Unauthorized Substance Tax

For persons in Tennessee who are charged with drug possession, a criminal charge is not the end to their troubles.  Under Tennessee, certain persons who are found to be in possession of drugs can be assessed an Unauthorized Substance Tax by Tennessee’s Department of revenue.


The Tennessee Department of Revenue will send out a “Notice of Assessment” that indicates that a person has been found in possession of untaxed, unauthorized substances and that they are liable for tax payments to the state.  The amount taxed will vary depending on the substance and the amount you were alleged to possess, but will always be greater than $10,000.00.


Why is the tax greater than $10,000.00?  There are two reasons.  First, under Tennessee law, individuals who possess unauthorized substances can be categorized as “merchants”.  A “merchant” is defined as any person who actively or constructively possesses any unauthorized substance in a quantity sufficient to create a principal tax liability of at least $10,000.00.  This bring us to our second reason, the Tennessee Legislature has created a schedule of tax amounts on unauthorized substances.  For example, the State levies 40 cents for each gram of harvested marijuana, $350.00 for each plant of marijuana and $50.00 for each gram of cocaine.  When the State receives a report from the arresting agency, they review the amounts, determine if it meets the $10,000.00 threshold, and if so, assess the tax against you.


So what can you do if you receive a Notice of Assessment from the Tennessee Department of Revenue?  The first thing you should do is contact an attorney.  Under Tennessee Law, you have a right to request an informal conference to discuss the tax assessment within thirty (30) days of receipt of the notice.  An informal conference is an opportunity to challenge the tax, in whole or in part, and requires detailed knowledge of the criminal charges that were made against you.  An attorney with experience in Unauthorized Substance Tax proceeding can use information from your criminal case to have the tax assessment dropped or reduced.  In the event that the tax is not vacated after the informal conference, you have the option to file suit in Chancery Court to challenge the tax.


In handling these types of cases, our firm has found that the Department of Revenue makes the decision to assess this tax based upon very limited information.  We take the time to thoroughly look through any documentation, including discovery from your criminal case, to challenge validity of the tax being assessed against our clients.  If you have received a Notice of Assessment for an Unauthorized Substance, contact our firm today.

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