You may have heard about the North Carolina Unauthorized Substance Tax, commonly called the “drug tax”. This law was implemented in 1990 and requires anyone in possession of illegal drugs or moonshine to pay a tax on them. The Unauthorized Substance Tax arises following a drug or moonshine possession arrest or confiscation of illegal substances by any law enforcement officer. Police officers are required by law to file a report with the North Carolina Department of Revenue anytime they seize illegal controlled substances, even if they do not arrest you, listing the type and quantity of drugs or moonshine confiscated, along with all identifying information on who they seized it from. Then the Department of Revenue calculates the tax owed by the person from whom the illegal substances were seized.
The tax is owed whether you are arrested or not, and you owe the NC drug tax even if you are never tried or convicted of any crime. Most people who get a bill for this tax think that if they were found not guilty or if the charges were dropped, they don’t owe the tax. That is not the case. The drug tax law says that anybody who has illegal substances in their possession is subject to tax, period. The tax, interest, and penalties can amount to hundreds of thousands of dollars and should be taken as seriously as any other tax owed to the state. Often the tax, penalty, and interest amount to more than the street value of the illegal drugs or moonshine that was confiscated.