2006 Minnesota Statutes

CHAPTER 297F. CIGARETTES AND TOBACCO TAXES

297F.01 DEFINITIONS.
    Subdivision 1. Applicability. Unless the language or context clearly indicates that a different
meaning is intended, the following terms for the purposes of this chapter, have the following
meanings.
    Subd. 2. Business. "Business" means any trade, occupation, activity, or enterprise engaged in
selling or distributing cigarettes or tobacco products in this state.
    Subd. 3. Cigarette. "Cigarette" means any roll for smoking made wholly or in part of
tobacco, the wrapper or cover of which is made of paper or another substance or material except
tobacco.
    Subd. 4. Cigarette distributor. "Cigarette distributor" means any of the following:
(1) a person engaged in the business of selling cigarettes in this state and who manufactures
or who brings, or causes to be brought, into this state from outside the state any packages of
cigarettes for sale to subjobbers or retailers;
(2) a person engaged in the business outside this state who ships or transports cigarettes to
retailers in this state, to be sold by those retailers;
(3) a person who is on direct purchase from a cigarette manufacturer and applies cigarette
stamps on at least 50 percent of cigarettes sold by that person.
    Subd. 5. Cigarette subjobber. "Cigarette subjobber" means any person who acquires
stamped cigarettes or other state's stamped cigarettes for the primary purpose of resale to retailers,
and any licensed distributor who delivers, sells, or distributes stamped cigarettes from a place
of business other than that licensed in the distributor's license.
"Cigarette subjobber" also means a person who is a vending machine operator. A vending
machine operator is a person whose principal business is operating, or owning and leasing to
operators, machines for the vending of merchandise or service.
    Subd. 6. Commissioner. "Commissioner" means the state commissioner of revenue.
    Subd. 7. Consumer. "Consumer" means an individual who has title to or possession of
cigarettes or tobacco products for personal consumption rather than for sale.
    Subd. 8. Internal Revenue Code. Unless specifically defined otherwise, "Internal Revenue
Code" means the Internal Revenue Code of 1986, as amended through December 31, 1996.
    Subd. 9. Licensing period. "Licensing period" means a two-year period during which
licenses are issued. A licensing period begins on January 1 of each even-numbered year and ends
on December 31 of the following odd-numbered year.
    Subd. 9a. Invoice. "Invoice" means a detailed list of cigarettes and tobacco products
purchased or sold in this state that contains the following information:
(1) name of seller;
(2) name of purchaser;
(3) date of sale;
(4) invoice number;
(5) itemized list of goods sold including brands of cigarettes and number of cartons of each
brand, unit price, and identification of tobacco products by name, quantity, and unit price; and
(6) any rebates, discounts, or other reductions.
    Subd. 10. Manufacturer. "Manufacturer" means a person who produces and sells cigarettes
or tobacco products.
    Subd. 10a. Out-of-state retailer. "Out-of-state retailer" means a person engaged outside of
this state in the business of selling, or offering to sell, cigarettes or tobacco products to consumers
located in this state.
    Subd. 11. Package. "Package" means the individual packet, box, or other container used to
contain and convey cigarettes to the consumer.
    Subd. 12. Person. "Person" means an individual or any entity engaged in the sale of
cigarettes or tobacco products.
    Subd. 13. Place of business. "Place of business" means a place where cigarettes or tobacco
products are sold or where cigarettes or tobacco products are manufactured, stored, or kept for the
purpose of sale or consumption, including any vessel, vehicle, airplane, train, or vending machine.
    Subd. 14. Retailer. "Retailer" means a person required to be licensed under chapter 461
engaged in this state in the business of selling, or offering to sell, cigarettes or tobacco products to
consumers.
    Subd. 15. Retail outlet. "Retail outlet" means each place of business from which cigarettes
or tobacco products are sold to consumers.
    Subd. 16. Sale. "Sale" means a transfer, exchange, or barter, in any manner or by any means,
for consideration, and includes all sales made by any person. It also includes gifts or samples
provided for advertising or promotional purposes, made by a person engaged in the selling of
cigarettes or tobacco products.
    Subd. 17. Stamp. "Stamp" means the adhesive stamp supplied by the commissioner of
revenue for use on cigarette packages or any other indicia adopted by the commissioner to
indicate that the tax has been paid.
    Subd. 18. Storage. "Storage" means any keeping or retention of cigarettes or tobacco
products for use or consumption in this state.
    Subd. 19. Tobacco products. "Tobacco products" means cigars; little cigars; cheroots;
stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco;
snuff; snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobacco; shorts;
refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco,
prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both
for chewing and smoking; but does not include cigarettes as defined in this section.
    Subd. 20. Tobacco products distributor. "Tobacco products distributor" means any of
the following:
(1) a person engaged in the business of selling tobacco products in this state who brings, or
causes to be brought, into this state from outside the state any tobacco products for sale;
(2) a person who makes, manufactures, or fabricates tobacco products in this state for sale in
this state;
(3) a person engaged in the business of selling tobacco products outside this state who ships
or transports tobacco products to retailers in this state, to be sold by those retailers.
    Subd. 21. Tobacco products subjobber. "Tobacco products subjobber" means a person,
other than a manufacturer or distributor, who buys from a distributor tobacco products upon which
the tax imposed by this chapter has been paid and sells them to persons other than the ultimate
consumers, and any licensed distributor who delivers, sells, or distributes tobacco products upon
which the tax imposed by this chapter has been paid from a place of business other than that
licensed in the distributor's license.
    Subd. 21a. Unlicensed seller. "Unlicensed seller" means anyone who is not licensed under
section 297F.03 to sell the particular product to the purchaser or possessor of the product.
    Subd. 22. Use. "Use" means the exercise of a right or power incidental to the ownership
of cigarettes or tobacco products.
    Subd. 22a. Weighted average retail price. "Weighted average retail price" means (1) the
average retail price per pack of 20 cigarettes, with the average price weighted by the number of
packs sold at each price, (2) reduced by the sales tax included in the retail price, and (3) adjusted
for the expected inflation from the time of the survey to the average of the 12 months that the
sales tax will be imposed. The commissioner shall make the inflation adjustment in accordance
with the Consumer Price Index for all urban consumers inflation indicator as published in the
most recent state budget forecast. The inflation factor for the calendar year in which the new tax
rate takes effect must be used. If the survey indicates that the average retail price of cigarettes has
not increased relative to the average retail price in the previous year's survey, then no inflation
adjustment must be made.
    Subd. 23. Wholesale sales price. "Wholesale sales price" means the price stated on the price
list in effect at the time of sale for which a manufacturer or person sells a tobacco product to a
distributor, exclusive of any discount, promotional offer, or other reduction. For purposes of this
subdivision, "price list" means the manufacturer's price at which tobacco products are made
available for sale to all distributors on an ongoing basis.
History: 1997 c 106 art 1 s 1; 1999 c 243 art 7 s 9; 2000 c 490 art 10 s 7-11; 2003 c 127 art
7 s 4,5; 1Sp2005 c 3 art 6 s 11; 2006 c 259 art 7 s 5

297F.02 ADMINISTRATION.
    Subdivision 1. Duties of commissioner. The commissioner shall enforce the provisions of
this chapter and may prescribe rules consistent with the provisions of this chapter for its detailed
and efficient administration.
In the enforcement of this chapter, the commissioner may call any county attorney or any
peace officer for assistance and may appoint such additional employees as may be required to
administer this chapter. The commissioner may bring injunction proceedings to restrain any
person from acting as a distributor without complying with the provisions of this chapter.
    Subd. 2. Powers of commissioner. 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
chapter 270C, and the provisions of that chapter shall apply to all such investigations, inquiries,
and hearings.
    Subd. 3. 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.
History: 1997 c 106 art 1 s 2; 2005 c 151 art 2 s 17

297F.03 LICENSES; CIGARETTE AND TOBACCO PRODUCTS DISTRIBUTOR AND
SUBJOBBER.
    Subdivision 1. Selling without license illegal. No person shall engage in the business of a
distributor or subjobber at any place of business without first having received a license from the
commissioner to engage in that business at that place of business.
    Subd. 2. Form of application. Every application for a cigarette or tobacco products license
shall be made on a form prescribed by the commissioner and shall state the name and address
of the applicant; if the applicant is a firm, partnership, or association, the name and address of
each of its members; if the applicant is a corporation, the name and address of each of its officers;
the address of its principal place of business; the place where the business to be licensed is to
be conducted; and any other information the commissioner may require for the administration
of this chapter.
    Subd. 3. Place of application. A separate application for a distributor's license shall be made
for each place of business at which a distributor proposes to engage in business.
A separate application for a subjobber's license may be made by a licensed distributor for
each place of business, other than that licensed in the distributor's license, to which the distributor
sells or distributes stamped cigarettes or tobacco products.
    Subd. 4. Nonresident application. A person outside this state who ships or transports
cigarettes or tobacco products to retailers in this state, to be sold by those retailers, shall make
an application for a distributor's license, be granted such a license by the commissioner, and
thereafter be subject to all the provisions of this chapter.
    Subd. 5. License fees; cigarettes. Each application for a cigarette distributor's license must
be accompanied by a fee of $300. Each application for a cigarette subjobber's license must be
accompanied by a fee of $24. A distributor or subjobber applying for a license during the second
year of a two-year licensing period is required to pay only one-half of the license fee.
    Subd. 6. License fees; tobacco products. Each application for a tobacco products
distributor's license must be accompanied by a fee of $75. Each application for a tobacco products
subjobber's license must be accompanied by a fee of $20. A distributor or subjobber applying
for a license during the second year of a two-year licensing period is required to pay only
one-half of the license fee.
    Subd. 7. Issuance of license. The commissioner, upon receipt of the application in proper
form, and payment of the license fee required by this chapter, shall, unless otherwise provided
by this chapter, issue the applicant a license in the form prescribed by the commissioner. The
license permits the applicant to engage in business as a distributor or subjobber at the place of
business shown in the application.
    Subd. 8. Licensing period; expiration. The licensing period begins January 1 of an
even-numbered year and ends on December 31 of the following year. Each license issued shall
expire on December 31 of the second year of the licensing period unless sooner revoked by the
commissioner or unless the business with respect to which the license was issued is transferred. In
either case the holder of the license shall immediately surrender it to the commissioner.
    Subd. 9. Display. Each license must be prominently displayed on the premises covered
by the license.
    Subd. 10. Transfer. Licenses are not transferable to any other person.
History: 1997 c 106 art 1 s 3

297F.031 REGISTRATION REQUIREMENT.
Prior to making delivery sales or shipping cigarettes or tobacco products in connection with
any sales, an out-of-state retailer shall file with the Department of Revenue a statement setting
forth the out-of-state retailer's name, trade name, and the address of the out-of-state retailer's
principal place of business and any other place of business.
History: 1Sp2005 c 3 art 6 s 12

297F.04 LICENSE SUSPENSION OR REVOCATION.
    Subdivision 1. Powers of commissioner. The commissioner may revoke or suspend
the license or licenses of any distributor or subjobber for violation of this chapter, any other
act applicable to the sale of cigarettes or tobacco products, or any rule promulgated by the
commissioner, in furtherance of this chapter.
    Subd. 2. Refusal to issue or renew; revocation. The commissioner must not issue or renew a
license under this chapter, and may revoke a license under this chapter, if the applicant or licensee:
(1) owes $500 or more in delinquent taxes as defined in section 270C.72, subdivision 2;
(2) after demand, has not filed tax returns required by the commissioner;
(3) had a cigarette or tobacco license revoked by the commissioner within the past two years;
(4) had a sales and use tax permit revoked by the commissioner within the past two years; or
(5) has been convicted of a crime involving cigarettes, including but not limited to:
selling stolen cigarettes or tobacco products, receiving stolen cigarettes or tobacco products, or
involvement in the smuggling of cigarettes or tobacco products.
    Subd. 3. Notice. No license may be revoked or suspended under this chapter, and no
application for a license may be denied under this chapter, except after 20 days' notice. In that
notice the commissioner shall specify the allegations against the licensee or applicant, and
provide the licensee or applicant the right to request in writing within 20 days a contested case
hearing as provided in chapter 14.
If a written request for a hearing is received by the Department of Revenue within 20 days of
the date of the initial notice, the hearing must be held within 45 days after referral to the Office of
Administrative Hearings, and no earlier than 20 days after notice to the licensee or applicant of
the hearing time and place. A license is revoked or suspended, and an application is denied, when
the commissioner serves notice of revocation, suspension, or denial after 20 days have passed
following the initial notice under this paragraph without a request for hearing being made, or if a
hearing is held, after the commissioner serves an order of revocation, suspension, or denial under
section 14.62, subdivision 1. All notices under this paragraph may be served personally or by mail.
History: 1997 c 106 art 1 s 4; 1Sp2001 c 5 art 20 s 10; 2005 c 151 art 2 s 17

297F.05 RATES OF TAX; PERSONAL DEBT.
    Subdivision 1. Rates; cigarettes. A tax is imposed upon the sale of cigarettes in this state,
upon having cigarettes in possession in this state with intent to sell, upon any person engaged in
business as a distributor, and upon the use or storage by consumers, at the following rates:
(1) on cigarettes weighing not more than three pounds per thousand, 24 mills on each such
cigarette; and
(2) on cigarettes weighing more than three pounds per thousand, 48 mills on each such
cigarette.
    Subd. 2. Distribution of free sample packages. A person who distributes free packages of
cigarettes is liable for the payment of tax under this chapter.
    Subd. 3. Rates; tobacco products. A tax is imposed upon all tobacco products in this state
and upon any person engaged in business as a distributor, at the rate of 35 percent of the wholesale
sales price of the tobacco products. The tax is imposed at the time the distributor:
(1) brings, or causes to be brought, into this state from outside the state tobacco products for
sale;
(2) makes, manufactures, or fabricates tobacco products in this state for sale in this state; or
(3) ships or transports tobacco products to retailers in this state, to be sold by those retailers.
    Subd. 4. Use tax; tobacco products. A tax is imposed upon the use or storage by consumers
of tobacco products in this state, and upon such consumers, at the rate of 35 percent of the cost to
the consumer of the tobacco products.
    Subd. 5. 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.
    Subd. 6. Tax construction. The tax imposed by this section is not a cost of doing business
or an overhead expense under section 325D.01, subdivision 7.
    Subd. 7. Tax; sales by state. The state of Minnesota or any of its agencies, instrumentalities,
or governmental subdivisions is subject to the tax imposed by this chapter on all cigarettes or
tobacco products sold, in the same manner as distributors, if such unit is engaged in the purchase
and sale of cigarettes or tobacco products.
History: 1997 c 106 art 1 s 5; 2003 c 127 art 14 s 5

297F.06 EXEMPTIONS FROM TAX.
    Subdivision 1. Federal laws. The tax imposed by this section does not apply with respect to
any sale of cigarettes or tobacco products which under the Constitution and laws of the United
States may not be subject to taxation by the state.
    Subd. 2. Use tax. The use tax does not apply if the tax imposed on cigarettes or tobacco
products has been paid.
    Subd. 3. Cigarette use tax. The cigarette use tax does not apply to the use or storage of
cigarettes in quantities of 200 or fewer in the possession of any one consumer, provided that the
cigarettes were carried into this state by that consumer.
    Subd. 4. Tobacco products use tax. The tobacco products use tax does not apply to the
possession, use, or storage of tobacco products that have an aggregate cost in any calendar month
to the consumer of $100 or less.
    Subd. 5. Ocean-going vessels. The commissioner may adopt rules for the sale by licensed
distributors of tax free cigarettes to the masters of ocean-going vessels for use aboard ship outside
the continental limits of the United States, provided the cigarettes are also exempt from the taxes
imposed on cigarettes by the United States government.
History: 1997 c 106 art 1 s 6; 2003 c 127 art 7 s 6

297F.07 SALES TO INDIAN TRIBES.
    Subdivision 1. Wholesalers. A wholesaler may set aside the part of the wholesaler's cigarette
and tobacco product stock necessary to make sales to the established governing body of an Indian
tribe recognized by the United States Department of Interior without paying the tax required by
this chapter. The amount of unstamped or untaxed stock that wholesalers may deliver to an
Indian reservation is limited to amounts necessary to meet the personal consumption needs of
qualified purchasers. The unstamped stock must be kept separate and apart from stamped stock.
When shipping or delivering unstamped or 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 the wholesaler fails to comply with this
section, the commissioner shall revoke the permission granted to the wholesaler to keep a stock
of unstamped goods.
    Subd. 2. Retailers. Retailers who are Indian tribal organizations may keep unstamped or
untaxed stock intended for sale to qualified purchasers.
    Subd. 3. Qualified purchasers. A qualified purchaser of unstamped or untaxed stock means
only an enrolled member of the Indian tribe which is offering the stock for sale.
    Subd. 4. Sales to nonqualified buyers. A retailer who sells or otherwise disposes of
unstamped or untaxed stock other than to a qualified purchaser shall collect from the buyer or
transferee the tax imposed by section 297F.05, and remit the tax to the Department of Revenue at
the same time and manner as required by section 297F.09. 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 product destined to be delivered to the retailer. The
product so seized shall be considered contraband and be subject to the procedures outlined in
section 297F.21, subdivision 3. The proceeds of the sale of the stock 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 unstamped or untaxed stock from
personal liability for the tax.
History: 1997 c 106 art 1 s 7

297F.08 CIGARETTE STAMPS.
    Subdivision 1. Stamp put on by distributor. Except as otherwise provided in this chapter,
payment of the tax imposed by this chapter must be evidenced by stamps affixed to each package.
Before delivering, or causing to be delivered, a package to any person in this state, a distributor
shall firmly affix to each package of cigarettes appropriate stamps in amounts equal to the tax on
those cigarettes as provided in this chapter.
    Subd. 2. Tax due; cigarettes. Notwithstanding any other provisions of this chapter, the tax
due on the return is based upon actual stamps purchased during the reporting period.
    Subd. 3. Time of affixing stamp. In all cases where cigarettes are shipped into this state
by any licensed distributor from outside this state, the appropriate stamps must be affixed to
packages at the time the package enters the state.
    Subd. 4. Stamps; design, printing. The commissioner shall adopt the design of two stamps.
One stamp must be designed for application to cigarette packages destined for retail sale on an
Indian reservation which is a party to an agreement under section 270C.19, subdivision 2, and
only to those packages. A second stamp must be designed for all other cigarette packages subject
to the provisions of this chapter. The commissioner shall arrange for the printing of stamps in
such amounts and denominations as the commissioner deems necessary.
    Subd. 5. Deposit of proceeds. The commissioner shall use the amounts appropriated by law
to purchase stamps for resale. The commissioner shall charge the purchasers for the costs of the
stamps along with the tax value plus shipping costs. The costs recovered along with shipping
costs must be deposited into the general fund.
    Subd. 6. Section 16A.56 superseded. The provisions of this chapter prescribing the powers
and duties of the commissioner with relation to stamps supersede all the provisions of section
16A.56 in conflict.
    Subd. 7. Price of stamps. The commissioner shall sell stamps to any person licensed as
a distributor. The commissioner shall not sell stamps to any other person. The commissioner
may prescribe the method of shipment of the stamps to the distributor as well as the quantities
of stamps purchased.
    Subd. 8. Sale of stamps. The commissioner may sell stamps on a credit basis under
conditions prescribed by the commissioner. The commissioner shall sell the stamps at a price
which includes the tax after giving effect to the discount provided in subdivision 7. The
commissioner shall recover the actual costs of the stamps from the distributor. The commissioner
shall annually establish the maximum amount of stamps that may be purchased each month.
    Subd. 8a. Revolving account. A cigarette tax stamp revolving account is created.
The commissioner shall use the amounts in this fund to purchase stamps for resale. The
commissioner shall charge distributors for the tax value of the stamps they receive along with the
commissioner's cost to purchase the stamps and ship them to the distributor. The stamp purchase
and shipping costs recovered must be credited to the revolving account and are appropriated to
the commissioner for the further purchases and shipping costs. The revolving account is initially
funded by a $40,000 transfer from the Department of Revenue.
    Subd. 9. Tax stamping machines. The commissioner shall require any person licensed as
a distributor to stamp packages with a tax stamping machine, approved by the commissioner,
which shall be provided by the distributor. The commissioner shall also supervise and check
the operation of the machines and shall provide for the payment of the tax on any package so
stamped, subject to the discount provided in subdivision 7. If the commissioner finds that a
stamping machine is not affixing a legible stamp on the package, the commissioner may order the
distributor to immediately cease the stamping process until the machine is functioning properly.
    Subd. 10. Resale or transfer of stamps prohibited. No distributor shall resell or transfer
any stamps purchased by the distributor from the commissioner. A distributor may transfer
another state's stamped cigarettes to another distributor for the purpose of resale in the other state.
A distributor who has on hand any uncanceled stamps at the time of discontinuing the business
of selling cigarettes may return them to the commissioner and receive a refund of the amount
paid for the stamps. Stamps which have become mutilated or unfit for use, or are affixed to
cigarettes being returned to the manufacturer, or are affixed to packages which, or the contents of
which, have become damaged and unfit for sale, shall be replaced by the commissioner, upon
application by the distributor owning the stamps or cigarettes if an investigation discloses that
the stamps have not evidenced a taxable transaction, after compliance with rules or orders of the
commissioner designed to prevent use of the stamps replaced.
    Subd. 11. Railroad or sleeping car company as a distributor. The commissioner may
authorize a railroad or sleeping car company licensed as a distributor to sell cigarettes on its cars
without affixing stamps to the packages, provided that monthly reports and payments of the tax
due subject to the discount in subdivision 7 must be made directly to the commissioner in the
manner and under the terms provided for by the commissioner. Only one distributor's license need
be obtained by each railroad or sleeping car company to permit it to sell cigarettes on any or all
of its cars within the state.
    Subd. 12. Cigarettes in interstate commerce. (a) A person may not transport or cause to be
transported from this state cigarettes for sale in another state without first affixing to the cigarettes
the stamp required by the state in which the cigarettes are to be sold or paying any other excise tax
on the cigarettes imposed by the state in which the cigarettes are to be sold.
(b) A person may not affix to cigarettes the stamp required by another state or pay any other
excise tax on the cigarettes imposed by another state if the other state prohibits stamps from
being affixed to the cigarettes, prohibits the payment of any other excise tax on the cigarettes, or
prohibits the sale of the cigarettes.
(c) Not later than 15 days after the end of each calendar quarter, a person who transports
or causes to be transported from this state cigarettes for sale in another state shall submit to
the commissioner a report identifying the quantity and style of each brand of the cigarettes
transported or caused to be transported in the preceding calendar quarter, and the name and
address of each recipient of the cigarettes. This reporting requirement only applies to cigarettes
manufactured by companies that are not original or subsequent participating manufacturers in the
Master Settlement Agreement with other states.
(d) For purposes of this section, "person" has the meaning given in section 297F.01,
subdivision 12 . Person does not include any common or contract carrier, or public warehouse that
is not owned, in whole or in part, directly or indirectly by such person, and does not include a
manufacturer that is an original or subsequent participating manufacturer in the Master Settlement
Agreement with other states.
    Subd. 13. Bond. The commissioner may require the furnishing of a corporate surety bond
or a certified check in an amount suitable to guarantee payment of the tax stamps purchased by
a distributor. The bond or certified check may be required when the commissioner determines
that a distributor is (1) delinquent in the filing of any return required under this chapter, or (2)
delinquent in the payment of any uncontested tax liability under this chapter. The distributor shall
furnish the bond or certified check for a period of two years, after which, if the distributor has not
been delinquent in the filing of any returns required under this chapter, or delinquent in the paying
of any tax under this chapter, a bond or certified check is no longer required. The commissioner at
any time may apply the bond or certified check to any unpaid taxes or fees, including interest and
penalties, owed to the department by the distributor.
History: 1997 c 106 art 1 s 8; 1999 c 250 art 1 s 92; 2000 c 490 art 10 s 12-16; 2003 c 127
art 14 s 6,7; 1Sp2003 c 23 s 31; 2005 c 151 art 2 s 17; art 8 s 10,11

297F.09 RETURNS; PAYMENT OF TAX.
    Subdivision 1. Monthly return; cigarette distributor. On or before the 18th day of each
calendar month, a distributor with a place of business in this state shall file a return with the
commissioner showing the quantity of cigarettes manufactured or brought in from outside the
state or purchased during the preceding calendar month and the quantity of cigarettes sold or
otherwise disposed of in this state and outside this state during that month. A licensed distributor
outside this state shall in like manner file a return showing the quantity of cigarettes shipped or
transported into this state during the preceding calendar month. Returns must be made in the form
and manner prescribed by the commissioner and must contain any other information required by
the commissioner. The return must be accompanied by a remittance for the full unpaid tax liability
shown by it. For distributors subject to the accelerated tax payment requirements in subdivision
10, the return for the May liability is due two business days before June 30th of the year and the
return for the June liability is due on or before August 18th of the year.
    Subd. 2. Monthly return; tobacco products distributor. On or before the 18th day of each
calendar month, a distributor with a place of business in this state shall file a return with the
commissioner showing the quantity and wholesale sales price of each tobacco product:
(1) brought, or caused to be brought, into this state for sale; and
(2) made, manufactured, or fabricated in this state for sale in this state, during the preceding
calendar month.
Every licensed distributor outside this state shall in like manner file a return showing the quantity
and wholesale sales price of each tobacco product shipped or transported to retailers in this state to
be sold by those retailers, during the preceding calendar month. Returns must be made in the form
and manner prescribed by the commissioner and must contain any other information required
by the commissioner. The return must be accompanied by a remittance for the full tax liability
shown. For distributors subject to the accelerated tax payment requirements in subdivision 10, the
return for the May liability is due two business days before June 30th of the year and the return
for the June liability is due on or before August 18th of the year.
    Subd. 3. Use tax return; cigarette or tobacco products consumer. On or before the 18th
day of each calendar month, a consumer who, during the preceding calendar month, has acquired
title to or possession of cigarettes or tobacco products for use or storage in this state, upon which
cigarettes or tobacco products the tax imposed by this chapter has not been paid, shall file a return
with the commissioner showing the quantity of cigarettes or tobacco products so acquired. The
return must be made in the form and manner prescribed by the commissioner, and must contain
any other information required by the commissioner. The return must be accompanied by a
remittance for the full unpaid tax liability shown by it.
    Subd. 4. Tax provisions applicable to consumers. All of the provisions of this chapter
relating to corrections of returns, deficiency assessments, protests, hearings, interest and penalties,
and collection of taxes, apply to consumers.
    Subd. 4a. Reporting requirements. No later than the 18th day of each calendar month, an
out-of-state retailer that has made a delivery of cigarettes or tobacco products or shipped or
delivered cigarettes or tobacco products into the state in a delivery sale in the previous calendar
month shall file with the Department of Revenue reports in the form and in the manner prescribed
by the commissioner of revenue that provides for each delivery sale, the name and address of
the purchaser and the brand or brands and quantity of cigarettes or tobacco products sold. A
tobacco retailer that meets the requirements of United States Code, title 15, section 375 et seq.
satisfies the requirements of this subdivision.
    Subd. 5. Extension of time. The commissioner may extend the time for filing returns and
remittance of tax, deficiencies, and penalties for not more than 60 days. The commissioner may
require that a tentative return be filed at the time for filing the regularly required return and that
payment of the tax be made with it on the basis of the tentative return. When an extension of
time for payment has been granted under this section, interest is payable at the rate provided in
section 270C.40 from the date when the payment should have been made, if no extension had
been granted, until the tax is paid.
    Subd. 6.[Repealed, 2000 c 490 art 10 s 22]
    Subd. 7. Electronic payment. A cigarette or tobacco products distributor having a liability
of $120,000 or more during a fiscal year ending June 30 must remit all liabilities in the subsequent
calendar year by electronic means.
    Subd. 8. 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. 9. Interest. The amount of tax not timely paid, together with any penalty imposed in
this section, bears interest at the rate specified in section 270C.40 from the time such tax should
have been paid until paid. Any interest and penalty is added to the tax and collected as a part of it.
    Subd. 10. Accelerated tax payment; cigarette or tobacco products distributor. A cigarette
or tobacco products distributor 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 distributor shall remit the actual May
liability and 78 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 distributor 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) 78 percent of the actual June liability; or
(2) 78 percent of the preceding May's liability.
History: 1997 c 106 art 1 s 9; 2000 c 490 art 10 s 17,18; 1Sp2001 c 5 art 17 s 17; 2003
c 127 art 14 s 8; 1Sp2003 c 21 art 9 s 7-9; 2005 c 151 art 2 s 17; art 8 s 12,13; 1Sp2005 c
3 art 6 s 13; 2006 c 259 art 13 s 7

297F.10 DEPOSIT OF PROCEEDS.
    Subdivision 1. Tax and use tax on cigarettes. Revenue received from cigarette taxes, as
well as related penalties, interest, license fees, and miscellaneous sources of revenue shall be
deposited by the commissioner in the state treasury and credited as follows:
(1) $22,220,000 for fiscal year 2006 and $22,250,000 for fiscal year 2007 and each year
thereafter must be credited to the Academic Health Center special revenue fund hereby created
and is annually appropriated to the Board of Regents at the University of Minnesota for Academic
Health Center funding at the University of Minnesota; and
(2) $8,553,000 for fiscal year 2006 and $8,550,000 for fiscal year 2007 and each year
thereafter must be credited to the medical education and research costs account hereby created
in the special revenue fund and is annually appropriated to the commissioner of health for
distribution under section 62J.692, subdivision 4; and
(3) the balance of the revenues derived from taxes, penalties, and interest (under this chapter)
and from license fees and miscellaneous sources of revenue shall be credited to the general fund.
    Subd. 2. Tax and use tax on tobacco products. Revenue received from taxes on tobacco
products, as well as related penalties, interest, and license fees shall be deposited by the
commissioner in the state treasury and credited to the general fund.
History: 1997 c 106 art 1 s 10; 2003 c 128 art 1 s 155; 1Sp2003 c 21 art 9 s 10; 1Sp2005 c
3 art 6 s 14

297F.11 INFORMATIONAL REPORTS; CIGARETTES.
    Subdivision 1. General rule. The following persons shall file with the commissioner a
monthly informational report in the form and manner prescribed by the commissioner:
(1) a distributor licensed to ship cigarettes into Minnesota;
(2) a person who manufactures cigarettes within the state;
(3) any other person who imports cigarettes into Minnesota; and
(4) a person who possesses, receives, stores, or warehouses cigarettes in Minnesota, upon
which the tax imposed by this chapter has not been paid.
The requirement of filing an informational report does not apply to a person conveying or
possessing cigarettes described in this chapter, nor to any lawful manufacture of cigarettes within
the state for personal consumption.
    Subd. 2. Filing dates; failure to file. No payment of any tax is required to be remitted with
the report required under subdivision 1. 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 cigarettes into or within Minnesota
during the previous month, unless the commissioner determines that a longer filing period is
appropriate for a particular person.
    Subd. 3. Common carriers. Common carriers and contract carriers transporting cigarettes
into this state shall file with the commissioner reports of all such shipments other than those
which are delivered to public warehouses of first destination in this state, licensed under the
provisions of chapter 231. The reports must be filed monthly on or before the tenth day of each
month and must show with respect to deliveries made in the preceding month: the date, point
of origin, point of delivery, name of consignee, the quantity of cigarettes delivered, and any
other information the commissioner requires.
A common carrier or a contract carrier transporting cigarettes into Minnesota shall permit
examination by the commissioner of its records relating to the shipment of cigarettes.
    Subd. 4. Cigarette consumers. A person who files a cigarette consumer return as required by
this chapter may fulfill the requirements of this section by indicating on the cigarette consumer's
return which of the items reported on the return were transported into the state by the consumer.
The requirement of filing an informational report does not apply to consumers who import fewer
than 200 cigarettes into this state.
History: 1997 c 106 art 1 s 11

297F.12 INFORMATIONAL REPORTS; TOBACCO PRODUCTS.
    Subdivision 1. General rule. The transportation of tobacco products into this state by
means other than common carrier must be reported to the commissioner within 30 days with
the following exceptions:
(1) transportation of not more than 50 cigars, not more then ten ounces of snuff or snuff
powder, or not more than one pound of smoking or chewing tobacco or other tobacco products
not specifically mentioned;
(2) transportation by a person with a place of business outside the state, who is licensed as a
distributor under this chapter, of tobacco products sold by the person to a retailer in this state.
The report must be made in the form and manner prescribed by the commissioner.
    Subd. 2. Common carriers. Common carriers transporting tobacco products into this state
shall file with the commissioner reports of all such shipments other than those which are delivered
to public warehouses of first destination in this state, licensed under the provisions of chapter
231. The reports must be filed monthly on or before the tenth day of each month and shall
show with respect to deliveries made in the preceding month: the date, point of origin, point of
delivery, name of consignee, description and quantity of tobacco products delivered, and any
other information required by the commissioner.
A common carrier transporting tobacco products into Minnesota shall permit examination by
the commissioner of its records relating to the shipment of tobacco products.
    Subd. 3. Manufacturers. A manufacturer of tobacco products as defined by this chapter
shall report in the form and manner prescribed by the commissioner all sales of tobacco products
to Minnesota licensed distributors, subjobbers, retailers, or to any locations within the state. The
report is due on the 18th day of the month following the reporting period.
History: 1997 c 106 art 1 s 12

297F.13 REQUIRED RECORDS.
    Subdivision 1. Cigarette distributor. (a) A distributor shall keep at each licensed place of
business complete and accurate records for that place of business. The records must include:
itemized invoices of cigarettes held, purchased, manufactured, or brought in or caused to be
brought in from outside the state, and all sales of cigarettes made, except sales to the ultimate
consumer. These records must show the names and addresses of purchasers, the inventory of all
stamps affixed and unaffixed and all cigarettes on hand at the close of each period for which a
return is required, and any other pertinent papers and documents relating to the purchase, sale,
or disposition of cigarettes.
(b) A distributor or subjobber who sells cigarettes at retail must maintain a separate
inventory, substantiated with invoices for cigarettes that were acquired for retail sale.
(c) When a licensed distributor sells cigarettes exclusively to the ultimate consumer at
the address given in the license, no invoice of those sales is required, but itemized invoices
must be made of all cigarettes transferred to other retail outlets owned or controlled by that
licensed distributor.
(d) All books, records, and other documents required by this chapter shall be preserved for a
period of at least 3-1/2 years after the date of the documents or the date of the entries appearing
in the records, unless the commissioner in writing authorizes their destruction or disposal at
an earlier date.
(e) To determine whether the distributor is in compliance with the provisions of this
chapter, at any time during usual business hours the commissioner, or duly authorized agents or
employees, may enter a place of business of a distributor, without a search warrant, and inspect
the premises, the records required to be kept under this chapter, and the packages of cigarettes and
the vending devices in that place of business. If the commissioner, or an agent or employee of the
commissioner, is denied free access or is hindered or interfered with in making the examination,
the commissioner may revoke the distributor's license.
    Subd. 2. Tobacco products distributor. (a) A distributor shall keep at each licensed place of
business complete and accurate records for that place of business, including itemized invoices
of tobacco products held, purchased, manufactured, brought in or caused to be brought in from
outside the state, or shipped or transported to retailers in this state, and all sales of tobacco
products made, except sales to the ultimate consumer.
(b) When a licensed distributor sells tobacco products exclusively to the ultimate consumer
at the address given in the license, no invoice of those sales is required, but itemized invoices
must be made of all tobacco products transferred to other retail outlets owned or controlled
by that licensed distributor.
(c) All books, records, and other documents required by this chapter must be preserved for a
period of at least 3-1/2 years after the date of the documents or the date of the entries appearing
in the records, unless the commissioner authorizes in writing their destruction or disposal at
an earlier date.
(d) To determine whether the distributor is in compliance with the provisions of this
chapter, at any time during usual business hours the commissioner, or duly authorized agents or
employees, may enter a place of business of a distributor, without a search warrant, and inspect
the premises, the records required to be kept under this chapter, and the tobacco products in that
place of business. If the commissioner, or an agent or employee of the commissioner, is denied
free access or is hindered or interfered with in making the examination, the commissioner may
revoke the distributor's license.
    Subd. 3. Distributor to preserve copies of invoices. A person who sells cigarettes or
tobacco products to persons other than the ultimate consumer shall render with each sale itemized
invoices showing the seller's name and address, the purchaser's name and address, the date of sale,
and all prices and discounts, and shall preserve legible copies of all such invoices for 3-1/2 years
from the date of the sale.
    Subd. 4. Retailer and subjobber to preserve purchase invoices. Every retailer and
subjobber shall procure itemized invoices of all cigarettes or tobacco products purchased.
The retailer and subjobber shall preserve a legible copy of each invoice for one year from the
date of the invoice. The retailer and subjobber shall preserve copies of the invoices at each retail
location or at a central location provided that the invoice must be produced and made available at
a retail location within one hour when requested by the commissioner or duly authorized agents
and employees. Copies should be numbered and kept in chronological order.
To determine whether the business is in compliance with the provisions of this chapter, at any
time during usual business hours, the commissioner, or duly authorized agents and employees,
may enter any place of business of a retailer or subjobber without a search warrant and inspect
the premises, the records required to be kept under this chapter, and the packages of cigarettes,
tobacco products, and vending devices contained on the premises.
    Subd. 5. Cigarettes and tobacco products; records of delivery and shipment. Records of
all deliveries or shipments of cigarettes or tobacco products from any public warehouse of first
destination in this state (which is subject to the provisions of and licensed under chapter 231), must
be kept by the warehouse and made available to the commissioner for inspection. The records
must show the name and address of the consignee, the date, the quantity of cigarettes or tobacco
products delivered, and any other information required by the commissioner. These records must
be preserved for one year from the date of delivery of the cigarettes or tobacco products.
History: 1997 c 106 art 1 s 13; 2000 c 490 art 10 s 19; 1Sp2001 c 5 art 20 s 11

297F.14 REFUNDS.
    Subdivision 1. General right to refund. If cigarettes or tobacco products, upon which
the tax imposed by this chapter has been reported and paid, are shipped or transported by the
distributor to consumers to be consumed outside the state, or to retailers or subjobbers outside
the state to be sold by those retailers or subjobbers outside the state, or are returned to the
manufacturer by the distributor, or destroyed by the distributor, refund of the tax or credit may
be made to the distributor.
    Subd. 2. Overpayment of tax. An overpayment of the tax imposed under this chapter may
be refunded to the taxpayer.
    Subd. 3. Credit against tax. The commissioner may credit the amount determined under this
section against taxes otherwise payable under this chapter by the taxpayer.
    Subd. 4. Bad debt. For any reporting period, a taxpayer may offset against taxes payable
under this chapter the amount of taxes previously paid under this chapter that is attributable to a
bad debt. The taxes must have been included in a transaction the consideration for which was a
debt owed to the taxpayer and which became uncollectible, but only in proportion to the portion
of debt that became uncollectible. To qualify for offset under this subdivision, the debt must have
qualified as a bad debt under section 166(a) of the Internal Revenue Code. The taxpayer may
claim the offset within the time period prescribed in section 297F.17, subdivision 6. If the taxpayer
is no longer liable for taxes imposed under this chapter, the commissioner shall refund to the
taxpayer the amount of the taxes attributable to the bad debt. Any recovery of the tax claimed as a
refund or credit must be reported to the commissioner on the tax return for the month in which
the recovery is made. If the taxpayer is no longer required to file returns under this chapter, the
taxpayer must reimburse the commissioner for tax recovered in the month following the recovery.
    Subd. 5. Source of refund; cigarettes. The commissioner of finance shall pay the cigarette
tax refund out of the general fund. The refunds are apportioned to the same accounts and funds in
the general fund to which the tax payments were deposited, except no refunds may be apportioned
to the general obligation special tax bond debt service account.
    Subd. 6. Source of refund; tobacco products. The commissioner of finance shall pay the
tobacco products tax refund out of the general fund.
    Subd. 7. Annual appropriation. There is appropriated annually from the general fund to the
commissioner of finance the amount necessary to make the refunds provided by this section.
History: 1997 c 106 art 1 s 14; 2005 c 151 art 8 s 14

297F.15 PHYSICAL INVENTORY; OFFSET.
    Subdivision 1.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 2.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 3.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 4.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 5.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 6.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 7.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 8.[Repealed, 2005 c 151 art 1 s 117]
    Subd. 9. Physical inventory. The commissioner or the commissioner's authorized agents
may, as considered necessary, require a cigarette or tobacco products distributor to furnish a
physical inventory of all cigarettes or tobacco products in stock. The inventory must contain the
information that the commissioner requests and must be certified by an officer of the corporation.
    Subd. 10. Offset. Upon audit, if a distributor's return reflects an overage resulting from an
inventory counting error, the overage shall be offset against a shortage, if any, in the month
immediately preceding the month of the overage. If any overage remains after that offset, the
remainder may only be offset against a shortage, if any, in the month immediately following
the month of the overage. If the commissioner determines that the overage is attributable to a
mistake by the distributor other than an inventory counting error, the commissioner may permit
the overage to be offset against a shortage in any month or months during the 12-month period
immediately following the month when the overage was discovered upon audit.
History: 1997 c 106 art 1 s 15

297F.16 [Repealed, 2005 c 151 art 1 s 117]

297F.17 LIMITATIONS ON TIME FOR ASSESSMENT OF TAX.
    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. The taxes are considered
assessed within the meaning of this section 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 such notice, and
such records must be preserved by the commissioner.
    Subd. 2. Date of filing. For purposes of this chapter, a return filed before the last day
prescribed by law for its 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 over 25 percent. If the person required to file the return omits from the
return a dollar amount properly includable in it that is in excess of 25 percent of the dollar amount
reported in the return, the tax may be assessed, or a proceeding in court for the collection of such
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 one year after the date of assessment, whichever period expires later.
    Subd. 6. Time limit for bad debt refund. Claims for refund must be filed with the
commissioner during the one-year period beginning with the timely filing of the taxpayer's federal
income tax return containing the bad debt deduction that is being claimed. Claimants under this
subdivision are subject to the notice requirements of section 289A.38, subdivision 7.
    Subd. 7. Consent to extend time. If before the expiration of the time prescribed in this
section 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
prior to 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. 8. Suspension of time; bankruptcy proceedings. The time during which a tax
must be assessed or collection proceedings commenced under this chapter is suspended during
the period from the date of a filing of a petition in bankruptcy until 30 days after notice to
the commissioner that the bankruptcy proceedings have been closed or dismissed, or that the
automatic stay has been terminated or has expired.
The suspension of the statute of limitations under this subdivision applies to the person
against whom the petition in bankruptcy is filed, and to all other persons who may be wholly or
partially liable for the tax under this chapter.
History: 1997 c 106 art 1 s 17; 1999 c 243 art 7 s 10

297F.18 INTEREST.
    Subdivision 1. Interest rate. When interest is required under this section, interest is
computed at the rate specified in section 270C.40.
    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. In the case of an erroneous refund, interest begins to accrue
from the date the refund was paid unless the erroneous refund 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 270C.40 from the date the judgment is entered until the date of payment.
    Subd. 7. Interest on penalties. (a) A penalty imposed under section 297F.19, 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.
History: 1997 c 106 art 1 s 18; 2005 c 151 art 2 s 17

297F.185 REVOCATION OF SALES AND USE TAX PERMITS.
(a) If a retailer purchases for resale from an unlicensed seller more than 20,000 cigarettes or
$500 or more worth of tobacco products, the commissioner may revoke the person's sales and use
tax permit as provided in section 270C.722.
(b) The commissioner may revoke a retailer's sales or use permit as provided in section
270C.722 if the retailer, directly or indirectly, purchases for resale cigarettes without the proper
stamp affixed.
History: 1Sp2001 c 5 art 12 s 86; 2005 c 151 art 2 s 17; 1Sp2005 c 4 art 4 s 3

297F.19 CIVIL PENALTIES.
    Subdivision 1. Civil action; general rule. The commissioner may recover the amount of any
tax due and unpaid under this chapter, as well as interest, and any penalty in a civil action. The
collection of the tax, interest, or penalty is not a bar to 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 an extension, a penalty of five percent of the amount
of tax not timely paid is added to the tax.
    Subd. 4.[Repealed, 1999 c 243 art 16 s 39]
    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 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 returns 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
the 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 270C.34.
    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. Payment of penalties. The penalties imposed by this section are collected and
paid in the same manner as taxes.
    Subd. 9. Penalties are additional. The civil penalties imposed by this section are in addition
to the criminal penalties imposed by this chapter.
History: 1997 c 106 art 1 s 19; 1Sp1997 c 5 s 32; 2005 c 151 art 2 s 17

297F.20 CRIMINAL PENALTIES.
    Subdivision 1. Penalties for failure to file or pay. (a) A person or consumer 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 or consumer 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 or consumer 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 or consumer 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 or consumer who files with
the commissioner a return, report, or other document, or who maintains or provides invoices
subject to review by the commissioner under this chapter, known by the person or consumer to be
fraudulent or false concerning a material matter, is guilty of a felony.
(b) A person or consumer who knowingly aids or assists in, or advises in the preparation or
presentation of a return, report, invoice, 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 or consumer authorized or required to present the return, report, invoice, or other
document, is guilty of a felony.
    Subd. 4. Counterfeiting. Any person who makes, alters, forges, or counterfeits a stamp, or
who possesses an altered, forged, or counterfeit stamp is guilty of a felony.
    Subd. 5. Unstamped cigarettes; presumption. (a) Except as provided in paragraph (b),
whenever a package of cigarettes is found in the place of business or in the possession of any
person without a proper stamp affixed as required by this chapter, it is presumed that those
cigarettes are kept there or held by that person illegally.
(b) This presumption does not apply to:
(1) cigarettes in the place of business or in the possession of a licensed distributor;
(2) cigarettes in the possession of a common carrier or sleeping car company engaged in
interstate commerce;
(3) cigarettes held in a public warehouse of first destination in this state, in the unbroken,
original shipping containers, subject to delivery or shipping instructions from the manufacturer
or a distributor;
(4) cigarettes in the possession of a person other than a distributor in quantities of 200
cigarettes or less, when those cigarettes have had the individual packages or seals broken, and
when they are intended for personal use and not to be sold or offered for sale;
(5) cigarettes sold under circumstances in which the tax cannot legally be imposed because
of the laws or Constitution of the United States.
    Subd. 6. Unstamped cigarettes; untaxed tobacco products. (a) A person, other than
a licensed distributor or a consumer, who possesses, receives, or transports fewer than 5,000
unstamped cigarettes, or up to $350 worth of untaxed tobacco products is guilty of a misdemeanor.
(b) A person, other than a licensed distributor or a consumer, who possesses, receives, or
transports 5,000 or more, but fewer than 20,001 unstamped cigarettes, or more than $350 but less
than $1,400 worth of untaxed tobacco products is guilty of a gross misdemeanor.
(c) A person, other than a licensed distributor or a consumer, who possesses, receives, or
transports more than 20,000 unstamped cigarettes, or $1,400 or more worth of untaxed tobacco
products is guilty of a felony.
(d) For purposes of this subdivision, an individual in possession of more than 4,999
unstamped cigarettes, or more than $350 worth of untaxed tobacco products, is presumed not to
be a consumer.
    Subd. 7. Sale of cigarette packages with Indian stamp. (a) A retailer doing business off of
an Indian reservation who sells or offers to sell more than 200 but fewer than 5,000 cigarettes
with Indian stamps is guilty of a misdemeanor.
(b) A retailer doing business off of an Indian reservation who sells or offers to sell 5,000 or
more, but fewer than 20,001 cigarettes with Indian stamps is guilty of a gross misdemeanor.
(c) A retailer doing business off of an Indian reservation who sells or offers to sell more
than 20,000 cigarettes with Indian stamps is guilty of a felony.
    Subd. 8. Sales after license revocation. A person selling cigarettes or tobacco products after
the person's license has been revoked is guilty of a felony.
    Subd. 9. Purchases from unlicensed sellers. (a) No retailer or subjobber shall purchase
cigarettes or tobacco products from any person who is not licensed under section 297F.03 as
a licensed distributor or subjobber.
(b) A retailer or subjobber who purchases from an unlicensed seller fewer than 5,000
cigarettes or up to $350 worth of tobacco products is guilty of a misdemeanor.
(c) A retailer or subjobber who purchases from an unlicensed seller 5,000 or more, but
fewer than 20,001 cigarettes or more than $350 but less than $1,400 worth of tobacco products
is guilty of a gross misdemeanor.
(d) A retailer or subjobber who purchases from an unlicensed seller more than 20,000
cigarettes or $1,400 or more worth of tobacco products is guilty of a felony.
    Subd. 10. Penalties are additional. Criminal penalties imposed by this section are in
addition to any civil penalties imposed by this chapter.
    Subd. 11. 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.
    Subd. 12. Other penalties. A violation of this chapter unless otherwise specified is a
misdemeanor.
History: 1997 c 106 art 1 s 20; 1Sp2001 c 5 art 11 s 6; 2003 c 127 art 7 s 7-11

297F.21 CONTRABAND.
    Subdivision 1. Contraband defined. The following are declared to be contraband and
therefore subject to civil and criminal penalties under this chapter:
(a) Cigarette packages which do not have stamps affixed to them as provided in this chapter,
including but not limited to (i) packages with illegible stamps and packages with stamps that are
not complete or whole even if the stamps are legible, and (ii) all devices for the vending of
cigarettes in which packages as defined in item (i) are found, including all contents contained
within the devices.
(b) A device for the vending of cigarettes and all packages of cigarettes, where the device
does not afford at least partial visibility of contents. Where any package exposed to view does
not carry the stamp required by this chapter, it shall be presumed that all packages contained
in the device are unstamped and contraband.
(c) A device for the vending of cigarettes to which the commissioner or authorized agents
have been denied access for the inspection of contents. In lieu of seizure, the commissioner or an
agent may seal the device to prevent its use until inspection of contents is permitted.
(d) A device for the vending of cigarettes which does not carry the name and address of the
owner, plainly marked and visible from the front of the machine.
(e) A device 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 more than 5,000 cigarettes which are contraband under
this subdivision. When cigarettes are being transported in the course of interstate commerce, or are
in movement from either a public warehouse to a distributor upon orders from a manufacturer or
distributor, or from one distributor to another, the cigarettes are not contraband, notwithstanding
the provisions of clause (a).
(f) A device 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 untaxed tobacco products intended for sale in
Minnesota other than those in the possession of a licensed distributor on or before the due date
for payment of the tax under section 297F.09, subdivision 2.
(g) Cigarette packages or tobacco products obtained from an unlicensed seller.
(h) Cigarette packages offered for sale or held as inventory in violation of section 297F.20,
subdivision 7 .
(i) Tobacco products on which the tax has not been paid by a licensed distributor.
(j) Any cigarette packages or tobacco products offered for sale or held as inventory for which
there is not an invoice from a licensed seller as required under section 297F.13, subdivision 4.
(k) Cigarette packages which have been imported into the United States in violation of United
States Code, title 26, section 5754. All cigarettes held in violation of that section shall be presumed
to have entered the United States after December 31, 1999, in the absence of proof to the contrary.
    Subd. 2. Seizure. Cigarettes, tobacco products, or other property made contraband by
subdivision 1 may be seized by the commissioner or authorized agents or by any sheriff or other
police officer, with or without process, and are subject to forfeiture as provided in subdivision 3.
    Subd. 3. Inventory; judicial determination; appeal; disposition of seized property. (a)
Within ten days after the seizure of any alleged contraband, the person making the seizure shall
serve by certified mail an inventory of the property seized on the person from whom the seizure
was made, if known, and on any person known or believed to have any right, title, interest, or lien
in the property, at the last known address, and file a copy with the commissioner. The notice must
include an explanation of the right to demand a judicial forfeiture determination.
(b) Within 60 days after the date of service of the inventory, which is the date of mailing, the
person from whom the property was seized or any person claiming an interest in the property may
file a demand for a judicial determination of the question as to whether the property was lawfully
subject to seizure and forfeiture. The demand must be in the form of a civil complaint and must
be filed with the court administrator in the county in which the seizure occurred, together with
proof of service of a copy of the complaint on the commissioner of revenue, and the standard
filing fee for civil actions unless the petitioner has the right to sue in forma pauperis under section
563.01. If the value of the seized property is $7,500 or less, the claimant may file an action in
conciliation court for recovery of the property. If the value of the seized property is less than $500,
the claimant does not have to pay the conciliation court filing fee.
(c) The complaint must be captioned in the name of the claimant as plaintiff and the
seized property as defendant, and must state with specificity the grounds on which the claimant
alleges the property was improperly seized and the plaintiff's interest in the property seized. No
responsive pleading is required of the commissioner, and no court fees may be charged for the
commissioner's appearance in the matter. The proceedings are governed by the Rules of Civil
Procedure. Notwithstanding any law to the contrary, an action for the return of property seized
under this section may not be maintained by or on behalf of any person who has been served with
an inventory unless the person has complied with this subdivision. The court shall decide whether
the alleged contraband is contraband, as defined in subdivision 1. The court shall hear the action
without a jury and shall try and determine the issues of fact and law involved.
(d) When a judgment of forfeiture is entered, the commissioner may, unless the judgment
is stayed pending an appeal, either:
(1) deliver the forfeited cigarette packages or tobacco products to the commissioner of
human services for use by patients in state institutions;
(2) cause the property in clause (1) to be destroyed; or
(3) cause the forfeited property to be sold at public auction as provided by law.
The person 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
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. The
balance of the proceeds must be paid 75 percent to the Department of Revenue for deposit as
a supplement to its operating fund or similar fund for official use, and 25 percent to the county
attorney or other prosecuting agency that handled the court proceeding, if there is one, for
deposit as a supplement to its operating fund or similar fund for prosecutorial purposes. If there
is no prosecuting authority involved in the forfeiture, the 25 percent of the proceeds otherwise
designated for the prosecuting authority must be deposited into the general fund.
(e) If no demand for judicial determination is made, the property seized is considered
forfeited to the state by operation of law and may be disposed of by the commissioner as provided
in the case of a judgment of forfeiture.
    Subd. 4.[Repealed, 1Sp2001 c 5 art 18 s 11]
History: 1997 c 106 art 1 s 21; 2000 c 490 art 10 s 20,21; 2000 c 496 s 1; 1Sp2001 c 5
art 18 s 6-8

297F.22 [Repealed, 2005 c 151 art 1 s 117]

297F.23 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.
History: 1997 c 106 art 1 s 23

297F.24 FEE IN LIEU OF SETTLEMENT.
    Subdivision 1. Fee imposed. (a) A fee is imposed upon the sale of nonsettlement cigarettes
in this state, upon having nonsettlement cigarettes in possession in this state with intent to sell,
upon any person engaged in business as a distributor, and upon the use or storage by consumers of
nonsettlement cigarettes. The fee equals a rate of 1.75 cents per cigarette.
(b) The purpose of this fee is to:
(1) ensure that manufacturers of nonsettlement cigarettes pay fees to the state that are
comparable to costs attributable to the use of the cigarettes;
(2) prevent manufacturers of nonsettlement cigarettes from undermining the state's policy
of discouraging underage smoking by offering nonsettlement cigarettes at prices substantially
below the cigarettes of other manufacturers; and
(3) fund such other purposes as the legislature determines appropriate.
    Subd. 2. Nonsettlement cigarettes. For purposes of this section, a "nonsettlement cigarette"
means a cigarette manufactured by a person other than a manufacturer that:
(1) is making annual payments to the state of Minnesota under a settlement of the lawsuit
styled as State v. Philip Morris Inc., No. C1-94-8565 (Minnesota District Court, Second Judicial
District), if the style of cigarettes is included in computation of the payments under the agreement;
or
(2) has voluntarily entered into an agreement with the state of Minnesota, approved by
the attorney general, agreeing to terms similar to those contained in the settlement agreement,
identified in clause (1) including making annual payments to the state, with respect to its national
sales of the style of cigarettes, equal to at least 75 percent of the payments that would apply if
the manufacturer was one of the four original parties to the settlement agreement required to
make annual payments to the state.
    Subd. 3. Collection and administration. The commissioner shall administer the fee under
this section in the same manner as the excise tax imposed under section 297F.05 and all of the
provisions of this chapter apply as if the fee were a tax imposed under section 297F.05. The
commissioner shall deposit the proceeds of the fee in the general fund.
History: 2003 c 127 art 14 s 9

297F.25 CIGARETTE SALES TAX.
    Subdivision 1. Imposition. A tax is imposed on distributors on the sale of cigarettes by a
cigarette distributor to a retailer or cigarette subjobber for resale in this state. The tax is equal
to 6.5 percent of the weighted average retail price. The weighted average retail price must
be expressed in cents per pack when rounded to the nearest one-tenth of a cent. The weighted
average retail price must be determined annually, with new rates published by May 1, and
effective for sales on or after August 1. The weighted average retail price must be established by
surveying cigarette retailers statewide in a manner and time determined by the commissioner. The
determination of the commissioner pursuant to this subdivision is not a "rule" and is not subject
to the Administrative Procedure Act contained in chapter 14. As of August 1, 2005, the tax is
25.5 cents per pack of 20 cigarettes. For packs of cigarettes with other than 20 cigarettes, the
tax must be adjusted proportionally.
    Subd. 2. Payment. Each taxpayer must remit payments of the taxes to the commissioner on
the same dates prescribed under section 297F.09, subdivision 1, for cigarette tax returns, including
the accelerated remittance of the June liability.
    Subd. 3. Return. A taxpayer must file a return with the commissioner on the same dates
prescribed under section 297F.09, subdivision 1, for cigarette tax returns. Notwithstanding any
other provisions of this chapter, the tax due on the return is based upon actual stamps purchased
during the reporting period.
    Subd. 4. Form of return. The return must contain the information and be in the form
prescribed by the commissioner.
    Subd. 5. Tax as debt. The tax that is required to be paid by the distributor is a debt from
the retailer or cigarette subjobber to the distributor recoverable at law in the same manner as
other debts. A cigarette retailer or subjobber must pay the tax imposed under subdivision 1 to
the distributor before the 12th day of the month following the month in which the cigarettes
were purchased from the distributor.
    Subd. 6. Sales tax stamp. Payment of the tax imposed under section 297F.05 and by this
section must be evidenced by a dual-purpose single stamp affixed to each package.
    Subd. 7. Administration. The stamping, audit, assessment, interest, penalty, appeal, refund,
and collection provisions applicable to the taxes imposed under this chapter apply to taxes
imposed under this section.
    Subd. 8. Deposit of revenues. Notwithstanding the provisions of section 297F.10, the
commissioner shall deposit all revenues, including penalties and interest, derived from the tax
imposed by this section, in the general fund.
History: 1Sp2005 c 3 art 6 s 15