SF 3775

Introduction - 84th Legislature (2005 - 2006)

Posted on 12/15/2009 12:00 a.m.

A bill for an act
relating to taxation; clarifying that the tax on cigarettes and tobacco products
imposed under Laws 2005, First Special Session chapter 4, article 4, is a tax,
not a fee; amending Minnesota Statutes 2005 Supplement, sections 256.9658;
325D.32, subdivision 9; Laws 2005, First Special Session chapter 4, article 4,
sections 5; 6; repealing Minnesota Statutes 2005 Supplement, section 16A.725.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin STATEMENT OF PURPOSE.
new text end

new text begin The purpose of this act is to clarify that the additional tax imposed on cigarettes and
tobacco products under Laws 2005, First Special Session chapter 4, article 4, was in fact a
tax, and to avoid the costs of litigation and the potential disruption to state finances due to
litigation over the political decision to designate that tax as a fee.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2005 Supplement, section 256.9658, is amended to read:

256.9658 TOBACCO deleted text begin HEALTH IMPACT FEE deleted text end new text begin TAX new text end .

deleted text begin Subdivision 1. deleted text end

deleted text begin Purpose. deleted text end

deleted text begin A tobacco use health impact fee is imposed on and
collected from cigarette distributors and tobacco products distributors to recover for
the state health costs related to or caused by tobacco use and to reduce tobacco use,
particularly by youths.
deleted text end

Subd. 2.

Definitions.

The definitions under section 297F.01 apply to this section.

Subd. 3.

deleted text begin Fee deleted text end new text begin Tax new text end imposed.

(a) A deleted text begin fee deleted text end new text begin tax new text end is imposed upon the sale of cigarettes in
this state, upon having cigarettes in possession in this state with intent to sell, upon any
person engaged in business as a distributor, and upon the use or storage by consumers of
cigarettes. The deleted text begin fee deleted text end new text begin tax new text end is imposed at the following rates:

(1) on cigarettes weighing not more than three pounds per thousand, 37.5 mills on
each cigarette; and

(2) on cigarettes weighing more than three pounds per thousand, 75 mills on each
cigarette.

(b) A deleted text begin fee deleted text end new text begin tax new text end is imposed upon all tobacco products in this state and upon any
person engaged in business as a distributor in an amount equal to the liability for tax
under section 297F.05, subdivision 3, or on a consumer of tobacco products equal to the
tax under section 297F.05, subdivision 4. Liability for the deleted text begin fee deleted text end new text begin tax new text end is in addition to the tax
under section 297F.05, subdivision 3 or 4.

Subd. 4.

Payment.

A distributor must pay the deleted text begin fee deleted text end new text begin tax new text end at the same time and in the
same manner as provided for payment of tax under chapter 297F.

Subd. 5.

deleted text begin Fee deleted text end new text begin Tax new text end on use of unstamped cigarettes.

Any person, other than a
distributor, that purchases or possesses cigarettes that have not been stamped and on
which the deleted text begin fee deleted text end new text begin tax new text end imposed under this section has not been paid is liable for the deleted text begin fee deleted text end new text begin tax new text end
under this section on the possession or use of those cigarettes.

Subd. 6.

Administration.

The audit, assessment, interest, appeal, refund, penalty,
enforcement, administrative, and collection provisions of chapters 270C and 297F apply
to the deleted text begin fee deleted text end new text begin tax new text end imposed under this section.

Subd. 7.

Cigarette stamp.

(a) The stamp in section 297F.08 must be affixed to each
package and is prima facie evidence that the deleted text begin fee deleted text end new text begin tax new text end imposed by this section has been paid.

(b) Notwithstanding any other provisions of this section, the deleted text begin fee deleted text end new text begin tax new text end due on the return
is based upon actual stamps purchased during the reporting period.

Subd. 8.

License revocation.

The commissioner of revenue may revoke or suspend
the license of a distributor for failure to pay the deleted text begin fee deleted text end new text begin tax new text end or otherwise comply with the
requirements under this section. The provisions and procedures under section 297F.04
apply to a suspension or revocation under this subdivision.

Subd. 9.

Deposit of revenues.

The commissioner of revenue shall deposit the
revenues from the deleted text begin fee deleted text end new text begin tax new text end under this section in the state treasury deleted text begin and credit them to the
health impact fund deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from August 1, 2005.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 325D.32, subdivision 9, is
amended to read:

Subd. 9.

Basic cost of cigarettes.

"Basic cost of cigarettes" means the gross invoice
cost of cigarettes to the wholesaler or retailer plus the full face value of any stamps
which may be required by any cigarette tax deleted text begin or fee deleted text end act of this state, unless included by
the manufacturer in the list price.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from August 1, 2005.
new text end

Sec. 4.

Laws 2005, First Special Session chapter 4, article 4, section 5, is amended to
read:

Sec. 5. FLOOR STOCKS deleted text begin FEE deleted text end new text begin TAX new text end .

Subdivision 1.

Cigarettes.

A floor stocks cigarette deleted text begin fee deleted text end new text begin tax new text end is imposed on every
person engaged in the business in this state as a distributor, retailer, subjobber, vendor,
manufacturer, or manufacturer's representative of cigarettes, on the stamped cigarettes and
unaffixed stamps in the person's possession or under the person's control at 12:01 a.m. on
August 1, 2005. The deleted text begin fee deleted text end new text begin tax new text end is imposed at the following rates:

(1) on cigarettes weighing not more than three pounds per thousand, 37.5 mills on each
cigarette; and

(2) on cigarettes weighing more than three pounds per thousand, 75 mills on each
cigarette.

Each distributor, on or before August 10, 2005, shall file a return with the
commissioner of revenue, in the form the commissioner prescribes, showing the stamped
cigarettes and unaffixed stamps on hand at 12:01 a.m. on August 1, 2005, and the amount
of deleted text begin fee deleted text end new text begin tax new text end due on the cigarettes and unaffixed stamps. Each retailer, subjobber, vendor,
manufacturer, or manufacturer's representative, on or before August 10, 2005, shall file
a return with the commissioner of revenue, in the form the commissioner prescribes,
showing the cigarettes on hand at 12:01 a.m. on August 1, 2005, and the amount of deleted text begin fee deleted text end new text begin tax new text end
due on the cigarettes. The deleted text begin fee deleted text end new text begin tax new text end imposed by this section is due and payable on or before
September 7, 2005, and after that date bears interest at the rate of one percent per month.

Subd. 2.

Audit and enforcement.

The deleted text begin fee deleted text end new text begin tax new text end imposed by this section is subject to
the audit, assessment, interest, appeal, refund, penalty, enforcement, administrative, and
collection provisions of Minnesota Statutes, chapters 270C and 297F. The commissioner
of revenue may require a distributor to receive and maintain copies of floor stocks deleted text begin fee deleted text end new text begin tax new text end
returns filed by all persons requesting a credit for returned cigarettes.

Subd. 3.

Deposit of proceeds.

The commissioner of revenue shall deposit the
revenues from the deleted text begin fee deleted text end new text begin tax new text end under this section in the state treasury and credit them to the
health impact fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from August 1, 2005.
new text end

Sec. 5.

Laws 2005, First Special Session chapter 4, article 4, section 6, is amended to
read:

Sec. 6. TOBACCO PRODUCTS FLOOR STOCKS deleted text begin FEE deleted text end new text begin TAX new text end .

A floor stocks deleted text begin fee deleted text end new text begin tax new text end is imposed upon every person engaged in business in this state
as a distributor of tobacco products, at the rate of 35 percent of the wholesale sales price
of each tobacco product in the distributor's possession or under the distributor's control at
12:01 a.m. on August 1, 2005. Each distributor, by August 10, 2005, shall file a return
with the commissioner, in the form the commissioner prescribes, showing the tobacco
products on hand at 12:01 a.m. on August 1, 2005, and the amount of deleted text begin fees deleted text end new text begin taxes new text end due on
them. The deleted text begin fee deleted text end new text begin tax new text end imposed by this section is due and payable by September 7, 2005, and
after that bears interest at the rate of one percent a month.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from August 1, 2005.
new text end

Sec. 6. new text begin TRANSFER OF PROCEEDS.
new text end

new text begin Revenues collected under Minnesota Statutes, section 256.9658, and Laws 2005,
First Special Session chapter 4, article 4, sections 5 and 6, that have been credited to
the health impact fund prior to the effective date of this section must be credited to the
general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2005 Supplement, section 16A.725, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end