Minnesota Legislature
SF 472
1st Unofficial Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to taxation; recodifying sales taxes on 1.3 cigarettes and tobacco products; providing criminal 1.4 and civil penalties; appropriating money; amending 1.5 Minnesota Statutes 1996, sections 16A.26; 16A.661, 1.6 subdivision 3; 16A.6701, subdivision 1; 116P.13, 1.7 subdivision 1; 325D.32, subdivision 4; and 325D.415; 1.8 proposing coding for new law as Minnesota Statutes, 1.9 chapter 297F; repealing Minnesota Statutes 1996, 1.10 sections 297.01; 297.02; 297.03; 297.031; 297.032; 1.11 297.04; 297.041; 297.05; 297.06; 297.07; 297.075; 1.12 297.08; 297.09; 297.10; 297.11; 297.12; 297.13; 1.13 297.21; 297.22; 297.23; 297.24; 297.25; 297.26; 1.14 297.31; 297.32; 297.321; 297.33; 297.335; 297.34; 1.15 297.35; 297.36; 297.37; 297.38; 297.385; 297.39; 1.16 297.40; 297.41; 297.42; 297.43; and 297.44. 1.17 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.18 ARTICLE 1 1.19 RECODIFICATION 1.20 Section 1. [297F.01] [DEFINITIONS.] 1.21 Subdivision 1. [APPLICABILITY.] Unless the language or 1.22 context clearly indicates that a different meaning is intended, 1.23 the following terms for the purposes of this chapter, have the 1.24 following meanings. 1.25 Subd. 2. [BUSINESS.] "Business" means any trade, 1.26 occupation, activity, or enterprise engaged in selling or 1.27 distributing cigarettes or tobacco products in this state. 1.28 Subd. 3. [CIGARETTE.] "Cigarette" means any roll for 1.29 smoking made wholly or in part of tobacco, the wrapper or cover 1.30 of which is made of paper or another substance or material 1.31 except tobacco. 2.1 Subd. 4. [CIGARETTE DISTRIBUTOR.] "Cigarette distributor" 2.2 means any of the following: 2.3 (1) a person engaged in the business of selling cigarettes 2.4 in this state and who manufactures or who brings, or causes to 2.5 be brought, into this state from outside the state any packages 2.6 of cigarettes for sale to subjobbers or retailers; 2.7 (2) a person engaged in the business outside this state who 2.8 ships or transports cigarettes to retailers in this state, to be 2.9 sold by those retailers; 2.10 (3) a person who is on direct purchase from a cigarette 2.11 manufacturer and applies cigarette stamps on at least 50 percent 2.12 of cigarettes sold by that person. 2.13 Subd. 5. [CIGARETTE SUBJOBBER.] "Cigarette subjobber" 2.14 means any person who acquires stamped cigarettes or other 2.15 state's stamped cigarettes for the primary purpose of resale to 2.16 retailers, and any licensed distributor who delivers, sells, or 2.17 distributes stamped cigarettes from a place of business other 2.18 than that licensed in the distributor's license. 2.19 "Cigarette subjobber" also means a person who is a vending 2.20 machine operator. A vending machine operator is a person whose 2.21 principal business is operating, or owning and leasing to 2.22 operators, machines for the vending of merchandise or service. 2.23 Subd. 6. [COMMISSIONER.] "Commissioner" means the state 2.24 commissioner of revenue. 2.25 Subd. 7. [CONSUMER.] "Consumer" means any person who has 2.26 title to or possession of cigarettes or tobacco products in 2.27 storage, for use or other consumption in this state. 2.28 Subd. 8. [INTERNAL REVENUE CODE.] Unless specifically 2.29 defined otherwise, "Internal Revenue Code" means the Internal 2.30 Revenue Code of 1986, as amended through December 31, 1996. 2.31 Subd. 9. [LICENSING PERIOD.] "Licensing period" means a 2.32 two-year period during which licenses are issued. A licensing 2.33 period begins on January 1 of each even-numbered year and ends 2.34 on December 31 of the following odd-numbered year. 2.35 Subd. 10. [MANUFACTURER.] "Manufacturer" means a person 2.36 who produces and sells cigarettes or tobacco products. 3.1 Subd. 11. [PACKAGE.] "Package" means the individual 3.2 packet, box, or other container used to contain and convey 3.3 cigarettes to the consumer. 3.4 Subd. 12. [PERSON.] "Person" means an individual or any 3.5 entity engaged in the sale of cigarettes or tobacco products. 3.6 Subd. 13. [PLACE OF BUSINESS.] "Place of business" means a 3.7 place where cigarettes or tobacco products are sold or where 3.8 cigarettes or tobacco products are manufactured, stored, or kept 3.9 for the purpose of sale or consumption, including any vessel, 3.10 vehicle, airplane, train, or vending machine. 3.11 Subd. 14. [RETAILER.] "Retailer" means a person engaged in 3.12 this state in the business of selling, or offering to sell, 3.13 cigarettes or tobacco products to consumers. 3.14 Subd. 15. [RETAIL OUTLET.] "Retail outlet" means each 3.15 place of business from which cigarettes or tobacco products are 3.16 sold to consumers. 3.17 Subd. 16. [SALE.] "Sale" means a transfer, exchange, or 3.18 barter, in any manner or by any means, for consideration, and 3.19 includes all sales made by any person. It also includes gifts 3.20 or samples provided for advertising or promotional purposes, 3.21 made by a person engaged in the selling of cigarettes or tobacco 3.22 products. 3.23 Subd. 17. [STAMP.] "Stamp" means the adhesive stamp 3.24 supplied by the commissioner of revenue for use on cigarette 3.25 packages. 3.26 Subd. 18. [STORAGE.] "Storage" means any keeping or 3.27 retention of cigarettes or tobacco products for use or 3.28 consumption in this state. 3.29 Subd. 19. [TOBACCO PRODUCTS.] "Tobacco products" means 3.30 cigars; little cigars; cheroots; stogies; periques; granulated, 3.31 plug cut, crimp cut, ready rubbed, and other smoking tobacco; 3.32 snuff; snuff flour; cavendish; plug and twist tobacco; fine-cut 3.33 and other chewing tobacco; shorts; refuse scraps, clippings, 3.34 cuttings and sweepings of tobacco, and other kinds and forms of 3.35 tobacco, prepared in such manner as to be suitable for chewing 3.36 or smoking in a pipe or otherwise, or both for chewing and 4.1 smoking; but does not include cigarettes as defined in this 4.2 section. 4.3 Subd. 20. [TOBACCO PRODUCTS DISTRIBUTOR.] "Tobacco 4.4 products distributor" means any of the following: 4.5 (1) a person engaged in the business of selling tobacco 4.6 products in this state who brings, or causes to be brought, into 4.7 this state from outside the state any tobacco products for sale; 4.8 (2) a person who makes, manufactures, or fabricates tobacco 4.9 products in this state for sale in this state; 4.10 (3) a person engaged in the business of selling tobacco 4.11 products outside this state who ships or transports tobacco 4.12 products to retailers in this state, to be sold by those 4.13 retailers. 4.14 Subd. 21. [TOBACCO PRODUCTS SUBJOBBER.] "Tobacco products 4.15 subjobber" means a person, other than a manufacturer or 4.16 distributor, who buys from a distributor tobacco products upon 4.17 which the tax imposed by this chapter has been paid and sells 4.18 them to persons other than the ultimate consumers, and any 4.19 licensed distributor who delivers, sells, or distributes tobacco 4.20 products upon which the tax imposed by this chapter has been 4.21 paid from a place of business other than that licensed in the 4.22 distributor's license. 4.23 Subd. 22. [USE.] "Use" means the exercise of a right or 4.24 power incidental to the ownership of cigarettes or tobacco 4.25 products. 4.26 Subd. 23. [WHOLESALE PRICE.] "Wholesale price" means the 4.27 established price for which a manufacturer sells a tobacco 4.28 product to a distributor, exclusive of any discount or other 4.29 reduction. 4.30 Sec. 2. [297F.02] [ADMINISTRATION.] 4.31 Subdivision 1. [DUTIES OF COMMISSIONER.] The commissioner 4.32 shall enforce the provisions of this chapter and may prescribe 4.33 rules consistent with the provisions of this chapter for its 4.34 detailed and efficient administration. 4.35 In the enforcement of this chapter, the commissioner may 4.36 call any county attorney or any peace officer for assistance and 5.1 may appoint such additional employees as may be required to 5.2 administer this chapter. The commissioner may bring injunction 5.3 proceedings to restrain any person from acting as a distributor 5.4 without complying with the provisions of this chapter. 5.5 Subd. 2. [POWERS OF COMMISSIONER.] The commissioner, or 5.6 duly authorized agents, may conduct investigations, inquiries, 5.7 and hearings under this chapter and, in connection with such 5.8 investigations, inquiries, and hearings, the commissioner and 5.9 the duly authorized agents shall have all the powers conferred 5.10 upon the commissioner and the commissioner's examiners by 5.11 section 270.06, and the provisions of that section shall apply 5.12 to all such investigations, inquiries, and hearings. 5.13 Subd. 3. [EXPENSES OF ADMINISTRATION.] Expenses for the 5.14 administration of this chapter shall be paid out of 5.15 appropriations to the commissioner for the administration of 5.16 this chapter and shall include fees and expenses incurred by the 5.17 attorney general and any county attorney in litigation in 5.18 connection with the enforcement of this chapter. Expenses also 5.19 include all court costs and expenses. 5.20 Sec. 3. [297F.03] [LICENSES; CIGARETTE AND TOBACCO 5.21 PRODUCTS DISTRIBUTOR AND SUBJOBBER.] 5.22 Subdivision 1. [SELLING WITHOUT LICENSE ILLEGAL.] No 5.23 person shall engage in the business of a distributor or 5.24 subjobber at any place of business without first having received 5.25 a license from the commissioner to engage in that business at 5.26 that place of business. 5.27 Subd. 2. [FORM OF APPLICATION.] Every application for a 5.28 cigarette or tobacco products license shall be made on a form 5.29 prescribed by the commissioner and shall state the name and 5.30 address of the applicant; if the applicant is a firm, 5.31 partnership, or association, the name and address of each of its 5.32 members; if the applicant is a corporation, the name and address 5.33 of each of its officers; the address of its principal place of 5.34 business; the place where the business to be licensed is to be 5.35 conducted; and any other information the commissioner may 5.36 require for the administration of this chapter. 6.1 Subd. 3. [PLACE OF APPLICATION.] A separate application 6.2 for a distributor's license shall be made for each place of 6.3 business at which a distributor proposes to engage in business. 6.4 A separate application for a subjobber's license may be 6.5 made by a licensed distributor for each place of business, other 6.6 than that licensed in the distributor's license, to which the 6.7 distributor sells or distributes stamped cigarettes or tobacco 6.8 products. 6.9 Subd. 4. [NONRESIDENT APPLICATION.] A person outside this 6.10 state who ships or transports cigarettes or tobacco products to 6.11 retailers in this state, to be sold by those retailers, shall 6.12 make an application for a distributor's license, be granted such 6.13 a license by the commissioner, and thereafter be subject to all 6.14 the provisions of this chapter. 6.15 Subd. 5. [LICENSE FEES; CIGARETTES.] Each application for 6.16 a cigarette distributor's license must be accompanied by a fee 6.17 of $300. Each application for a cigarette subjobber's license 6.18 must be accompanied by a fee of $24. A distributor or subjobber 6.19 applying for a license during the second year of a two-year 6.20 licensing period is required to pay only one-half of the license 6.21 fee. 6.22 Subd. 6. [LICENSE FEES; TOBACCO PRODUCTS.] Each 6.23 application for a tobacco products distributor's license must be 6.24 accompanied by a fee of $75. Each application for a tobacco 6.25 products subjobber's license must be accompanied by a fee of 6.26 $20. A distributor or subjobber applying for a license during 6.27 the second year of a two-year licensing period is required to 6.28 pay only one-half of the license fee. 6.29 Subd. 7. [ISSUANCE OF LICENSE.] The commissioner, upon 6.30 receipt of the application in proper form, and payment of the 6.31 license fee required by this chapter, shall, unless otherwise 6.32 provided by this chapter, issue the applicant a license in the 6.33 form prescribed by the commissioner. The license permits the 6.34 applicant to engage in business as a distributor or subjobber at 6.35 the place of business shown in the application. 6.36 Subd. 8. [LICENSING PERIOD; EXPIRATION.] The licensing 7.1 period begins January 1 of an even-numbered year and ends on 7.2 December 31 of the following year. Each license issued shall 7.3 expire on December 31 of the second year of the licensing period 7.4 unless sooner revoked by the commissioner or unless the business 7.5 with respect to which the license was issued is transferred. In 7.6 either case the holder of the license shall immediately 7.7 surrender it to the commissioner. 7.8 Subd. 9. [DISPLAY.] Each license must be prominently 7.9 displayed on the premises covered by the license. 7.10 Subd. 10. [TRANSFER.] Licenses are not transferable to any 7.11 other person. 7.12 Sec. 4. [297F.04] [LICENSE SUSPENSION OR REVOCATION.] 7.13 Subdivision 1. [POWERS OF COMMISSIONER.] The commissioner 7.14 may revoke or suspend the license or licenses of any distributor 7.15 or subjobber for violation of this chapter, any other act 7.16 applicable to the sale of cigarettes or tobacco products, or any 7.17 rule promulgated by the commissioner, in furtherance of this 7.18 chapter. The commissioner may also revoke, cancel, or suspend 7.19 the license or licenses of any distributor or subjobber for 7.20 violation of sections 325D.30 to 325D.42. 7.21 Subd. 2. [REFUSAL TO ISSUE OR RENEW; REVOCATION.] The 7.22 commissioner must not issue or renew a license under this 7.23 chapter, and may revoke a license under this chapter, if the 7.24 applicant or licensee: 7.25 (1) owes $500 or more in delinquent taxes as defined in 7.26 section 270.72, subdivision 2; 7.27 (2) after demand, has not filed tax returns required by the 7.28 commissioner; 7.29 (3) had a cigarette or tobacco license revoked by the 7.30 commissioner within the past two years; 7.31 (4) had a sales and use tax permit revoked by the 7.32 commissioner within the past two years; or 7.33 (5) has been convicted of a crime involving cigarettes, 7.34 including but not limited to: selling stolen cigarettes or 7.35 tobacco products, receiving stolen cigarettes or tobacco 7.36 products, or involvement in the smuggling of cigarettes or 8.1 tobacco products. 8.2 Subd. 3. [NOTICE.] No license may be revoked or suspended 8.3 under this chapter, and no application for a license may be 8.4 denied under this chapter, except after 20 days' notice. In 8.5 that notice the commissioner shall specify the allegations 8.6 against the licensee or applicant, and provide the licensee or 8.7 applicant the right to request in writing within 20 days a 8.8 contested case hearing as provided in chapter 14. 8.9 If a written request for a hearing is received by the 8.10 department of revenue within 20 days of the date of the initial 8.11 notice, the hearing must be held within 45 days after referral 8.12 to the office of administrative hearings, and no earlier than 20 8.13 days after notice to the licensee or applicant of the hearing 8.14 time and place. A license is revoked or suspended, and an 8.15 application is denied, when the commissioner serves notice of 8.16 revocation, suspension, or denial after 20 days have passed 8.17 following the initial notice under this paragraph without a 8.18 request for hearing being made, or if a hearing is held, after 8.19 the commissioner serves an order of revocation, suspension, or 8.20 denial under section 14.62, subdivision 1. All notices under 8.21 this paragraph may be served personally or by mail. 8.22 Sec. 5. [297F.05] [RATES OF TAX; PERSONAL DEBT.] 8.23 Subdivision 1. [RATES; CIGARETTES.] A tax is imposed upon 8.24 the sale of cigarettes in this state, upon having cigarettes in 8.25 possession in this state with intent to sell, upon any person 8.26 engaged in business as a distributor, and upon the use or 8.27 storage by consumers, at the following rates, subject to the 8.28 discount provided in this chapter: 8.29 (1) on cigarettes weighing not more than three pounds per 8.30 thousand, 24 mills on each such cigarette; and 8.31 (2) on cigarettes weighting more than three pounds per 8.32 thousand, 48 mills on each such cigarette. 8.33 Subd. 2. [DISTRIBUTION OF FREE SAMPLE PACKAGES.] A person 8.34 who distributes free packages of cigarettes is liable for the 8.35 payment of tax under this chapter. 8.36 Subd. 3. [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 9.1 all tobacco products in this state and upon any person engaged 9.2 in business as a distributor, at the rate of 35 percent of the 9.3 wholesale sales price of the tobacco products. The tax is 9.4 imposed at the time the distributor: 9.5 (1) brings, or causes to be brought, into this state from 9.6 outside the state tobacco products for sale; 9.7 (2) makes, manufactures, or fabricates tobacco products in 9.8 this state for sale in this state; or 9.9 (3) ships or transports tobacco products to retailers in 9.10 this state, to be sold by those retailers. 9.11 Subd. 4. [USE TAX; TOBACCO PRODUCTS.] A tax is imposed 9.12 upon the use or storage by consumers of tobacco products in this 9.13 state, and upon such consumers, at the rate of 35 percent of the 9.14 cost to the consumer of the tobacco products. 9.15 Subd. 5. [TAX AS PERSONAL DEBT.] The tax imposed by this 9.16 chapter, and interest and penalties imposed with respect to it, 9.17 is a personal debt of the person required to file a return from 9.18 the time the liability for it arises, regardless of when the 9.19 time for payment of the liability occurs. In the case of the 9.20 executor or administrator of the estate of a decedent and in the 9.21 case of any fiduciary, the debt is that of the person in the 9.22 person's official or fiduciary capacity only, unless the person 9.23 has voluntarily distributed the assets held in that capacity 9.24 without reserving sufficient assets to pay the tax, interest, 9.25 and penalties. In that case, the person is personally liable 9.26 for the deficiency. 9.27 Subd. 6. [TAX CONSTRUCTION.] The tax imposed by this 9.28 section is not a cost of doing business or an overhead expense 9.29 under section 325D.01, subdivision 7. 9.30 Subd. 7. [TAX; SALES BY STATE.] The state of Minnesota or 9.31 any of its agencies, instrumentalities, or governmental 9.32 subdivisions is subject to the tax imposed by this chapter on 9.33 all cigarettes or tobacco products sold, in the same manner as 9.34 distributors, if such unit is engaged in the purchase and sale 9.35 of cigarettes or tobacco products. 9.36 Sec. 6. [297F.06] [EXEMPTIONS FROM TAX.] 10.1 Subdivision 1. [FEDERAL LAWS.] The tax imposed by this 10.2 section does not apply with respect to any sale of cigarettes or 10.3 tobacco products which under the constitution and laws of the 10.4 United States may not be subject to taxation by the state. 10.5 Subd. 2. [USE TAX.] The use tax does not apply if the tax 10.6 imposed on cigarettes or tobacco products has been paid. 10.7 Subd. 3. [CIGARETTE USE TAX.] The cigarette use tax does 10.8 not apply to the use or storage of cigarettes in quantities of 10.9 200 or fewer in the possession of any one consumer, provided 10.10 that the cigarettes were carried into this state by that 10.11 consumer. 10.12 Subd. 4. [TOBACCO PRODUCTS USE TAX.] The tobacco products 10.13 use tax does not apply to the use or storage of tobacco products 10.14 in quantities of: 10.15 (1) not more than 50 cigars; 10.16 (2) not more than ten ounces snuff or snuff powder; 10.17 (3) not more than one pound smoking or chewing tobacco or 10.18 any other tobacco product in the possession of any one consumer. 10.19 Subd. 5. [OCEAN-GOING VESSELS.] The commissioner may adopt 10.20 rules for the sale by licensed distributors of tax free 10.21 cigarettes to the masters of ocean-going vessels for use aboard 10.22 ship outside the continental limits of the United States, 10.23 provided the cigarettes are also exempt from the taxes imposed 10.24 on cigarettes by the United States government. 10.25 Sec. 7. [297F.07] [SALES TO INDIAN TRIBES.] 10.26 Subdivision 1. [WHOLESALERS.] A wholesaler may set aside 10.27 the part of the wholesaler's cigarette and tobacco product stock 10.28 necessary to make sales to the established governing body of an 10.29 Indian tribe recognized by the United States Department of 10.30 Interior without paying the tax required by this chapter. The 10.31 amount of unstamped or untaxed stock that wholesalers may 10.32 deliver to an Indian reservation is limited to amounts necessary 10.33 to meet the personal consumption needs of qualified purchasers. 10.34 The unstamped stock must be kept separate and apart from stamped 10.35 stock. When shipping or delivering unstamped or untaxed stock 10.36 to an Indian tribal organization, the wholesaler shall make a 11.1 true duplicate invoice. The invoice must show the complete 11.2 details of the sale or delivery. The wholesaler shall send the 11.3 duplicate to the commissioner not later than the 18th day of the 11.4 following calendar month. If the wholesaler fails to comply 11.5 with this section, the commissioner shall revoke the permission 11.6 granted to the wholesaler to keep a stock of unstamped goods. 11.7 Subd. 2. [RETAILERS.] Retailers who are Indian tribal 11.8 organizations may keep unstamped or untaxed stock intended for 11.9 sale to qualified purchasers. 11.10 Subd. 3. [QUALIFIED PURCHASERS.] A qualified purchaser of 11.11 unstamped or untaxed stock means only an enrolled member of the 11.12 Indian tribe which is offering the stock for sale. 11.13 Subd. 4. [SALES TO NONQUALIFIED BUYERS.] A retailer who 11.14 sells or otherwise disposes of unstamped or untaxed stock other 11.15 than to a qualified purchaser shall collect from the buyer or 11.16 transferee the tax imposed by section 297F.05, and remit the tax 11.17 to the department of revenue at the same time and manner as 11.18 required by section 297F.09. If the retailer fails to collect 11.19 the tax from the buyer or transferee, or fails to remit the tax, 11.20 the retailer is personally responsible for the tax and the 11.21 commissioner may seize any product destined to be delivered to 11.22 the retailer. The product so seized shall be considered 11.23 contraband and be subject to the procedures outlined in section 11.24 297F.21, subdivision 3. The proceeds of the sale of the stock 11.25 may be applied to any tax liability owed by the retailer after 11.26 deducting all costs and expenses. 11.27 This section does not relieve the buyer or possessor of 11.28 unstamped or untaxed stock from personal liability for the tax. 11.29 Sec. 8. [297F.08] [CIGARETTE STAMPS.] 11.30 Subdivision 1. [STAMP PUT ON BY DISTRIBUTOR.] Except as 11.31 otherwise provided in this chapter, payment of the tax imposed 11.32 by this chapter must be evidenced by stamps affixed to each 11.33 package. Before delivering, or causing to be delivered, a 11.34 package to any person in this state, a distributor shall firmly 11.35 affix to each package of cigarettes appropriate stamps in 11.36 amounts equal to the tax on those cigarettes as provided in this 12.1 chapter. 12.2 Subd. 2. [TAX DUE; CIGARETTES.] Notwithstanding any other 12.3 provisions of this chapter, the tax due on the return is based 12.4 upon actual heat-applied stamps purchased during the reporting 12.5 period. 12.6 Subd. 3. [TIME OF AFFIXING STAMP.] In all cases where 12.7 cigarettes are shipped into this state by any licensed 12.8 distributor from outside this state, the appropriate stamps must 12.9 be affixed to packages at the time the package enters the state. 12.10 Subd. 4. [STAMPS; DESIGN, PRINTING.] The commissioner 12.11 shall adopt the design of two stamps. One stamp must be 12.12 designed for application to cigarette packages destined for 12.13 retail sale on an Indian reservation which is a party to an 12.14 agreement under section 270.60, subdivision 2, and only to those 12.15 packages. A second stamp must be designed for all other 12.16 cigarette packages subject to the provisions of this chapter. 12.17 The commissioner shall arrange for the printing of stamps in 12.18 such amounts and denominations as the commissioner deems 12.19 necessary. 12.20 Subd. 5. [DEPOSIT OF PROCEEDS.] The commissioner shall use 12.21 the amounts appropriated by law to purchase heat-applied stamps 12.22 for resale. The commissioner shall charge the purchasers for 12.23 the costs of the stamps along with the tax value plus shipping 12.24 costs. The costs recovered along with shipping costs must be 12.25 deposited into the general fund. 12.26 Subd. 6. [SECTION 16A.56 SUPERSEDED.] The provisions of 12.27 this chapter prescribing the powers and duties of the 12.28 commissioner with relation to stamps supersede all the 12.29 provisions of section 16A.56 in conflict. 12.30 Subd. 7. [PRICE OF STAMPS.] The commissioner shall sell 12.31 stamps to any person licensed as a distributor at a discount of 12.32 1.0 percent from the face amount of the stamps for the first 12.33 $1,500,000 of such stamps purchased in any fiscal year; and at a 12.34 discount of 0.6 percent on the remainder of such stamps 12.35 purchased in any fiscal year. The commissioner shall not sell 12.36 stamps to any other person. The commissioner may prescribe the 13.1 method of shipment of the stamps to the distributor as well as 13.2 the quantities of stamps purchased. 13.3 Subd. 8. [SALE OF STAMPS.] The commissioner may sell 13.4 heat-applied stamps on a credit basis under conditions 13.5 prescribed by the commissioner. The commissioner shall sell the 13.6 stamps at a price which includes the tax after giving effect to 13.7 the discount provided in subdivision 7. The commissioner shall 13.8 recover the actual costs of the stamps from the distributor. 13.9 The commissioner shall annually establish the maximum amount of 13.10 heat-applied stamps that may be purchased each month. 13.11 Subd. 9. [TAX STAMPING MACHINES.] The commissioner shall 13.12 require any person licensed as a distributor to stamp packages 13.13 with a heat-applied tax stamping machine, approved by the 13.14 commissioner, which shall be provided by the distributor. The 13.15 commissioner shall also supervise and check the operation of the 13.16 machines and shall provide for the payment of the tax on any 13.17 package so stamped, subject to the discount provided in 13.18 subdivision 7. If the commissioner finds that a stamping 13.19 machine is not affixing a legible stamp on the package, the 13.20 commissioner may order the distributor to immediately cease the 13.21 stamping process until the machine is functioning properly. 13.22 Subd. 10. [RESALE OR TRANSFER OF STAMPS PROHIBITED.] No 13.23 distributor shall resell or transfer any stamps purchased by the 13.24 distributor from the commissioner. A distributor may transfer 13.25 another state's stamped cigarettes to another distributor for 13.26 the purpose of resale in the other state. A distributor who has 13.27 on hand any uncanceled stamps at the time of discontinuing the 13.28 business of selling cigarettes may return them to the 13.29 commissioner and receive a refund of the amount paid for the 13.30 stamps. Stamps which have become mutilated or unfit for use, or 13.31 are affixed to cigarettes being returned to the manufacturer, or 13.32 are affixed to packages which, or the contents of which, have 13.33 become damaged and unfit for sale, shall be replaced by the 13.34 commissioner, upon application by the distributor owning the 13.35 stamps or cigarettes if an investigation discloses that the 13.36 stamps have not evidenced a taxable transaction, after 14.1 compliance with rules or orders of the commissioner designed to 14.2 prevent use of the stamps replaced. 14.3 Subd. 11. [RAILROAD OR SLEEPING CAR COMPANY AS A 14.4 DISTRIBUTOR.] The commissioner may authorize a railroad or 14.5 sleeping car company licensed as a distributor to sell 14.6 cigarettes on its cars without affixing stamps to the packages, 14.7 provided that monthly reports and payments of the tax due 14.8 subject to the discount in subdivision 7 must be made directly 14.9 to the commissioner in the manner and under the terms provided 14.10 for by the commissioner. Only one distributor's license need be 14.11 obtained by each railroad or sleeping car company to permit it 14.12 to sell cigarettes on any or all of its cars within the state. 14.13 Sec. 9. [297F.09] [RETURNS; PAYMENT OF TAX.] 14.14 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On 14.15 or before the 18th day of each calendar month, a distributor 14.16 with a place of business in this state shall file a return with 14.17 the commissioner showing the quantity of cigarettes manufactured 14.18 or brought in from outside the state or purchased during the 14.19 preceding calendar month and the quantity of cigarettes sold or 14.20 otherwise disposed of in this state and outside this state 14.21 during that month. A licensed distributor outside this state 14.22 shall in like manner file a return showing the quantity of 14.23 cigarettes shipped or transported into this state during the 14.24 preceding calendar month. Returns must be made in the form and 14.25 manner prescribed by the commissioner and must contain any other 14.26 information required by the commissioner. The return must be 14.27 accompanied by a remittance for the full unpaid tax liability 14.28 shown by it. The return for the May liability and 75 percent of 14.29 the estimated June liability is due on the date payment of the 14.30 tax is due. 14.31 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS 14.32 DISTRIBUTOR.] On or before the 18th day of each calendar month, 14.33 a distributor with a place of business in this state shall file 14.34 a return with the commissioner showing the quantity and 14.35 wholesale sales price of each tobacco product: 14.36 (1) brought, or caused to be brought, into this state for 15.1 sale; and 15.2 (2) made, manufactured, or fabricated in this state for 15.3 sale in this state, during the preceding calendar month. 15.4 Every licensed distributor outside this state shall in like 15.5 manner file a return showing the quantity and wholesale sales 15.6 price of each tobacco product shipped or transported to 15.7 retailers in this state to be sold by those retailers, during 15.8 the preceding calendar month. Returns must be made in the form 15.9 and manner prescribed by the commissioner and must contain any 15.10 other information required by the commissioner. The return must 15.11 be accompanied by a remittance for the full tax liability shown, 15.12 less 1.5 percent of the liability as compensation to reimburse 15.13 the distributor for expenses incurred in the administration of 15.14 this chapter. The return for the May liability and 75 percent 15.15 of the estimated June liability is due on the date payment of 15.16 the tax is due. 15.17 Subd. 3. [USE TAX RETURN; CIGARETTE OR TOBACCO PRODUCTS 15.18 CONSUMER.] On or before the 18th day of each calendar month, a 15.19 consumer who, during the preceding calendar month, has acquired 15.20 title to or possession of cigarettes or tobacco products for use 15.21 or storage in this state, upon which cigarettes or tobacco 15.22 products the tax imposed by this chapter has not been paid, 15.23 shall file a return with the commissioner showing the quantity 15.24 of cigarettes or tobacco products so acquired. The return must 15.25 be made in the form and manner prescribed by the commissioner, 15.26 and must contain any other information required by the 15.27 commissioner. The return must be accompanied by a remittance 15.28 for the full unpaid tax liability shown by it. 15.29 Subd. 4. [TAX PROVISIONS APPLICABLE TO CONSUMERS.] All of 15.30 the provisions of this chapter relating to corrections of 15.31 returns, deficiency assessments, protests, hearings, interest 15.32 and penalties, and collection of taxes, apply to consumers. 15.33 Subd. 5. [EXTENSION OF TIME.] The commissioner may extend 15.34 the time for filing returns and remittance of tax, deficiencies, 15.35 and penalties for not more than 60 days. The commissioner may 15.36 require that a tentative return be filed at the time for filing 16.1 the regularly required return and that payment of the tax be 16.2 made with it on the basis of the tentative return. When an 16.3 extension of time for payment has been granted under this 16.4 section, interest is payable at the rate provided in section 16.5 270.75 from the date when the payment should have been made, if 16.6 no extension had been granted, until the tax is paid. 16.7 Subd. 6. [ACCELERATED TAX PAYMENT; CIGARETTE OR TOBACCO 16.8 PRODUCTS DISTRIBUTOR.] A cigarette or tobacco products 16.9 distributor having a liability of $120,000 or more during a 16.10 fiscal year ending June 30, shall remit the June liability for 16.11 the next year in the following manner: 16.12 (a) Two business days before June 30 of the year, the 16.13 distributor shall remit the actual May liability and 75 percent 16.14 of the estimated June liability to the commissioner and file the 16.15 return in the form and manner prescribed by the commissioner. 16.16 (b) On or before August 18 of the year, the distributor 16.17 shall submit a return showing the actual June liability and pay 16.18 any additional amount of tax not remitted in June. A penalty is 16.19 imposed equal to ten percent of the amount of June liability 16.20 required to be paid in June, less the amount remitted in June. 16.21 However, the penalty is not imposed if the amount remitted in 16.22 June equals the lesser of: 16.23 (1) 70 percent of the actual June liability; or 16.24 (2) 75 percent of the preceding May's liability. 16.25 Subd. 7. [ELECTRONIC FUNDS TRANSFER.] A cigarette or 16.26 tobacco products distributor having a liability of $120,000 or 16.27 more during a fiscal year ending June 30 must remit all 16.28 liabilities in the subsequent calendar year by means of a fund 16.29 transfer as defined in section 336.4A-104, paragraph (a). The 16.30 funds transfer payment date, as defined in section 336.4A-401, 16.31 must be on or before the date the tax is due. If the date the 16.32 tax is due is not a funds transfer business day, as defined in 16.33 section 336.4A-105, paragraph (a), clause (4), the payment date 16.34 must be on or before the funds transfer day immediately 16.35 following the date the tax is due. 16.36 Subd. 8. [ORDER PAYMENTS CREDITED.] All payments received 17.1 may, in the discretion of the commissioner, be credited first to 17.2 the oldest liability not secured by a judgment or lien, but in 17.3 all cases must be credited first to penalties, next to interest, 17.4 and then to the tax due. 17.5 Subd. 9. [INTEREST.] The amount of tax not timely paid, 17.6 together with any penalty imposed in this section, bears 17.7 interest at the rate specified in section 270.75 from the time 17.8 such tax should have been paid until paid. Any interest and 17.9 penalty is added to the tax and collected as a part of it. 17.10 Sec. 10. [297F.10] [DEPOSIT OF PROCEEDS.] 17.11 Subdivision 1. [TAX AND USE TAX ON CIGARETTES.] Revenue 17.12 received from cigarette taxes, as well as related penalties, 17.13 interest, license fees, and miscellaneous sources of revenue 17.14 shall be deposited by the commissioner in the state treasury and 17.15 credited as follows: 17.16 (a) first to the general obligation special tax bond debt 17.17 service account in each fiscal year the amount required to 17.18 increase the balance on hand in the account on each December 1 17.19 to an amount equal to the full amount of principal and interest 17.20 to come due on all outstanding bonds whose debt service is 17.21 payable primarily from the proceeds of the tax to and including 17.22 the second following July 1; and 17.23 (b) after the requirements of paragraph (a) have been met: 17.24 (1) the revenue produced by one mill of the tax on 17.25 cigarettes weighing not more than three pounds a thousand and 17.26 two mills of the tax on cigarettes weighing more than three 17.27 pounds a thousand must be credited to the Minnesota future 17.28 resources fund; and 17.29 (2) the balance of the revenues derived from taxes, 17.30 penalties, and interest (under this chapter) and from license 17.31 fees and miscellaneous sources of revenue shall be credited to 17.32 the general fund. 17.33 Subd. 2. [TAX AND USE TAX ON TOBACCO PRODUCTS.] Revenue 17.34 received from taxes on tobacco products, as well as related 17.35 penalties, interest, and license fees shall be deposited by the 17.36 commissioner in the state treasury and credited to the general 18.1 fund. 18.2 Sec. 11. [297F.11] [INFORMATIONAL REPORTS; CIGARETTES.] 18.3 Subdivision 1. [GENERAL RULE.] The following persons shall 18.4 file with the commissioner a monthly informational report in the 18.5 form and manner prescribed by the commissioner: 18.6 (1) a distributor licensed to ship cigarettes into 18.7 Minnesota; 18.8 (2) a person who manufactures cigarettes within the state; 18.9 (3) any other person who imports cigarettes into Minnesota; 18.10 and 18.11 (4) a person who possesses, receives, stores, or warehouses 18.12 cigarettes in Minnesota, upon which the tax imposed by this 18.13 chapter has not been paid. 18.14 The requirement of filing an informational report does not 18.15 apply to a person conveying or possessing cigarettes described 18.16 in this chapter, nor to any lawful manufacture of cigarettes 18.17 within the state for personal consumption. 18.18 Subd. 2. [FILING DATES; FAILURE TO FILE.] No payment of 18.19 any tax is required to be remitted with the report required 18.20 under subdivision 1. The report must be filed on or before the 18.21 tenth day following the end of each calendar month, regardless 18.22 of whether or not the person shipped, manufactured, possessed, 18.23 received, stored, or warehoused any cigarettes into or within 18.24 Minnesota during the previous month, unless the commissioner 18.25 determines that a longer filing period is appropriate for a 18.26 particular person. 18.27 Subd. 3. [COMMON CARRIERS.] Common carriers and contract 18.28 carriers transporting cigarettes into this state shall file with 18.29 the commissioner reports of all such shipments other than those 18.30 which are delivered to public warehouses of first destination in 18.31 this state, licensed under the provisions of chapter 231. The 18.32 reports must be filed monthly on or before the tenth day of each 18.33 month and must show with respect to deliveries made in the 18.34 preceding month: the date, point of origin, point of delivery, 18.35 name of consignee, the quantity of cigarettes delivered, and any 18.36 other information the commissioner requires. 19.1 A common carrier or a contract carrier transporting 19.2 cigarettes into Minnesota shall permit examination by the 19.3 commissioner of its records relating to the shipment of 19.4 cigarettes. 19.5 Subd. 4. [CIGARETTE CONSUMERS.] A person who files a 19.6 cigarette consumer return as required by this chapter may 19.7 fulfill the requirements of this section by indicating on the 19.8 cigarette consumer's return which of the items reported on the 19.9 return were transported into the state by the consumer. The 19.10 requirement of filing an informational report does not apply to 19.11 consumers who import fewer than 200 cigarettes into this state. 19.12 Sec. 12. [297F.12] [INFORMATIONAL REPORTS; TOBACCO 19.13 PRODUCTS.] 19.14 Subdivision 1. [GENERAL RULE.] The transportation of 19.15 tobacco products into this state by means other than common 19.16 carrier must be reported to the commissioner within 30 days with 19.17 the following exceptions: 19.18 (1) transportation of not more than 50 cigars, not more 19.19 then ten ounces of snuff or snuff powder, or not more than one 19.20 pound of smoking or chewing tobacco or other tobacco products 19.21 not specifically mentioned; 19.22 (2) transportation by a person with a place of business 19.23 outside the state, who is licensed as a distributor under this 19.24 chapter, of tobacco products sold by the person to a retailer in 19.25 this state. 19.26 The report must be made in the form and manner prescribed 19.27 by the commissioner. 19.28 Subd. 2. [COMMON CARRIERS.] Common carriers transporting 19.29 tobacco products into this state shall file with the 19.30 commissioner reports of all such shipments other than those 19.31 which are delivered to public warehouses of first destination in 19.32 this state, licensed under the provisions of chapter 231. The 19.33 reports must be filed monthly on or before the tenth day of each 19.34 month and shall show with respect to deliveries made in the 19.35 preceding month: the date, point of origin, point of delivery, 19.36 name of consignee, description and quantity of tobacco products 20.1 delivered, and any other information required by the 20.2 commissioner. 20.3 A common carrier transporting tobacco products into 20.4 Minnesota shall permit examination by the commissioner of its 20.5 records relating to the shipment of tobacco products. 20.6 Subd. 3. [MANUFACTURERS.] A manufacturer of tobacco 20.7 products as defined by this chapter shall report in the form and 20.8 manner prescribed by the commissioner all sales of tobacco 20.9 products to Minnesota licensed distributors, subjobbers, 20.10 retailers, or to any locations within the state. The report is 20.11 due on the 18th day of the month following the reporting period. 20.12 Sec. 13. [297F.13] [REQUIRED RECORDS.] 20.13 Subdivision 1. [CIGARETTE DISTRIBUTOR.] (a) A distributor 20.14 shall keep at each licensed place of business complete and 20.15 accurate records for that place of business. The records must 20.16 include: itemized invoices of cigarettes held, purchased, 20.17 manufactured, or brought in or caused to be brought in from 20.18 outside the state, and all sales of cigarettes made, except 20.19 sales to the ultimate consumer. These records must show the 20.20 names and addresses of purchasers, the inventory of all stamps 20.21 affixed and unaffixed and all cigarettes on hand at the close of 20.22 each period for which a return is required, and any other 20.23 pertinent papers and documents relating to the purchase, sale, 20.24 or disposition of cigarettes. 20.25 (b) A distributor or subjobber who sells cigarettes at 20.26 retail must maintain a separate inventory, substantiated with 20.27 invoices for cigarettes that were acquired for retail sale. 20.28 (c) When a licensed distributor sells cigarettes 20.29 exclusively to the ultimate consumer at the address given in the 20.30 license, no invoice of those sales is required, but itemized 20.31 invoices must be made of all cigarettes transferred to other 20.32 retail outlets owned or controlled by that licensed distributor. 20.33 (d) All books, records, and other documents required by 20.34 this chapter shall be preserved for a period of at least 3-1/2 20.35 years after the date of the documents or the date of the entries 20.36 appearing in the records, unless the commissioner in writing 21.1 authorizes their destruction or disposal at an earlier date. 21.2 (e) To determine whether the distributor is in compliance 21.3 with the provisions of this chapter, at any time during usual 21.4 business hours the commissioner, or duly authorized agents or 21.5 employees, may enter a place of business of a distributor, 21.6 without a search warrant, and inspect the premises, the records 21.7 required to be kept under this chapter, and the packages of 21.8 cigarettes and the vending devices in that place of business. 21.9 If the commissioner, or an agent or employee of the 21.10 commissioner, is denied free access or is hindered or interfered 21.11 with in making the examination, the commissioner may revoke the 21.12 distributor's license. 21.13 Subd. 2. [TOBACCO PRODUCTS DISTRIBUTOR.] (a) A distributor 21.14 shall keep at each licensed place of business complete and 21.15 accurate records for that place of business, including itemized 21.16 invoices of tobacco products held, purchased, manufactured, 21.17 brought in or caused to be brought in from outside the state, or 21.18 shipped or transported to retailers in this state, and all sales 21.19 of tobacco products made, except sales to the ultimate consumer. 21.20 (b) When a licensed distributor sells tobacco products 21.21 exclusively to the ultimate consumer at the address given in the 21.22 license, no invoice of those sales is required, but itemized 21.23 invoices must be made of all tobacco products transferred to 21.24 other retail outlets owned or controlled by that licensed 21.25 distributor. 21.26 (c) All books, records, and other documents required by 21.27 this chapter must be preserved for a period of at least 3-1/2 21.28 years after the date of the documents or the date of the entries 21.29 appearing in the records, unless the commissioner authorizes in 21.30 writing their destruction or disposal at an earlier date. 21.31 (d) To determine whether the distributor is in compliance 21.32 with the provisions of this chapter, at any time during usual 21.33 business hours the commissioner, or duly authorized agents or 21.34 employees, may enter a place of business of a distributor, 21.35 without a search warrant, and inspect the premises, the records 21.36 required to be kept under this chapter, and the tobacco products 22.1 in that place of business. If the commissioner, or an agent or 22.2 employee of the commissioner, is denied free access or is 22.3 hindered or interfered with in making the examination, the 22.4 commissioner may revoke the distributor's license. 22.5 Subd. 3. [DISTRIBUTOR TO PRESERVE COPIES OF INVOICES.] A 22.6 person who sells cigarettes or tobacco products to persons other 22.7 than the ultimate consumer shall render with each sale itemized 22.8 invoices showing the seller's name and address, the purchaser's 22.9 name and address, the date of sale, and all prices and 22.10 discounts, and shall preserve legible copies of all such 22.11 invoices for 3-1/2 years from the date of the sale. 22.12 Subd. 4. [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 22.13 INVOICES.] Every retailer and subjobber shall procure itemized 22.14 invoices of all cigarettes or tobacco products purchased. The 22.15 invoices shall show the name and address of the seller and the 22.16 date of purchase. 22.17 The retailer and subjobber shall preserve a legible copy of 22.18 each invoice for one year from the date of purchase. Copies 22.19 should be numbered and kept in chronological order. 22.20 To determine whether the business is in compliance with the 22.21 provisions of this chapter and sections 325D.30 to 325D.42, at 22.22 any time during usual business hours, the commissioner, or duly 22.23 authorized agents and employees, may enter any place of business 22.24 of a retailer or subjobber without a search warrant and inspect 22.25 the premises, the records required to be kept under this 22.26 chapter, and the packages of cigarettes, tobacco products, and 22.27 vending devices contained on the premises. 22.28 Subd. 5. [CIGARETTES AND TOBACCO PRODUCTS; RECORDS OF 22.29 DELIVERY AND SHIPMENT.] Records of all deliveries or shipments 22.30 of cigarettes or tobacco products from any public warehouse of 22.31 first destination in this state (which is subject to the 22.32 provisions of and licensed under chapter 231), must be kept by 22.33 the warehouse and made available to the commissioner for 22.34 inspection. The records must show the name and address of the 22.35 consignee, the date, the quantity of cigarettes or tobacco 22.36 products delivered, and any other information required by the 23.1 commissioner. These records must be preserved for one year from 23.2 the date of delivery of the cigarettes or tobacco products. 23.3 Sec. 14. [297F.14] [REFUNDS.] 23.4 Subdivision 1. [GENERAL RIGHT TO REFUND.] If cigarettes or 23.5 tobacco products, upon which the tax imposed by this chapter has 23.6 been reported and paid, are shipped or transported by the 23.7 distributor to consumers to be consumed outside the state, or to 23.8 retailers or subjobbers outside the state to be sold by those 23.9 retailers or subjobbers outside the state, or are returned to 23.10 the manufacturer by the distributor, or destroyed by the 23.11 distributor, refund of the tax or credit may be made to the 23.12 distributor. 23.13 Subd. 2. [OVERPAYMENT OF TAX.] An overpayment of the tax 23.14 imposed under this chapter may be refunded to the taxpayer. 23.15 Subd. 3. [CREDIT AGAINST TAX.] The commissioner may credit 23.16 the amount determined under this section against taxes otherwise 23.17 payable under this chapter by the taxpayer. 23.18 Subd. 4. [BAD DEBT.] The commissioner may adopt rules 23.19 providing a refund of the tax paid under this chapter if the tax 23.20 paid qualifies as a bad debt under section 166(a) of the 23.21 Internal Revenue Code. 23.22 Subd. 5. [SOURCE OF REFUND; CIGARETTES.] The commissioner 23.23 of finance shall pay the cigarette tax refund out of the general 23.24 fund. The refunds are apportioned to the same accounts and 23.25 funds in the general fund to which the tax payments were 23.26 deposited, except no refunds may be apportioned to the general 23.27 obligation special tax bond debt service account. 23.28 Subd. 6. [SOURCE OF REFUND; TOBACCO PRODUCTS.] The 23.29 commissioner of finance shall pay the tobacco products tax 23.30 refund out of the general fund. 23.31 Subd. 7. [ANNUAL APPROPRIATION.] There is appropriated 23.32 annually from the general fund to the commissioner of finance 23.33 the amount necessary to make the refunds provided by this 23.34 section. 23.35 Sec. 15. [297F.15] [EXAMINATIONS AND AUDITS.] 23.36 Subdivision 1. [EXAMINATION OF TAXPAYER.] To determine the 24.1 accuracy of a return or a report, or for the purpose of 24.2 collection, or in fixing liability or verifying information 24.3 under any tax under this chapter, the commissioner may make 24.4 reasonable examinations or investigations of a taxpayer's place 24.5 of business, tangible personal property, equipment, computer 24.6 systems and facilities, pertinent books, records, papers, 24.7 vouchers, computer printouts, accounts, and documents. 24.8 Subd. 2. [ACCESS TO RECORDS.] When conducting an 24.9 investigation or an audit of a taxpayer, or for the purpose of 24.10 collection, or in fixing liability or verifying information 24.11 under any tax under this chapter, the commissioner may examine, 24.12 except where privileged by law, the relevant records and files 24.13 of any person, business, institution, financial institution, 24.14 state agency, agency of the United States government, or agency 24.15 of any other state where permitted by statute, agreement, or 24.16 reciprocity. The commissioner may compel production of these 24.17 records by subpoena. A subpoena may be served directly by the 24.18 commissioner. 24.19 Subd. 3. [POWER TO COMPEL TESTIMONY.] In the 24.20 administration of any tax under this chapter, the commissioner 24.21 may: 24.22 (1) administer oaths or affirmations and compel by subpoena 24.23 the attendance of witnesses, testimony, and the production of a 24.24 person's pertinent books, records, papers, and other data for 24.25 inspection and copying; 24.26 (2) examine under oath or affirmation any person regarding 24.27 the business of any taxpayer concerning any relevant matter 24.28 incident to the administration of any tax under this chapter. 24.29 The fees of witnesses required by the commissioner to attend a 24.30 hearing are equal to those allowed to witnesses appearing before 24.31 courts of this state. The fees must be paid in the manner 24.32 provided for the payment of other expenses incident to the 24.33 administration of any tax under this chapter; and 24.34 (3) in addition to other remedies that may be available, 24.35 bring an action in equity by the state against a taxpayer for an 24.36 injunction ordering the taxpayer to file a complete and proper 25.1 return or amended return. The district courts of this state 25.2 have jurisdiction over the action and disobedience of an 25.3 injunction issued under this clause may be punished as a 25.4 contempt of district court. 25.5 Subd. 4. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 25.6 IS KNOWN.] An investigation may extend to a person that the 25.7 commissioner determines has access to information that may be 25.8 relevant to the examination or investigation. When a subpoena 25.9 requiring the production of records as described in subdivision 25.10 2 is served on a third-party recordkeeper, written notice of the 25.11 subpoena must be mailed to the taxpayer and to any other person 25.12 who is identified on the subpoena. The notices must be given 25.13 within three days of the day on which the subpoena is served. 25.14 Notice to the taxpayer required by this section is sufficient if 25.15 it is mailed to the last address on record with the 25.16 commissioner. The provisions of this subdivision relating to 25.17 notice to the taxpayer or other parties identified in the 25.18 subpoena do not apply if there is reasonable cause to believe 25.19 that the giving of notice may lead to attempts to conceal, 25.20 destroy, or alter records relevant to the examination, to 25.21 prevent the communication of information from other persons 25.22 through intimidation, bribery, or collusion, or to flee to avoid 25.23 prosecution, testifying, or production of records. 25.24 Subd. 5. [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 25.25 IS NOT KNOWN.] A subpoena that does not identify the person or 25.26 persons whose tax liability is investigated may be served only 25.27 if: 25.28 (1) the subpoena relates to the investigation of a 25.29 particular person or an ascertainable group or class of persons; 25.30 (2) there is reasonable basis for believing that the person 25.31 or group or class of persons may fail or may have failed to 25.32 comply with the tax laws administered by the commissioner; 25.33 (3) the information sought to be obtained from the 25.34 examination of the records, and the identity of the person or 25.35 persons with respect to whose liability the subpoena is issued, 25.36 is not readily available from other sources; 26.1 (4) the subpoena is clear and specific concerning the 26.2 information sought to be obtained; and 26.3 (5) the information sought to be obtained is limited solely 26.4 to the scope of the investigation. 26.5 The party served with a subpoena that does not identify the 26.6 person or persons with respect to whose tax liability the 26.7 subpoena is issued may, within 20 days after service of the 26.8 subpoena, petition the district court in the judicial district 26.9 in which that party is located for a determination whether the 26.10 commissioner has complied with all the requirements in clauses 26.11 (1) to (5), and thus, whether the subpoena is enforceable. If 26.12 no petition is made by the party served within the time 26.13 prescribed, the subpoena has the effect of a court order. 26.14 Subd. 6. [REQUEST BY TAXPAYER FOR SUBPOENA.] When the 26.15 commissioner has the power to issue a subpoena for investigative 26.16 or auditing purposes, the commissioner shall honor a reasonable 26.17 request by the taxpayer to issue a subpoena on the taxpayer's 26.18 behalf in connection with the investigation or audit. 26.19 Subd. 7. [APPLICATION TO COURT FOR ENFORCEMENT OF 26.20 SUBPOENA.] Disobedience of subpoenas issued under this section 26.21 shall be punished by the district court of the district in which 26.22 the party served with the subpoena is located, in the same 26.23 manner as contempt of the district court. 26.24 Subd. 8. [COST OF PRODUCTION OF RECORDS.] The cost of 26.25 producing records of a third party required by a subpoena must 26.26 be paid by the taxpayer, if the taxpayer requests the subpoena 26.27 to be issued, or if the taxpayer has the records available but 26.28 has refused to provide them to the commissioner. In other cases 26.29 when the taxpayer cannot produce records and the commissioner 26.30 then initiates a subpoena for third-party records, the 26.31 commissioner shall pay the reasonable cost of producing the 26.32 records. The commissioner may later assess the reasonable costs 26.33 against the taxpayer if the records contribute to the 26.34 determination of an assessment of tax against the taxpayer. 26.35 Subd. 9. [PHYSICAL INVENTORY.] The commissioner or the 26.36 commissioner's authorized agents may, as considered necessary, 27.1 require a cigarette or tobacco products distributor to furnish a 27.2 physical inventory of all cigarettes or tobacco products in 27.3 stock. The inventory must contain the information that the 27.4 commissioner requests and must be certified by an officer of the 27.5 corporation. 27.6 Subd. 10. [OFFSET.] Upon audit, if a distributor's return 27.7 reflects an overage resulting from an inventory counting error, 27.8 the overage shall be offset against a shortage, if any, in the 27.9 month immediately preceding the month of the overage. If any 27.10 overage remains after that offset, the remainder may only be 27.11 offset against a shortage, if any, in the month immediately 27.12 following the month of the overage. If the commissioner 27.13 determines that the overage is attributable to a mistake by the 27.14 distributor other than an inventory counting error, the 27.15 commissioner may permit the overage to be offset against a 27.16 shortage in any month or months during the 12-month period 27.17 immediately following the month when the overage was discovered 27.18 upon audit. 27.19 Sec. 16. [297F.16] [ASSESSMENTS.] 27.20 Subdivision 1. [GENERAL RULE.] The commissioner shall make 27.21 determinations, corrections, and assessments with respect to any 27.22 tax under this chapter, including interest, additions to taxes, 27.23 and assessable penalties. 27.24 Subd. 2. [COMMISSIONER FILED RETURNS.] If a taxpayer fails 27.25 to file a required return, the commissioner, from information in 27.26 the commissioner's possession or obtainable by the commissioner, 27.27 may make a return for the taxpayer. The return is prima facie 27.28 correct and valid. The commissioner may use statistical or 27.29 other sampling techniques consistent with generally accepted 27.30 auditing standards in examining returns or records and making 27.31 assessments. 27.32 Subd. 3. [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 27.33 TAXPAYER.] (a) When a return has been filed and the commissioner 27.34 determines that the tax disclosed by the return is different 27.35 than the tax determined by the examination, the commissioner 27.36 shall send an order of assessment to the taxpayer. When no 28.1 return has been filed, the commissioner may make a return for 28.2 the taxpayer under subdivision 2 or may send an order of 28.3 assessment under this subdivision. The order must explain the 28.4 basis for the assessment and must explain the taxpayer's appeal 28.5 rights. An order of assessment is final when made but may be 28.6 reconsidered by the commissioner under this chapter. 28.7 (b) Penalties under this chapter are not imposed and no 28.8 collection action can be taken, including the filing of liens 28.9 under section 270.69, if the amount shown on the order is paid 28.10 to the commissioner: 28.11 (1) within 60 days after notice of the amount and demand 28.12 for its payment have been mailed to the taxpayer by the 28.13 commissioner; or 28.14 (2) if an administrative appeal is filed under this 28.15 chapter, or a tax court appeal is filed under chapter 271, 28.16 within 60 days following final determination of the appeal if 28.17 the appeal is based upon a constitutional challenge to the tax, 28.18 and if not, when the decision of the tax court is made. 28.19 Subd. 4. [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 28.20 refund or credit is considered an underpayment of tax on the 28.21 date made. An assessment of a deficiency arising out of an 28.22 erroneous refund or credit must be made within 3-1/2 years from 28.23 the date prescribed for filing the return, plus any extension of 28.24 time granted for filing the return, but only if filed within the 28.25 extended time, or two years from the time the tax is paid in 28.26 full, whichever period expires later. 28.27 Subd. 5. [ASSESSMENT PRESUMED VALID.] A return or 28.28 assessment of tax made by the commissioner is prima facie 28.29 correct and valid. The taxpayer has the burden of establishing 28.30 its incorrectness or invalidity in any related action or 28.31 proceeding. 28.32 Subd. 6. [AGGREGATE REFUND OR ASSESSMENT.] The 28.33 commissioner, on examining returns of a taxpayer for more than 28.34 one year or period, may issue one order covering the period 28.35 under examination that reflects the aggregate refund or 28.36 additional tax due. 29.1 Subd. 7. [SUFFICIENCY OF NOTICE.] An order of assessment, 29.2 sent postage prepaid by United States mail to the taxpayer at 29.3 the taxpayer's last known address, is sufficient even if the 29.4 taxpayer is deceased or is under a legal disability, or, in the 29.5 case of a corporation, has terminated its existence, unless the 29.6 department has been provided with a new address by a party 29.7 authorized to receive notices of assessment. 29.8 Sec. 17. [297F.17] [LIMITATIONS ON TIME FOR ASSESSMENT OF 29.9 TAX.] 29.10 Subdivision 1. [GENERAL RULE.] Except as otherwise 29.11 provided in this chapter, the amount of any tax due must be 29.12 assessed within 3-1/2 years after a return is filed. The taxes 29.13 are considered assessed within the meaning of this section when 29.14 the commissioner has prepared a notice of tax assessment and 29.15 mailed it to the person required to file a return to the post 29.16 office address given in the return. The notice of tax 29.17 assessment must be sent by mail to the post office address given 29.18 in the return and the record of the mailing is presumptive 29.19 evidence of the giving of such notice, and such records must be 29.20 preserved by the commissioner. 29.21 Subd. 2. [DATE OF FILING.] For purposes of this chapter, a 29.22 return filed before the last day prescribed by law for its 29.23 filing is considered filed on the last day. 29.24 Subd. 3. [FALSE OR FRAUDULENT RETURN OR CLAIM FOR REFUND; 29.25 NO RETURN.] When a person required to file a return under this 29.26 chapter files a false or fraudulent return or claim for refund, 29.27 or fails to file a return, the tax may be assessed, and a 29.28 proceeding in court for the collection of such tax may be begun 29.29 at any time. 29.30 Subd. 4. [OMISSION OVER 25 PERCENT.] If the person 29.31 required to file the return omits from the return a dollar 29.32 amount properly includable in it that is in excess of 25 percent 29.33 of the dollar amount reported in the return, the tax may be 29.34 assessed, or a proceeding in court for the collection of such 29.35 tax may be begun, at any time within 6-1/2 years after the 29.36 return was filed. 30.1 Subd. 5. [TIME LIMIT FOR REFUNDS.] Unless otherwise 30.2 provided in this chapter, a claim for a refund of an overpayment 30.3 of tax must be filed within 3-1/2 years from the date prescribed 30.4 for filing the return, plus any extension of time granted for 30.5 filing the return, but only if filed within the extended time, 30.6 or one year after the date of assessment, whichever period 30.7 expires later. 30.8 Subd. 6. [TIME LIMIT FOR BAD DEBT DEDUCTION.] Claims for 30.9 refund must be filed with the commissioner within one year of 30.10 the filing date of the taxpayer's federal income tax return 30.11 containing the bad debt deduction that is being claimed. 30.12 Claimants under this subdivision are subject to the notice 30.13 requirements of section 289A.38, subdivision 7. 30.14 Subd. 7. [CONSENT TO EXTEND TIME.] If before the 30.15 expiration of the time prescribed in this section for the 30.16 assessment of the tax, the commissioner and the person filing 30.17 the return consent in writing to an extension of time for the 30.18 assessment of the tax, the tax may be assessed at any time prior 30.19 to the expiration of the period agreed upon. The period so 30.20 agreed upon may be extended by subsequent agreements in writing 30.21 made before the expiration of the period previously agreed upon. 30.22 Subd. 8. [SUSPENSION OF TIME; BANKRUPTCY PROCEEDINGS.] The 30.23 time during which a tax must be assessed or collection 30.24 proceedings commenced under this chapter is suspended during the 30.25 period from the date of a filing of a petition in bankruptcy 30.26 until 30 days after notice to the commissioner that the 30.27 bankruptcy proceedings have been closed or dismissed, or that 30.28 the automatic stay has been terminated or has expired. 30.29 The suspension of the statute of limitations under this 30.30 subdivision applies to the person against whom the petition in 30.31 bankruptcy is filed, and to all other persons who may be wholly 30.32 or partially liable for the tax under this chapter. 30.33 Sec. 18. [297F.18] [INTEREST.] 30.34 Subdivision 1. [INTEREST RATE.] When interest is required 30.35 under this section, interest is computed at the rate specified 30.36 in section 270.75. 31.1 Subd. 2. [LATE PAYMENT.] If a tax under this chapter is 31.2 not paid within the time named by law for payment, the unpaid 31.3 tax bears interest from the date the tax should have been paid 31.4 until the date the tax is paid. 31.5 Subd. 3. [EXTENSIONS.] When an extension of time for 31.6 payment has been granted, interest must be paid from the date 31.7 the payment should have been made, if no extension had been 31.8 granted, until the date the tax is paid. 31.9 Subd. 4. [ADDITIONAL ASSESSMENTS.] When a taxpayer is 31.10 liable for additional taxes because of a redetermination by the 31.11 commissioner, or for any other reason, the additional taxes bear 31.12 interest from the time the tax should have been paid, without 31.13 regard to an extension allowed, until the date the tax is paid. 31.14 Subd. 5. [ERRONEOUS REFUNDS.] In the case of an erroneous 31.15 refund, interest begins to accrue from the date the refund was 31.16 paid unless the erroneous refund results from a mistake of the 31.17 department, in which case no interest or penalty is imposed, 31.18 unless the deficiency assessment is not satisfied within 60 days 31.19 of the order. 31.20 Subd. 6. [INTEREST ON JUDGMENTS.] Notwithstanding section 31.21 549.09, if judgment is entered in favor of the commissioner with 31.22 regard to any tax under this chapter, the judgment bears 31.23 interest at the rate given in section 270.75 from the date the 31.24 judgment is entered until the date of payment. 31.25 Subd. 7. [INTEREST ON PENALTIES.] (a) A penalty imposed 31.26 under section 297F.19, subdivisions 2 to 7, bears interest from 31.27 the date the return or payment was required to be filed or paid, 31.28 including any extensions, to the date of payment of the penalty. 31.29 (b) A penalty not included in paragraph (a) bears interest 31.30 only if it is not paid within ten days from the date of the 31.31 notice. In that case interest is imposed from the date of 31.32 notice to the date of payment. 31.33 Sec. 19. [297F.19] [CIVIL PENALTIES.] 31.34 Subdivision 1. [CIVIL ACTION; GENERAL RULE.] The 31.35 commissioner may recover the amount of any tax due and unpaid 31.36 under this chapter, as well as interest, and any penalty in a 32.1 civil action. The collection of the tax, interest, or penalty 32.2 is not a bar to any prosecution under this chapter. 32.3 Subd. 2. [PENALTY FOR FAILURE TO PAY TAX.] If a tax 32.4 imposed by this chapter is not paid within the time specified 32.5 for payment, a penalty is added to the amount required to be 32.6 shown as tax. The penalty is five percent of the tax not paid 32.7 on or before the date specified for payment of the tax if the 32.8 failure is for not more than 30 days, with an additional penalty 32.9 of five percent of the amount of tax remaining unpaid during 32.10 each additional 30 days or fraction of 30 days during which the 32.11 failure continues, not exceeding 15 percent in the aggregate. 32.12 Subd. 3. [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 32.13 a taxpayer fails to make and file a return within the time 32.14 prescribed, including an extension, a penalty of five percent of 32.15 the amount of tax not timely paid is added to the tax. 32.16 Subd. 4. [COMBINED PENALTIES.] When penalties are imposed 32.17 under subdivisions 2 and 3, the penalties imposed under both 32.18 subdivisions combined must not exceed 38 percent in the 32.19 aggregate. 32.20 Subd. 5. [PENALTY FOR INTENTIONAL DISREGARD OF LAW OR 32.21 RULES.] If part of an additional assessment is due to negligence 32.22 or intentional disregard of the provisions of the applicable tax 32.23 laws or rules of the commissioner, but without intent to 32.24 defraud, there must be added to the tax an amount equal to ten 32.25 percent of the additional assessment. 32.26 Subd. 6. [PENALTY FOR REPEATED FAILURES TO FILE RETURNS OR 32.27 PAY TAXES.] If there is a pattern by a person of repeated 32.28 failures to timely file returns or timely pay taxes, and written 32.29 notice is given that a penalty will be imposed if such failures 32.30 continue, a penalty of 25 percent of the amount of the tax not 32.31 timely paid as a result of each such subsequent failure is added 32.32 to the tax. The penalty can be abated under the abatement 32.33 authority in section 270.07, subdivisions 1, paragraph (e), and 32.34 6. 32.35 Subd. 7. [PENALTY FOR FALSE OR FRAUDULENT RETURN; 32.36 EVASION.] If a person files a false or fraudulent return, or 33.1 attempts in any manner to evade or defeat a tax or payment of 33.2 tax, there is imposed on the person a penalty equal to 50 33.3 percent of the tax due for the period to which the return 33.4 related, less amounts paid by the person on the basis of the 33.5 false or fraudulent return. 33.6 Subd. 8. [PAYMENT OF PENALTIES.] The penalties imposed by 33.7 this section are collected and paid in the same manner as taxes. 33.8 Subd. 9. [PENALTIES ARE ADDITIONAL.] The civil penalties 33.9 imposed by this section are in addition to the criminal 33.10 penalties imposed by this chapter. 33.11 Sec. 20. [297F.20] [CRIMINAL PENALTIES.] 33.12 Subdivision 1. [PENALTIES FOR FAILURE TO FILE OR PAY.] (a) 33.13 A person required to file a return, report, or other document 33.14 with the commissioner who fails to do so is guilty of a 33.15 misdemeanor. 33.16 (b) A person required to pay or to collect and remit a tax 33.17 under this chapter, who fails to do so when required, is guilty 33.18 of a misdemeanor. 33.19 Subd. 2. [PENALTIES FOR KNOWING FAILURE TO FILE OR 33.20 PAY.] (a) A person required to file a return, report, or other 33.21 document with the commissioner, who knowingly, rather than 33.22 accidentally, inadvertently, or negligently, fails to file it 33.23 when required, is guilty of a gross misdemeanor. 33.24 (b) A person required to pay or to collect and remit a tax 33.25 under this chapter, who knowingly, rather than accidentally, 33.26 inadvertently, or negligently, fails to file it when required, 33.27 is guilty of a gross misdemeanor. 33.28 Subd. 3. [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 33.29 person who files with the commissioner a return, report, or 33.30 other document, known by the person to be fraudulent or false 33.31 concerning a material matter, is guilty of a felony. 33.32 (b) A person who knowingly aids or assists in, or advises 33.33 in the preparation or presentation of a return, report, or other 33.34 document that is fraudulent or false concerning a material 33.35 matter, whether or not the falsity or fraud is committed with 33.36 the knowledge or consent of the person authorized or required to 34.1 present the return, report, or other document, is guilty of a 34.2 felony. 34.3 Subd. 4. [COUNTERFEITING.] Any person who makes, alters, 34.4 forges, or counterfeits a stamp, or who possesses an altered, 34.5 forged, or counterfeit stamp is guilty of a felony. 34.6 Subd. 5. [UNSTAMPED CIGARETTES; PRESUMPTION.] (a) Except 34.7 as provided in paragraph (b), whenever a package of cigarettes 34.8 is found in the place of business or in the possession of any 34.9 person without a proper stamp affixed as required by this 34.10 chapter, it is presumed that those cigarettes are kept there or 34.11 held by that person illegally. 34.12 (b) This presumption does not apply to: 34.13 (1) cigarettes in the place of business or in the 34.14 possession of a licensed distributor; 34.15 (2) cigarettes in the possession of a common carrier or 34.16 sleeping car company engaged in interstate commerce; 34.17 (3) cigarettes held in a public warehouse of first 34.18 destination in this state, in the unbroken, original shipping 34.19 containers, subject to delivery or shipping instructions from 34.20 the manufacturer or a distributor; 34.21 (4) cigarettes in the possession of a person other than a 34.22 distributor in quantities of 200 cigarettes or less, when those 34.23 cigarettes have had the individual packages or seals broken, and 34.24 when they are intended for personal use and not to be sold or 34.25 offered for sale; 34.26 (5) cigarettes sold under circumstances in which the tax 34.27 cannot legally be imposed because of the laws or constitution of 34.28 the United States. 34.29 Subd. 6. [UNSTAMPED CIGARETTES; UNTAXED TOBACCO 34.30 PRODUCTS.] (a) A person who possesses, receives, or transports 34.31 more than 200 but fewer than 5,000 unstamped cigarettes, or up 34.32 to $100 worth of untaxed tobacco products is guilty of a 34.33 misdemeanor. 34.34 (b) A person who possesses, receives, or transports 5,000 34.35 or more, but fewer than 20,001 unstamped cigarettes, or up to 34.36 $500 worth of untaxed tobacco products is guilty of a gross 35.1 misdemeanor. 35.2 (c) A person who possesses, receives, or transports more 35.3 than 20,000 unstamped cigarettes, or $500 or more worth of 35.4 untaxed tobacco products is guilty of a felony. 35.5 Subd. 7. [SALE OF CIGARETTE PACKAGES WITH INDIAN 35.6 STAMP.] (a) A retailer doing business off of an Indian 35.7 reservation who sells or offers to sell more than 200 but fewer 35.8 than 5,000 cigarettes with Indian stamps is guilty of a 35.9 misdemeanor. 35.10 (b) A retailer doing business off of an Indian reservation 35.11 who sells or offers to sell 5,000 or more, but fewer than 20,001 35.12 cigarettes with Indian stamps is guilty of a gross misdemeanor. 35.13 (c) A retailer doing business off of an Indian reservation 35.14 who sells or offers to sell more than 20,000 cigarettes with 35.15 Indian stamps is guilty of a felony. 35.16 Subd. 8. [SALES AFTER LICENSE REVOCATION.] A person 35.17 selling cigarettes or tobacco products after the person's 35.18 license has been revoked is guilty of a felony. 35.19 Subd. 9. [PURCHASES FROM UNLICENSED SELLERS.] (a) A 35.20 retailer, subjobber, or consumer who purchases from an 35.21 unlicensed seller more than 200 but fewer than 5,000 cigarettes 35.22 or up to $100 worth of tobacco products is guilty of a 35.23 misdemeanor. 35.24 (b) A retailer, subjobber, or consumer who purchases from 35.25 an unlicensed seller 5,000 or more, but fewer than 20,001 35.26 cigarettes or up to $500 worth of untaxed tobacco products is 35.27 guilty of a gross misdemeanor. 35.28 (c) A retailer, subjobber, or consumer who purchases from 35.29 an unlicensed seller more than 20,000 cigarettes or $500 or more 35.30 worth of tobacco products is guilty of a felony. 35.31 Subd. 10. [PENALTIES ARE ADDITIONAL.] Criminal penalties 35.32 imposed by this section are in addition to any civil penalties 35.33 imposed by this chapter. 35.34 Subd. 11. [STATUTE OF LIMITATIONS.] Notwithstanding 35.35 section 628.26, or any other provision of the criminal laws of 35.36 this state, an indictment may be found and filed, or a complaint 36.1 filed, upon a criminal offense named in this section, in the 36.2 proper court within six years after the offense is committed. 36.3 Subd. 12. [OTHER PENALTIES.] A violation of this chapter 36.4 unless otherwise specified is a misdemeanor. 36.5 Sec. 21. [297F.21] [CONTRABAND.] 36.6 Subdivision 1. [CONTRABAND DEFINED.] The following are 36.7 declared to be contraband and therefore subject to civil and 36.8 criminal penalties under this chapter: 36.9 (a) Cigarette packages which do not have stamps affixed to 36.10 them as provided in this chapter, including but not limited to 36.11 (i) packages with illegible stamps and packages with stamps that 36.12 are not complete or whole even if the stamps are legible, and 36.13 (ii) all devices for the vending of cigarettes in which packages 36.14 as defined in item (i) are found, including all contents 36.15 contained within the devices. 36.16 (b) A device for the vending of cigarettes and all packages 36.17 of cigarettes, where the device does not afford at least partial 36.18 visibility of contents. Where any package exposed to view does 36.19 not carry the stamp required by this chapter, it shall be 36.20 presumed that all packages contained in the device are unstamped 36.21 and contraband. 36.22 (c) A device for the vending of cigarettes to which the 36.23 commissioner or authorized agents have been denied access for 36.24 the inspection of contents. In lieu of seizure, the 36.25 commissioner or an agent may seal the device to prevent its use 36.26 until inspection of contents is permitted. 36.27 (d) A device for the vending of cigarettes which does not 36.28 carry the name and address of the owner, plainly marked and 36.29 visible from the front of the machine. 36.30 (e) A device including, but not limited to, motor vehicles, 36.31 trailers, snowmobiles, airplanes, and boats used with the 36.32 knowledge of the owner or of a person operating with the consent 36.33 of the owner for the storage or transportation of more than 36.34 5,000 cigarettes which are contraband under this subdivision. 36.35 When cigarettes are being transported in the course of 36.36 interstate commerce, or are in movement from either a public 37.1 warehouse to a distributor upon orders from a manufacturer or 37.2 distributor, or from one distributor to another, the cigarettes 37.3 are not contraband, notwithstanding the provisions of clause (a). 37.4 (f) Cigarette packages or tobacco products obtained from an 37.5 unlicensed seller. 37.6 (g) Cigarette packages offered for sale or held as 37.7 inventory in violation of section 297F.20, subdivision 7. 37.8 (h) Tobacco products on which the tax has not been paid by 37.9 a licensed distributor. 37.10 Subd. 2. [SEIZURE.] Cigarettes, tobacco products, or other 37.11 property made contraband by subdivision 1 may be seized by the 37.12 commissioner or authorized agents or by any sheriff or other 37.13 police officer, with or without process, and are subject to 37.14 forfeiture as provided in subdivisions 3 and 4. 37.15 Subd. 3. [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 37.16 DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 37.17 seizure of any alleged contraband, the person making the seizure 37.18 shall make available an inventory of the property seized to the 37.19 person from whom the seizure was made, if known, and file a copy 37.20 with the commissioner. Within ten days after the date of 37.21 service of the inventory, the person from whom the property was 37.22 seized or any person claiming an interest in the property may 37.23 file with the commissioner a demand for a judicial determination 37.24 of the question as to whether the property was lawfully subject 37.25 to seizure and forfeiture. The commissioner, within 60 days, 37.26 shall institute an action in the district court of the county 37.27 where the seizure was made to determine the issue of forfeiture. 37.28 (b) The action must be brought in the name of the state and 37.29 must be prosecuted by the county attorney or by the attorney 37.30 general. The court shall hear the action without a jury and 37.31 shall try and determine the issues of fact and law involved. 37.32 (c) When a judgment of forfeiture is entered, the 37.33 commissioner may, unless the judgment is stayed pending an 37.34 appeal, either: 37.35 (1) deliver the forfeited property to the commissioner of 37.36 human services for use by patients in state institutions; 38.1 (2) cause it to be destroyed; or 38.2 (3) cause it to be sold at public auction as provided by 38.3 law. 38.4 (d) If a demand for judicial determination is made and no 38.5 action commenced as provided in this subdivision, the property 38.6 must be released by the commissioner and returned to the person 38.7 entitled to it. If no demand is made, the property seized is 38.8 considered forfeited to the state by operation of law and may be 38.9 disposed of by the commissioner as provided in the case of a 38.10 judgment of forfeiture. When the commissioner is satisfied that 38.11 a person from whom property is seized was acting in good faith 38.12 and without intent to evade the tax imposed by this chapter, the 38.13 commissioner shall release the property seized without further 38.14 legal proceedings. 38.15 Subd. 4. [DISPOSAL OF OTHER PROPERTY.] (a) The property 38.16 described in subdivision 1, clause (e), must be confiscated 38.17 after conviction of the person from whom it was seized, upon 38.18 compliance with the following procedure: the commissioner or 38.19 agents shall file with the court a separate complaint against 38.20 the property, describing it and charging its use in the 38.21 specified violation, and specifying substantially the time and 38.22 place of the unlawful use. A copy of the complaint must be 38.23 served upon the defendant or person in charge of the property at 38.24 the time of seizure, if any. 38.25 (b) If the person arrested is acquitted, the court shall 38.26 dismiss the complaint against the property and order it returned 38.27 to the persons legally entitled to it. Upon conviction of the 38.28 person arrested, the court shall issue an order directed to any 38.29 person known or believed to have any right or title or interest 38.30 in, or lien upon, any of the property, and to persons unknown 38.31 claiming any right, title, interest, or lien in it, describing 38.32 the property; and 38.33 (1) stating that it was seized and that a complaint against 38.34 it, charging the specified violation, has been filed with the 38.35 court, 38.36 (2) requiring the persons to file with the court 39.1 administrator their answer to the complaint, setting forth any 39.2 claim they may have to any right or title to, interest in, or 39.3 lien upon the property, within 30 days after the service of the 39.4 order, and 39.5 (3) notifying them in substance that if they fail to file 39.6 their answer within the prescribed time, the property will be 39.7 ordered sold by the commissioner or the commissioner's agents. 39.8 (c) The court shall cause the order to be served on any 39.9 person known or believed to have any right, title, interest, or 39.10 lien as in the case of a summons in a civil action, and on 39.11 unknown persons by publication, as provided for service of 39.12 summons in a civil action. If an answer is filed within the 39.13 time provided, the court shall fix a time for hearing, which 39.14 shall be not less than ten nor more than 30 days after the time 39.15 for filing answer expires. If no answer is filed within the 39.16 time prescribed, the court shall, upon affidavit by the court 39.17 administrator, setting forth the fact, order the property sold 39.18 by the commissioner or agents. Seventy-five percent of the 39.19 proceeds of the sale of forfeited property, after payment of 39.20 seizure, storage, forfeiture, and sale expenses, must be 39.21 forwarded to the commissioner for deposit as a supplement to its 39.22 operating fund or similar fund for official use, and 25 percent 39.23 must be forwarded to the county attorney or other prosecuting 39.24 agency that handled the forfeiture for deposit as a supplement 39.25 to its operating fund or similar fund for prosecutorial purposes. 39.26 (d) At the time fixed for hearing, unless continued for 39.27 cause, the matter must be heard and determined by the court 39.28 without a jury as in other civil actions. If the court finds 39.29 that the property, or any part of it, was used in the violation 39.30 specified in the complaint, it shall order the property 39.31 unlawfully used, and sold as provided by law, unless the owner 39.32 shows to the satisfaction of the court that the owner had no 39.33 notice or knowledge or reason to believe that the property was 39.34 used or intended to be used in the violation. The officer 39.35 making a sale, after deducting the expense of keeping the 39.36 property, the fee for seizure, and the costs of the sale, shall 40.1 pay all liens according to their priority, which are established 40.2 at the hearing as being bona fide, and as existing without the 40.3 lienor having any notice or knowledge that the property was 40.4 being used or was intended to be used for or in connection with 40.5 the violation specified in the order of the court, and shall pay 40.6 the balance of the proceeds to the commissioner for official use 40.7 and sharing in the manner provided in paragraph (c). A sale 40.8 under the provisions of this section operates to free the 40.9 property sold from any and all liens on it. An appeal from the 40.10 order of the district court lies as in other civil cases. 40.11 (e) At any time after seizure of the articles specified in 40.12 this subdivision, and before the hearing provided for, the 40.13 property must be returned to the owner or person having a legal 40.14 right to its possession, upon execution of a good and valid bond 40.15 to the state, with corporate surety, in the sum of not less than 40.16 $100 and not more than double the value of the property seized, 40.17 to be approved by the court in which the case is triable, or a 40.18 judge of it, conditioned to abide any order and the judgment of 40.19 the court, and to pay the full value of the property at the time 40.20 of seizure. The commissioner may dismiss the proceedings 40.21 outlined in this subdivision when the commissioner considers it 40.22 in the best interests of the state to do so. 40.23 Sec. 22. [297F.22] [ADMINISTRATIVE REVIEW.] 40.24 Subdivision 1. [TAXPAYER RIGHT TO RECONSIDERATION.] A 40.25 taxpayer may obtain reconsideration by the commissioner of an 40.26 order assessing any tax imposed by this chapter, a denial of a 40.27 request for abatement of penalty, or a denial of a claim for 40.28 refund by filing an administrative appeal under subdivision 3. 40.29 A taxpayer cannot obtain reconsideration under this section if 40.30 the action taken by the commissioner is the outcome of an 40.31 administrative appeal. 40.32 Subd. 2. [NOTICE DATE.] For purposes of this section, the 40.33 term "notice date" means the date of the order adjusting the tax 40.34 or order denying a request for abatement, or, in the case of a 40.35 denied refund, the date of the notice of denial. 40.36 Subd. 3. [TIME AND CONTENT FOR ADMINISTRATIVE 41.1 APPEAL.] Within 60 days after the notice date, the taxpayer must 41.2 file a written appeal with the commissioner. The appeal need 41.3 not be in any particular form but must contain the following 41.4 information: 41.5 (1) the name and address of the taxpayer; 41.6 (2) if a corporation, the state of incorporation of the 41.7 taxpayer, and the principal place of business of the 41.8 corporation; 41.9 (3) the Minnesota identification number or social security 41.10 number of the taxpayer; 41.11 (4) the type of tax involved; 41.12 (5) the date; 41.13 (6) the tax years or period involved and the amount of tax 41.14 involved for each year or period; 41.15 (7) the findings in the notice that the taxpayer disputes; 41.16 (8) a summary statement that the taxpayer relies on for 41.17 each exception; and 41.18 (9) the taxpayer's signature or signature of the taxpayer's 41.19 duly authorized agent. 41.20 Subd. 4. [EXTENSIONS.] When requested in writing and 41.21 within the time allowed for filing an administrative appeal, the 41.22 commissioner may extend the time for filing an appeal for a 41.23 period of not more than 30 days from the expiration of the 60 41.24 days from the notice date. 41.25 Subd. 5. [DETERMINATION OF APPEAL.] On the basis of 41.26 applicable law and available information, the commissioner shall 41.27 determine the validity, if any, in whole or part of the appeal 41.28 and notify the taxpayer of the decision. This notice must be in 41.29 writing and contain the basis for the determination. 41.30 Subd. 6. [AGREEMENT DETERMINING TAX LIABILITY.] When it 41.31 appears to be in the best interests of the state, the 41.32 commissioner may settle any taxes, penalties, or interest that 41.33 the commissioner has under consideration by virtue of an appeal 41.34 filed under this section. An agreement must be in writing and 41.35 signed by the commissioner and the taxpayer, or the taxpayer's 41.36 representative authorized by the taxpayer to enter into an 42.1 agreement. The agreement must be filed in the office of the 42.2 commissioner. 42.3 Subd. 7. [APPEAL OF AN ADMINISTRATIVE 42.4 DETERMINATION.] Following the determination or settlement of an 42.5 appeal and notwithstanding any period of limitations for making 42.6 assessments or other determinations to the contrary, the 42.7 commissioner must issue an order reflecting that disposition. 42.8 If the statute of limitations for making assessments or other 42.9 determinations would have expired before the issuance of this 42.10 order, except for this section, the order is limited to issues 42.11 or matters contained in the appealed determination. Except in 42.12 the case of an agreement determining tax under this section, the 42.13 order is appealable to the Minnesota tax court under section 42.14 271.06. 42.15 Subd. 8. [APPEAL WHERE NO DETERMINATION.] If the 42.16 commissioner does not make a determination within six months of 42.17 the filing of an administrative appeal, the taxpayer may appeal 42.18 to tax court. 42.19 Subd. 9. [INAPPLICABILITY OF ADMINISTRATIVE PROCEDURE 42.20 ACT.] An appeal under this section is not a contested case 42.21 governed by chapter 14. 42.22 Sec. 23. [297F.23] [JUDICIAL REVIEW.] 42.23 In lieu of an administrative appeal under this chapter, a 42.24 person aggrieved by an order of the commissioner fixing a tax, 42.25 penalty, or interest under this chapter may, within 60 days from 42.26 the date of the notice of the order, appeal to the tax court in 42.27 the manner provided under section 271.06. 42.28 Sec. 24. [PURPOSE.] 42.29 It is the intent of the legislature to simplify Minnesota's 42.30 cigarette and tobacco products tax laws by consolidating and 42.31 recodifying tax administration and compliance provisions now 42.32 contained throughout Minnesota Statutes, chapter 297. Due to 42.33 the complexity of the recodification, prior provisions are 42.34 repealed on the effective date of the new provisions. The 42.35 repealed provisions, however, continue to remain in effect until 42.36 superseded by the analogous provision in the new law. 43.1 Sec. 25. [REPEALER.] 43.2 Minnesota Statutes 1996, sections 297.01; 297.02; 297.03; 43.3 297.031; 297.032; 297.04; 297.041; 297.05; 297.06; 297.07; 43.4 297.075; 297.08; 297.09; 297.10; 297.11; 297.12; 297.13; 297.21; 43.5 297.22; 297.23; 297.24; 297.25; 297.26; 297.31; 297.32; 297.321; 43.6 297.33; 297.335; 297.34; 297.35; 297.36; 297.37; 297.38; 43.7 297.385; 297.39; 297.40; 297.41; 297.42; 297.43; and 297.44, are 43.8 repealed. 43.9 Sec. 26. [EFFECTIVE DATE.] 43.10 Sections 1, 7, and 24 are effective the day following final 43.11 enactment. 43.12 Sections 2 to 6 and 8 to 12, 14, 19, 22, and 23 are 43.13 effective for returns, reports, taxes, or other payments first 43.14 becoming due on or after August 1, 1997. 43.15 Sections 13, 21, and 25 are effective August 1, 1997. 43.16 Sections 15 and 16 are effective for audits or 43.17 investigations initiated on or after August 1, 1997. 43.18 Section 17 is effective for returns becoming due on or 43.19 after August 1, 1997. 43.20 Section 18 is effective for interest on amounts first 43.21 becoming due to the commissioner on or after August 1, 1997. 43.22 Section 20 is effective for crimes committed on or after 43.23 August 1, 1997. 43.24 ARTICLE 2 43.25 CROSS-REFERENCE CORRECTIONS 43.26 Section 1. Minnesota Statutes 1996, section 16A.26, is 43.27 amended to read: 43.28 16A.26 [ONE DEPOSITORY ACCOUNT FOR EACH TAX.] 43.29 Notwithstanding sections297.13297F.10, 298.17, 298.282, 43.30 298.39, 298.396, 297C.02 to 297C.08 and similar laws to the 43.31 contrary relating to the depositing, disposition, or 43.32 apportionment of tax receipts, the commissioner may use one 43.33 depository account for each tax. To do so, there must be enough 43.34 information to identify and dispose of or apportion the tax 43.35 under law. The commissioner shall ask the appropriate officials 43.36 for the transfers and necessary certifications. The 44.1 commissioner may issue directives to carry out this section. 44.2 Sec. 2. Minnesota Statutes 1996, section 16A.661, 44.3 subdivision 3, is amended to read: 44.4 Subd. 3. [ESTABLISHMENT OF DEBT SERVICE FUND; 44.5 APPROPRIATION OF DEBT SERVICE FUND MONEY.] (a) There is 44.6 established within the state bond fund a separate and special 44.7 account designated as a general obligation special tax bond debt 44.8 service account. There must be credited to this debt service 44.9 account in each fiscal year from the tobacco tax revenue fund 44.10 established in section297.13297F.10 an amount sufficient to 44.11 increase the balance on hand in the debt service account on each 44.12 December 1 to an amount equal to the full amount of principal 44.13 and interest to come due on all outstanding bonds whose debt 44.14 service is payable primarily from proceeds of the tax to and 44.15 including the second following July 1. The money on hand in the 44.16 debt service account must be used solely for the payment of the 44.17 principal of, and interest on, the bonds, and is appropriated 44.18 for this purpose. This appropriation does not cancel as long as 44.19 any of the bonds remain outstanding. 44.20 (b) There is established within the state bond fund a 44.21 separate and special account designated as a general obligation 44.22 special tax bond debt service account. There must be credited 44.23 to this debt service account in each fiscal year from the sports 44.24 and health club sales tax revenue fund established in section 44.25 297A.44 an amount sufficient to increase the balance on hand in 44.26 the debt service account on each December 1 to an amount equal 44.27 to the full amount of principal and interest to come due on all 44.28 outstanding bonds whose debt service is payable primarily from 44.29 proceeds of the tax to and including the second following July 44.30 1. The money on hand in the debt service account must be used 44.31 solely for the payment of the principal of, and interest on, the 44.32 bonds, and is appropriated for this purpose. This appropriation 44.33 does not cancel as long as any of the bonds remain outstanding. 44.34 Sec. 3. Minnesota Statutes 1996, section 16A.6701, 44.35 subdivision 1, is amended to read: 44.36 Subdivision 1. [STATE LICENSE AND SERVICE FEES.] For 45.1 purposes of section 16A.67, subdivision 3, and this section, the 45.2 term "state license and service fees" means, and refers to, all 45.3 license fees, service fees, and charges imposed by law and 45.4 collected by any state officer, agency, or employee, which are 45.5 listed below or which are defined as departmental earnings under 45.6 section 16A.1285, subdivision 1, and the use of which is not 45.7 otherwise restricted by law, and which are not required to be 45.8 credited or transferred to a fund other than the general fund: 45.9 Minnesota Statutes 1994, sections 3.9221; 5.12; 5.14; 5.16; 45.10 5A.04; 6.58; 13.03, subdivision 10; 16A.155; 16A.48; 16A.54; 45.11 16A.72; 16B.59; 16B.70; 17A.04; 18.51, subdivision 2; 18.53; 45.12 18.54; 18C.551; 19.58; 19.64; 27.041, subdivision 2, clauses (d) 45.13 and (e); 27.07, subdivision 5; 28A.08; 32.071; 32.075; 32.392; 45.14 35.71; 35.824; 35.95; 41C.12; 45.027, subdivisions 3 and 6; 45.15 46.041, subdivision 1; 46.131, subdivisions 2, 7, 8, 9, and 10; 45.16 47.101, subdivision 2; 47.54, subdivisions 1 and 4; 47.62, 45.17 subdivision 4; 47.65; 48.475, subdivision 1; 48.61, subdivision 45.18 7; 48.93; 49.36, subdivision 1; 52.01; 52.203; 53.03, 45.19 subdivisions 1, 5, and 6; 53.09, subdivision 1; 53A.03; 53A.05, 45.20 subdivision 1; 53A.081, subdivision 3; 54.294, subdivision 1; 45.21 55.04, subdivision 2; 55.095; 56.02; 56.04; 56.10; 59A.03, 45.22 subdivision 2; 59A.06, subdivision 3; 60A.14, subdivisions 1 and 45.23 2; 60A.23, subdivision 8; 60K.19, subdivision 5; 65B.48, 45.24 subdivision 3; 70A.14, subdivision 4; 72B.04, subdivision 10; 45.25 79.251, subdivision 5; 80A.28, subdivisions 1, 2, 3, 4, 5, 6, 7, 45.26 7a, 8, and 9; 80C.04, subdivision 1; 80C.07; 80C.08, subdivision 45.27 1; 80C.16, subdivisions 2 and 3; 80C.18, subdivision 2; 82.20, 45.28 subdivision 8 and 9; 82A.04, subdivision 1; 82A.08, subdivision 45.29 2; 82A.16, subdivisions 2 and 6; 82B.09, subdivision 1; 83.23, 45.30 subdivisions 2, 3, and 4; 83.25, subdivisions 1 and 2; 83.26, 45.31 subdivision 2; 83.30, subdivision 2; 83.31, subdivision 2; 45.32 83.38, subdivision 2; 85.052; 85.053; 85.055; 88.79, subdivision 45.33 2; 89.035; 89.21; 115.073; 115.77, subdivisions 1 and 2; 116.41, 45.34 subdivision 2; 116C.69; 116C.712; 116J.9673; 125.08; 136C.04, 45.35 subdivision 9; 155A.045; 155A.16; 168.27, subdivision 11; 45.36 168.33, subdivisions 3 and 7; 168.54; 168.67; 168.705; 168A.152; 46.1 168A.29; 169.345; 171.06, subdivision 2a; 171.29, subdivision 2; 46.2 176.102; 176.1351; 176.181, subdivision 2a; 177.30; 181A.12; 46.3 183.545; 183.57; 184.28; 184.29; 184A.09; 201.091, subdivision 46.4 5; 204B.11; 207A.02; 214.06; 216C.261; 221.0355; 239.101; 46.5 240.06; 240.07; 240.08; 240.09; 240.10; 246.51; 270.69, 46.6 subdivision 2; 270A.07; 272.484; 296.06; 296.12; 296.17; 46.7297.04297F.03; 297.33; 299C.46; 299C.62; 299K.09; 299K.095; 46.8 299L.07; 299M.04; 300.49; 318.02; 323.44, subdivision 3; 46.9 325D.415; 326.22; 326.3331; 326.47; 326.50; 326.92, subdivisions 46.10 1 and 3; 327.33; 331A.02; 332.15, subdivisions 2 and 3; 332.17; 46.11 332.22, subdivision 1; 332.33, subdivisions 3 and 4; 332.54, 46.12 subdivision 7; 333.055; 333.20; 333.23; 336.9-413; 336A.04; 46.13 336A.05; 336A.09; 345.35; 345.43, subdivision 2a; 345.44; 46.14 345.55, subdivision 3; 347.33; 349.151; 349.161; 349.162; 46.15 349.163; 349.164; 349.165; 349.166; 349.167; 357.08; 359.01, 46.16 subdivision 3; 360.018; 360.63; 386.68; and 414.01, subdivision 46.17 11; Minnesota Statutes 1994, chapters 154; 216B; 237; 302A; 303; 46.18 308A; 317A; 322A; and 322B; Laws 1990, chapter 593; Laws 1993, 46.19 chapter 254, section 7; and Laws 1994, chapter 573, section 4; 46.20 Minnesota Rules, parts 1800.0500; 1950.1070; 2100.9300; 46.21 7515.0210; and 9545.2000 to 9545.2040. 46.22 Sec. 4. Minnesota Statutes 1996, section 116P.13, 46.23 subdivision 1, is amended to read: 46.24 Subdivision 1. [REVENUE SOURCES.] The money in the 46.25 Minnesota future resources fund consists of revenue credited 46.26 under section297.13297F.10, subdivision 1, paragraph (b), 46.27 clause (1). 46.28 Sec. 5. Minnesota Statutes 1996, section 325D.32, 46.29 subdivision 4, is amended to read: 46.30 Subd. 4. "Wholesaler" means and includes any person who 46.31 acquires cigarettes for the purpose of sale to retailers or to 46.32 other persons for resale, and who maintains an established place 46.33 of business when any part of the business is the sale of 46.34 cigarettes at wholesale to persons licensed to sell cigarettes 46.35 by the state or any municipality, and where at all times a stock 46.36 of cigarettes is available to retailers for resale, or any 47.1 cigarette manufacturer or manufacturer's representative who 47.2 sells to retailers or to other persons for resale, and any 47.3 person defined as a "distributor" under section297.01297F.01, 47.4 subdivision76. The term "wholesaler" shall also include a 47.5 "subjobber" as defined by section297.01297F.01, subdivision1447.6 19. This subdivision does not prohibit any person from engaging 47.7 in business as a retailer as defined in subdivision 5. 47.8 Sec. 6. Minnesota Statutes 1996, section 325D.415, is 47.9 amended to read: 47.10 325D.415 [CIGARETTE DISTRIBUTOR FEES.] 47.11 A cigarette distributor as defined in section297.0147.12 297F.01, subdivision76, shall pay to the commissioner an 47.13 annual fee as follows: 47.14 (1) a fee of $2,500 is due from those distributors whose 47.15 annual cigarette tax collections exceed $2,000,000; and 47.16 (2) a fee of $1,200 is due from those distributors whose 47.17 annual cigarette tax collections are $2,000,000 or less. 47.18 The annual fee must be paid by December 31 of each year. 47.19 If the fee is not paid when due, the commissioner shall revoke 47.20 or refuse to issue or renew the license under chapter 297. The 47.21 annual fee must be deposited into the general fund. 47.22 Sec. 7. [EFFECTIVE DATE.] 47.23 Sections 1 to 6 are effective August 1, 1997.