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N.C. law requires taxes on illegal substances

Posted January 18, 2010

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— The state of North Carolina has collected more than $135 million in taxes from confiscated illegal substances since 1990 – about $50 million of it within the past five years.

The North Carolina Department of Revenue gets the money by seizing bank accounts, garnishing wages or auctioning off personal assets, such as cars, boats, motorcycles, electronics and jewelry – property that he or she might have been able to keep under a state program that allows taxpayers to buy "drug stamps."

N.C. law requires taxes on illegal substances N.C. law requires taxes on illegal substances

It's a program under the state's unauthorized substance tax, an excise tax on controlled substances, such as marijuana, cocaine, moonshine and other substances.

A stamp for marijuana, for example, costs $3.50 per gram; for cocaine, it's $50 per gram. There's also a stamp for illegally possessing prescription drugs like oxycodone.

Cale Johnson, director of tax enforcement for the department, says that, just because a person pays the tax, does not mean the substance is then legal. It only fulfills his or her obligation to pay taxes.

The process to purchase the stamps is anonymous. An individual can go online, complete a tax form and mail it, and no identifying information, such as name, address or Social Security number, is required.

"It is against North Carolina law for the Department of Revenue to notify law enforcement agencies of an individual that pays their taxes," Johnson said.

The tax is due once, no matter how many individuals come into possession of the drugs. Not paying it within 48 hours of acquiring the substances can also mean a 40 percent penalty on the tax due.

The revenue department handles about 5,000 to 6,000 cases each year in unpaid taxes on illegal substances.

The department has had people pay the taxes but not many, Johnson says. Since the program started, it has received 106 stamp orders worth nearly $5,900. He says he believes a majority of those orders were from stamp collectors.

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  • thatpeteguy Jan 19, 2:21 p.m.

    I wonder how much the state spent investigating/arresting and prosecuting these cases to reap the benefits of the $135 million over the last 20 years...far more than the amount collected I'm sure. Think how much tax revenue the state could rake in by legalizing, taxing and regulating cannabis; not to mention the money saved not having to pay for law enforcement to investigate and arrest consenting adults who choose to partake of cannabis. Law enforcement could then focus on violent offenders and our correctional facilities could lock up these violent offenders and not non-violent drug offenders.
    Legalize it!

  • Das G Jan 19, 1:11 p.m.

    I'm sure shady drug dealers are standing in line to anonymously pay taxes out of the kindness of their hearts.

  • Scrat Jan 19, 9:38 a.m.

    How about a tax on knee-jerk politics? The National and State debt would vanish overnight.

  • sweetydmh Jan 19, 8:56 a.m.

    wow.

  • familyfour Jan 18, 7:35 p.m.

    "It is against North Carolina law for the Department of Revenue to notify law enforcement agencies of an individual that pays their taxes," Johnson said.
    The tax is due once, no matter how many individuals come into possession of the drugs. Not paying it within 48 hours of acquiring the substances can also mean a 40 percent penalty on the tax due.

    bahahahahahahahahahahahaha

    ahahahahahahahahahahah
    hehehehehehehehehehehh

    pfft

  • whatelseisnew Jan 18, 7:15 p.m.

    This is amoral and such laws should be repealed.

  • What if_I could Jan 18, 7:13 p.m.

    Mary Jane purchased weed from her dealer. Mary Jane bought her tax stamp for the weed. Mary Jane sold some of her weed to me. I was stopped by the cops for illegal possesion of weed. They want me to pay taxes on this weed. From this article I don't have to pay taxes because Mary Jane already paid taxes. Who has the time to keep up with if the taxes have been paid on this illegal mess???

  • wa4mjf Jan 18, 6:37 p.m.

    The charge for moonshine is possession of non tax paid liquor. So if the person buys the stamp, then it is not non tax paid liquor, so, of course, LEOs would not find non tax paid liquor with a tax stamp on it.

  • james27613 Jan 18, 6:29 p.m.

    Now we can balance our state budget real easy.
    Just change the tax stamp rules for illegal stuff to
    be taxed each time the item changes hands or ownership.
    The tax rate should be 50% of street value at time of ownership for these illegal items.

    Just like sales tax on a car or truck, the new owner pays the sales tax when the car is purchased.

    So taxing weed, pills, meth, etc each time it changes hands will
    generate big revenue for NC.