1.1                          A bill for an act 
  1.2             relating to state government; transferring the 
  1.3             administration and enforcement of the Unfair Cigarette 
  1.4             Sales Act from the commissioner of revenue to the 
  1.5             commissioner of commerce; amending Minnesota Statutes 
  1.6             2000, sections 45.011, subdivision 1; 270.06; 297F.04, 
  1.7             subdivision 1; 297F.13, subdivision 4; 325D.33, 
  1.8             subdivision 8, by adding a subdivision; 325D.405; 
  1.9             325D.415; repealing Minnesota Statutes 2000, section 
  1.10            325D.33, subdivision 5. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2000, section 45.011, 
  1.13  subdivision 1, is amended to read: 
  1.14     Subdivision 1.  [SCOPE.] As used in chapters 45 to 83, 
  1.15  155A, 309, 332, 345, and 359, and sections 325D.30 to 325D.42, 
  1.16  326.83 to 326.991, and 386.61 to 386.78, unless the context 
  1.17  indicates otherwise, the terms defined in this section have the 
  1.18  meanings given them.  
  1.19     Sec. 2.  Minnesota Statutes 2000, section 270.06, is 
  1.20  amended to read: 
  1.21     270.06 [POWERS AND DUTIES.] 
  1.22     The commissioner of revenue shall: 
  1.23     (1) have and exercise general supervision over the 
  1.24  administration of the assessment and taxation laws of the state, 
  1.25  over assessors, town, county, and city boards of review and 
  1.26  equalization, and all other assessing officers in the 
  1.27  performance of their duties, to the end that all assessments of 
  1.28  property be made relatively just and equal in compliance with 
  2.1   the laws of the state; 
  2.2      (2) confer with, advise, and give the necessary 
  2.3   instructions and directions to local assessors and local boards 
  2.4   of review throughout the state as to their duties under the laws 
  2.5   of the state; 
  2.6      (3) direct proceedings, actions, and prosecutions to be 
  2.7   instituted to enforce the laws relating to the liability and 
  2.8   punishment of public officers and officers and agents of 
  2.9   corporations for failure or negligence to comply with the 
  2.10  provisions of the laws of this state governing returns of 
  2.11  assessment and taxation of property, and cause complaints to be 
  2.12  made against local assessors, members of boards of equalization, 
  2.13  members of boards of review, or any other assessing or taxing 
  2.14  officer, to the proper authority, for their removal from office 
  2.15  for misconduct or negligence of duty; 
  2.16     (4) require county attorneys to assist in the commencement 
  2.17  of prosecutions in actions or proceedings for removal, 
  2.18  forfeiture and punishment for violation of the laws of this 
  2.19  state in respect to the assessment and taxation of property in 
  2.20  their respective districts or counties; 
  2.21     (5) require town, city, county, and other public officers 
  2.22  to report information as to the assessment of property, 
  2.23  collection of taxes received from licenses and other sources, 
  2.24  and such other information as may be needful in the work of the 
  2.25  department of revenue, in such form and upon such blanks as the 
  2.26  commissioner may prescribe; 
  2.27     (6) require individuals, copartnerships, companies, 
  2.28  associations, and corporations to furnish information concerning 
  2.29  their capital, funded or other debt, current assets and 
  2.30  liabilities, earnings, operating expenses, taxes, as well as all 
  2.31  other statements now required by law for taxation purposes; 
  2.32     (7) subpoena witnesses, at a time and place reasonable 
  2.33  under the circumstances, to appear and give testimony, and to 
  2.34  produce books, records, papers and documents for inspection and 
  2.35  copying relating to any matter which the commissioner may have 
  2.36  authority to investigate or determine; 
  3.1      (8) issue a subpoena which does not identify the person or 
  3.2   persons with respect to whose liability the subpoena is issued, 
  3.3   but only if (a) the subpoena relates to the investigation of a 
  3.4   particular person or ascertainable group or class of persons, 
  3.5   (b) there is a reasonable basis for believing that such person 
  3.6   or group or class of persons may fail or may have failed to 
  3.7   comply with any law administered by the commissioner, (c) the 
  3.8   information sought to be obtained from the examination of the 
  3.9   records (and the identity of the person or persons with respect 
  3.10  to whose liability the subpoena is issued) is not readily 
  3.11  available from other sources, (d) the subpoena is clear and 
  3.12  specific as to the information sought to be obtained, and (e) 
  3.13  the information sought to be obtained is limited solely to the 
  3.14  scope of the investigation.  Provided further that the party 
  3.15  served with a subpoena which does not identify the person or 
  3.16  persons with respect to whose tax liability the subpoena is 
  3.17  issued shall have the right, within 20 days after service of the 
  3.18  subpoena, to petition the district court for the judicial 
  3.19  district in which lies the county in which that party is located 
  3.20  for a determination as to whether the commissioner of revenue 
  3.21  has complied with all the requirements in (a) to (e), and thus, 
  3.22  whether the subpoena is enforceable.  If no such petition is 
  3.23  made by the party served within the time prescribed, the 
  3.24  subpoena shall have the force and effect of a court order; 
  3.25     (9) cause the deposition of witnesses residing within or 
  3.26  without the state, or absent therefrom, to be taken, upon notice 
  3.27  to the interested party, if any, in like manner that depositions 
  3.28  of witnesses are taken in civil actions in the district court, 
  3.29  in any matter which the commissioner may have authority to 
  3.30  investigate or determine; 
  3.31     (10) investigate the tax laws of other states and countries 
  3.32  and to formulate and submit to the legislature such legislation 
  3.33  as the commissioner may deem expedient to prevent evasions of 
  3.34  assessment and taxing laws, and secure just and equal taxation 
  3.35  and improvement in the system of assessment and taxation in this 
  3.36  state; 
  4.1      (11) consult and confer with the governor upon the subject 
  4.2   of taxation, the administration of the laws in regard thereto, 
  4.3   and the progress of the work of the department of revenue, and 
  4.4   furnish the governor, from time to time, such assistance and 
  4.5   information as the governor may require relating to tax matters; 
  4.6      (12) transmit to the governor, on or before the third 
  4.7   Monday in December of each even-numbered year, and to each 
  4.8   member of the legislature, on or before November 15 of each 
  4.9   even-numbered year, the report of the department of revenue for 
  4.10  the preceding years, showing all the taxable property in the 
  4.11  state and the value of the same, in tabulated form; 
  4.12     (13) inquire into the methods of assessment and taxation 
  4.13  and ascertain whether the assessors faithfully discharge their 
  4.14  duties, particularly as to their compliance with the laws 
  4.15  requiring the assessment of all property not exempt from 
  4.16  taxation; 
  4.17     (14) administer and enforce the assessment and collection 
  4.18  of state taxes and fees, including the use of any remedy 
  4.19  available to nongovernmental creditors, and, from time to time, 
  4.20  make, publish, and distribute rules for the administration and 
  4.21  enforcement of assessments and fees administered by the 
  4.22  commissioner and state tax laws.  The rules have the force of 
  4.23  law; 
  4.24     (15) prepare blank forms for the returns required by state 
  4.25  tax law and distribute them throughout the state, furnishing 
  4.26  them subject to charge on application; 
  4.27     (16) prescribe rules governing the qualification and 
  4.28  practice of agents, attorneys, or other persons representing 
  4.29  taxpayers before the commissioner.  The rules may require that 
  4.30  those persons, agents, and attorneys show that they are of good 
  4.31  character and in good repute, have the necessary qualifications 
  4.32  to give taxpayers valuable services, and are otherwise competent 
  4.33  to advise and assist taxpayers in the presentation of their case 
  4.34  before being recognized as representatives of taxpayers.  After 
  4.35  due notice and opportunity for hearing, the commissioner may 
  4.36  suspend and disbar from further practice before the commissioner 
  5.1   any person, agent, or attorney who is shown to be incompetent or 
  5.2   disreputable, who refuses to comply with the rules, or who with 
  5.3   intent to defraud, willfully or knowingly deceives, misleads, or 
  5.4   threatens a taxpayer or prospective taxpayer, by words, 
  5.5   circular, letter, or by advertisement.  This clause does not 
  5.6   curtail the rights of individuals to appear in their own behalf 
  5.7   or partners or corporations' officers to appear in behalf of 
  5.8   their respective partnerships or corporations; 
  5.9      (17) appoint agents as the commissioner considers necessary 
  5.10  to make examinations and determinations.  The agents have the 
  5.11  rights and powers conferred on the commissioner to subpoena, 
  5.12  examine, and copy books, records, papers, or memoranda, subpoena 
  5.13  witnesses, administer oaths and affirmations, and take 
  5.14  testimony.  In addition to administrative subpoenas of the 
  5.15  commissioner and the agents, upon demand of the commissioner or 
  5.16  an agent, the court administrator of any district court shall 
  5.17  issue a subpoena for the attendance of a witness or the 
  5.18  production of books, papers, records, or memoranda before the 
  5.19  agent for inspection and copying.  Disobedience of a court 
  5.20  administrator's subpoena shall be punished by the district court 
  5.21  of the district in which the subpoena is issued, or in the case 
  5.22  of a subpoena issued by the commissioner or an agent, by the 
  5.23  district court of the district in which the party served with 
  5.24  the subpoena is located, in the same manner as contempt of the 
  5.25  district court; 
  5.26     (18) appoint and employ additional help, purchase supplies 
  5.27  or materials, or incur other expenditures in the enforcement of 
  5.28  state tax laws as considered necessary.  The salaries of all 
  5.29  agents and employees provided for in this chapter shall be fixed 
  5.30  by the appointing authority, subject to the approval of the 
  5.31  commissioner of administration; 
  5.32     (19) execute and administer any agreement with the 
  5.33  secretary of the treasury of the United States or a 
  5.34  representative of another state regarding the exchange of 
  5.35  information and administration of the tax laws; 
  5.36     (20) ~~administer and enforce the provisions of sections~~ 
  6.1   ~~325D.30 to 325D.42, the Minnesota Unfair Cigarette Sales Act;~~ 
  6.2      ~~(21)~~ authorize the use of unmarked motor vehicles to 
  6.3   conduct seizures or criminal investigations pursuant to the 
  6.4   commissioner's authority; and 
  6.5      ~~(22)~~ (21) exercise other powers and perform other duties 
  6.6   required of or imposed upon the commissioner of revenue by law.  
  6.7      Sec. 3.  Minnesota Statutes 2000, section 297F.04, 
  6.8   subdivision 1, is amended to read: 
  6.9      Subdivision 1.  [POWERS OF COMMISSIONER.] The commissioner 
  6.10  may revoke or suspend the license or licenses of any distributor 
  6.11  or subjobber for violation of this chapter, any other act 
  6.12  applicable to the sale of cigarettes or tobacco products, or any 
  6.13  rule promulgated by the commissioner, in furtherance of this 
  6.14  chapter.  ~~The commissioner may also revoke, cancel, or suspend~~ 
  6.15  ~~the license or licenses of any distributor or subjobber for~~ 
  6.16  ~~violation of sections 325D.30 to 325D.42.~~ 
  6.17     Sec. 4.  Minnesota Statutes 2000, section 297F.13, 
  6.18  subdivision 4, is amended to read: 
  6.19     Subd. 4.  [RETAILER AND SUBJOBBER TO PRESERVE PURCHASE 
  6.20  INVOICES.] Every retailer and subjobber shall procure itemized 
  6.21  invoices of all cigarettes or tobacco products purchased.  
  6.22     The retailer and subjobber shall preserve a legible copy of 
  6.23  each invoice for one year from the date of the invoice.  The 
  6.24  retailer and subjobber shall preserve copies of the invoices at 
  6.25  each retail location or at a central location provided that the 
  6.26  invoice must be produced and made available at a retail location 
  6.27  within one hour when requested by the commissioner or duly 
  6.28  authorized agents and employees.  Copies should be numbered and 
  6.29  kept in chronological order. 
  6.30     To determine whether the business is in compliance with the 
  6.31  provisions of this chapter ~~and sections 325D.30 to 325D.42~~, at 
  6.32  any time during usual business hours, the commissioner, or duly 
  6.33  authorized agents and employees, may enter any place of business 
  6.34  of a retailer or subjobber without a search warrant and inspect 
  6.35  the premises, the records required to be kept under this 
  6.36  chapter, and the packages of cigarettes, tobacco products, and 
  7.1   vending devices contained on the premises. 
  7.2      Sec. 5.  Minnesota Statutes 2000, section 325D.33, is 
  7.3   amended by adding a subdivision to read: 
  7.4      Subd. 2a.  [COMMISSIONER.] "Commissioner" means the 
  7.5   commissioner of commerce or the commissioner's designated 
  7.6   representative.  
  7.7      Sec. 6.  Minnesota Statutes 2000, section 325D.33, 
  7.8   subdivision 8, is amended to read: 
  7.9      Subd. 8.  [PENALTIES.] (a) A retailer who sells cigarettes 
  7.10  for less than a legal retail price may be assessed a penalty in 
  7.11  the full amount of three times the difference between the actual 
  7.12  selling price and a legal price under sections 325D.30 to 
  7.13  325D.42.  This penalty may be collected by the commissioner 
  7.14  under the authorities given the commissioner of revenue in 
  7.15  ~~chapters~~ chapter 270 ~~and 297F~~, and the penalty shall bear 
  7.16  interest at the rate prescribed by section 270.75, subdivision 5.
  7.17     (b) A wholesaler who sells cigarettes for less than a legal 
  7.18  price may be assessed a penalty in the full amount of three 
  7.19  times the difference between the actual selling price and the 
  7.20  legal price under sections 325D.30 to 325D.42.  This penalty may 
  7.21  be collected by the commissioner under the authorities given the 
  7.22  commissioner of revenue in ~~chapters~~ chapter 270 ~~and 297F~~, and 
  7.23  the penalty shall bear interest at the rate prescribed by 
  7.24  section 270.75, subdivision 5.  
  7.25     (c) A retailer who engages in a plan, scheme, or device 
  7.26  with a wholesaler to purchase cigarettes at a price which the 
  7.27  retailer knows to be less than a legal price may be assessed a 
  7.28  penalty in the full amount of three times the difference between 
  7.29  the actual purchase price and the legal price under sections 
  7.30  325D.30 to 325D.42.  A retailer that coerces or requires a 
  7.31  wholesaler to sell cigarettes at a price which the retailer 
  7.32  knows to be less than a legal price may be assessed a penalty in 
  7.33  the full amount of three times the difference between the actual 
  7.34  purchase price and the legal price.  These penalties may be 
  7.35  collected by the commissioner under the authorities given the 
  7.36  commissioner of revenue in ~~chapters~~ chapter 270 ~~and 297F~~, and 
  8.1   the penalties shall bear interest at the rate prescribed by 
  8.2   section 270.75, subdivision 5. 
  8.3      For purposes of this subdivision, a retailer is presumed to 
  8.4   know that a purchase price is less than a legal price if any of 
  8.5   the following have been done: 
  8.6      (1) the commissioner has published the legal price in the 
  8.7   Minnesota State Register; 
  8.8      (2) the commissioner has provided written notice to the 
  8.9   retailer of the legal price; 
  8.10     (3) the commissioner has provided written notice to the 
  8.11  retailer that the retailer is purchasing cigarettes for less 
  8.12  than a legal price; 
  8.13     (4) the commissioner has issued a written order to the 
  8.14  retailer to cease and desist from purchases of cigarettes for 
  8.15  less than a legal price; or 
  8.16     (5) there is evidence that the retailer has knowledge of, 
  8.17  or has participated in, efforts to disguise or misrepresent the 
  8.18  actual purchase price as equal to or more than a legal price, 
  8.19  when it is actually less than a legal price. 
  8.20     In any proceeding arising under this subdivision, the 
  8.21  commissioner shall have the burden of providing by a reasonable 
  8.22  preponderance of the evidence that the facts necessary to 
  8.23  establish the presumption set forth in this section exist, or 
  8.24  that the retailer had knowledge that a purchase price was less 
  8.25  than the legal price. 
  8.26     (d) The commissioner may not assess penalties against any 
  8.27  wholesaler, retailer, or combination of wholesaler and retailer, 
  8.28  which are greater than three times the difference between the 
  8.29  actual price and the legal price under sections 325D.30 to 
  8.30  325D.42. 
  8.31     Sec. 7.  Minnesota Statutes 2000, section 325D.405, is 
  8.32  amended to read: 
  8.33     325D.405 [INVESTIGATIONS.] 
  8.34     The commissioner or duly authorized agents may conduct 
  8.35  investigations to determine compliance with the provisions of 
  8.36  sections 325D.30 to 325D.42 and, in connection with such 
  9.1   investigations, the commissioner and duly authorized agents have 
  9.2   all the powers conferred upon the commissioner by section ~~270.06~~ 
  9.3   45.027. 
  9.4      Sec. 8.  Minnesota Statutes 2000, section 325D.415, is 
  9.5   amended to read: 
  9.6      325D.415 [CIGARETTE DISTRIBUTOR FEES.] 
  9.7      A cigarette distributor as defined in section 297F.01, 
  9.8   subdivision 4, shall pay to the commissioner an annual fee as 
  9.9   follows:  
  9.10     (1) a fee of $2,500 is due from those distributors whose 
  9.11  annual cigarette tax collections exceed $2,000,000; and 
  9.12     (2) a fee of $1,200 is due from those distributors whose 
  9.13  annual cigarette tax collections are $2,000,000 or less. 
  9.14     The annual fee must be paid by December 31 of each year.  
  9.15  ~~If the fee is not paid when due, the commissioner shall revoke~~ 
  9.16  ~~or refuse to issue or renew the license under chapter 297F.~~  The 
  9.17  annual fee must be deposited into the general fund. 
  9.18     Sec. 9.  [TRANSFER OF RESPONSIBILITIES.] 
  9.19     Minnesota Statutes, section 15.039, subdivisions 1 to 6 and 
  9.20  8, apply to the transfer of responsibilities made by this act.  
  9.21  Consistent with Minnesota Statutes, section 15.039, subdivision 
  9.22  6, the commissioner of finance shall transfer a portion of the 
  9.23  general fund appropriations in fiscal years 2002 and 2003 for 
  9.24  the department of revenue to the department of commerce for the 
  9.25  enforcement and administration of Minnesota Statutes, sections 
  9.26  325D.30 to 325D.42. 
  9.27     Sec. 10.  [REPEALER.] 
  9.28     Minnesota Statutes 2000, section 325D.33, subdivision 5, is 
  9.29  repealed. 
  9.30     Sec. 11.  [EFFECTIVE DATE.] 
  9.31     This act is effective July 1, 2001.