SF 2693

1st Unofficial Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to taxation and regulation of cigarettes and 
  1.3             tobacco; making technical and administrative changes 
  1.4             in the tobacco tax; defining terms; authorizing the 
  1.5             use of heat applied stamps; defining contraband; 
  1.6             prohibiting sales of certain cigarettes; providing a 
  1.7             private cause of action for violations; amending 
  1.8             Minnesota Statutes 1998, sections 297F.01, 
  1.9             subdivisions 7, 14, 17, and by adding subdivisions; 
  1.10            297F.08, subdivisions 2, 5, 8, and 9; 297F.13, 
  1.11            subdivision 4; 297F.21, subdivisions 1 and 3; 
  1.12            Minnesota Statutes 1999 Supplement, section 297F.08, 
  1.13            subdivision 8a; proposing coding for new law in 
  1.14            Minnesota Statutes, chapter 325D. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1998, section 297F.01, 
  1.17  subdivision 7, is amended to read: 
  1.18     Subd. 7.  [CONSUMER.] "Consumer" means any person an 
  1.19  individual who has title to or possession of cigarettes or 
  1.20  tobacco products in storage, for use or other personal 
  1.21  consumption in this state rather than for sale. 
  1.22     Sec. 2.  Minnesota Statutes 1998, section 297F.01, is 
  1.23  amended by adding a subdivision to read: 
  1.24     Subd. 9a.  [INVOICE.] "Invoice" means a detailed list of 
  1.25  cigarettes and tobacco products purchased or sold in this state 
  1.26  that contains the following information: 
  1.27     (1) name of seller; 
  1.28     (2) name of purchaser; 
  1.29     (3) date of sale; 
  1.30     (4) invoice number; 
  2.1      (5) itemized list of goods sold including brands of 
  2.2   cigarettes and number of cartons of each brand, unit price, and 
  2.3   identification of tobacco products by name, quantity, and unit 
  2.4   price; and 
  2.5      (6) any rebates, discounts, or other reductions. 
  2.6      Sec. 3.  Minnesota Statutes 1998, section 297F.01, 
  2.7   subdivision 14, is amended to read: 
  2.8      Subd. 14.  [RETAILER.] "Retailer" means a person required 
  2.9   to be licensed under chapter 461 engaged in this state in the 
  2.10  business of selling, or offering to sell, cigarettes or tobacco 
  2.11  products to consumers. 
  2.12     Sec. 4.  Minnesota Statutes 1998, section 297F.01, 
  2.13  subdivision 17, is amended to read: 
  2.14     Subd. 17.  [STAMP.] "Stamp" means the adhesive stamp 
  2.15  supplied by the commissioner of revenue for use on cigarette 
  2.16  packages or any other indicia adopted by the commissioner to 
  2.17  indicate that the tax has been paid. 
  2.18     Sec. 5.  Minnesota Statutes 1998, section 297F.01, is 
  2.19  amended by adding a subdivision to read: 
  2.20     Subd. 21a.  [UNLICENSED SELLER.] "Unlicensed seller" means 
  2.21  anyone who is not licensed under section 297F.03 or 461.12 to 
  2.22  sell the particular product to the purchaser or possessor of the 
  2.23  product. 
  2.24     Sec. 6.  Minnesota Statutes 1998, section 297F.08, 
  2.25  subdivision 2, is amended to read: 
  2.26     Subd. 2.  [TAX DUE; CIGARETTES.] Notwithstanding any other 
  2.27  provisions of this chapter, the tax due on the return is based 
  2.28  upon actual heat-applied stamps purchased during the reporting 
  2.29  period. 
  2.30     Sec. 7.  Minnesota Statutes 1998, section 297F.08, 
  2.31  subdivision 5, is amended to read: 
  2.32     Subd. 5.  [DEPOSIT OF PROCEEDS.] The commissioner shall use 
  2.33  the amounts appropriated by law to purchase heat-applied stamps 
  2.34  for resale.  The commissioner shall charge the purchasers for 
  2.35  the costs of the stamps along with the tax value plus shipping 
  2.36  costs.  The costs recovered along with shipping costs must be 
  3.1   deposited into the general fund. 
  3.2      Sec. 8.  Minnesota Statutes 1998, section 297F.08, 
  3.3   subdivision 8, is amended to read: 
  3.4      Subd. 8.  [SALE OF STAMPS.] The commissioner may sell 
  3.5   heat-applied stamps on a credit basis under conditions 
  3.6   prescribed by the commissioner.  The commissioner shall sell the 
  3.7   stamps at a price which includes the tax after giving effect to 
  3.8   the discount provided in subdivision 7.  The commissioner shall 
  3.9   recover the actual costs of the stamps from the distributor.  
  3.10  The commissioner shall annually establish the maximum amount of 
  3.11  heat-applied stamps that may be purchased each month. 
  3.12     Sec. 9.  Minnesota Statutes 1999 Supplement, section 
  3.13  297F.08, subdivision 8a, is amended to read: 
  3.14     Subd. 8a.  [REVOLVING ACCOUNT.] A heat-applied cigarette 
  3.15  tax stamp revolving account is created.  The commissioner shall 
  3.16  use the amounts in this fund to purchase heat-applied stamps for 
  3.17  resale.  The commissioner shall charge distributors for the tax 
  3.18  value of the stamps they receive along with the commissioner's 
  3.19  cost to purchase the stamps and ship them to the distributor.  
  3.20  The stamp purchase and shipping costs recovered must be credited 
  3.21  to the revolving account and are appropriated to the 
  3.22  commissioner for the further purchases and shipping costs.  The 
  3.23  revolving account is initially funded by a $40,000 transfer from 
  3.24  the department of revenue. 
  3.25     Sec. 10.  Minnesota Statutes 1998, section 297F.08, 
  3.26  subdivision 9, is amended to read: 
  3.27     Subd. 9.  [TAX STAMPING MACHINES.] The commissioner shall 
  3.28  require any person licensed as a distributor to stamp packages 
  3.29  with a heat-applied tax stamping machine, approved by the 
  3.30  commissioner, which shall be provided by the distributor.  The 
  3.31  commissioner shall also supervise and check the operation of the 
  3.32  machines and shall provide for the payment of the tax on any 
  3.33  package so stamped, subject to the discount provided in 
  3.34  subdivision 7.  If the commissioner finds that a stamping 
  3.35  machine is not affixing a legible stamp on the package, the 
  3.36  commissioner may order the distributor to immediately cease the 
  4.1   stamping process until the machine is functioning properly. 
  4.2      Sec. 11.  Minnesota Statutes 1998, section 297F.13, 
  4.3   subdivision 4, is amended to read: 
  4.4      Subd. 4.  [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 
  4.5   INVOICES.] Every retailer and subjobber shall procure itemized 
  4.6   invoices of all cigarettes or tobacco products purchased.  The 
  4.7   invoices shall show the name and address of the seller and the 
  4.8   date of purchase. 
  4.9      The retailer and subjobber shall preserve a legible copy of 
  4.10  each invoice for one year from the date of purchase the invoice. 
  4.11  The retailer and subjobber shall preserve copies of the invoices 
  4.12  at each retail location or at a central location provided that 
  4.13  the invoice must be produced and made available at a retail 
  4.14  location within one hour when requested by the commissioner or 
  4.15  duly authorized agents and employees.  Copies should be numbered 
  4.16  and kept in chronological order. 
  4.17     To determine whether the business is in compliance with the 
  4.18  provisions of this chapter and sections 325D.30 to 325D.42, at 
  4.19  any time during usual business hours, the commissioner, or duly 
  4.20  authorized agents and employees, may enter any place of business 
  4.21  of a retailer or subjobber without a search warrant and inspect 
  4.22  the premises, the records required to be kept under this 
  4.23  chapter, and the packages of cigarettes, tobacco products, and 
  4.24  vending devices contained on the premises. 
  4.25     Sec. 12.  Minnesota Statutes 1998, section 297F.21, 
  4.26  subdivision 1, is amended to read: 
  4.27     Subdivision 1.  [CONTRABAND DEFINED.] The following are 
  4.28  declared to be contraband and therefore subject to civil and 
  4.29  criminal penalties under this chapter: 
  4.30     (a) Cigarette packages which do not have stamps affixed to 
  4.31  them as provided in this chapter, including but not limited to 
  4.32  (i) packages with illegible stamps and packages with stamps that 
  4.33  are not complete or whole even if the stamps are legible, and 
  4.34  (ii) all devices for the vending of cigarettes in which packages 
  4.35  as defined in item (i) are found, including all contents 
  4.36  contained within the devices. 
  5.1      (b) A device for the vending of cigarettes and all packages 
  5.2   of cigarettes, where the device does not afford at least partial 
  5.3   visibility of contents.  Where any package exposed to view does 
  5.4   not carry the stamp required by this chapter, it shall be 
  5.5   presumed that all packages contained in the device are unstamped 
  5.6   and contraband. 
  5.7      (c) A device for the vending of cigarettes to which the 
  5.8   commissioner or authorized agents have been denied access for 
  5.9   the inspection of contents.  In lieu of seizure, the 
  5.10  commissioner or an agent may seal the device to prevent its use 
  5.11  until inspection of contents is permitted. 
  5.12     (d) A device for the vending of cigarettes which does not 
  5.13  carry the name and address of the owner, plainly marked and 
  5.14  visible from the front of the machine. 
  5.15     (e) A device including, but not limited to, motor vehicles, 
  5.16  trailers, snowmobiles, airplanes, and boats used with the 
  5.17  knowledge of the owner or of a person operating with the consent 
  5.18  of the owner for the storage or transportation of more than 
  5.19  5,000 cigarettes which are contraband under this subdivision.  
  5.20  When cigarettes are being transported in the course of 
  5.21  interstate commerce, or are in movement from either a public 
  5.22  warehouse to a distributor upon orders from a manufacturer or 
  5.23  distributor, or from one distributor to another, the cigarettes 
  5.24  are not contraband, notwithstanding the provisions of clause (a).
  5.25     (f) Cigarette packages or tobacco products obtained from an 
  5.26  unlicensed seller. 
  5.27     (g) Cigarette packages offered for sale or held as 
  5.28  inventory in violation of section 297F.20, subdivision 7. 
  5.29     (h) Tobacco products on which the tax has not been paid by 
  5.30  a licensed distributor. 
  5.31     (i) Any cigarette packages or tobacco products offered for 
  5.32  sale or held as inventory for which there is not an invoice from 
  5.33  a licensed seller as required under section 297F.13, subdivision 
  5.34  4.  
  5.35     (j) Cigarette packages which have been imported into the 
  5.36  United States in violation of United States Code, title 26, 
  6.1   section 5754.  All cigarettes held in violation of that section 
  6.2   shall be presumed to have entered the United States after 
  6.3   December 31, 1999, in the absence of proof to the contrary. 
  6.4      Sec. 13.  Minnesota Statutes 1998, section 297F.21, 
  6.5   subdivision 3, is amended to read: 
  6.6      Subd. 3.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
  6.7   DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
  6.8   seizure of any alleged contraband, the person making the seizure 
  6.9   shall make available an inventory of the property seized to the 
  6.10  person from whom the seizure was made, if known, and file a copy 
  6.11  with the commissioner.  Within ten days after the date of 
  6.12  service of the inventory, the person from whom the property was 
  6.13  seized or any person claiming an interest in the property may 
  6.14  file with the commissioner a demand for a judicial determination 
  6.15  of the question as to whether the property was lawfully subject 
  6.16  to seizure and forfeiture.  The commissioner, within 60 days, 
  6.17  shall institute an action in the district court of the county 
  6.18  where the seizure was made to determine the issue of 
  6.19  forfeiture.  The court shall decide whether the alleged 
  6.20  contraband is contraband, as defined in subdivision 1. 
  6.21     (b) The action must be brought in the name of the state and 
  6.22  must be prosecuted by the county attorney or by the attorney 
  6.23  general.  The court shall hear the action without a jury and 
  6.24  shall try and determine the issues of fact and law involved. 
  6.25     (c) When a judgment of forfeiture is entered, the 
  6.26  commissioner may, unless the judgment is stayed pending an 
  6.27  appeal, either: 
  6.28     (1) deliver the forfeited property to the commissioner of 
  6.29  human services for use by patients in state institutions; 
  6.30     (2) cause it to be destroyed; or 
  6.31     (3) cause it to be sold at public auction as provided by 
  6.32  law. 
  6.33     (d) If a demand for judicial determination is made and no 
  6.34  action commenced as provided in this subdivision, the property 
  6.35  must be released by the commissioner and returned to the person 
  6.36  entitled to it.  If no demand is made, the property seized is 
  7.1   considered forfeited to the state by operation of law and may be 
  7.2   disposed of by the commissioner as provided in the case of a 
  7.3   judgment of forfeiture.  When the commissioner is satisfied that 
  7.4   a person from whom property is seized was acting in good faith 
  7.5   and without intent to evade the tax imposed by this chapter, the 
  7.6   commissioner shall release the property seized without further 
  7.7   legal proceedings. 
  7.8      Sec. 14.  [325D.091] [UNLAWFUL CIGARETTE TRADE PRACTICES.] 
  7.9      Subdivision 1.  [PROHIBITIONS.] (a) It is unlawful for any 
  7.10  person to sell or distribute in this state; to acquire, hold, 
  7.11  own, possess, or transport, for sale or distribution in this 
  7.12  state; or to import, or cause to be imported, into this state 
  7.13  for sale or distribution in this state, any cigarettes: 
  7.14     (1) the package of which: 
  7.15     (i) bears any statement, label, stamp, sticker, or notice 
  7.16  indicating that the manufacturer did not intend the cigarettes 
  7.17  to be sold, distributed, or used in the United States, 
  7.18  including, but not limited to, labels stating "For Export Only," 
  7.19  "U.S. Tax-Exempt," "For Use Outside U.S.," or similar wording; 
  7.20  or 
  7.21     (ii) does not comply with all requirements imposed by or 
  7.22  pursuant to federal law regarding warnings and other information 
  7.23  on packages of cigarettes manufactured, packaged, or imported 
  7.24  for sale, distribution, or use in the United States, including, 
  7.25  but not limited to, the precise warning labels specified in the 
  7.26  federal Cigarette Labeling and Advertising Act, United States 
  7.27  Code, title 15, section 1333; 
  7.28     (2) imported into the United States in violation of United 
  7.29  States Code, title 26, section 5754, or any other federal law or 
  7.30  regulation; or 
  7.31     (3) for which there has not been submitted to the secretary 
  7.32  of the United States Department of Health and Human Services the 
  7.33  list or lists of the ingredients added to tobacco in the 
  7.34  manufacture of the cigarettes required by the federal Cigarette 
  7.35  Labeling and Advertising Act, United States Code, title 15, 
  7.36  section 1335a. 
  8.1      (b) It is unlawful for any person to alter the package of 
  8.2   any cigarettes, prior to sale or distribution to the ultimate 
  8.3   consumer, so as to remove, conceal, or obscure: 
  8.4      (1) any statement, label, stamp, sticker, or notice 
  8.5   described in paragraph (a), clause (1), item (i); or 
  8.6      (2) any health warning that is not specified in, or does 
  8.7   not conform with the requirements of the federal Cigarette 
  8.8   Labeling and Advertising Act, United States Code, title 15, 
  8.9   section 1333. 
  8.10     (c) If cigarettes are sold or distributed under any trade 
  8.11  name, trade dress, or trademark that is the same as, or is 
  8.12  confusingly similar to, any trade name, trade dress, or 
  8.13  trademark used for other cigarettes previously sold or 
  8.14  distributed, it is unlawful for a wholesaler, as defined in 
  8.15  section 325D.32, subdivision 4, or a retailer, as defined in 
  8.16  section 325D.32, subdivision 5, to sell the cigarettes at a 
  8.17  price lower than the minimum price presently permitted under 
  8.18  sections 325D.30 to 325D.42 for the cigarettes which were 
  8.19  previously sold or distributed in this state.  For purposes of 
  8.20  this subdivision, "previously sold or distributed" means 
  8.21  cigarettes using a trade name, trade dress, or trademark that 
  8.22  were sold or distributed in this state before January 1, 1998.  
  8.23  No provision of sections 325D.30 to 325D.42 authorizes or 
  8.24  permits sales of cigarettes, subject to this paragraph, at 
  8.25  prices lower than the minimum prices under this paragraph.  The 
  8.26  commissioner of revenue is not responsible for enforcing this 
  8.27  paragraph.  None of the enforcement mechanisms or remedies under 
  8.28  sections 325D.30 to 325D.42 apply to violations of this 
  8.29  paragraph. 
  8.30     Subd. 2.  [PRIVATE CAUSE OF ACTION.] (a) In addition to any 
  8.31  other private remedy provided by law, any person that sustains 
  8.32  economic damages or commercial injury as a result of any 
  8.33  violation of subdivision 1 may bring an action for appropriate 
  8.34  injunctive or other equitable relief, actual damages, if any, 
  8.35  sustained by reason of the violation, and, as determined by the 
  8.36  court, interest on the damages from the date of the complaint, 
  9.1   taxable costs, and reasonable attorney fees.  
  9.2      (b) If the trier of fact finds that the violation is 
  9.3   egregious, it may increase the recovery to an amount not in 
  9.4   excess of three times the actual damages sustained by reason of 
  9.5   the violation.  The trier of fact may, in addition, award 
  9.6   exemplary damages for violations of subdivision 1, paragraph 
  9.7   (c), equal to the difference between the permitted legal price 
  9.8   and the actual price for the sales. 
  9.9      Subd. 3.  [APPLICABILITY.] This section does not apply to 
  9.10  cigarettes imported or reimported into the United States for 
  9.11  personal use and cigarettes sold or intended to be sold as 
  9.12  duty-free merchandise by a duty-free sales enterprise in 
  9.13  accordance with the provisions of United States Code, title 19, 
  9.14  section 1555(b), and any implementing regulations; unless the 
  9.15  cigarettes are brought back into the customs territory for 
  9.16  resale within the customs territory. 
  9.17     Subd. 4.  [VIOLATION.] A violation of this section is a 
  9.18  misdemeanor. 
  9.19     Sec. 15.  [EFFECTIVE DATE.] 
  9.20     Sections 2, 11, and 14 are effective July 1, 2000.  The 
  9.21  rest of this act is effective the day following final enactment.