SB 662 Text

Senate Bill No. 662
(By Senators Jenkins and Plymale)
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[Introduced February 19, 2007; referred to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4, §11-28-5, §11-28-6, §11-28-7, §11-28-8, §11-28-9 and §11-28-10, all relating to imposing taxes on certain unauthorized substances, including cocaine, certain low-street-value drugs, marijuana, certain controlled substances, illicit alcoholic liquor, certain beer, certain wine and mash; providing procedures for collecting and distributing the proceeds of the tax; and providing penalties.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4, §11-28-5, §11-28-6, §11-28-7, §11-28-8, §11-28-9 and §11-28-10, all to read as follows:
ARTICLE 28. UNAUTHORIZED SUBSTANCES TAXES.
§11-28-1. Purpose.
The purpose of this article is to levy an excise tax to generate revenue for state and local law-enforcement agencies and for the General Fund. Nothing in this article provides immunity from criminal prosecution for a person who possesses an illegal substance.
§11-28-2. Definitions.
The following definitions apply in this article:
(1) "Commissioner" means the Tax Commissioner of the Tax Division of the Department of Revenue.
(2) "Controlled substance" has the same meaning as defined in section one hundred one, article one, chapter sixty-a of this code.
(3) "Dealer" means any of the following:
(A) A person who actually or constructively possesses more than forty-two and one-half grams of marijuana, seven or more grams of any other controlled substance that is sold by weight, or ten or more dosage units of any other controlled substance that is not sold by weight;
(B) A person who in violation of chapter sixty of this code possesses alcoholic liquor for sale.
(C) A person who in violation of article sixteen, chapter eleven of this code possesses nonintoxicating beer for sale.
(D) A person who in violation of chapter sixty of this code possesses wine for sale.
(4) "Division" means the Tax Division of the Department of Revenue.
(5) "Illicit alcoholic liquor" includes:
(A) Alcoholic liquor, as defined in section five, article one, chapter sixty of this code, possessed in West Virginia but that was not purchased from the Alcohol Beverage Control Commissioner as required in chapter sixty of this code. Some examples of illicit alcoholic liquor are the products known as "bootleg liquor," "moonshine," "nontax-paid liquor" and "white liquor;"
(B) Nonintoxicating beer as defined in section five, article one, chapter sixty of this code, possessed in West Virginia and for which a tax provided in article sixteen of this chapter is imposed and has not been paid; and
(C) Wine as defined in section five, article one, chapter sixty of this code, possessed in West Virginia for which a tax provided in chapter sixty is imposed and has not been paid.
(6) "Local law-enforcement agency" means a municipal police department or a county sheriff's office.
(7) "Low-street-value drug" includes any of the following:
(A) (i) An anabolic steroid, which includes any drug or hormonal substance, chemically and pharmacologically related to testosterone, other than estrogens, progestins, and corticosteroids, that promotes muscle growth, including, but not limited to: Methandrostenolone, stanozolol, ethylestrenol, nandrolone phenpropionate, nandrolone deconoate, testosterone propionate, chorionic gonadotropin, boldenone, chlorotestosterone (4-chlorotestosterone), clostebol, dehydrochlormethyltestosterone, dibydrostestosterone (4-dihydrotestosterone), drostanolone, fluoxymesterone, formebulone (formebolone), mesterolene, methandienone, methandranone, methandriol, methenolene, methyltestosterone, mibolerone, nandrolene, norethandrolene, oxandrolone, oxymesterone, oxymetholone, stanolone, testolactone, testosterone and trenbolone; and
(ii) Any salt, ester, or isomer of a drug or substance described or listed in subparagraph (i) of this subdivision, if that salt, ester or isomer promotes muscle growth. A "low-street-value drug" does not include an anabolic steroid which is expressly approved for administration through implants to cattle or other nonhuman species, unless a person prescribes, dispenses or distributes the steroid for human use;
(B) A depressant described in either section two hundred four, section two hundred six, section two hundred eight or section two hundred ten, all of article two, chapter sixty-a of this code; (C) A hallucinogenic substance described in section two hundred four or section two hundred six, both of article two, chapter sixty-a of this code;
(D) A stimulant described in section two hundred four, section two hundred six, section two hundred eight, section two hundred ten or section two hundred twelve, all of article two, chapter sixty-a of this code;
(E) A controlled substance described in subsection (d) or (e), section two hundred eight; subdivision (1), subsection (b), section two hundred ten; any of subdivisions (1) through (8), subsection (e), section two hundred ten; or subsection (c) section two hundred twelve, all of article two, chapter sixty-a of this code.
(8) "Marijuana" means all parts of the plant of the genus Cannabis, whether growing or not; the seeds of the plant; the resin extracted from any part of the plant; and every compound, salt, derivative, mixture or preparation of the plant, its seeds or its resin.
(9) "Mash" means the fermentable starchy mixture from which alcoholic liquor can be distilled.
(10) "Person" means a person as defined in section three, article nine of this chapter.
(11) "State law-enforcement agency" means any state agency, force, department or unit responsible for enforcing criminal laws.
(12) "Unauthorized substance" a controlled substance, illicit alcoholic liquor or mash.
§11-28-3. Excise tax on unauthorized substances.
(a) An excise tax is levied on unauthorized substances possessed, either actually or constructively, by dealers at the following rates:
(1) At the rate of forty cents for each gram, or fraction of a gram, of harvested marijuana stems and stalks that have been separated from and are not mixed with any other parts of the marijuana plant.
(2) At the rate of three dollars and fifty cents for each gram, or fraction of a gram, of marijuana, other than separated stems and stalks taxed under subdivision (1) of this section.
(3) At the rate of fifty dollars for each gram, or fraction of a gram, of cocaine.
(4) At the rate of two hundred dollars for each gram, or fraction of a gram, of any other controlled substance that is sold by weight.
(5) At the rate of fifty dollars for each ten dosage units, or fraction of a dosage unit, of any low-street-value drug that is not sold by weight.
(6) At the rate of two hundred dollars for each ten dosage units, or fraction of a dosage unit, of any other controlled substance that is not sold by weight.
(b) A quantity of marijuana or other controlled substance is measured by the weight of the substance whether pure or impure or dilute, or by dosage units when the substance is not sold by weight, in the dealer's possession. A quantity of a controlled substance is dilute if it consists of a detectable quantity of pure controlled substance and any excipients or fillers.
(c) An excise tax is levied on illicit alcoholic liquor possessed by a dealer at the following rates:
(1) At the rate of thirty-one dollars and seventy cents for each gallon, or fraction of a gallon, of illicit alcoholic liquor sold by the drink.
(2) At the rate of twelve dollars and eighty cents for each gallon, or fraction of a gallon, of illicit alcoholic liquor not sold by the drink.
(d) An excise tax is levied on mash possessed by a dealer at the rate of one dollar and twenty-eight cents for each gallon or fraction of a gallon.
§11-28-4. Exemptions.
(a) The tax levied in this article does not apply to a substance in the possession of a dealer who is authorized by law to possess the substance. This exemption applies only during the time the dealer's possession of the substance is authorized by law.
(b) The tax levied in this article does not apply to the following marijuana:
(1) Harvested mature marijuana stalks when separated from and not mixed with any other parts of the marijuana plant;
(2) Fiber or any other product of marijuana stalks described in subdivision (1) of this subsection, except resin extracted from the stalks;
(3) Marijuana seeds that have been sterilized and are incapable of germination; and
(4) Roots of the marijuana plant.
§11-28-5. Reports; revenue stamps.
(a) The commissioner shall issue stamps to affix to unauthorized substances to indicate payment of the tax required by this article. Dealers shall report the taxes payable under this article at the time and on the return prescribed by the commissioner. Notwithstanding any other provision of law, dealers are not required to give their name, address, social security number or other identifying information on the return, and the return is not required to be verified by oath or affirmation. Upon payment of the tax, the commissioner shall issue stamps in an amount equal to the amount of the tax paid. Taxes may be paid and stamps may be issued either by mail or in person.
(b) Every local law-enforcement agency and every state law-enforcement agency shall report to the division within forty-eight hours after seizing an unauthorized substance, or making an arrest of an individual in possession of an unauthorized substance, listed in this subsection upon which a stamp has not been affixed. The report must be in the form prescribed by the commissioner and it shall include the time and place of the arrest or seizure, the amount, location and kind of substance, the identification of an individual in possession of the substance and that individual's social security number and any other information prescribed by the commissioner. The report shall be made when the arrest or seizure involves any of the following unauthorized substances upon which a stamp has not been affixed as required by this article:
(1) More than forty-two and one half grams of marijuana;
(2) Seven or more grams of any other controlled substance that is sold by weight;
(3) Ten or more dosage units of any other controlled substance that is not sold by weight;
(4) Any illicit alcoholic liquor; and
(5) Mash.
§11-28-6. When tax payable.
The tax imposed by this article is payable by any dealer who actually or constructively possesses an unauthorized substance in this state upon which the tax has not been paid, as evidenced by a stamp. The tax is payable within forty-eight hours after the dealer acquires actual or constructive possession of a non-tax-paid unauthorized substance, exclusive of Saturdays, Sundays and legal holidays of this state, in which case the tax is payable on the next working day. Upon payment of the tax, the dealer shall permanently affix the appropriate stamps to the unauthorized substance. Once the tax due on an unauthorized substance has been paid, no additional tax is due under this article even though the unauthorized substance may be handled by other dealers.
§11-28-7. Administration.
Article ten of this chapter applies to this article.
§11-28-8. Assessments.
Notwithstanding any other provision of law, an assessment against a dealer who possesses an unauthorized substance to which a stamp has not been affixed as required by this article shall be made as provided in this section. The commissioner shall assess a tax, applicable penalties, and interest based on personal knowledge or information available to the commissioner. The commissioner shall notify the dealer in writing of the amount of the tax, penalty and interest due, and demand its immediate payment. The notice and demand shall be either mailed to the dealer at the dealer's last known address or served on the dealer in person. If the dealer does not pay the tax, penalty and interest immediately upon receipt of the notice and demand, the commissioner shall collect the tax, penalty, and interest pursuant to the procedure provided in section seven, article ten of this chapter for jeopardy assessments or the procedure set forth in section thirteen, article ten of this chapter, including causing execution to be issued immediately against the personal property of the dealer, unless the dealer files with the commissioner a bond in the amount of the asserted liability for the tax, penalty and interest. The commissioner shall use all means available to collect the tax, penalty and interest from any property in which the dealer has a legal, equitable or beneficial interest. The dealer may seek review of the assessment as provided in section ten, article ten of this chapter.
§11-28-9. Confidentiality of information.
Information obtained by the division in the course of administering the tax imposed by this article, including information on whether the division has issued a revenue stamp to a person, is confidential tax information and is subject to the following restrictions on disclosure:
(1) The disclosure provisions contained in article ten of this chapter; and
(2) The information may not be used as evidence in a criminal prosecution for an offense other than an offense under this article or under article nine of this chapter. Under this prohibition, no officer, employee, or agent of the division may testify about the information in a criminal prosecution for an offense other than an offense under this article or under article nine of this chapter. This subdivision implements the protections against double jeopardy and self-incrimination set out in Amendment V of the United States Constitution and the restrictions in it apply regardless of whether information may be disclosed under the provisions of article ten of this chapter. This subdivision does not apply to information obtained from a source other than an employee, officer or agent of the division.
§11-28-10. Use of tax proceeds.
(a) The commissioner shall credit the proceeds of the tax levied by this article to a special nonreverting account, called the "Unauthorized Substances Tax Account," which is created in the State Treasury, until the tax proceeds are unencumbered. The commissioner shall remit the unencumbered tax proceeds as provided in this section on a quarterly or more frequent basis. Tax proceeds are unencumbered when either of the following occurs:
(1) The tax has been fully paid and the taxpayer has no current right to seek a refund; or
(2) The taxpayer has been notified of the final assessment of the tax under and has neither fully paid nor timely contested the tax.
(b) The commissioner shall remit seventy-five percent of the part of the unencumbered tax proceeds that was collected by assessment to the state or local law-enforcement agency that conducted the investigation of a dealer that led to the assessment. If more than one state or local law-enforcement agency conducted the investigation, the commissioner shall determine the equitable share for each agency based on the contribution each agency made to the investigation. The commissioner shall credit the remaining unencumbered tax proceeds to the General Fund.
(c) The refund of a tax that has already been distributed shall be drawn initially from the Unauthorized Substances Tax Account. The amount of refunded taxes that had been distributed to a law-enforcement agency under this section and any interest shall be subtracted from succeeding distributions from the account to that law-enforcement agency. The amount of refunded taxes that had been credited to the General Fund under this section and any interest shall be subtracted from succeeding credits to the General Fund from the account.

NOTE: The purpose of this bill is to impose excise taxes on certain unauthorized substances, including cocaine, certain low-street-value drugs, marijuana, certain controlled substances, illicit alcoholic liquor, certain beer, certain wine and mash .

This article is new; therefore, strike-throughs and underscoring have been omitted.

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