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Minnesota Legislature

Office of the Revisor of Statutes

Chapter 297E

Section 297E.02

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297E.02 TAX IMPOSED.
    Subdivision 1. Imposition. A tax is imposed on all lawful gambling other than (1) pull-tab
deals or games; (2) tipboard deals or games; and (3) items listed in section 297E.01, subdivision
8
, clauses (4) and (5), at the rate of 8.5 percent on the gross receipts as defined in section 297E.01,
subdivision 8
, less prizes actually paid. The tax imposed by this subdivision is in lieu of the tax
imposed by section 297A.62 and all local taxes and license fees except a fee authorized under
section 349.16, subdivision 8, or a tax authorized under subdivision 5.
The tax imposed under this subdivision is payable by the organization or party conducting,
directly or indirectly, the gambling.
    Subd. 2. Tax-exempt gambling. An organization's receipts from lawful gambling that are
excluded or exempt from licensing under section 349.166, are not subject to the tax imposed by
this section or section 297A.62. This exclusion from tax is only valid if at the time of the event
giving rise to the tax the organization either has an exclusion under section 349.166, subdivision
1
, or has applied for and received a valid exemption from the lawful gambling control board.
    Subd. 2a. Tax credit for certain raffles. An organization may claim a credit equal to the tax
reported under subdivision 1 resulting from a raffle the net proceeds of which have been used
exclusively for the purposes of section 349.12, subdivision 25, paragraph (a), clause (2). The
organization claiming the credit must do so on the monthly gambling tax return on which the
raffle activity is reported under subdivision 1.
    Subd. 3. Collection; disposition. Taxes imposed by this section other than in subdivision 4
are due and payable to the commissioner when the gambling tax return is required to be filed.
Taxes imposed by subdivision 4 are due and payable to the commissioner on or before the last
business day of the month following the month in which the taxable sale was made. Returns
covering the taxes imposed under this section must be filed with the commissioner on or before the
20th day of the month following the close of the previous calendar month. The commissioner may
require that the returns be filed via magnetic media or electronic data transfer. The proceeds, along
with the revenue received from all license fees and other fees under sections 349.11 to 349.191,
349.211, and 349.213, must be paid to the commissioner of finance for deposit in the general fund.
    Subd. 4. Pull-tab and tipboard tax. (a) A tax is imposed on the sale of each deal of
pull-tabs and tipboards sold by a distributor. The rate of the tax is 1.7 percent of the ideal gross of
the pull-tab or tipboard deal. The sales tax imposed by chapter 297A on the sale of the pull-tabs
and tipboards by the distributor is imposed on the retail sales price less the tax imposed by
this subdivision. The retail sale of pull-tabs or tipboards by the organization is exempt from
taxes imposed by chapter 297A and is exempt from all local taxes and license fees except a fee
authorized under section 349.16, subdivision 8.
(b) The liability for the tax imposed by this section is incurred when the pull-tabs and
tipboards are delivered by the distributor to the customer or to a common or contract carrier for
delivery to the customer, or when received by the customer's authorized representative at the
distributor's place of business, regardless of the distributor's method of accounting or the terms
of the sale.
The tax imposed by this subdivision is imposed on all sales of pull-tabs and tipboards,
except the following:
(1) sales to the governing body of an Indian tribal organization for use on an Indian
reservation;
(2) sales to distributors licensed under the laws of another state or of a province of Canada,
as long as all statutory and regulatory requirements are met in the other state or province;
(3) sales of promotional tickets as defined in section 349.12; and
(4) pull-tabs and tipboards sold to an organization that sells pull-tabs and tipboards under
the exemption from licensing in section 349.166, subdivision 2. A distributor shall require an
organization conducting exempt gambling to show proof of its exempt status before making a
tax-exempt sale of pull-tabs or tipboards to the organization. A distributor shall identify, on all
reports submitted to the commissioner, all sales of pull-tabs and tipboards that are exempt from
tax under this subdivision.
(c) A 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.
(d) Any customer who purchases deals of pull-tabs or tipboards from a distributor may
file an annual claim for a refund or credit of taxes paid pursuant to this subdivision for unsold
pull-tab and tipboard tickets. The claim must be filed with the commissioner on a form prescribed
by the commissioner by March 20 of the year following the calendar year for which the refund
is claimed. The refund must be filed as part of the customer's February monthly return. The
refund or credit is equal to 1.7 percent of the face value of the unsold pull-tab or tipboard tickets,
provided that the refund or credit will be 1.75 percent of the face value of the unsold pull-tab
or tipboard tickets for claims for a refund or credit of taxes filed on the February 2001 monthly
return. The refund claimed will be applied as a credit against tax owing under this chapter on the
February monthly return. If the refund claimed exceeds the tax owing on the February monthly
return, that amount will be refunded. The amount refunded will bear interest pursuant to section
270C.405 from 90 days after the claim is filed.
    Subd. 5.[Renumbered 349.213, subd 3]
    Subd. 6. Combined receipts tax. In addition to the taxes imposed under subdivisions 1
and 4, a tax is imposed on the combined receipts of the organization. As used in this section,
"combined receipts" is the sum of the organization's gross receipts from lawful gambling less
gross receipts directly derived from the conduct of bingo, raffles, and paddlewheels, as defined in
section 297E.01, subdivision 8, for the fiscal year. The combined receipts of an organization are
subject to a tax computed according to the following schedule:
If the combined receipts for
the fiscal year are:
The tax is:
Not over $500,000
zero
Over $500,000, but not
over $700,000
1.7 percent of the amount
over $500,000, but not over
$700,000
Over $700,000, but not
over $900,000
$3,400 plus 3.4 percent of
the amount over $700,000,
but not over $900,000
Over $900,000
$10,200 plus 5.1 percent of
the amount over $900,000
    Subd. 7. Untaxed gambling product. (a) In addition to penalties or criminal sanctions
imposed by this chapter, a person, organization, or business entity possessing or selling a pull-tab
or tipboard upon which the tax imposed by subdivision 4 has not been paid is liable for a tax of
six percent of the ideal gross of each pull-tab or tipboard. The tax on a partial deal must be
assessed as if it were a full deal.
(b) In addition to penalties and criminal sanctions imposed by this chapter, a person not
licensed by the board who conducts bingo, raffles, or paddlewheel games is liable for a tax of six
percent of the gross receipts from that activity.
(c) The tax must be assessed by the commissioner. An assessment must be considered a
jeopardy assessment or jeopardy collection as provided in section 270C.36. The commissioner
shall assess the tax based on personal knowledge or information available to the commissioner.
The commissioner shall mail to the taxpayer at the taxpayer's last known address, or serve in
person, a written notice of the amount of tax, demand its immediate payment, and, if payment
is not immediately made, collect the tax by any method described in chapter 270C, except that
the commissioner need not await the expiration of the times specified in chapter 270C. The tax
assessed by the commissioner is presumed to be valid and correctly determined and assessed. The
burden is upon the taxpayer to show its incorrectness or invalidity. The tax imposed under this
subdivision does not apply to gambling that is exempt from taxation under subdivision 2.
    Subd. 8. Personal debt. The tax imposed by this section, and interest and penalties imposed
with respect to it, are a personal debt of the person required to file a return from the time the
liability for it arises, irrespective of when the time for payment of the liability occurs. The debt
must, in the case of the executor or administrator of the estate of a decedent and in the case of a
fiduciary, be 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 which event the person is personally liable for any deficiency.
    Subd. 9. Public information. All records concerning the administration of the taxes under
this chapter are classified as public information.
    Subd. 10. Refunds; appropriation. A person who has, under this chapter, paid to the
commissioner an amount of tax for a period in excess of the amount legally due for that period,
may file with the commissioner a claim for a refund of the excess. The amount necessary to pay
the refunds under this subdivision and subdivision 4, paragraph (d), is appropriated from the
general fund to the commissioner.
    Subd. 11. Unplayed or defective pull-tabs or tipboards. If a deal of pull-tabs or tipboards
registered with the board or bar coded in accordance with this chapter and chapter 349 and upon
which the tax imposed by subdivision 4 has been paid is returned unplayed to the distributor, the
commissioner shall allow a refund of the tax paid.
If a defective deal registered with the board or bar coded in accordance with this chapter
and chapter 349 and upon which the taxes have been paid is returned to the manufacturer, the
distributor shall submit to the commissioner of revenue certification from the manufacturer
that the deal was returned and in what respect it was defective. The certification must be on a
form prescribed by the commissioner and must contain additional information the commissioner
requires.
The commissioner may require that no refund under this subdivision be made unless the
returned pull-tabs or tipboards have been set aside for inspection by the commissioner's employee.
Reductions in previously paid taxes authorized by this subdivision must be made when and
in the manner prescribed by the commissioner.
History: 1994 c 633 art 2 s 2; 1995 c 264 art 17 s 3-5,11; 1996 c 471 art 13 s 12,13; 1998 c
389 art 13 s 3-5; 1999 c 243 art 7 s 5-8; 2000 c 418 art 1 s 44; 2000 c 490 art 10 s 3-6; 1Sp2001
c 5 art 17 s 16; 2003 c 112 art 2 s 50; 2005 c 151 art 2 s 17