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In the Matter of the Appeal of

February 22, 2013

IN THE MATTER OF THE APPEAL OF BURCH, IAN A. FROM AN ORDER OF THE DIVISION OF TAXATION ON THE ASSESSMENT OF CONTROLLED SUBSTANCES TAX.


Appeal from Court of Tax Appeals.

SYLLABUS BY THE COURT

SYLLABUS BY THE COURT 1. An appellate court gives no deference to an agency's interpretation of a statute. Instead, whether an agency properly interpreted a statute is a question of law over which the court exercises unlimited review. 2. In reviewing a statute that is plain and unambiguous an appellate court will not speculate as to the legislative intent behind it and will not read into the statute something not readily found in it. 3. Statutes that impose a tax are strictly construed in favor of the taxpayer. 4. The Kansas Legislature's silence in K.S.A. 2012 Supp. 79-5205 as to whether the exclusionary rule applies in civil tax proceedings does not preclude application of the rule. K.S.A. 2012 Supp. 79-5205(b) merely places the burden on the taxpayer to rebut the presumption of the assessment's validity and the prima facie evidence; it does not preclude consideration of the exclusionary rule. 5. The Fourth Amendment to the United States Constitution, made applicable to the states through the Fourteenth Amendment, provides that the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures shall not be violated. 6. The Fourth Amendment to the United States Constitution itself does not preclude the use of evidence obtained in violation of its command. The judicially created exclusionary rule seeks to deter unconstitutional conduct by suppressing illegally obtained evidence. 7. Because a violation of the Fourth Amendment to the United States Constitution is fully accomplished at the time of an illegal search or seizure, the exclusion of evidence from a later proceeding cannot cure the invasion of constitutional rights previously suffered. Therefore, the exclusionary rule applies only in contexts where its remedial objectives are thought most efficaciously served. 8. To determine whether the exclusionary rule warrants suppressing evidence in a civil tax proceeding, a court should weigh the benefit of deterring police conduct against the cost of losing probative evidence. 9. As applied in the context of a civil tax proceeding, the balancing test outlined in United States v. Janis, 428 U.S. 433, 96 S. Ct. 3021, 49 L. Ed. 2d 1046 (1976), and implemented in Martin v. Kansas Dept. of Revenue, 285 Kan. 625, 640, 176 P.3d 938

(2008), requires consideration of whether the secondary civil tax proceeding was in the seizing officer's zone of primary interest at the time of the Fourth Amendment violation. 10. For purposes of deciding whether the exclusionary rule which has been applied in a first proceeding will be applied in a secondary proceeding, we determine whether a secondary proceeding was in an officer's zone of primary interest. This requires consideration of the nature of the second proceeding-i.e.,whether civil or criminal-as well as other factors bearing on the potential motivation in the search or seizure. Such factors include, but are not limited to: (1) whether the proceedings occurred in an intrasovereign or intersovereign context; (2) whether the first and second proceedings were initiated by the same agency; (3) the relatedness of the objectives of the first and second proceedings; (4) the existence of any resource-sharing statutory scheme or explicit or implicit agreements between the entities or agencies involved; and (5) statements made by the officer regarding his or her motivation in conducting the search or seizure. Additionally, the balancing test requires consideration of the egregiousness of the officer's conduct.

The opinion of the court was delivered by: Moritz, J.

Reversed and remanded with directions.

The opinion of the court was delivered by MORITZ, J.:

Ian A. Burch appeals from the decision of the Court of Tax Appeals (COTA) granting summary judgment to the Kansas Department of Revenue (KDOR) on its assessment of taxes and civil penalties against Burch under the Kansas Drug Tax Act, K.S.A. 79-5201 et seq. Burch argues COTA erred in failing to consider and apply the exclusionary rule to the drugs upon which the taxes were assessed, and in failing to invalidate the tax assessment.

We conclude COTA erroneously interpreted K.S.A. 2012 Supp. 79-5205(b), which provides that KDOR's tax and penalty assessment is presumed valid, to preclude consideration of the exclusionary rule. Consequently, COTA erred in granting summary judgment to KDOR, and we remand the case to COTA for consideration of the exclusionary rule and the factors appropriate to that consideration, as outlined herein.

TRAFFIC STOP AND RESULTING CRIMINAL CHARGES

Kansas Highway Patrol Trooper Steve Harvey was patrolling I-70 in Trego County when he spotted a motor home that did not appear to have a license tag. Harvey pulled over the motor home and approached the vehicle. As he did so he noticed a temporary tag in the back window that the window's heavy tint had obscured. Nevertheless, Harvey asked the driver, Kurt Christiansen, for his driver's license, vehicle registration, and temporary tag.

The temporary tag identified Burch, who was a passenger, as the owner of the vehicle. As dispatch ran Christiansen's license, Harvey spoke with Burch, obtained his license, and provided it to dispatch. In response to Harvey's questions about the group's travel plans, Burch said that someone had flown from the New England states to Florida to pick up the motor home, and he and seven other adults were traveling in it to Colorado.

At some point, dispatch informed Harvey that Burch or Christiansen had a drug conviction.

In investigating the validity of the temporary tag, Harvey compared Burch's license to the information on the tag and determined the information matched. Harvey also determined the description on the temporary tag matched the vehicle. But Harvey did not provide dispatch with the temporary tag information, and during the subsequent suppression hearing Harvey admitted he had no particularized suspicion that the motor home was stolen.

Despite his lack of any particularized suspicion of a crime, Harvey continued to detain the motor home and its passengers, asking to see the vehicle's VIN plate. When the driver and passengers, including Burch, advised the officer they did not know where to find the VIN plate, Harvey responded by instructing the passengers to open the side door so he could look inside the vehicle for the VIN plate.

As Harvey stood on the step of the motor home to check the frame of the vehicle for the VIN plate, he saw an open alcoholic beverage. Once inside, he noticed wrapping papers, which he recognized as drug paraphernalia. Two other officers eventually arrived and assisted Harvey while he conducted a full search of the vehicle, revealing marijuana, ecstasy, psilocybin mushrooms, additional drug paraphernalia, and approximately $15,000 in cash.

The State filed four felony and two misdemeanor charges against Burch. Burch moved to suppress the drugs and paraphernalia found in the vehicle, arguing Harvey impermissibly extended the traffic stop in violation of the Fourth Amendment to the United States Constitution. The district court agreed, concluding that while Harvey had legally stopped the vehicle to inquire about the temporary tag, once he had obtained the information necessary to dispel his concern, the continued detention of the vehicle and its passengers became unlawful. Thus, the district court held Harvey had no reasonable suspicion that a crime had been or was being committed when he discovered the drugs and paraphernalia. Because Harvey unlawfully extended the scope and length of the stop, the district court suppressed the evidence found in the vehicle, and the State dismissed the criminal charges against Burch without prejudice.

THE TAX ASSESSMENT AND RELATED PROCEEDINGS

Approximately 1 week after the district court dismissed Burch's criminal charges, Harvey "requested [KDOR's] assistance for the collection of drug taxes and seizure of approximately $17,000 cash." KDOR's Director of Taxation responded by issuing a tax assessment notice indicating Burch owed $17,761 in taxes and penalties on the drugs found in his motor home. Burch objected to the assessment by requesting an informal conference with the Secretary of KDOR. Following a hearing, the Secretary's designee upheld the assessment.

Burch's Motion for Summary Judgment

Burch appealed the assessment to COTA's predecessor, the Board of Tax Appeals (BOTA), and subsequently moved for summary judgment. Relying upon In re Appeal of Kasel, No. 93-528, Director of Taxation of the Kansas Department of Revenue Order, dated April 26, 1994, Burch argued the exclusionary rule applied to the unlawfully seized drugs and invalidated the tax assessment.

In Kasel, the director examined several factors in determining whether the exclusionary rule applied, including whether the potential tax assessment was in the officer's "zone of primary interest" at the time of the Fourth Amendment violation, whether KDOR participated or colluded in the case, whether the officer acted in good faith, and whether the officer's actions were motivated by the potential for tax assessment. Kasel, No. 93-528, p. 6. Applying these considerations, the director in Kasel determined the exclusionary rule should be applied to deter future violations of the Fourth Amendment.

Burch pointed out that shortly after Kasel, the legislature modified K.S.A. 2012 Supp. 79-5211 to increase the percentage of the assessment remitted to law enforcement agencies assisting in the investigation from 50 percent to 75 percent. L. 1994, ch. 259, sec. 2. Burch argued that because of this change to the statute, the Highway Patrol potentially had greater motivation to pursue the tax assessment in this case than in Kasel. Consequently, ...


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