crouse had the ability to maintain dominion and control over the marijuana in the storage unit. This Court concludes that Crouse did have the ability to maintain dominion and control over marijuana because he had a possessory interest in the storage unit as the lessee of it and he possessed a key to it. See Hall, 720 N.E.2d at 1290; Hurst, 721 N.E.2d at 374; Carnes, 480 N.E.2d at 585.
Next, the Court looks to whether Crouse had the intent to maintain dominion and control over the marijuana. Crouse seems to contend that he did not have knowledge of the marijuana, and therefore, he could not have intended to maintain dominion and control over it. Crouse asserts that he shared possession of the storage unit because he claims that he gave Rodriguez a key and the gate pass to the storage unit. Crouse asserts that on March 16th or 17th, 1994, Lozano used the gate pass and key that Crouse had given to Rodriguez to place the marijuana in Crouse’s storage unit without Crouse’s knowledge. Because Crouse asserts that his possession of the premises was not exclusive, he claims that his knowledge of the presence of the marijuana cannot be reasonably inferred. However, Crouse has not presented any evidence, besides his own testimony, demonstrating that anyone else had access to the unit. There is no evidence, such as a written sublease, that he subleased the unit to Rodriquez. Crouse merely claims that Rodriguez gave him $100 “for his end.” (Trial Tr. at p. 30.) There is also no evidence to corroborate Crouse’s testimony that he gave Rodriguez the pass and a key, and this Court does not find Crouse’s testimony credible. See Milburn v. Milburn, 694 N.E.2d 738, 740 (Ind. Ct. App. 1998) (holding that “[i]n reaching its decision, the trial court must review self-serving and uncorroborated testimony by the claimant ’with caution and scrutiny’"), trans. denied. Consequently, this Court holds that Crouse had exclusive possession. Therefore, Crouse’s exclusive possession of the premises allows this Court to infer that he had knowledge of the marijuana and its presence in the storage unit. See Mills, 379 N.E.2d at 1029.
Even assuming arguendo that Crouse did not have exclusive possession, there are additional factors that support his knowledge. Crouse’s knowledge of the marijuana is demonstrated by the fact that he told the police that the marijuana was located in his storage unit. See Hall, 720 N.E.2d at 1290; Hurst, 721 N.E.2d at 375. This incriminating statement made by Crouse is additional evidence that buttresses the inference that he knew that the marijuana was located in the storage unit. See Hall, 720 N.E.2d at 1290. On the day in question, Crouse did not tell the police that his identification of the location of the marijuana was not based upon his personal knowledge. His assertion, after the assessment of the tax, that he had no personal knowledge that the marijuana was in his storage unit until Lozano told him on the day in question, is not convincing to this Court. Therefore, even if his possession was non-exclusive, the statement to the police telling them where the marijuana was located demonstrates that he had knowledge of the marijuana’s presence in his storage shed.
The evidence shows that Crouse had the intent and the capability to maintain dominion and control over the marijuana. Consequently, the evidence presented demonstrates that Crouse had constructive possession of the marijuana. Therefore, Crouse has not presented a prima facie case showing that he did not possess the marijuana.

II. Assessment Date


The next issue is whether the assessment should be set aside because the assessment period listed on the notice of jeopardy assessment was not the same date that the marijuana was confiscated. Crouse argues that this defect warrants the reversal of the assessment.
    The notice of proposed assessment has various functions. First, it informs the taxpayer that the Department of Revenue believes that the taxpayer owes tax. Ind. Code Ann. § 6-8.1-5-1(a) (West 2000). It also serves as prima facie evidence that the Department of Revenue's claim is valid and places the burden of proving that the proposed assessment is wrong on the person against whom the proposed assessment is made. IC § 6-8.1-5-1(b). This has the practical effect of forcing the taxpayer to come forward with evidence demonstrating that the claim is invalid. Horrall, 687 N.E.2d at 1221. In addition, the notice of proposed assessment provides information concerning written protest procedures. IC § 6-8.1-5-1(c). Finally, the notice begins the running of the sixty-day period in which a taxpayer must file a written protest or else lose his right to challenge the assessment. IC § 6-8.1-5-1(c).
Slight factual errors in the notice of proposed assessment given to a taxpayer may not have an impact on the substantive question of the taxpayer’s liability. Horrall, N.E.2d at 1221-22. There is no statutory requirement that a notice of proposed assessment contain completely accurate information concerning the basis for the Department of Revenue's belief. Id. at 1222. Nor is there any evidence that the legislature intended the Department of Revenue to be bound by factual representations contained in a notice of proposed assessment. Id. However, as this Court has stated before, there may be certain situations where factual errors in the notice of proposed assessment will prejudice taxpayers. Id. In those instances, this Court will undoubtedly have adequate remedies at its disposal to cure any prejudice, short of holding the notice of assessment invalid. Id.
In Horrall, the taxpayer claimed that his assessment was fatally defective because the assessment period was a day that the taxpayer could not have been in possession of the marijuana because he was incarcerated. Id. at 1221. This Court held that this factual error in the notice of proposed assessment did not impact the substantive question of the taxpayer’s liability. Id. at 1221-22. Therefore, the assessment was valid. Id. at 1222.
    Crouse argues that he should not be liable for the tax because the assessment period was not the same date that the marijuana was discovered and confiscated by the police. The assessment period on the notice of assessment was November 27, 1996. (State’s Ex. B.) The marijuana was discovered and confiscated on March 17, 1994. The functions set forth in the statute demonstrate that the notice of proposed assessment is an important procedural device. Horrall, 687 N.E.2d at 1221. Crouse did not fail to file a written protest, nor did he present evidence that the preparation of his case was negatively affected by the error in the date listed on the notice for the assessment period. As such, Crouse has not demonstrated that he was prejudiced by the error in the period date listed on the notice of assessment. Therefore, the factual error in the notice of proposed assessment given to Crouse does not impact the substantive question of Crouse's tax liability. See id. at 1221-22. Consequently, Crouse’s claim that the assessment should be set aside is without merit. See footnote See id.
CONCLUSION

    Because Crouse possessed the marijuana found in his storage unit and the error regarding the assessment date did not prejudice him, this Court concludes that the Department of Revenue properly assessed Crouse for the CSET. The Department of Revenue’s finding is therefore AFFIRMED in all respects. See footnote


Footnote: This Court notes that Crouse also briefly contended at both his trial and oral argument that the CSET statute was unconstitutional because he claims that it is a criminal statute and therefore he was entitled to indigent counsel. (Trial Tr. at 5-6); (Oral Argument Tr. at 2.) This Court denied Crouse’s request for indigent counsel.
Crouse also briefly asserted at the oral argument that the burden should not be on him to show that the assessment is improper, rather it should be on the State to show that the assessment was proper. He bases this argument on changes to the federal law. This Court reminds Crouse that he is being assessed under Indiana state law, not federal law. It is up to our state legislature, not this Court, to make a similar change if it deems it appropriate. This Court follows law currently in effect that places the burden on the person against whom the proposed assessment is made to prove that the proposed assessment is wrong. Ind. Code Ann. § 6-8.1-5-1(b) (West 2000); Horrall v. Indiana Dep’t of State Revenue, 687 N.E.2d 1219, 1221 (Ind. Tax Ct. 1997). Therefore, Crouse’s contention is without merit. See id.


Footnote: Creekbaum’s testimony spun an incredible tale of international drug dealing and threats against his life that were not corroborated by any other witnesses or evidence. He also testified that he suspected that a semi-truck that he spotted during surveillance was carrying the marijuana but he had testified earlier that he was looking for 118 pounds of marijuana that were headed for Brownsburg. It would be odd for a police officer to be looking for the arrival of 118 pounds in such a large vehicle. As such, his testimony regarding the arrival 118 pounds of marijuana in a very large vehicle like a semi-truck seems highly unlikely and thus does not weigh in favor of Creekbaum’s credibility.


Footnote: The Department of Revenue correctly points out that the later assessment date was actually favorable to Crouse because he was taxed at the rate of $3.50 per gram of marijuana, which was the effective rate in November of 1996. Resp’t Post Trial Brief at 4; Resp’t Ex. B; Ind. Code Ann. § 6-7-3-6 (b)(1)&(2) (West 2000). Prior to July 1, 1996 the taxation rate was $40 per gram for marijuana. IC § 6-7-3-6(a)(1) (West Supp. 1993); Clifft v. Indiana Department of Revenue, 660 N.E.2d 310, 312 (Ind. 1995). In addition, as the Department of Revenue points out, the date of 1996 for the assessment period saved Crouse interest charges that he would have incurred from March 17, 1994, to November 27, 1996. (Resp’t Post-trial Brief at 4.)


Footnote: This Court notes that pursuant to Ind. Code Ann. Section 6-8.1-10-1(a) (West 2000) Crouse is liable for all interest that has accrued or will accrue.