Minnesota Office of the Revisor of Statutes
[*Add Subtitle/link: Office]

Menu

Revisor of Statutes Menu

Minnesota Session Laws

Key: (1) language to be deleted (2) new language

                            CHAPTER 179-S.F.No. 378 
                  An act relating to taxation; recodifying taxes on 
                  liquor; providing civil and criminal penalties; 
                  appropriating money; amending Minnesota Statutes 1996, 
                  sections 16A.26; 340A.301, subdivision 8; 340A.302, 
                  subdivision 1; 340A.414, subdivision 7; 340A.417; and 
                  340A.7035; proposing coding for new law as Minnesota 
                  Statutes, chapter 297G; repealing Minnesota Statutes 
                  1996, sections 297C.01; 297C.02; 297C.03; 297C.04; 
                  297C.045; 297C.05; 297C.06; 297C.07; 297C.08; 297C.09; 
                  297C.10; 297C.11; 297C.12; 297C.13; 297C.14; 297C.16; 
                  and 297C.17. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                                 RECODIFICATION 
           Section 1.  [297G.01] [DEFINITIONS.] 
           Subdivision 1.  [TERMS.] For purposes of this chapter, the 
        following terms have the meaning given them unless the language 
        or context clearly indicates that a different meaning is 
        intended. 
           Subd. 2.  [ALCOHOLIC BEVERAGE.] "Alcoholic beverage" is any 
        beverage containing more than one-half of one percent alcohol by 
        volume. 
           Subd. 3.  [BREWER.] "Brewer" is a person who manufactures 
        malt liquor for sale. 
           Subd. 4.  [COLLECTOR.] "Collector" is a person who collects 
        commemorative bottles for their use and enjoyment as collector's 
        items and not for the consumption of the beverage contained in 
        them.  The term does not include licensed wholesalers or 
        retailers of alcoholic beverages. 
           Subd. 5.  [COMMEMORATIVE BOTTLES.] "Commemorative bottles" 
        are ceramic commemorative bottles or other specially designed 
        decanters which have value as collector's items and which 
        contain an alcoholic beverage. 
           Subd. 6.  [COMMISSIONER.] "Commissioner" is the 
        commissioner of revenue. 
           Subd. 7.  [DISTILLED SPIRITS.] "Distilled spirits" is 
        intoxicating liquors, including ethyl alcohol, hydrated oxide of 
        ethyl, spirits of wine, whiskey, rum, brandy, gin, and other 
        distilled spirits, including all dilutions and mixtures, for 
        nonindustrial use. 
           Subd. 8.  [FERMENTED MALT BEVERAGES.] "Fermented malt 
        beverages" is any beer, ale, or other beverage made from malt by 
        fermentation and containing not less than one-half of one 
        percent alcohol by volume. 
           Subd. 9.  [INTERNAL REVENUE CODE.] Unless specifically 
        defined otherwise, "Internal Revenue Code" means the Internal 
        Revenue Code of 1986, as amended through December 31, 1996. 
           Subd. 10.  [INTOXICATING LIQUOR.] "Intoxicating liquor" is 
        ethyl alcohol, distilled spirits, fermented, spirituous, vinous, 
        and fermented malt beverages containing more than 3.2 percent of 
        alcohol by weight. 
           Subd. 11.  [LIQUEUR-FILLED CANDY.] "Liqueur-filled candy" 
        is any confectionery containing more than one-half of one 
        percent alcohol by volume in liquid form that is intended for or 
        capable of beverage use. 
           Subd. 12.  [LIQUOR ACT.] For purposes of this chapter, the 
        terms defined in section 340A.101, have the meanings given them 
        in that section except as provided in this section. 
           Subd. 13.  [MANUFACTURER.] "Manufacturer" is a person who, 
        by a process of manufacturing, fermenting, brewing, distilling, 
        refining, rectifying, blending, or by the combination of 
        different materials, prepares or produces intoxicating liquor 
        for sale. 
           Subd. 14.  [MINIATURES.] "Miniatures" are containers of 
        distilled spirits of two fluid ounces or less or 50 milliliters 
        or less. 
           Subd. 15.  [PERSON.] "Person" means an individual or any 
        entity engaged in the sale of distilled spirits, wine, or 
        fermented malt beverages. 
           Subd. 16.  [RETAILER.] "Retailer" means a person engaged in 
        this state in the business of selling, or offering to sell, 
        distilled spirits, wine, or fermented malt beverages. 
           Subd. 17.  [TABLE OR SPARKLING WINE.] "Table or sparkling 
        wine" is a beverage made without rectification or fortification 
        and containing not more than 25 percent alcohol by volume and 
        made by the fermentation of grapes, grape juice, other fruits, 
        or honey. 
           Subd. 18.  [3.2 PERCENT MALT LIQUOR.] "3.2 percent malt 
        liquor" is a fermented malt beverage containing not less than 
        one-half of one percent alcohol by volume nor more than 3.2 
        percent alcohol by weight. 
           Subd. 19.  [WHOLESALER.] "Wholesaler" is a person who sells 
        alcoholic beverages to persons to whom sale is permitted under 
        section 340A.310, from a stock maintained in a warehouse in the 
        state. 
           Subd. 20.  [WINE.] "Wine" is the product made from the 
        normal alcoholic fermentation of grapes, including still wine, 
        sparkling and carbonated wine, wine made from condensed grape 
        must, wine made from other agricultural products than sound ripe 
        grapes, imitation wine, compounds sold as wine, vermouth, cider, 
        perry, and sake, in each instance containing not less than 
        one-half of one percent nor more than 24 percent alcohol by 
        volume for nonindustrial use.  Wine does not include distilled 
        spirits as defined in subdivision 7. 
           Sec. 2.  [297G.02] [ADMINISTRATION.] 
           Subdivision 1.  [ENFORCEMENT RESPONSIBILITY.] The 
        commissioners of public safety and revenue shall enforce and 
        administer the provisions of this chapter. 
           Subd. 2.  [NONAPPLICABILITY.] This chapter does not apply 
        to: 
           (1) medicines intended for therapeutic purposes and not 
        intended as a beverage; 
           (2) industrial alcohol designed for mechanical, chemical, 
        scientific, pharmaceutical, or industrial purposes; or 
           (3) nonpotable compounds or preparations containing alcohol.
           Subd. 3.  [POWERS OF COMMISSIONER OF REVENUE.] The 
        commissioner, or duly authorized agents, may conduct 
        investigations, inquiries, and hearings under this chapter and, 
        in connection with such investigations, inquiries, and hearings, 
        the commissioner and the duly authorized agents shall have all 
        the powers conferred upon the commissioner and the 
        commissioner's examiners by section 270.06, and the provisions 
        of that section shall apply to all such investigations, 
        inquiries, and hearings. 
           Subd. 4.  [EXPENSES OF ADMINISTRATION.] Expenses for the 
        administration of this chapter shall be paid out of 
        appropriations to the commissioner for the administration of 
        this chapter and shall include fees and expenses incurred by the 
        attorney general and any county attorney in litigation in 
        connection with the enforcement of this chapter.  Expenses also 
        include all court costs and expenses. 
           Sec. 3.  [297G.03] [DISTILLED SPIRITS AND WINE; RATE OF 
        TAX.] 
           Subdivision 1.  [GENERAL RATE; DISTILLED SPIRITS AND WINE.] 
        The following excise tax is imposed on all distilled spirits and 
        wine manufactured, imported, sold, or possessed in this state: 
                                        Standard             Metric
        (a) Distilled spirits,      $5.03 per gallon   $1.33 per liter
        liqueurs, cordials, 
        and specialties regardless 
        of alcohol content 
        (excluding ethyl alcohol) 
        (b) Wine containing         $ .30 per gallon   $ .08 per liter 
        14 percent or less
        alcohol by volume 
        (c) Wine containing         $ .95 per gallon   $ .25 per liter
        more than 14 percent 
        but not more than 21
        percent alcohol by volume 
        (d) Wine containing more    $1.82 per gallon   $ .48 per liter
        than 21 percent but not 
        more than 24 percent
        alcohol by volume 
        (e) Wine containing more    $3.52 per gallon   $ .93 per liter
        than 24 percent alcohol
        by volume
        (f) Natural and             $1.82 per gallon   $ .48 per liter
        artificial sparkling wines
        containing alcohol 
           In computing the tax on a package of distilled spirits or 
        wine, a proportional tax at a like rate on all fractional parts 
        of a gallon or liter must be paid, except that the tax on a 
        fractional part of a gallon less than 1/16 of a gallon is the 
        same as for 1/16 of a gallon. 
           Subd. 2.  [TAX ON MINIATURES; DISTILLED SPIRITS.] The tax 
        on miniatures is 14 cents per bottle. 
           Subd. 3.  [TAX IS METRIC.] The metric tax is imposed on all 
        products taxable under this section when the net contents are 
        stated in metric units of measure.  The commissioner may 
        establish by rule a date and procedure for the conversion of 
        excise tax computation and reporting from rates expressed in 
        gallons to rates expressed in metric volumes.  The official 
        conversion factor is one liter equals 0.264172 United States 
        gallons. 
           Subd. 4.  [BOTTLE TAX.] A tax of one cent is imposed on 
        each bottle or container of distilled spirits and wine except as 
        provided in 297G.07, subdivision 3.  The wholesaler is 
        responsible for the payment of this tax when the bottles of 
        distilled spirits and wine are removed from inventory for sale, 
        delivery, or shipment. 
           Sec. 4.  [297G.04] [FERMENTED MALT BEVERAGES; RATE OF TAX.] 
           Subdivision 1.  [TAX IMPOSED.] The following excise tax is 
        imposed on all fermented malt beverages that are imported, 
        directly or indirectly sold, or possessed in this state: 
           (1) on fermented malt beverages containing not more than 
        3.2 percent alcohol by weight, $2.40 per 31-gallon barrel; 
           (2) on fermented malt beverages containing more than 3.2 
        percent alcohol by weight, $4.60 per 31-gallon barrel. 
           For fractions of a 31-gallon barrel, the tax rate is 
        calculated proportionally. 
           Subd. 2.  [TAX CREDIT.] A qualified brewer producing 
        fermented malt beverages is entitled to a tax credit of $4.60 
        per barrel on 25,000 barrels sold in any fiscal year beginning 
        July 1, regardless of the alcohol content of the product.  
        Qualified brewers may take the credit on the 18th day of each 
        month, but the total credit allowed may not exceed in any fiscal 
        year the lesser of: 
           (1) the liability for tax; or 
           (2) $115,000. 
           For purposes of this subdivision, a "qualified brewer" 
        means a brewer, whether or not located in this state, 
        manufacturing less than 100,000 barrels of fermented malt 
        beverages in the calendar year immediately preceding the 
        calendar year for which the credit under this subdivision is 
        claimed.  In determining the number of barrels, all brands or 
        labels of a brewer must be combined.  All facilities for the 
        manufacture of fermented malt beverages owned or controlled by 
        the same person, corporation, or other entity must be treated as 
        a single brewer. 
           Sec. 5.  [297G.05] [USE TAX; RATE OF TAX.] 
           Subdivision 1.  [WINE AND DISTILLED SPIRITS.] A tax is 
        imposed on the use or storage by consumers of wine and distilled 
        spirits in this state, and on such consumers, at the rates 
        specified in section 297G.03, subdivision 1. 
           Subd. 2.  [FERMENTED MALT BEVERAGES.] A tax is imposed on 
        the use or storage by consumers of fermented malt beverages in 
        this state, and on such consumers, at the rates specified in 
        section 297G.04, subdivision 1. 
           Subd. 3.  [TAX PROVISIONS APPLICABLE TO CONSUMERS.] All of 
        the provisions of this chapter relating to the correction of 
        returns, deficiency assessments, protests, hearings, interest 
        and penalties, and collection of taxes, apply to consumers. 
           Sec. 6.  [297G.06] [TAX AS PERSONAL DEBT.] 
           The tax imposed by this chapter, and interest and penalties 
        imposed with respect to it, is a personal debt of the person 
        required to file a return from the time the liability for it 
        arises, regardless of when the time for payment of the liability 
        occurs.  In the case of the executor or administrator of the 
        estate of a decedent and in the case of any fiduciary, the debt 
        is that of the person in the person's official or fiduciary 
        capacity only, unless the person has voluntarily distributed the 
        assets held in that capacity without reserving sufficient assets 
        to pay the tax, interest, and penalties.  In that case, the 
        person is personally liable for the deficiency. 
           Sec. 7.  [297G.07] [EXEMPTIONS FROM TAX.] 
           Subdivision 1.  [EXEMPTIONS.] The following are not subject 
        to the excise tax: 
           (1) Sales by a manufacturer, brewer, or wholesaler for 
        shipment outside the state in interstate commerce. 
           (2) Alcoholic beverages sold or transferred between 
        Minnesota wholesalers. 
           (3) Sales to common carriers engaged in interstate 
        transportation of passengers, except as provided in this chapter.
           (4) Malt beverages served by a brewery for on-premise 
        consumption at no charge, or distributed to brewery employees 
        for on-premise consumption under a labor contract. 
           (5) Shipments of wine to Minnesota residents under section 
        340A.417. 
           (6) Fruit juices naturally fermented or beer naturally 
        brewed in the home for family use. 
           (7) Sales of wine for sacramental purposes under section 
        340A.316. 
           (8) Alcoholic beverages sold to authorized manufacturers of 
        food products or pharmaceutical firms.  The alcoholic beverage 
        must be used exclusively in the manufacture of food products or 
        medicines.  For purposes of this clause, "manufacturer" means a 
        person who manufactures food products intended for sale to 
        wholesalers or retailers for ultimate sale to the consumer. 
           (9) Liqueur-filled candy. 
           (10) Sales to a federal agency, that the state of Minnesota 
        is prohibited from taxing under the constitution or laws of the 
        United States or under the constitution of Minnesota. 
           (11) Sales to Indian tribes as defined in section 297G.08. 
           Subd. 2.  [IMPORTATION BY INDIVIDUALS.] (a) A person, other 
        than a person under the age of 21 years, entering Minnesota from 
        another state may have in possession one liter of intoxicating 
        liquor or 288 ounces of fermented malt beverages without the 
        required payment of the Minnesota excise tax, provided the 
        alcoholic beverages accompany the person into this state and 
        will not be offered for sale or used for any commercial purposes.
           (b) A person, other than a person under the age of 21 
        years, entering Minnesota from a foreign country may have in 
        possession four liters of intoxicating liquor or ten quarts (320 
        ounces) of fermented malt beverages without the required payment 
        of the Minnesota excise tax, provided the alcoholic beverages 
        accompany the person into this state and will not be offered for 
        sale or used for any commercial purposes. 
           (c) A collector of commemorative bottles, other than a 
        person under the age of 21 years, entering Minnesota from 
        another state may have in possession 12 or fewer commemorative 
        bottles without the required payment of the Minnesota excise tax.
           (d) This subdivision does not apply to consignments of 
        alcoholic beverages shipped into this state by holders of 
        Minnesota import licenses or Minnesota manufacturers and 
        wholesalers when licensed by the commissioner of public safety 
        or to common carriers with licenses to sell intoxicating liquor 
        in more than one state. 
           Subd. 3.  [EXEMPTIONS FROM BOTTLE TAX.] The following are 
        exempt from the bottle tax: 
           (1) miniatures of distilled spirits and wines; 
           (2) containers of fermented malt beverage; 
           (3) containers of intoxicating liquor or wine holding less 
        than 200 milliliters; 
           (4) containers of alcoholic beverages sold and shipped to 
        dealers, wineries, or distillers in other states; 
           (5) containers of alcoholic beverages sold to other 
        Minnesota wholesalers; 
           (6) containers of alcoholic beverages sold to common 
        carriers engaged in interstate commerce; 
           (7) containers of wine intended exclusively for sacramental 
        purposes; 
           (8) containers of alcoholic beverages sold to authorized 
        food processors or pharmaceutical firms for use exclusively in 
        the manufacturing of food products or medicines; and 
           (9) sales to a federal agency, that the state of Minnesota 
        is prohibited from taxing under the constitution or laws of the 
        United States or under the constitution of Minnesota. 
           Sec. 8.  [297G.08] [SALES TO INDIAN TRIBES.] 
           Subdivision 1.  [WHOLESALERS.] A wholesaler may set aside 
        the part of the wholesaler's stock necessary to make sales to 
        the established governing body of an Indian tribe recognized by 
        the United States Department of the Interior, without paying the 
        tax required by this chapter.  The amount of untaxed stock that 
        wholesalers may deliver to an Indian reservation is limited to 
        amounts necessary to meet the personal consumption needs of 
        qualified purchasers.  When shipping or delivering untaxed stock 
        to an Indian tribal organization, the wholesaler shall make a 
        true duplicate invoice.  The invoice must show the complete 
        details of the sale or delivery.  The wholesaler shall send the 
        duplicate to the commissioner not later than the 18th day of the 
        following calendar month.  If a wholesaler fails to comply with 
        the requirements of this section, the commissioner shall revoke 
        the permission granted to the wholesaler to keep a stock of 
        untaxed goods. 
           Subd. 2.  [RETAILERS.] Retailers who are Indian tribal 
        organizations may keep untaxed stock intended for sale to 
        qualified purchasers. 
           Subd. 3.  [QUALIFIED PURCHASERS.] A qualified purchaser of 
        untaxed liquor means only an enrolled member of the Indian tribe 
        that is offering the liquor for sale. 
           Subd. 4.  [SALES TO NONQUALIFIED BUYERS.] A retailer who 
        sells or otherwise disposes of untaxed liquor other than to a 
        qualified purchaser shall collect from the buyer or transferee 
        the tax imposed by this chapter and remit the tax to the 
        department of revenue at the same time and manner as required by 
        this chapter.  If the retailer fails to collect the tax from the 
        buyer or transferee, or fails to remit the tax, the retailer is 
        personally responsible for the tax and the commissioner may 
        seize any liquor destined to be delivered to the retailer.  The 
        procedures outlined in section 297G.20 apply to the seized 
        liquor.  The proceeds of the sale of the liquor may be applied 
        to any tax liability owed by the retailer after deducting all 
        costs and expenses.  
           This section does not relieve the buyer or possessor of 
        untaxed liquor from personal liability for the tax. 
           Sec. 9.  [297G.09] [RETURNS; PAYMENT OF TAX.] 
           Subdivision 1.  [MONTHLY RETURNS; MANUFACTURERS, 
        WHOLESALERS, BREWERS, OR IMPORTERS.] On or before the 18th day 
        of each calendar month following the month in which a licensed 
        manufacturer or wholesaler first sells wine and distilled 
        spirits within the state, or a brewer or importer first sells or 
        imports fermented malt beverages, or a wholesaler knowingly 
        acquires title to or possession of untaxed fermented malt 
        beverages, the licensed manufacturer, wholesaler, brewer, or 
        importer liable for the excise tax must file a return with the 
        commissioner, and in addition must keep records and render 
        reports as required by the commissioner.  Returns must be made 
        in a form and manner prescribed by the commissioner, and must 
        contain any other information required by the commissioner.  
        Returns must be accompanied by a remittance for the full unpaid 
        tax liability.  Returns must be filed regardless of whether a 
        tax is due. 
           Subd. 2.  [MONTHLY USE TAX RETURNS; CONSUMERS.] On or 
        before the 18th day of each calendar month, a consumer who has 
        acquired title to or possession of wine, distilled spirits, or 
        fermented malt beverages for use or storage in this state, upon 
        which wine, distilled spirits, or fermented malt beverages the 
        tax imposed by this chapter has not been paid, shall file a 
        return with the commissioner in the month following the month in 
        which the consumer obtains title to or possession of the wine, 
        distilled spirits, or fermented malt beverages.  Returns must be 
        made in a form and manner prescribed by the commissioner and 
        must contain any other information required by the commissioner. 
        Returns must be accompanied by a remittance for the full unpaid 
        tax liability. 
           Subd. 3.  [COMMON CARRIER RETURNS.] A common carrier 
        engaged in interstate transportation of passengers must file 
        monthly reports together with the tax payment on the sale of 
        alcoholic beverages sold in Minnesota.  The report and payment 
        must be filed by the 18th day of the month following the month 
        in which the sale took place.  A common carrier is permitted to 
        use a formula for the allocation of the total sales of alcoholic 
        beverages among states on the basis of passenger miles in each 
        state or some other method of allocation if written approval is 
        received from the commissioner. 
           Subd. 4.  [EXTENSIONS.] When in the commissioner's 
        judgment, good cause exists, the commissioner may extend the 
        time for filing liquor tax returns for not more than six 
        months.  The commissioner may require the taxpayer to file a 
        tentative return when the regularly required return is due, and 
        pay a tax on the basis of the tentative return at the times 
        required for the payment of taxes on the basis of the regularly 
        required return. 
           Subd. 5.  [ACCELERATED TAX PAYMENT; PENALTY.] A person 
        liable for tax under this chapter having a liability of $120,000 
        or more during a fiscal year ending June 30, shall remit the 
        June liability for the next year in the following manner: 
           (a) Two business days before June 30 of the year, the 
        taxpayer shall remit the actual May liability and 75 percent of 
        the estimated June liability to the commissioner and file the 
        return in the form and manner prescribed by the commissioner. 
           (b) On or before August 18 of the year, the taxpayer shall 
        submit a return showing the actual June liability and pay any 
        additional amount of tax not remitted in June.  A penalty is 
        imposed equal to ten percent of the amount of June liability 
        required to be paid in June less the amount remitted in June.  
        However, the penalty is not imposed if the amount remitted in 
        June equals the lesser of: 
           (1) 70 percent of the actual June liability; or 
           (2) 75 percent of the preceding May liability. 
           Subd. 6.  [ELECTRONIC FUNDS TRANSFER.] A licensed brewer, 
        importer, or wholesaler having an excise tax liability of 
        $120,000 or more during a fiscal year ending June 30 must remit 
        all excise tax liabilities in the subsequent calendar year by 
        means of a funds transfer as defined in section 336.4A-104, 
        paragraph (a).  The funds transfer payment date, as defined in 
        section 336.4A-401, must be on or before the date the excise tax 
        is due.  If the date the excise tax is due is not a funds 
        transfer business day, as defined in section 336.4A-105, 
        paragraph (a), clause (4), the payment date must be on or before 
        the funds transfer business day next following the date the 
        excise tax is due. 
           Subd. 7.  [ORDER PAYMENTS CREDITED.] All payments received 
        may, in the discretion of the commissioner, be credited first to 
        the oldest liability not secured by a judgment or lien, but in 
        all cases must be credited first to penalties, next to interest, 
        and then to the tax due. 
           Subd. 8.  [INTEREST.] The amount of tax not timely paid, 
        together with any penalty imposed by this chapter, bears 
        interest at the rate specified in section 270.75 from the time 
        the tax should have been paid until paid.  Any interest and 
        penalty is added to the tax and collected as a part of it. 
           Sec. 10.  [297G.10] [DEPOSIT OF PROCEEDS.] 
           All tax revenues and other receipts payable to the state 
        under this chapter must be paid into the state treasury and 
        credited to the general fund. 
           Sec. 11.  [297G.11] [INFORMATIONAL REPORTS.] 
           The following persons shall file with the commissioner a 
        monthly informational report in the form and manner prescribed 
        by the commissioner: 
           (1) a manufacturer, wholesaler, and importer licensed to 
        ship distilled spirits or wine into Minnesota; 
           (2) a person who manufactures distilled spirits or wine in 
        Minnesota; 
           (3) any other person who imports distilled spirits or wine 
        into Minnesota; 
           (4) a person who possesses, receives, stores, or warehouses 
        distilled spirits or wine in Minnesota, upon which the tax 
        imposed by this chapter has not been paid; and 
           (5) a person who possesses, receives, stores, or warehouses 
        distilled spirits or wine in Minnesota, which are required to 
        give bond as required by the Internal Revenue Code, subtitle E, 
        chapter 51. 
           No payment of any tax is required to be remitted with this 
        report.  The report must be filed on or before the tenth day 
        following the end of each calendar month, regardless of whether 
        or not the person shipped, manufactured, possessed, received, 
        stored, or warehoused any distilled spirits or wine into or 
        within Minnesota during the previous month, unless the 
        commissioner determines that a longer filing period is 
        appropriate for a particular person.  A person failing to file 
        this report is subject to the civil or criminal penalties 
        imposed by this chapter. 
           This section does not apply to the lawful importation of 
        wine and distilled spirits under section 297G.07, subdivision 2, 
        nor to any lawful manufacture of wine or distilled spirits 
        within the state for personal consumption. 
           Sec. 12.  [297G.12] [REFUNDS.] 
           Subdivision 1.  [OVERPAYMENT OF TAX.] An overpayment of the 
        tax imposed under this chapter may be refunded to the taxpayer, 
        provided that the claim for refund is filed within the time 
        prescribed under section 297G.16. 
           Subd. 2.  [PRODUCTS DESTROYED.] The commissioner may refund 
        to a taxpayer the amount of tax paid under this chapter on 
        intoxicating liquor or fermented malt beverages which become 
        unfit for human consumption and are destroyed under an order by 
        a federal, state, or local agency while being held for sale by a 
        licensed retailer.  The destruction must meet the requirements 
        of the environmental laws of this state. 
           Subd. 3.  [WHOLESALER REFUND FOR BREAKAGE OF 
        INVENTORY.] The commissioner may refund to a wholesaler the 
        amount of tax paid under this chapter for the breakage of 
        inventory not subject to reimbursement from any insurance 
        proceeds.  The commissioner may prescribe the method of proof 
        for obtaining the refund. 
           Subd. 4.  [RETAILER REFUND FOR BREAKAGE OF INVENTORY.] 
        Refunds for breakage of inventory may be made to retailers only 
        if satisfactory proof is presented to the commissioner by the 
        wholesaler and the licensed retailer that the retailer was not 
        indemnified by insurance for the tax.  The commissioner may 
        prescribe the method of proof required for obtaining the refund. 
           Subd. 5.  [BAD DEBTS.] The commissioner may adopt rules 
        providing a refund of the tax paid under this chapter on 
        intoxicating liquor or wine if the tax paid qualifies as a bad 
        debt under section 166(a) of the Internal Revenue Code. 
           Subd. 6.  [CREDIT AGAINST TAX.] The commissioner may credit 
        the amount determined under this section against taxes otherwise 
        payable under this chapter by the taxpayer. 
           Subd. 7.  [SOURCE OF REFUND.] There is appropriated 
        annually from the general fund to the commissioner the sums 
        necessary to make the refunds provided by this section. 
           Sec. 13.  [297G.13] [INSPECTION RIGHTS.] 
           The commissioner of public safety or the commissioner of 
        revenue, or their duly authorized employees, may, at any 
        reasonable time, without notice and without a search warrant, 
        enter in and upon a licensed premises, and examine the books, 
        papers, and records of a brewer, manufacturer, wholesaler, or 
        retailer for the purpose of determining whether the excise tax 
        has been paid, and may in addition inspect any premises where 
        fermented malt beverages are manufactured, sold, offered for 
        sale, possessed, or stored for the purpose of determining 
        whether the party is in full compliance with the provisions of 
        this chapter. 
           Sec. 14.  [297G.14] [EXAMINATIONS AND AUDITS.] 
           Subdivision 1.  [EXAMINATION OF THE TAXPAYER.] To determine 
        the accuracy of a return or report, or for the purpose of 
        collection, or in fixing liability or verifying information 
        regarding any tax under this chapter, the commissioner may make 
        reasonable examinations or investigations of a taxpayer's place 
        of business, tangible personal property, equipment, computer 
        systems and facilities, pertinent books, records, papers, 
        vouchers, computer printouts, accounts, and documents. 
           Subd. 2.  [ACCESS TO RECORDS OF OTHER PERSONS IN CONNECTION 
        WITH THE EXAMINATION OF TAXPAYER.] When conducting an 
        investigation or an audit of a taxpayer, or for the purpose of 
        collection, or in fixing liability or verifying information 
        regarding any tax under this chapter, the commissioner may 
        examine, except where privileged by law, the relevant records 
        and files of a person, business, institution, financial 
        institution, state agency, agency of the United States 
        government, or agency of any other state where permitted by 
        statute, agreement, or reciprocity.  The commissioner may compel 
        production of these records by subpoena. A subpoena may be 
        served directly by the commissioner. 
           Subd. 3.  [POWER TO COMPEL TESTIMONY.] In the 
        administration of any tax under this chapter, the commissioner 
        may: 
           (1) administer oaths or affirmations and compel by subpoena 
        the attendance of witnesses, testimony, and the production of a 
        person's pertinent books, records, papers, and other data for 
        inspection and copying; 
           (2) examine under oath or affirmation any person regarding 
        the business of a taxpayer concerning any relevant matter 
        incident to the administration of any tax under this chapter.  
        The fees of witnesses required by the commissioner to attend a 
        hearing are equal to those allowed to witnesses appearing before 
        courts of this state.  The fees must be paid in the manner 
        provided for the payment of other expenses incident to the 
        administration of any tax under this chapter; and 
           (3) in addition to other remedies that may be available, 
        bring an action in equity by the state against a taxpayer for an 
        injunction ordering the taxpayer to file a complete and proper 
        return or amended return.  The district courts of this state 
        have jurisdiction over the action and disobedience of an 
        injunction issued under this clause may be punished as a 
        contempt of district court. 
           Subd. 4.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS KNOWN.] An investigation may extend to a person that the 
        commissioner determines has access to information that may be 
        relevant to the examination or investigation.  When a subpoena 
        requiring the production of records as described in subdivision 
        4 is served on a third-party recordkeeper, written notice of the 
        subpoena must be mailed to the taxpayer and to any other person 
        who is identified in the subpoena.  The notices must be given 
        within three days of the day on which the subpoena is served.  
        Notice to the taxpayer required by this section is sufficient if 
        it is mailed to the last address on record with the commissioner.
           The provisions of this subdivision relating to notice to 
        the taxpayer or other parties identified in the subpoena do not 
        apply if there is reasonable cause to believe that the giving of 
        notice may lead to attempts to conceal, destroy, or alter 
        records relevant to the examination, to prevent the 
        communication of information from other persons through 
        intimidation, bribery, or collusion, or to flee to avoid 
        prosecution, testifying, or production of records. 
           Subd. 5.  [THIRD-PARTY SUBPOENA WHERE TAXPAYER'S IDENTITY 
        IS NOT KNOWN.] A subpoena that does not identify the person or 
        persons whose tax liability is investigated may be served only 
        if: 
           (1) the subpoena relates to the investigation of a 
        particular person or an ascertainable group or class of persons; 
           (2) there is reasonable basis for believing that the person 
        or group or class of persons may fail or may have failed to 
        comply with the tax laws administered by the commissioner; 
           (3) the information sought to be obtained from the 
        examination of the records, and the identity of the person or 
        persons with respect to whose liability the subpoena is issued, 
        is not readily available from other sources; 
           (4) the subpoena is clear and specific concerning the 
        information sought to be obtained; and 
           (5) the information sought to be obtained is limited solely 
        to the scope of the investigation. 
           The party served with a subpoena that does not identify the 
        person or persons with respect to whose tax liability the 
        subpoena is issued may, within 20 days after service of the 
        subpoena, petition the district court in the judicial district 
        in which that party is located for a determination concerning 
        whether the commissioner has complied with all the requirements 
        in clauses (1) to (5), and thus, whether the subpoena is 
        enforceable.  If no petition is made by the party served within 
        the time prescribed, the subpoena has the effect of a court 
        order. 
           Subd. 6.  [REQUEST BY TAXPAYER FOR SUBPOENA.] When the 
        commissioner has the power to issue a subpoena for investigative 
        or auditing purposes, the commissioner shall honor a reasonable 
        request by the taxpayer to issue a subpoena on the taxpayer's 
        behalf, if in connection with the investigation or audit. 
           Subd. 7.  [APPLICATION TO COURT FOR ENFORCEMENT OF 
        SUBPOENA.] Disobedience of subpoenas issued under this section 
        shall be punished by the district court of the district in which 
        the party served with the subpoena is located, in the same 
        manner as contempt of the district court. 
           Subd. 8.  [COST OF PRODUCTION OF RECORDS.] The cost of 
        producing records of a third party required by a subpoena must 
        be paid by the taxpayer, if the taxpayer requests the subpoena 
        to be issued, or if the taxpayer has the records available but 
        has refused to provide them to the commissioner.  In other cases 
        when the taxpayer cannot produce records and the commissioner 
        then initiates a subpoena for third-party records, the 
        commissioner shall pay the reasonable cost of producing the 
        records.  The commissioner may later assess the reasonable costs 
        against the taxpayer if the records contribute to the 
        determination of an assessment of tax against the taxpayer. 
           Subd. 9.  [PHYSICAL INVENTORY.] The commissioner or the 
        commissioner's authorized agents may, as considered necessary, 
        require a manufacturer, wholesaler, or retailer to furnish a 
        physical inventory of all wine and distilled spirits in stock.  
        The inventory must contain the information that the commissioner 
        requests and must be certified by an officer of the corporation. 
           Sec. 15.  [297G.15] [ASSESSMENTS.] 
           Subdivision 1.  [GENERAL RULE.] The commissioner shall make 
        determinations, corrections, and assessments with respect to any 
        tax under this chapter, including interest, additions to taxes, 
        and assessable penalties.  The commissioner may use statistical 
        or other sampling techniques consistent with generally accepted 
        auditing standards in examining returns or records and making 
        assessments. 
           Subd. 2.  [COMMISSIONER FILED RETURNS.] If a taxpayer fails 
        to file a required return, the commissioner, from information in 
        the commissioner's possession or obtainable by the commissioner, 
        may make a return for the taxpayer.  The return is prima facie 
        correct and valid. 
           Subd. 3.  [ORDER OF ASSESSMENT; NOTICE AND DEMAND TO 
        TAXPAYER.] (a) When a return has been filed and the commissioner 
        determines that the tax disclosed by the return is different 
        than the tax determined by the examination, the commissioner 
        shall send an order of assessment to the taxpayer.  When no 
        return has been filed, the commissioner may make a return for 
        the taxpayer under subdivision 2 or may send an order of 
        assessment under this subdivision.  The order must explain the 
        basis for the assessment and must explain the taxpayer's appeal 
        rights.  An order of assessment is final when made but may be 
        reconsidered by the commissioner under this chapter. 
           (b) The taxes are considered assessed when the commissioner 
        has prepared a notice of tax assessment and mailed it to the 
        person required to file a return to the post office address 
        given in the return.  The notice of tax assessment must be sent 
        by mail to the post office address given in the return and the 
        record of the mailing is presumptive evidence of the giving of 
        notice, and such records must be preserved by the commissioner. 
           (c) No collection action can be taken, including the filing 
        of liens under section 270.69, and no late payment penalty under 
        this chapter is imposed when a return has been filed for the 
        taxable period upon which the order is based, if the amount 
        shown on the order is paid to the commissioner: 
           (1) within 60 days after the order has been mailed to the 
        taxpayer by the commissioner; or 
           (2) if an administrative appeal is filed under this 
        chapter, or a tax court appeal is filed under chapter 271, 
        within 60 days following final determination of the appeal if 
        the appeal is based upon a constitutional challenge to the tax, 
        and if not, when the decision of the tax court is made. 
           Subd. 4.  [ERRONEOUS REFUNDS OR CREDITS.] An erroneous 
        refund or credit is considered an underpayment of tax on the 
        date made.  An assessment of a deficiency arising out of an 
        erroneous refund or credit must be made within 3-1/2 years from 
        the date prescribed for filing the return, plus any extension of 
        time granted for filing the return, but only if filed within the 
        extended time, or two years from the time the tax is paid in 
        full, whichever period expires later. 
           Subd. 5.  [ASSESSMENT PRESUMED VALID.] A return or 
        assessment of tax made by the commissioner is prima facie 
        correct and valid.  The taxpayer has the burden of establishing 
        its incorrectness or invalidity in any related action or 
        proceeding. 
           Subd. 6.  [AGGREGATE REFUND OR ASSESSMENT.] The 
        commissioner, on examining returns of a taxpayer for more than 
        one year or period, may issue one order covering the period 
        under examination that reflects the aggregate refund or 
        additional tax due. 
           Subd. 7.  [SUFFICIENCY OF NOTICE.] An order of assessment, 
        sent postage prepaid by United States mail to the taxpayer at 
        the taxpayer's last known address, is sufficient even if the 
        taxpayer is deceased or is under a legal disability, or, in the 
        case of a corporation, has terminated its existence, unless the 
        department has been provided with a new address by a party 
        authorized to receive notices of assessment. 
           Sec. 16.  [297G.16] [STATUTES OF LIMITATIONS.] 
           Subdivision 1.  [GENERAL RULE.] Except as otherwise 
        provided in this chapter, the amount of any tax due must be 
        assessed within 3-1/2 years after a return is filed.  
           Subd. 2.  [DATE OF FILING.] For the purposes of this 
        section, a return filed before the last day prescribed by law 
        for filing is considered filed on the last day. 
           Subd. 3.  [FALSE OR FRAUDULENT RETURN OR CLAIM FOR REFUND; 
        NO RETURN.] When a person required to file a return under this 
        chapter files a false or fraudulent return or claim for refund, 
        or fails to file a return, the tax may be assessed, and a 
        proceeding in court for the collection of such tax may be begun 
        at any time. 
           Subd. 4.  [OMISSION IN EXCESS OF 25 PERCENT.] If a person 
        required to file a return omits from the return an amount 
        properly includable in it that is in excess of 25 percent of the 
        amount of tax reported in the return, the tax may be assessed, 
        or a proceeding in court for the collection of the tax may be 
        begun, at any time within 6-1/2 years after the return was filed.
           Subd. 5.  [TIME LIMIT FOR REFUNDS.] Unless otherwise 
        provided in this chapter, a claim for a refund of an overpayment 
        of tax must be filed within 3-1/2 years from the date prescribed 
        for filing the return, plus any extension of time granted for 
        filing the return, but only if filed within the extended time, 
        or two years from the time the tax is paid in full, whichever 
        period expires later.  Claimants under this section are subject 
        to the notice requirements of section 289A.38, subdivision 7. 
           Subd. 6.  [TIME LIMIT FOR A DESTRUCTION ORDER REFUND.] 
        Claims for refund under section 297G.12, subdivision 2, must be 
        filed with the commissioner within one year from the date of the 
        breakage or destruction order. 
           Subd. 7.  [TIME LIMIT FOR A BAD DEBT DEDUCTION.] Claims for 
        refund must be filed with the commissioner within one year of 
        the filing of the taxpayer's income tax return containing the 
        bad debt deduction that is being claimed. 
           Subd. 8.  [CONSENT TO EXTEND TIME.] If, before the 
        expiration of the time prescribed in this chapter for the 
        assessment of the tax, the commissioner and the person filing 
        the return consent in writing to an extension of time for the 
        assessment of the tax, the tax may be assessed at any time 
        before the expiration of the period agreed upon.  The period so 
        agreed upon may be extended by subsequent agreements in writing 
        made before the expiration of the period previously agreed upon. 
           Subd. 9.  [BANKRUPTCY; SUSPENSION OF TIME.] The running of 
        the period during which a tax must be assessed or collection 
        proceedings commenced is suspended during the period from the 
        date of a filing of a petition in bankruptcy until 30 days after 
        either notice to the commissioner that the bankruptcy 
        proceedings have been closed or dismissed, or the automatic stay 
        has been terminated or has expired, whichever occurs first. 
           The suspension of the statute of limitations under this 
        section applies to the person the petition in bankruptcy is 
        filed against and other persons who may also be wholly or 
        partially liable for the tax. 
           Sec. 17.  [297G.17] [INTEREST.] 
           Subdivision 1.  [INTEREST RATE.] When interest is required 
        under this section, interest is computed at the rate specified 
        in section 270.75. 
           Subd. 2.  [LATE PAYMENT.] If a tax under this chapter is 
        not paid within the time named by law for payment, the unpaid 
        tax bears interest from the date the tax should have been paid 
        until the date the tax is paid. 
           Subd. 3.  [EXTENSIONS.] When an extension of time for 
        payment has been granted, interest must be paid from the date 
        the payment should have been made, if no extension had been 
        granted, until the date the tax is paid. 
           Subd. 4.  [ADDITIONAL ASSESSMENTS.] When a taxpayer is 
        liable for additional taxes because of a redetermination by the 
        commissioner, or for any other reason, the additional taxes bear 
        interest from the time the tax should have been paid, without 
        regard to an extension allowed, until the date the tax is paid. 
           Subd. 5.  [ERRONEOUS REFUNDS OR CREDITS.] In the case of an 
        erroneous refund or credit, interest begins to accrue from the 
        date the refund or credit was paid unless the erroneous refund 
        or credit results from a mistake of the department, in which 
        case no interest or penalty is imposed, unless the deficiency 
        assessment is not satisfied within 60 days of the order. 
           Subd. 6.  [INTEREST ON JUDGMENTS.] Notwithstanding section 
        549.09, if judgment is entered in favor of the commissioner with 
        regard to any tax under this chapter, the judgment bears 
        interest at the rate given in section 270.75 from the date the 
        judgment is entered until the date of payment. 
           Subd. 7.  [INTEREST ON PENALTIES.] (a) A penalty imposed 
        under section 297G.18, subdivisions 2 to 7, bears interest from 
        the date the return or payment was required to be filed or paid, 
        including any extensions, to the date of payment of the penalty. 
           (b) A penalty not included in paragraph (a) bears interest 
        only if it is not paid within ten days from the date of the 
        notice.  In that case interest is imposed from the date of 
        notice to the date of payment. 
           Subd. 8.  [INTEREST ON OVERPAYMENTS.] Interest must be paid 
        on an overpayment refunded or credited to the taxpayer from the 
        date of payment of the tax until the date the refund is paid or 
        credited. 
           Sec. 18.  [297G.18] [CIVIL PENALTIES.] 
           Subdivision 1.  [GENERAL RULE.] The commissioner may 
        recover the amount of any tax due under this chapter, as well as 
        any interest and penalty in a civil action.  The collection of a 
        tax, interest, or penalty does not bar any prosecution under 
        this chapter. 
           Subd. 2.  [PENALTY FOR FAILURE TO PAY TAX.] If a tax 
        imposed by this chapter is not paid within the time specified 
        for payment, a penalty is added to the amount required to be 
        shown as tax.  The penalty is five percent of the tax not paid 
        on or before the date specified for payment of the tax if the 
        failure is for not more than 30 days, with an additional penalty 
        of five percent of the amount of tax remaining unpaid during 
        each additional 30 days or fraction of 30 days during which the 
        failure continues, not exceeding 15 percent in the aggregate. 
           Subd. 3.  [PENALTY FOR FAILURE TO MAKE AND FILE RETURN.] If 
        a taxpayer fails to make and file a return within the time 
        prescribed, including any extension, a penalty of five percent 
        of the amount of tax not timely paid is added to the tax.  If no 
        tax is due, a penalty of $25 is assessed for each unfiled return.
           Subd. 4.  [COMBINED PENALTIES.] When penalties are imposed 
        under subdivisions 2 and 3, the penalties combined must not 
        exceed 38 percent in the aggregate. 
           Subd. 5.  [PENALTY FOR INTENTIONAL DISREGARD OF LAW OR 
        RULES.] If part of an additional assessment is due to negligence 
        or intentional disregard of the provisions of the applicable tax 
        laws or rules of the commissioner, but without an intent to 
        defraud, there must be added to the tax an amount equal to ten 
        percent of the additional assessment. 
           Subd. 6.  [PENALTY FOR REPEATED FAILURES TO FILE OR PAY 
        TAXES.] If there is a pattern by a person of repeated failures 
        to timely file returns or timely pay taxes, and written notice 
        is given that a penalty will be imposed if such failures 
        continue, a penalty of 25 percent of the amount of tax not 
        timely paid as a result of each such subsequent failure is added 
        to the tax.  The penalty can be abated under the abatement 
        authority in section 270.07, subdivisions 1, paragraph (e), and 
        6. 
           Subd. 7.  [PENALTY FOR FALSE OR FRAUDULENT RETURN; 
        EVASION.] If a person files a false or fraudulent return, or 
        attempts in any manner to evade or defeat a tax or payment of 
        tax, there is imposed on the person a penalty equal to 50 
        percent of the tax due for the period to which the return 
        related, less amounts paid by the person on the basis of the 
        false or fraudulent return. 
           Subd. 8.  [REVOCATION OR SUSPENSION OF LICENSE.] The 
        commissioner may certify to the commissioner of public safety 
        any failure to pay taxes when due as a violation of the statute 
        relating to the sale of intoxicating liquor for possible 
        revocation or suspension of license. 
           Subd. 9.  [FAILURE TO FILE INFORMATIONAL RETURNS.] A person 
        required to file informational returns or reports that fails to 
        do so as required by this chapter is assessed a $25 penalty for 
        each month the return remains unfiled. 
           Subd. 10.  [PAYMENT OF PENALTIES.] The penalties imposed by 
        this section are collected and paid in the same manner as taxes. 
           Subd. 11.  [PENALTIES ARE ADDITIONAL.] The civil penalties 
        imposed by this section are in addition to the criminal 
        penalties imposed by this chapter. 
           Sec. 19.  [297G.19] [CRIMINAL PENALTIES.] 
           Subdivision 1.  [PENALTIES FOR FAILURE TO FILE OR PAY.] (a) 
        A person required to file a return, report, or other document 
        with the commissioner who fails to do so is guilty of a 
        misdemeanor.  
           (b) A person required to pay or to collect and remit a tax 
        under this chapter, who fails to do so when required, is guilty 
        of a misdemeanor. 
           Subd. 2.  [PENALTIES FOR KNOWING FAILURE TO FILE OR 
        PAY.] (a) A person required to file a return, report, or other 
        document with the commissioner, who knowingly, rather than 
        accidentally, inadvertently, or negligently, fails to file it 
        when required, is guilty of a gross misdemeanor.  
           (b) A person required to pay or to collect and remit a tax 
        under this chapter, who knowingly, rather than accidentally, 
        inadvertently, or negligently, fails to file it when required, 
        is guilty of a gross misdemeanor. 
           Subd. 3.  [FALSE OR FRAUDULENT RETURNS; PENALTIES.] (a) A 
        person who files with the commissioner a return, report, or 
        other document, known by the person to be fraudulent or false 
        concerning a material matter, is guilty of a felony. 
           (b) A person who knowingly aids or assists in, or advises 
        in the preparation or presentation of a return, report, or other 
        document that is fraudulent or false concerning a material 
        matter, whether or not the falsity or fraud is committed with 
        the knowledge or consent of the person authorized or required to 
        present the return, report, or other document, is guilty of a 
        felony. 
           Subd. 4.  [IMPORTATION FROM ANOTHER STATE.] (a) A person 
        entering Minnesota from another state who imports or possesses 
        more than one liter, but fewer than 25 liters of untaxed 
        intoxicating liquor, or more than 288 ounces (nine quarts), but 
        fewer than 6,800 ounces (225 quarts) of untaxed fermented malt 
        beverages is guilty of a misdemeanor. 
           (b) A person entering Minnesota from another state who 
        imports or possesses 25 liters or more, but fewer than 225 
        liters of untaxed intoxicating liquor, or 6,800 ounces (225 
        quarts) or more, but fewer than 34,000 ounces (1,225 quarts) of 
        untaxed fermented malt beverages is guilty of a gross 
        misdemeanor. 
           (c) A person entering Minnesota from another state who 
        imports or possesses 225 liters or more of untaxed intoxicating 
        liquor, or 34,000 ounces (1,225 quarts) or more of untaxed 
        fermented malt beverages is guilty of a felony. 
           Subd. 5.  [IMPORTATION FROM A FOREIGN COUNTRY.] (a) A 
        person entering Minnesota from a foreign country who imports or 
        possesses more than four liters, but fewer than 100 liters of 
        untaxed intoxicating liquor, or more than 320 ounces (ten 
        quarts), but fewer than 8,000 ounces (250 quarts) of untaxed 
        fermented malt beverages is guilty of a misdemeanor. 
           (b) A person entering Minnesota from a foreign country who 
        imports or possesses 100 liters or more, but fewer than 500 
        liters of untaxed intoxicating liquor, or 8,000 ounces (250 
        quarts) or more, but fewer than 40,000 ounces (1,250 quarts) of 
        untaxed fermented malt beverages is guilty of a gross 
        misdemeanor. 
           (c) A person entering Minnesota from a foreign country who 
        imports or possesses 500 liters or more of untaxed intoxicating 
        liquor, or 40,000 ounces (1,250 quarts) or more of untaxed 
        fermented malt beverages is guilty of a felony. 
           Subd. 6.  [PENALTIES ARE ADDITIONAL.] Criminal penalties 
        imposed by this section are in addition to any civil penalties 
        imposed by this chapter. 
           Subd. 7.  [OTHER PENALTIES.] Any violation of this chapter 
        unless otherwise specified is a misdemeanor. 
           Subd. 8.  [STATUTE OF LIMITATIONS.] Notwithstanding section 
        628.26, or any other provision of the criminal laws of this 
        state, an indictment may be found and filed, or a complaint 
        filed, upon a criminal offense named in this section, in the 
        proper court within six years after the offense is committed. 
           Sec. 20.  [297G.20] [CONTRABAND.] 
           Subdivision 1.  [CONTRABAND DEFINED.] The following are 
        declared to be contraband and therefore subject to civil and 
        criminal penalties and seizure under this chapter: 
           (1) All distilled spirits, wine, and fermented malt 
        beverages possessed or held with intent to sell without payment 
        of an excise tax. 
           (2) All distilled spirits, wine, and fermented malt 
        beverages sold without payment of an excise tax. 
           (3) All distilled spirits, wine, and fermented malt 
        beverages transported without payment of an excise tax. 
           (4) Devices including, but not limited to, motor vehicles, 
        trailers, snowmobiles, airplanes, and boats used with the 
        knowledge of the owner, or of a person operating with the 
        consent of the owner, for the storage or transportation of 
        distilled spirits, wine, and fermented malt beverages which are 
        contraband under this subdivision. 
           Subd. 2.  [EXCEPTION.] When distilled spirits, wine, and 
        fermented malt beverages are being transported in the course of 
        interstate commerce, or are in movement from either a public 
        warehouse to a wholesaler upon orders from a manufacturer or 
        wholesaler, or from one wholesaler to another, the distilled 
        spirits, wine, and fermented malt beverages are not contraband, 
        notwithstanding the provisions of subdivision 1. 
           Subd. 3.  [SEIZURE.] Distilled spirits, wine, fermented 
        malt beverages, or other property made contraband by subdivision 
        1 may be seized by the commissioner of revenue or public safety 
        and their authorized agents or by any sheriff or other police 
        officer, with or without process, and are subject to forfeiture 
        as provided in subdivisions 4 and 5. 
           Subd. 4.  [INVENTORY; JUDICIAL DETERMINATION; APPEAL; 
        DISPOSITION OF SEIZED PROPERTY.] (a) Within ten days after the 
        seizure of alleged contraband, the person making the seizure 
        shall make available an inventory of the property seized to the 
        person from whom the property was seized, if known, and file 
        a copy with both the commissioners of revenue and public safety. 
        Within ten days after the date of service of the inventory, the 
        person from whom the property was seized or any person claiming 
        an interest in the property may file with the seizing authority 
        a demand for judicial determination of whether the property was 
        lawfully subject to seizure and forfeiture.  Within 60 days 
        after the date of the filing of the demand, the seizing 
        authority must bring an action in the district court of the 
        county where seizure was made to determine the issue of 
        forfeiture. 
           (b) The action must be brought in the name of the state and 
        must be prosecuted by the county attorney or by the attorney 
        general.  The court shall hear the action without a jury and 
        determine the issues of fact and law involved. 
           (c) If a judgment of forfeiture is entered, the seizing 
        authority may, unless the judgment is stayed pending an appeal, 
        either: 
           (1) cause the forfeited property to be destroyed; or 
           (2) cause it to be sold at a public auction as provided by 
        law. 
           (d) If demand for judicial determination is made and no 
        action is commenced by the seizing authority as provided in this 
        subdivision, the property must be released by the seizing 
        authority and delivered to the person entitled to it.  If no 
        demand is made, the property seized is considered forfeited to 
        the seizing authority by operation of law and may be disposed of 
        by the seizing authority as provided for a judgment of 
        forfeiture.  When the seizing authority is satisfied that a 
        person from whom property is seized was acting in good faith and 
        without intent to evade the tax imposed by this chapter, the 
        seizing authority shall release the property seized without 
        further legal proceedings. 
           Subd. 5.  [DISPOSAL.] (a) The property described in 
        subdivision 1, clause (4), must be confiscated after conviction 
        of the person from whom it was seized, upon compliance with the 
        following procedure:  the seizing authority shall file with the 
        court a separate complaint against the property, describing it 
        and charging its use in the specific violation, and specifying 
        substantially the time and place of the unlawful use.  A copy of 
        the complaint must be served upon the defendant or person in 
        charge of the seizure, if any.  
           (b) If the person arrested is acquitted, the court shall 
        dismiss the complaint against the property and order it returned 
        to the persons legally entitled to it.  Upon conviction of the 
        person arrested, the court shall issue an order directed to any 
        person known or believed to have any right, title, or interest 
        in, or lien upon, any of the property, and to persons unknown 
        claiming any right, title, interest, or lien in it, describing 
        the property and (1) stating that it was seized and that a 
        complaint against it, charging the specified violation, has been 
        filed with the court, (2) requiring the persons to file with the 
        court administrator their answer to the complaint, setting forth 
        any claim they may have to any right or title to, interest in, 
        or lien upon the property, within 30 days after the service of 
        the order, and (3) notifying them in substance that if they fail 
        to file their answer within the time, the property will be 
        ordered sold by the seizing authority.  
           (c) The court shall cause the order to be served upon any 
        person known or believed to have any right, title, interest, or 
        lien as in the case of a summons in a civil action, and upon 
        unknown persons by publication, as provided for service of 
        summons in a civil action.  If an answer is filed within the 
        time provided, the court shall fix a time for hearing, which 
        must not be less than ten nor more than 30 days after the time 
        for filing the answer expires.  If no answer is filed within the 
        time prescribed, upon affidavit by the court administrator, 
        setting forth the fact, the court shall order the property sold 
        by the seizing authority.  Seventy-five percent of the proceeds 
        of the sale of forfeited property, after payment of seizure, 
        storage, forfeiture, and sale expenses, must be forwarded to the 
        seizing authority for deposit as a supplement to its operating 
        fund or similar fund for official use, and 25 percent must be 
        forwarded to the county attorney or other prosecuting agency 
        that handled the forfeiture for deposit as a supplement to its 
        operating fund or similar fund for prosecutorial purposes. 
           (d) At the time fixed for hearing, unless continued for 
        cause, the matter must be heard and determined by the court, 
        without a jury as in other civil actions.  If the court finds 
        that the property, or any part of it, was used in the violation 
        specified in the complaint, it shall order the unlawfully used 
        property sold as provided by law, unless the owner shows to the 
        satisfaction of the court that the owner had no notice or 
        knowledge or reason to believe that the property was used or 
        intended to be used in the violation.  The officer making a 
        sale, after deducting the expense of keeping the property, the 
        fee for seizure, and the costs of the sale, shall pay all liens 
        according to their priority, which are established at the 
        hearing as being bona fide and as existing without the lienor 
        having any notice or knowledge that the property was being used 
        or was intended to be used for or in connection with the 
        violation specified in the order of the court, and shall pay the 
        balance of the proceeds to the seizing authority for official 
        use and sharing in the manner provided in paragraph (a).  A sale 
        under this section frees the property from all liens on it.  
        Appeal from the order of the district is available as in other 
        civil cases. 
           (e) At any time after seizure of the articles specified in 
        this subdivision, and before the hearing provided for, the 
        property must be returned to the owner or person having a legal 
        right to its possession, upon execution of a good and valid bond 
        to the state, with corporate surety, in the sum of at least $100 
        and not more than double of the value of the property seized, to 
        be approved by the court in which the case is triable, or a 
        judge of it, conditioned to abide any order and the judgment of 
        the court, and to pay the full value of the property at the time 
        of the seizure.  The seizing authority may dismiss the 
        proceedings outlined in this subdivision when the seizing 
        authority considers it in the public interest to do so. 
           Sec. 21.  [297G.21] [ADMINISTRATIVE REVIEW.] 
           Subdivision 1.  [TAXPAYER RIGHT TO RECONSIDERATION.] A 
        taxpayer may obtain reconsideration by the commissioner of an 
        order assessing any tax imposed by this chapter, a denial of a 
        request for abatement of penalty, or a denial of a claim for 
        refund by filing an administrative appeal under subdivision 3.  
        A taxpayer cannot obtain reconsideration under this section if 
        the action taken by the commissioner is the outcome of an 
        administrative appeal. 
           Subd. 2.  [NOTICE DATE.] For purposes of this section, the 
        term "notice date" means the date of the order adjusting the tax 
        or order denying a request for abatement, or, in the case of a 
        denied refund, the date of the notice of denial. 
           Subd. 3.  [TIME AND CONTENT FOR ADMINISTRATIVE APPEAL.] 
        Within 60 days after the notice date, the taxpayer must file a 
        written appeal with the commissioner.  The appeal need not be in 
        any particular form but must contain the following information: 
           (1) the name and address of the taxpayer; 
           (2) if a corporation, the state of incorporation of the 
        taxpayer, and the principal place of business of the 
        corporation; 
           (3) the Minnesota identification number or social security 
        number of the taxpayer; 
           (4) the type of tax involved; 
           (5) the date; 
           (6) the tax years or periods involved and the amount of tax 
        involved for each year or period; 
           (7) the findings in the notice that the taxpayer disputes; 
           (8) a summary statement that the taxpayer relies on for 
        each exception; and 
           (9) the taxpayer's signature or signature of the taxpayer's 
        duly authorized agent. 
           Subd. 4.  [EXTENSIONS.] When requested in writing and 
        within the time allowed for filing an administrative appeal, the 
        commissioner may extend the time for filing an appeal for a 
        period of not more than 30 days from the expiration of the 60 
        days from the notice date. 
           Subd. 5.  [DETERMINATION OF APPEAL.] On the basis of 
        applicable law and available information, the commissioner shall 
        determine the validity, if any, in whole or part of the appeal 
        and notify the taxpayer of the decision.  This notice must be in 
        writing and contain the basis for the determination. 
           Subd. 6.  [AGREEMENT DETERMINING TAX LIABILITY.] When it 
        appears to be in the best interests of the state, the 
        commissioner may settle any taxes, penalties, or interest that 
        the commissioner has under consideration by virtue of an appeal 
        filed under this section.  An agreement must be in writing and 
        signed by the commissioner and the taxpayer, or the taxpayer's 
        representative authorized by the taxpayer to enter into an 
        agreement.  The agreement must be filed in the office of the 
        commissioner. 
           Subd. 7.  [APPEAL OF AN ADMINISTRATIVE DETERMINATION.] 
        Following the determination or settlement of an appeal and 
        notwithstanding any period of limitations for making assessments 
        or other determinations to the contrary, the commissioner shall 
        issue an order reflecting that disposition.  If the statute of 
        limitations for making assessments or other determinations would 
        have expired before the issuance of this order, except for this 
        section, the order is limited to issues or matters contained in 
        the appealed determination.  Except in the case of an agreement 
        determining tax under this section, the order is appealable to 
        the Minnesota tax court under section 271.06. 
           Subd. 8.  [APPEAL WHERE NO DETERMINATION.] If the 
        commissioner does not make a determination within six months of 
        the filing of an administrative appeal, the taxpayer may elect 
        to appeal to tax court. 
           Subd. 9.  [INAPPLICABILITY OF ADMINISTRATIVE PROCEDURE 
        ACT.] An appeal under this section is not a contested case 
        governed by chapter 14. 
           Sec. 22.  [297G.22] [JUDICIAL REVIEW.] 
           In lieu of an administrative appeal under this chapter, a 
        person aggrieved by an order of the commissioner fixing a tax, 
        penalty, or interest under this chapter may, within 60 days from 
        the date of the notice of the order, appeal to the tax court in 
        the manner provided under section 271.06.  
           Sec. 23.  [PURPOSE.] 
           It is the intent of the legislature to simplify Minnesota's 
        liquor tax laws by consolidating and recodifying tax 
        administration and compliance provisions now contained 
        throughout Minnesota Statutes, chapter 297C.  Due to the 
        complexity of the recodification, prior provisions are repealed 
        on the effective date of the new provisions.  The repealed 
        provisions, however, continue to remain in effect until 
        superseded by the analogous provision in the new law. 
           Sec. 24.  [REPEALER.] 
           Minnesota Statutes 1996, sections 297C.01; 297C.02; 
        297C.03; 297C.04; 297C.045; 297C.05; 297C.06; 297C.07; 297C.08; 
        297C.09; 297C.10; 297C.11; 297C.12; 297C.13; 297C.14; 297C.16; 
        and 297C.17, are repealed. 
           Sec. 25.  [EFFECTIVE DATE.] 
           Sections 1 and 23 are effective the day following final 
        enactment.  Sections 2 to 12, 18, 21, and 22 are effective for 
        returns, reports, taxes, or other payments first becoming due on 
        or after August 1, 1997.  Sections 13, 20, and 24 are effective 
        August 1, 1997.  Sections 14 and 15 are effective for audits or 
        investigations initiated on or after August 1, 1997.  Section 16 
        is effective for returns becoming due on or after August 1, 
        1997.  Section 17 is effective for interest on amounts first 
        becoming due to the commissioner on or after August 1, 1997.  
        Section 19 is effective for crimes committed on or after August 
        1, 1997. 
                                   ARTICLE 2 
                               TECHNICAL CHANGES 
           Section 1.  Minnesota Statutes 1996, section 16A.26, is 
        amended to read: 
           16A.26 [ONE DEPOSITORY ACCOUNT FOR EACH TAX.] 
           Notwithstanding sections 297.13, 298.17, 298.282, 298.39, 
        298.396, 297C.02 to 297C.08 297G.10, and similar laws to the 
        contrary relating to the depositing, disposition, or 
        apportionment of tax receipts, the commissioner may use one 
        depository account for each tax.  To do so, there must be enough 
        information to identify and dispose of or apportion the tax 
        under law.  The commissioner shall ask the appropriate officials 
        for the transfers and necessary certifications.  The 
        commissioner may issue directives to carry out this section. 
           Sec. 2.  Minnesota Statutes 1996, section 340A.301, 
        subdivision 8, is amended to read: 
           Subd. 8.  [SALES WITHOUT LICENSE.] A licensed brewer may 
        without an additional license sell malt liquor to employees or 
        retired former employees, in amounts of not more than 768 fluid 
        ounces in a week for off-premise consumption only.  A collector 
        of commemorative bottles, those terms are as defined in 
        section 297C.01 297G.01, subdivisions 4 and 5, may sell them to 
        another collector without a license.  It is also lawful for a 
        collector of beer cans to sell unopened cans of a brand which 
        has not been sold commercially for at least two years to another 
        collector without obtaining a license.  The amount sold to any 
        one collector in any one month shall not exceed 768 fluid 
        ounces. A licensed manufacturer of wine containing not more than 
        25 percent alcohol by volume nor less than 51 percent wine made 
        from Minnesota-grown agricultural products may sell at on-sale 
        or off-sale wine made on the licensed premises without a further 
        license. 
           Sec. 3.  Minnesota Statutes 1996, section 340A.302, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSES REQUIRED.] Except as provided in 
        sections 297C.09 297G.07, subdivision 2, and 340A.301, 
        subdivision 1, no retailer or other person may ship or cause to 
        be shipped alcoholic beverages or ethyl alcohol for personal use 
        or to a licensed manufacturer or wholesaler without obtaining an 
        importer's license from the commissioner. 
           Sec. 4.  Minnesota Statutes 1996, section 340A.414, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INSPECTION.] An establishment holding a permit 
        under this section is open for inspection by the commissioner 
        and the commissioner's representative and by peace officers, who 
        may enter and inspect during reasonable hours.  Intoxicating 
        liquor sold, served, or displayed in violation of law may be 
        seized and may be disposed of under section 297C.12 297G.20. 
           Sec. 5.  Minnesota Statutes 1996, section 340A.417, is 
        amended to read: 
           340A.417 [SHIPMENTS INTO MINNESOTA.] 
           (a) Notwithstanding section 297C.09 297G.07, subdivision 2, 
        or any provision of this chapter, a winery licensed in a state 
        which affords Minnesota wineries an equal reciprocal shipping 
        privilege may ship, for personal use and not for resale, not 
        more than two cases of wine, containing a maximum of nine liters 
        per case, in any calendar year to any resident of Minnesota age 
        21 or over.  Delivery of a shipment under this section may not 
        be deemed a sale in this state.  
           (b) The shipping container of any wine sent into or out of 
        Minnesota under this section must be clearly labeled to indicate 
        that the package cannot be delivered to a person under the age 
        of 21 years.  
           (c) No person may (1) advertise shipments authorized under 
        this section, or (2) by advertisement or otherwise, solicit 
        shipments authorized by this section.  No shipper located 
        outside Minnesota may advertise such interstate reciprocal wine 
        shipments in Minnesota.  
           (d) It is not the intent of this section to impair the 
        distribution of wine through distributors or importing 
        distributors, but only to permit shipments of wine for personal 
        use.  
           Sec. 6.  Minnesota Statutes 1996, section 340A.7035, is 
        amended to read: 
           340A.7035 [CONSUMER IMPORTATION; ILLEGAL ACTS.] 
           A person who enters Minnesota from another state and who 
        imports or possesses alcoholic beverages in excess of the 
        tax-exempt quantities provided for in section 297C.07, 
        paragraphs (10), (11), and (12), 297G.07, subdivision 2, 
        paragraphs (a), (b), and (c), is guilty of a misdemeanor.  A 
        person who enters Minnesota from a foreign country who imports 
        or possesses alcoholic beverages on which the excise tax imposed 
        by sections 297C.02 and 297C.09 chapter 297G has not been paid, 
        other than the tax-exempt quantities provided for in 
        section 297C.07, paragraphs (10), (11), and (12), 297G.07, 
        subdivision 2, paragraphs (a), (b), and (c), is guilty of a 
        misdemeanor.  A peace officer, the commissioner of public 
        safety, and employees designated by the commissioner of public 
        safety may seize alcoholic beverages imported or possessed in 
        violation of this section.  This section does not apply to the 
        consignments of alcoholic beverages shipped into this state by 
        holders of Minnesota import licenses or Minnesota manufacturers 
        and wholesalers when licensed by the commissioner of public 
        safety or to common carriers with licenses to sell alcoholic 
        beverages in more than one state when licensed by the 
        commissioner of public safety to sell alcoholic beverages in 
        this state. 
           Sec. 7.  [EFFECTIVE DATE.] 
           Sections 1 to 6 are effective August 1, 1997. 
           Presented to the governor May 17, 1997 
           Signed by the governor May 19, 1997, 7:22 p.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569