Frequently Asked Questions About Drug Tax
Where do I purchase drug tax stamps?
The only location you can purchase drug tax stamp(s) at is the following location:
Taxpayer Assistance Center
Scott State Office Building
120 SE 10th Street
Topeka, KS 66612-1103
When can I purchase drug tax stamps?
The Taxpayer Assistance Center is open Monday through Friday from 8:00 a.m. to
What methods of payment are accepted
for purchasing drug tax stamps?
Only cash, money order, or a cashier's check can be used to purchase drug tax stamps. No personal checks are allowed.
How much do drug tax stamps cost?
Drug tax stamps can be purchased in denominations and multiples of $10, $50, $100, $500, and $1000.
What is the minimum purchase required for purchasing drug tax stamps?
The smallest denomination of tax stamp sold is $10.
Why tax illegal drugs?
There are two reasons why illegal drugs are taxed:
- Taxing the Underground Economy - The fact that the business of dealing marijuana and controlled substances is illegal does not exempt it from taxation. Legitimate business transactions are taxed. Dealing drugs is a large part of a previously untaxed underground economy.
- Providing a Source of Revenue - 25 percent of drug tax collections are allocated to the State General Fund.
Who is liable for the drug tax?
An individual is classified as a drug dealer and is liable for the payment of drug taxes if he/she manufactures, produces, ships, transports or imports into Kansas or possesses:
- more than 28 grams of marijuana (processed or marijuana plants)or
- more than one gram of controlled substance or 10 or more dosage units of a controlled substance (K.S.A. 79-5201)
How is tax paid?
Drug dealers, as defined above, are required by law to purchase tax stamps from the Department of Revenue's Division of Taxation - Miscellaneous Tax (K.S.A. 79-5204). In order to protect against any possible violation of the self-incrimination constitutional protection, a dealer is not required to give his/her name or address when purchasing stamps and the department is prohibited from sharing any information relating to the purchase of drug tax stamps with law enforcement or anyone else. Payment of the drug tax (the purchase and affixation of stamps) is due immediately upon acquisition or possession by the dealer. The stamps are valid for 3 months from the date of issuance. If drugs are seized without stamps or the stamps which are affixed have expired, the possessor is liable for payment for the tax as well as a penalty of 100 percent for payment of the tax. For example:
Drug tax assessment: 10
grams of cocaine x $200 per gram = $2,000
Penalty: $2,000 x 100% = $2,000
Total Liability: $2,000 + $2,000 = $4,000
What are the tax rates for marijuana?
Pursuant to K.S.A. 79-5202, the tax rates are:
- Processed $3.50 per gram
- Wet Plant 40 cents per gram
- Dry Plant 90 cents per gram
What are the tax rates for controlled
Pursuant to K.S.A. 79-5202, the tax rates are:
- If customarily sold by weight (cocaine, methamphetamine, etc.) $200 per gram
- If customarily sold by Dosage Unit (pills, etc.) $2,000 per 50 units or portion thereof
What happens to a drug dealer not
possessing drug tax stamps?
There are both criminal and civil penalties.
- Failure to pay the drug tax is a felony punishable of up to five years and/or a fine of up to $10,000.
- Failing to purchase and affix tax stamps to illegal drugs may result in the issuance of a jeopardy tax assessment and tax warrant by the Department of Revenue against the drug dealer based upon the amount of the drugs seized pursuant to K.S.A. 79-5205 and K.S.A. 79-5212. The fact that the assessment is a "jeopardy assessment" allows for the initiation of collection activities immediately. Execution of the tax warrant may involve the seizing and selling of the drug dealer's property to satisfy the drug tax liability. In other words, the drug dealer subjects his/her property to possible seizure by failing to purchase the necessary drug tax stamps. In addition, the tax warrant, once filed by the clerk of the district court, serves as a lien against the drug dealer's real estate. This prevents the drug dealer from selling his/her real estate without first satisfying the drug tax liability. Laws exempting personal property from seizure do not apply to seizure pursuant to drug tax warrants.
Does purchasing drug tax stamps
make possession of drugs legal?
No. Purchasing drug tax stamps prevents criminal prosecution for the charge of failure to affix the stamps on the drugs and prevents the Department of Revenue from assessing the 100 percent penalty for possession of illegal drugs without tax stamps.
Does the drug dealer have an opportunity
to be heard?
Yes. The drug dealer has 15 days from the date of assessment to request a hearing before the Director of Taxation to determine the validity of the assessment pursuant to K.S.A. 79-5205. The assessment is statutorily presumed to be valid and correctly determined. The burden is on the taxpayer to prove otherwise.
The criminal prosecution for failure to pay the drug tax and the civil tax assessment are separate actions. What occurs with the criminal case, for instance, does not necessarily affect the Department of Revenue's tax assessment.
Who administers and enforces the
Drug Tax Law?
The local district or county attorney handles the criminal prosecution for failure to affix drug tax stamps. The Department of Revenue is responsible for administering the tax on illegal drugs. After receiving information from the law enforcement community, ABC represents the Director of Taxation in issuing assessment notices and tax warrants, ABC assists local law enforcement in identifying assets of drug dealers for satisfaction of drug tax liability. The county sheriff's departments perform execution of the tax warrants, which may include seizure and storage of property.
Is the tax on illegal drug unique
No. Kansas was one of the first states to enact a tax on illegal drugs. There are about 20 states that continue to impose a tax on illegal drugs.
What do I need to do with the drug
tax stamp once I receive it?
Affix the drug tax stamps to the marijuana and/or controlled substance immediately after receiving the substance.
Can I reuse my stamps?
How long are drug tax stamps valid?
Drug tax stamps expire three months after the date of issuance.
Do I have to provide my name and
address when purchasing drug tax stamps?
No. The department sells drug tax stamps without asking for any identification, demographic information, e.g. name, social security number. Department associates cannot share any information relating to drug tax stamp purchases with anyone, including law enforcement agencies.
Can I purchase drug tax stamps
through the mail?
Yes. The purchaser will need to provide their mailing address in order for the Department to send the drug tax stamps.