Adams v. State, 49S04-0011-CR-627.
| Decision Date | 08 February 2002 |
| Docket Number | No. 49S04-0011-CR-627.,49S04-0011-CR-627. |
| Citation | 762 N.E.2d 737 |
| Parties | Dante ADAMS, Appellant (Defendant below), v. STATE of Indiana, Appellee (Plaintiff below). |
| Court | Indiana Supreme Court |
Robert W. Hammerle, Joseph M. Cleary, Hammerle Foster Allen & Long-Sharp, Indianapolis, IN, Attorneys for Appellant.
Karen M. Freeman-Wilson, Attorney General of Indiana, Thomas D. Perkins, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee.
ON PETITION TO TRANSFER
This is the second of two cases we decide today involving Dante Adams's difficulties with state revenue and criminal authorities after cocaine was discovered first in his safety deposit box and later in his home. This case presents the question of whether the cocaine found in a search of the home by revenue authorities who were seeking property to satisfy a tax assessment can be used by criminal authorities in a subsequent drug prosecution. We conclude the search of the home was unconstitutional and that the exclusionary rule bars the use of the cocaine as evidence in criminal proceedings.
Police officers found cocaine in a safe deposit box that Adams leased from an Indianapolis bank, but a trial court later determined that the search violated Adams's constitutional rights and suppressed the cocaine for purposes of pending criminal charges against him.1
On March 23—a day before the criminal charges were dropped—the Indiana Department of Revenue ("the Department") issued an assessment pursuant to the Controlled Substance Excise Tax ("CSET")2 against Defendant. The assessment included $79,548 in unpaid tax and a 100 percent penalty, yielding a total assessment of $159,096. The drugs seized from Defendant's safe deposit box were the basis for the tax. Upon learning of the assessment, Defendant filed a protest letter with the Department.
On March 31, 1998, the Department issued a tax warrant to collect on the CSET assessment. Pursuant to the warrant, revenue officers entered Defendant's home on April 13. While looking for assets to satisfy the assessment, the officers discovered cocaine hidden in a stove and in a bedroom drawer. Marion County narcotics detectives waited outside the home while the revenue officers searched it. When the Department's officers found the cocaine, the narcotics officers entered. Even though the narcotics officers decided to seek a search warrant, the search of the home continued unabated. In fact, the officers found more cocaine before a search warrant was obtained.3
Defendant was arrested and charged with Dealing in Cocaine,4 a Class A felony, and Possession of Cocaine,5 a Class C felony. Defendant filed a motion to suppress the cocaine on the grounds that the assessment and the tax warrant were based on the evidence illegally seized in the original criminal case. The trial court denied the motion to suppress. Defendant sought an interlocutory appeal, which both the trial court and the Court of Appeals granted.
The Court of Appeals reversed the trial court, concluding that the exclusionary rule applies to the CSET and as such the cocaine was the "fruit of the poisonous tree" in the criminal trial. Adams v. State, 726 N.E.2d 390, 393 (Ind.Ct.App. 2000). We granted transfer. Adams v. State, No. 49S04-0011-CR-627, 2000 Ind. LEXIS 1098 (Ind. Nov. 3, 2000). For the reasons set forth below, we also reverse the trial court.
Defendant contends that the revenue officers searched his residence when they served the jeopardy tax warrant and that this search violated the Fourth Amendment's prohibition on unreasonable searches and seizures.6 The paramount concern of the Fourth Amendment7 is the reasonableness of the state's intrusion into the privacy of its citizens. See Vernonia School Dist. v. Acton, 515 U.S. 646, 652, 115 S.Ct. 2386, 132 L.Ed.2d 564 (1995)
(). Generally, a search of a home is unreasonable unless it is conducted pursuant to a search warrant based on probable cause. See Griffin v. Wisconsin, 483 U.S. 868, 873, 107 S.Ct. 3164, 97 L.Ed.2d 709 (1987). Therefore, we will first look at the Indiana CSET collection procedures to determine whether the revenue officers entered Defendant's home pursuant to a warrant based on probable cause.
We begin this analysis by distinguishing between two different chapters of the Indiana tax code. Chapter 3 of Article 7 of the tax code imposes the CSET and sets forth procedures for its enforcement. Ind.Code § 6-7-3 ("CSET Chapter"). Chapter 5 of Article 8.1 of the tax code sets forth the Department's generic enforcement procedures applicable to all taxes it collects. This includes CSET and such other taxes as the gross income and retail sales taxes. Ind.Code § 6-8.1-5 ("General Enforcement Chapter").
Under section 3 of the General Enforcement Chapter, the CSET's status as a "jeopardy assessment" allows the Department to expedite collection, including the power to issue "jeopardy tax warrants" against the taxpayer. Ind.Code § 6-8.1-5-3. These warrants empower revenue officers to "levy on and sell the [taxpayer's] property" and to do so "either without or with the assistance of the sheriffs of any counties in the state." Id.8 Jeopardy tax warrants are issued by the Department unilaterally without judicial review but typically can be issued only when the Department concludes that the taxpayer intends to take some action that would jeopardize the state's ability to collect the tax. See id. However, the CSET Chapter provides that Ind.Code § 6-7-3-13. As such, the CSET Chapter provides that assessments under the CSET are jeopardy assessments per se, Ind.Code § 6-7-3-13, allowing the Department to skip the finding of exigency required by section 3 of the General Enforcement Chapter, Ind.Code § 6-8.1-5-3.
Under these statutes, then, jeopardy tax warrants under the CSET are not issued pursuant to judicial review and are not necessarily based on probable cause since there is no required finding of exigency. An entry of a home pursuant to these warrants is therefore presumptively unreasonable and the search of Defendant's home was unconstitutional unless some exception to the warrant rule applies.
The Supreme Court has recognized that the Fourth Amendment's requirement of reasonableness will allow the government to conduct some searches in non-criminal or administrative contexts when the same search would be invalid if conducted during a criminal investigation. For example, the Court has carved both "administrative search"9 and "special needs"10 exceptions to the warrant requirement on the basis that the circumstances present in those contexts make a warrantless search reasonable for Fourth Amendment purposes. Under this analysis, we must determine whether the nature of the CSET makes an entry into a home to collect the tax reasonable even if the revenue officers obtained only a non-judicial jeopardy tax warrant.
The Supreme Court had the opportunity to analyze the reasonableness of a warrantless search of a home pursuant to tax collection proceedings in G.M. Leasing Corp. v. United States, 429 U.S. 338, 97 S.Ct. 619, 50 L.Ed.2d 530 (1977). The facts of G.M. Leasing are worthy of close attention. The case involved the seizure of several expensive automobiles to satisfy a tax assessment. Id. at 341-43, 97 S.Ct. 619. Revenue officials found one such automobile inside a free-standing garage near a cottage owned by the taxpayer. Id. at 344-45, 97 S.Ct. 619. Upon learning that the taxpayer used the cottage for a business enterprise related to the tax assessment,11 the revenue agents seized the cottage in hopes of finding records that would lead to more assets. Id. at 345-46, 97 S.Ct. 619. The agents seized several sets of business records after conducting a search of the cottage. Id. At no point in this process did the agents obtain a search warrant, although they claimed authority to levy on the taxpayer's property pursuant to federal statutes.
The Supreme Court determined that the warrantless search of the cottage was unreasonable. The Court recognized that the power to enforce tax laws—including the power to seize assets to satisfy tax debts—was critical to the functioning of government:
Indeed, one may readily acknowledge that the existence of the levy power is an essential part of our self-assessment tax system and that it enhances voluntary compliance in the collection of taxes that this Court has described as "the lifeblood of government, and their prompt and certain availability an imperious need."
Id. at 350, 97 S.Ct. 619 (quoting Bull v. United States, 295 U.S. 247, 259, 55 S.Ct. 695, 79 L.Ed. 1421 (1935)). But the Court determined that general Fourth Amendment principles applied to tax collection procedures, in part because the British abused general warrants when collecting royal taxes during the colonial period. Id. at 355, 97 S.Ct. 619. Because the Fourth Amendment applied to tax collection, the Court concluded that the warrant requirement should apply to levies under the federal tax code:
The intrusion into petitioner's office is therefore governed by the normal Fourth Amendment rule that "except in certain carefully defined classes of cases, a search of private property without proper consent is `unreasonable' unless it has been authorized by a valid search warrant."
Id. at 359, 97 S.Ct. 619 (quoting Camara v. Municipal Court, 387 U.S. 523, 528-529, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967) (emphasis added)).
Finding that the general warrant rule applied, the Court then rejected the government's contention that an exception to the rule should apply to the IRS's search. Specifically, the Court...
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STATE OF INDIANA DEPARTMENT OF REVENUE v. Adams
...will be infrequent. In the companion case, we hold that CSET levies will generally be reasonable for Fourth Amendment purposes. Adams v. State, 762 N.E.2d at 743. The companion case invalidates searches by revenue officers only where the officers rely solely on a jeopardy warrant issued und......
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