SF 1192

as introduced - 89th Legislature (2015 - 2016) Posted on 03/24/2015 03:25pm

A bill for an act
relating to taxation; tobacco; providing penalties; appropriating money;
amending Minnesota Statutes 2014, sections 289A.63, subdivisions 1, 2;
297F.01, subdivision 14; 297F.03, subdivisions 5, 6; 297F.04, subdivisions 1, 2;
297F.13, subdivision 4; 297F.19, by adding a subdivision; 297F.20, by adding
subdivisions; 609.035, by adding a subdivision; proposing coding for new law
in Minnesota Statutes, chapter 297F.

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

Section 1. new text begin PURPOSE.
new text end

new text begin This act is designed to bring fairness to tobacco tax administration and enforcement
and reduce smuggling of contraband tobacco products. By increasing enforcement efforts
and providing a unified system of collecting the taxes on cigarettes and other tobacco
products, this proposal will deter tax evasion, prevent the expansion of criminal activity in
Minnesota, and reduce youth access to unregulated tobacco products.
new text end

new text begin As required by Minnesota Laws 2013, chapter 143, article 5, section 27, the
Department of Revenue submitted a report to the legislature on February 19, 2014. The
report, conducted by an independent evaluator, included recommendations to improve
collection of cigarette and tobacco products taxes. The proposals in this act include many
of the recommendations in the report.
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 2014, section 289A.63, subdivision 1, is amended to read:

Subdivision 1.

Penalties for knowing failure to file or pay; willful evasion.

(a) A
person required to file a return, report, or other document with the commissioner, who
knowingly, rather than accidentally, inadvertently, or negligently, fails to file it when
required, is guilty of a gross misdemeanor. A person required to file a return, report, or
other document who willfully attempts in any manner to evade or defeat a tax by failing
to file it when required, is guilty of a felony. new text begin Each violation of this paragraph is a single
course of conduct separate and independent from the conduct constituting a violation of
paragraph (b).
new text end

(b) A person required to pay or to collect and remit a tax, who knowingly, rather
than accidentally, inadvertently, or negligently, fails to do so when required, is guilty of a
gross misdemeanor. A person required to pay or to collect and remit a tax, who willfully
attempts to evade or defeat a tax law by failing to do so when required, is guilty of a felony. new text begin
Each violation of this paragraph is a single course of conduct separate and independent
from the conduct constituting a violation of paragraph (a) or subdivision 2, paragraph (a).
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. 3.

Minnesota Statutes 2014, section 289A.63, subdivision 2, is amended to read:

Subd. 2.

False or fraudulent returns; penalties.

(a) A person who files with the
commissioner a return, report, or other document, known by the person to be fraudulent or
false concerning a material matter, is guilty of a felony. new text begin Each violation of this paragraph
is a single course of conduct separate and independent from the conduct constituting a
violation of subdivision 1, paragraph (b).
new text end

(b) A person who knowingly aids or assists in, or advises in the preparation or
presentation of a return, report, or other document that is fraudulent or false concerning
a material matter, whether or not the falsity or fraud committed is with the knowledge
or consent of the person authorized or required to present the return, report, or other
document, is guilty of a felony.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2014, section 297F.01, subdivision 14, is amended to read:

Subd. 14.

Retailer.

"Retailer" means a person deleted text begin required to be licensed under chapter
461 deleted text end new text begin located in this state new text end engaged deleted text begin in this state deleted text end in the business of selling, or offering to sell,
cigarettes or tobacco products to consumers.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2016.
new text end

Sec. 5.

Minnesota Statutes 2014, section 297F.03, subdivision 5, is amended to read:

Subd. 5.

License fees; cigarettes.

Each application for a cigarette distributor's
license must be accompanied by a fee of deleted text begin $300 deleted text end new text begin $500 new text end . Each application for a cigarette
subjobber's license must be accompanied by a fee of deleted text begin $24 deleted text end new text begin $100 new text end . A distributor or subjobber
applying for a license during the second year of a two-year licensing period is required to
pay only one-half of the license fee.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for license periods beginning after
December 31, 2015.
new text end

Sec. 6.

Minnesota Statutes 2014, section 297F.03, subdivision 6, is amended to read:

Subd. 6.

License fees; tobacco products.

Each application for a tobacco products
distributor's license must be accompanied by a fee of deleted text begin $75 deleted text end new text begin $500 new text end . Each application for
a tobacco products subjobber's license must be accompanied by a fee of deleted text begin $20 deleted text end new text begin $100 new text end . A
distributor or subjobber applying for a license during the second year of a two-year
licensing period is required to pay only one-half of the license fee.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for license periods beginning after
December 31, 2015.
new text end

Sec. 7.

new text begin [297F.032] STATE RETAIL LICENSE.
new text end

new text begin Subdivision 1. new text end

new text begin Selling without license illegal. new text end

new text begin No person shall engage in the
business of a retailer of cigarette or tobacco products at any place of business without
first having received a license from the commissioner to engage in that business at that
place of business.
new text end

new text begin Subd. 2. new text end

new text begin Form of application. new text end

new text begin The commissioner shall prescribe the content,
format, and manner of every application for a cigarette and tobacco products retail license.
The application must state the name and address of the applicant. If the applicant is a
corporation, the application shall state the name and address of each of its officers, the
address of its principal place of business, the place where the business to be licensed
will be conducted, and any other information the commissioner may require for the
administration of this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Place of application. new text end

new text begin An application for a retailer's license must be made
for each location at which a retailer proposes to engage in business.
new text end

new text begin Subd. 4. new text end

new text begin Retail license fee. new text end

new text begin Each application for a cigarette and tobacco products
retailer's license must be accompanied by a fee of $50.
new text end

new text begin Subd. 5. new text end

new text begin Issuance of license. new text end

new text begin Upon receipt of the application in proper form
and payment of the license fee required by this chapter, the commissioner shall, unless
otherwise provided by this chapter, issue the applicant a license in the form prescribed by
the commissioner. The license permits the applicant to engage in business as a cigarette
and tobacco products retailer at the place of business shown in the application.
new text end

new text begin Subd. 6. new text end

new text begin Licensing period; expiration. new text end

new text begin The licensing period begins January 1 of
each year and ends on December 31 of that year. Each license issued shall expire on
December 31 of the year of the licensing period unless sooner revoked by the commissioner
or unless the business with respect to which the license was issued is transferred.
new text end

new text begin Subd. 7. new text end

new text begin Display. new text end

new text begin Each license must be prominently displayed at the retail location
covered by the license.
new text end

new text begin Subd. 8. new text end

new text begin Transfer. new text end

new text begin Licenses are not transferable to any other person.
new text end

new text begin Subd. 9. new text end

new text begin Local control. new text end

new text begin Nothing in this section preempts or supersedes any local
cigarette or tobacco products provisions set forth in chapter 461.
new text end

new text begin Subd. 10. new text end

new text begin General information. new text end

new text begin (a) Starting January 1, 2016, a retailer must
possess and maintain a license to engage in the retail sale of cigarettes or tobacco products.
A retailer that owns or controls more than one retail location shall obtain a separate license
for each retail location, but may submit a single application for those licenses.
new text end

new text begin (b) A retailer who obtains a license as a retailer who ceases to do business as specified
in the license, or who never commenced business, or whose license is suspended, canceled,
revoked, or not renewed, shall immediately surrender the license to the commissioner.
new text end

new text begin (c) A license shall be valid for a 12-month period, and shall be renewed annually.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for license periods beginning after
December 31, 2015.
new text end

Sec. 8.

Minnesota Statutes 2014, section 297F.04, subdivision 1, is amended to read:

Subdivision 1.

Powers of commissioner.

The commissioner may revoke deleted text begin or deleted text end new text begin , new text end
suspend new text begin , or cancel new text end the license or licenses of any distributor deleted text begin or deleted text end new text begin , new text end subjobber new text begin , or retailer new text end
for violation of this chapter, any other act applicable to the sale of cigarettes or tobacco
products, or any rule promulgated by the commissioner, in furtherance of this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2016.
new text end

Sec. 9.

Minnesota Statutes 2014, section 297F.04, subdivision 2, is amended to read:

Subd. 2.

Refusal to issue or renew; revocation.

new text begin (a) new text end The commissioner must not
issue or renew a license under this chapter, and may revoke new text begin or suspend new text end a license under
this chapter, if the applicant or licensee:

(1) owes $500 or more in delinquent taxes as defined in section 270C.72, subdivision
2;

(2) after demand, has not filed tax returns required by the commissioner;

(3) had a cigarette or tobacco license revoked by the commissioner within the past
two years;

(4) had a sales and use tax permit revoked by the commissioner within the past
two years; deleted text begin or
deleted text end

(5) has been convicted of a crime involving cigarettes, including but not limited
to: selling stolen cigarettes or tobacco products, receiving stolen cigarettes or tobacco
products, or involvement in the smuggling of cigarettes or tobacco products.

new text begin (b) The commissioner may refuse to issue or renew a license under this chapter, and
may revoke or suspend a license under this chapter, if the applicant or licensee has had
untaxed tobacco or cigarette product seized or been assessed tax for such untaxed product
within the previous two years.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for seizures or tax assessments for
untaxed product occurring after June 30, 2015.
new text end

Sec. 10.

Minnesota Statutes 2014, section 297F.13, subdivision 4, is amended to read:

Subd. 4.

Retailer and subjobber to preserve purchase invoices.

Every retailer and
subjobber shall procure itemized invoices of all cigarettes or tobacco products purchased.

The retailer and subjobber shall preserve a legible copy of each invoice for one
year from the date of the invoice new text begin or as long as the cigarette or tobacco product listed on
the invoice is available for sale or in their possession, whichever period is longer new text end . The
retailer and subjobber shall preserve copies of the invoices at each retail location or at a
central location provided that the invoice must be produced and made available at a retail
location within one hour when requested by the commissioner or duly authorized agents
and employees. Copies should be numbered and kept in chronological order.

To determine whether the business is in compliance with the provisions of this
chapter, at any time during usual business hours, the commissioner, or duly authorized
agents and employees, may enter any place of business of a retailer or subjobber without
a search warrant and inspect the premises, the records required to be kept under this
chapter, and the packages of cigarettes, tobacco products, and vending devices contained
on the premises.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases by subjobbers
and retailers made after June 30, 2015.
new text end

Sec. 11.

Minnesota Statutes 2014, section 297F.19, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Penalty for retailers and subjobbers failure to comply. new text end

new text begin Retailers
or subjobbers (1) failing to comply with the invoice requirements in section 297F.13,
subdivision 4; (2) found to be possessing untaxed cigarettes or tobacco products; or (3)
found to be selling cigarettes or tobacco products without a valid license, shall be subject
to a $1,000 per violation penalty. Second-time offenders within three years of the first
offense shall be subject to a penalty of $2,000 per violation. Third-time or more offenders
within three years of the second offense shall be subject to a $5,000 per violation penalty.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for violations occurring after June
30, 2015.
new text end

Sec. 12.

Minnesota Statutes 2014, section 297F.20, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Penalties for willful failure to file or pay. new text end

new text begin (a) A person or consumer
required to file a return, report, or other document with the commissioner who willfully
attempts in any manner to evade or defeat a tax by failing to do so when required, is
guilty of a felony.
new text end

new text begin (b) A person or consumer required to pay or to collect and remit a tax under this
chapter, who willfully attempts to evade or defeat a tax by failing to do so when required,
is guilty of a felony.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for offenses committed after August
30, 2015.
new text end

Sec. 13.

Minnesota Statutes 2014, section 297F.20, is amended by adding a subdivision
to read:

new text begin Subd. 13. new text end

new text begin Aggregation and consolidation of venue. new text end

new text begin In any prosecution under this
section, the number of unstamped cigarettes or the value of the untaxed tobacco products
possessed, received, transported, sold, offered to be sold, or purchased in violation of
this section within any six-month period may be aggregated and the defendant charged
accordingly in applying the provisions of this section. When two or more offenses are
committed by the same person in two or more counties, the accused may be prosecuted in
any county in which one of the offenses was committed. In the alternative, prosecutions
under this section may be brought in Ramsey County.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for offenses committed after August
30, 2015.
new text end

Sec. 14.

Minnesota Statutes 2014, section 609.035, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Exception; tax crimes. new text end

new text begin Notwithstanding subdivision 1, a prosecution or
conviction for committing a violation of section 289A.63, subdivision 1, paragraph (b), is
not a bar to conviction of or punishment for any other crime committed by the defendant
as part of the same conduct. If an offender is punished for more than one crime as
authorized by this subdivision and the court imposes consecutive sentences for the crimes,
the consecutive sentences are not a departure from the sentencing guidelines.
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. 15. new text begin APPROPRIATIONS.
new text end

new text begin $1,421,000 in fiscal year 2016, $1,036,000 in fiscal year 2017, $1,036,000 in fiscal
year 2018, and $1,036,000 in fiscal year 2019 are appropriated from the general fund to
the commissioner of revenue to carry out the provisions of this act. This is an ongoing
appropriation and shall be added to the base.
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