Attorneys for Appellant
Robert W. Hammerle
Joseph M. Cleary
Hammerle Foster Allen & Long-Sharp
Indianapolis, IN
Attorneys for Appellee
Karen M. Freeman-Wilson
Attorney General of Indiana
Thomas D. Perkins
Deputy Attorney General
Indianapolis, IN
IN THE
INDIANA SUPREME COURT
DANTE ADAMS,
Appellant (Defendant below),
v.
STATE OF INDIANA,
Appellee (Plaintiff below).
)
) Supreme Court No.
) 49S04-0011-CR-627
)
) Court of Appeals No.
) 49A04-9903-CR-130
)
)
)
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Z. Mae Jimison, Judge
Cause No. 49G20-9804-CF-56875
ON PETITION TO TRANSFER
February 8, 2002
SULLIVAN, Justice.
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.
Background
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.
Discussion
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 Amendment[7] 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 (1995) (“As the text of the Fourth
Amendment indicates, the ultimate measure of the constitutionality of a
governmental search is ‘reasonableness.’”). 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, 438 U.S. 868, 873 (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 “[a]n assessment for the tax due under [the
CSET] is considered a jeopardy assessment. The Department shall demand
immediate payment and take action to collect the tax due as provided by
Ind. Code §6-8.1-5-3.” 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 (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. Revenue officials found one such automobile inside a free-standing
garage near a cottage owned by the taxpayer. Id. at 344-45. 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. 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 (quoting Bull v. United States, 295 U.S. 247, 259 (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. 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 (quoting Camara v. Municipal Court, 387 U.S. 523, 528-529 (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 rejected the government’s claim
that provisions of the Internal Revenue Code authorized a warrantless entry
of a home for purposes of a tax levy and that these provisions made the
search of the cottage reasonable. The government claimed that 26 U.S.C. §
6331(b), as it then read,[12] authorized the Internal Revenue Service to
use “every means possible to deprive the taxpayer of use, enjoyment, or
title to property” including “warrantless intrusions into privacy.” G.M.
Leasing, 429 U.S. at 357. The government relied on language in the statute
that defined the IRS’s power to levy to include “the power of distraint and
seizure by any means.” The government argued that this language authorized
an administrative search of the type the Court first found permissible in
Camara v. Municipal Court, 387 U.S. 523, 531 (1967) and See v. Seattle, 387
U.S. 541 (1967).
The Court assumed for the sake of argument that the statute purported
to give the IRS power to make warrantless searches, but rejected on two
grounds the claim that such searches would be reasonable administrative
searches. First, the Court concluded that § 6331 gave the IRS excessive
discretion in determining what property to search:
The respondents recognize that one of the Court’s critical concerns in
Camara and See was the discretion of the seizing officers. Yet § 6331
clearly gives the Secretary or his delegate discretion as to what
property to seize. If more than one location is involved, the
Secretary will choose which dwelling will be invaded. If property is
to be found both in public places and in private areas, the Secretary
may choose which to seize. This hardly can be called a restraint on
discretion.
Id. at 357 (citation omitted).
Second, the Court rejected the government’s claim that a search under
the statute was reasonable because a warrant requirement would burden the
government’s ability to collect taxes in exigent circumstances:
The respondents assert that the burden on the Government of obtaining
a warrant is a relevant factor. They suggest that the burden is great
here because the Government is dealing with persons who may attempt to
put their property beyond reach. Yet the statute authorizes distraint
and seizure whenever a taxpayer neglects or refuses to pay his tax,
and regardless of any indication of risk of concealment. The statute
simply does not focus on situations involving a need for rapid action
Id. at 357 (citation omitted).[13]
After dispelling several other exceptions that the government
proposed, the Court concluded that the warrantless search of the cottage
was unreasonable and violated the Fourth Amendment.
At first blush, G.M. Leasing is distinguishable from the case before
us because the search of the cottage in that case was conducted without a
warrant. Here, the revenue officers searched Defendant’s home only after
they issued an administrative warrant under the jeopardy assessment rules
of section 3 of the General Enforcement Chapter. Ind. Code § 6-8.1-5-3.
Generally, an assessment qualifies as a jeopardy assessment under this
section if the Department determines that a taxpayer “intends to quickly
leave the state, remove his property from the state, conceal his property
in the state, or do any other act that would jeopardize the collection of
those taxes … .” This initial step addresses the concerns the G.M. Leasing
Court expressed about warrantless searches under 26 U.S.C. § 6331.
Indiana revenue officers do not enjoy the kind of unfettered
discretion present in G.M. Leasing because the Department may issue
jeopardy assessments only under statutorily prescribed circumstances.
These statutory standards relate directly to exigent circumstances and
ensure that a jeopardy assessment will be made only when the taxpayer
“intends to quickly leave the state, remove his property from the state,
conceal his property in the state, or do any other act that would
jeopardize the collection of those taxes … .” Ind. Code § 6-8.1-5-3.
Because the jeopardy warrant provisions of section 3 of the General
Enforcement Chapter, Ind. Code 6-8.1-5-3, address the concerns of the G.M.
Leasing Court, we hold that a search of a home pursuant to a jeopardy
warrant under section 3 provision will generally be reasonable for Fourth
Amendment purposes.
A close look at the CSET collection proceedings shows, however, that
the protections generally inherent in Indiana’s assessment scheme are not
present when revenue officers search a home under the CSET. As previously
mentioned, section 13 of the CSET Chapter, Ind. Code § 6-7-3-13, states
that all CSET assessments are jeopardy assessments, and as jeopardy
assessments the Department is empowered to issue jeopardy warrants to
collect them. Therefore, once the Department makes a CSET assessment,
revenue officers enjoy carte blanche to issue jeopardy warrants and levy on
private premises. Section 13 of the CSET Chapter essentially states that
CSET assessments create a per se exigent circumstance and grants revenue
officers complete discretion to enter the taxpayer’s home.
We therefore conclude that both of the factors that led the G.M.
Leasing Court to conclude that a search of a home under 26 U.S.C. § 6331
was unreasonable are present in searches of homes conducted pursuant to
jeopardy tax warrants issued to collect Indiana CSET assessments. First,
in both instances officers have boundless discretion to intrude upon the
privacy of the home. Because section 13 of the CSET Chapter states that
all CSET assessments are jeopardy assessments, Ind. Code § 6-7-3-13, the
only limit placed on revenue officers’ ability to search homes is the
requirement that they fill out their own warrant. See Ind. Code § 6-8.1-5-
3 (“the department may issue … a jeopardy tax warrant .. .”). Second, G.M.
Leasing determined that the exigency of the circumstances did not justify a
warrantless entry into the cottage. The search of Defendant’s home was
based on even less exigency. In G.M. Leasing, the taxpayer whose conduct
initiated the seizures was a fugitive. The IRS knew that his family
members were attempting to hide assets and were alone with documents inside
the cottage. There is nothing in the present record to suggest that
Defendant was about to abscond, hide assets, or destroy documents. In
fact, the record shows that Defendant was arrested when he returned to his
apartment during the search. This lack of evidence as to the exigency of
the circumstances is due at least in part to the fact that the Department
was not required to establish exigency under the CSET collection
procedures. Because of the similarities between this case and G.M.
Leasing, we conclude that the search of Defendant’s home under Indiana Code
§§ 6-7-3-13 and 6-8.1-5-3 was unreasonable for the same reasons that the
search of the taxpayer’s cottage under 26 U.S.C. § 6331 was unreasonable in
G.M. Leasing.
G.M. Leasing – which was a civil case – only addressed the
constitutionality of the search and did not determine whether the records
would have to be suppressed during a subsequent criminal prosecution. 429
U.S. at 359.[14] However, under normal Fourth Amendment principles,
evidence obtained in the course of an illegal search is not admissible in a
subsequent criminal proceeding. See, e.g., Mapp v. Ohio, 367 U.S. 643
(1961), Wong Sun v. United States, 371 U.S. 471 (1963). For example,
When applied, the [fruit of the poisonous tree] doctrine operates to
bar not only evidence directly obtained, but also evidence
derivatively gained as a result of information learned or leads
obtained during an unlawful search or seizure. To invoke the doctrine,
a defendant must show that challenged evidence was obtained by the
State in violation of the defendant’s Fourth Amendment rights.
State v. Farber, 677 N.E.2d 1111, 1114 (Ind. Ct. App. 1997) (Rucker, J.),
transfer denied. We believe that that the Supreme Court’s statements in
G.M. Leasing that “[t]he suppression issue, as to the books and records,
obviously is premature and may be considered if and when proceedings arise
in which the Government seeks to use the documents or information obtained
from them” is simply a statement of the Court’s limited jurisdiction given
the posture of that case, and was not intended to call into question the
elementary application of the principles of Mapp or Wong Sun. See State v.
Hinchey, 374 N.W.2d 14 (Neb. 1985) (relying on G.M. Leasing to exclude
evidence in a criminal case). We therefore hold that the trial court
should have suppressed evidence stemming from the search of Defendant’s
home under the jeopardy tax warrant.[15]
The Court of Appeals concluded that the fruit of poisonous tree
doctrine would preclude the State from introducing evidence obtained in the
CSET search. See Adams v. State, 726 N.E.2d 390, 393 (Ind. Ct. App. 2000).
It reached this conclusion because it determined that the exclusionary
rule applied to the CSET. See id.[16] However, the exclusionary rule’s
application to the CSET does not affect the suppression of evidence in
Defendant’s criminal trial. See Mapp v. Ohio, 367 U.S. 643 (1961). In a
criminal trial, evidence must be suppressed if it stems from an
unconstitutional search. Therefore, our analysis is focused on whether the
search of Defendant’s home was unconstitutional. Having found it so, we
conclude that the fruits of this search must be suppressed at Defendant’s
trial.
Our holding that the search of Defendant’s home was unreasonable is a
limited one. In this case, government officers intruded upon the privacy
of a home. Our conclusion that this intrusion was unreasonable does not
affect the Department’s ability to seize assets found in less private
contexts. In fact, G.M. Leasing endorsed the government’s power to
institute tax liens, seize assets found in public places, and take other
basic measures to collect taxes so long as they do not involve warrantless
intrusions into the home.[17] Moreover, our holding does not affect the
Department’s ability to collect taxes under the General Enforcement Chapter
using jeopardy assessments and jeopardy warrants in most circumstances.
The jeopardy warrant procedures both cabin revenue officers’ discretion and
provide that such warrants will not be issued except in exigent
circumstances. We conclude today that execution of jeopardy warrants based
only on a statutory declaration in the CSET Chapter that the CSET is a
jeopardy assessment is unreasonable. This conclusion does not impinge on
the general functioning of jeopardy warrants based on a finding of
exigency.
Conclusion
Having previously granted transfer, we now reverse the decision of
the trial court.
SHEPARD, C.J., and DICKSON, BOEHM, and RUCKER, JJ., concur.
-----------------------
[1] We set forth additional facts in the companion case issued today,
Dep’t. of Revenue v. Adams, No. 49S10-0011-TA-628 (Ind. Feb. 8, 2002).
[2] The CSET is a tax on the possession of certain narcotics. We discuss
the tax and the procedures for collecting it in greater detail infra.
[3] All of the cocaine at issue in this case was discovered prior to the
time the police served a valid search warrant.
[4] Ind. Code § 35-48-4-1 (1998).
[5] Id. § 35-48-4-6.
[6] United States Supreme Court precedent makes clear that the revenue
officers’ entry of Adam’s home to collect the CSET assessment was a search.
See G. M. Leasing Corp. v. United States, 429 U.S. 338 (1977) (holding
that revenue officers conducted a search when they entered a cottage and
seized records when levying on delinquent tax). Cf. Thomas v. Indiana
Dept. of State Revenue, 675 N.E.2d 362, 367 (Ind. Tax Ct. 1997).
[7] The Fourth Amendment to the federal constitution states 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, and no Warrants shall issue, but upon probable cause,
supported by Oath or affirmation, and particularly describing the
place to be searched, and the persons or things to be seized.
Adams does not raise any independent claims under the analogous provision
of the Indiana Constitution found in Article 1, § 11.
[8] We will assume for the sake of argument that this language purports to
give revenue officers the power to enter a home under a jeopardy tax
warrant.
[9] Administrative searches are reasonable because they are “carried out
pursuant to a regulation that itself satisfies the Fourth Amendment’s
reasonableness requirement.” Griffin v. Wisconsin, 483 U.S. 868, 873
(1987). These administrative searches may be conducted without a warrant
under three criteria: 1) “there must be a ‘substantial’ government interest
that informs the regulatory scheme pursuant to which the inspection is
made”; 2) “the warrantless inspections must be ‘necessary to further [the]
regulatory scheme’”; and 3) “‘the statute’s inspection program, in terms of
the certainty and regularity of its application, [must] provid[e] a
constitutionally adequate substitute for a warrant.’” New York v. Burger,
482 U.S. 691, 703 (1987) (quoting Donovan v. Dewey, 452 U.S. 594, 600-02
(1981)).
[10] The special needs of government may justify a warrantless,
suspicionless search “where the privacy interests implicated by the search
are minimal, and where an important governmental interest furthered by the
intrusion would be placed in jeopardy by a requirement of individualized
suspicion.” Skinner v. Railway Labor Executives’ Association, 489 U.S. 602,
624 (1989).
[11] The cottage was also used as a residence by the taxpayer’s son, who
became an intervenor in the tax collection suit. Id. at 347.
[12] At the time of the search, 26 U.S.C. § 6331 provided:
(a) Authority of Secretary.
If any person liable to pay any tax neglects or refuses to pay the
same within 10 days after notice and demand, it shall be lawful for
the Secretary to collect such tax (and such further sum as shall be
sufficient to cover the expenses of the levy) by levy upon all
property and rights to property (except such property as is exempt
under section 6334) belonging to such person or on which there is a
lien provided in this chapter for the payment of such tax. ... If the
Secretary makes a finding that the collection of such tax is in
jeopardy, notice and demand for immediate payment of such tax may be
made by the Secretary or his delegate and, upon failure or refusal to
pay such tax, collection thereof by levy shall be lawful without
regard to the 10-day period provided in this section.
(b) Seizure and sale of property.
The term ‘levy’ as used in this title includes the power of distraint
and seizure by any means. … A levy shall extend only to property
possessed and obligations existing at the time thereof. In any case in
which the Secretary or his delegate may levy upon property or rights
to property, he may seize and sell such property or rights to property
(whether real or personal, tangible or intangible).
[13] The government did not rely on a separate part of 26 U.S.C. § 6331
which authorized expedited jeopardy assessments much like those at issue
here. However, the Court later rejected the government’s argument that
exigent circumstances justified the warrantless search. Id. at 358-59.
[14] In refusing to address this issue, the Court cited two cases that held
that the issue of whether evidence seized in tax collections could be used
in a subsequent criminal prosecution was not ripe for adjudication in a
civil action concerning the tax. See id. (citing Meister v. United States,
397 F.2d 268 (3d Cir. 1968), and Hill v. United States, 346 F.2d 175 (9th
Cir. 1965), cert denied).
[15] The State argues that the cocaine could be introduced under good faith
exception to the exclusionary rule found in Indiana Code § 35-37-4-5 and
United States v. Leon, 468 U.S. 897 (1984). However, both the statute and
Leon require that the warrant on which the government relies to be reviewed
by a neutral and detached magistrate. As we discussed supra, the search
was conducted pursuant to a tax warrant that was never reviewed by a judge.
[16] We address this argument – and come to the opposite conclusion – in
the companion case, Dep’t. of Revenue v. Adams, 49S10-0011-TA-628.
[17] The G.M. Leasing Court was only concerned with the intrusion into the
privacy of the cottage, and not the actual levies on property. It
acknowledged that the government could seize property without obtaining a
warrant. Id. at 354. That is to say,
While the Government is indeed authorized to effect a seizure of
property without obtaining court authorization, it can not
constitutionally enter private premises to search for property subject
to such a seizure without a prior judicial determination that such an
intrusion is justified. The G.M. Leasing decision was grounded on the
need to protect the reasonable expectations of privacy of the
occupants of the premises. Thus, a tax seizure may still be effected
without judicial intervention if the property to be seized is found in
a public place. But, under G.M. Leasing, if it is necessary for the
Government to enter private premises to effect the seizure, it must
first obtain a court order authorizing such entry.
Matter of Campbell, 761 F.2d 1181 (6th Cir. 1985). See also United States
v. Shriver, 645 F.2d 221, 222 (4th Cir. 1981) (“The warrant requirement,
however, has to do with entry upon private property and nothing at all to
do with the reasonableness or possible unreasonableness of a contemplated
levy upon private property in aid of tax collection.”).