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CHAPTER 297E. GAMBLING TAXES

Table of Sections
SectionHeadnote
297E.01DEFINITIONS.
297E.02TAX IMPOSED.
297E.03SPORTS BOOKMAKING TAX.
297E.031GAMBLING TAX PERMIT.
297E.04MANUFACTURER'S REPORTS AND RECORDS.
297E.05DISTRIBUTOR REPORTS AND RECORDS.
297E.06ORGANIZATION REPORTS AND RECORDS.
297E.07INSPECTION RIGHTS.
297E.08Repealed, 2005 c 151 art 1 s 117
297E.09Repealed, 2005 c 151 art 1 s 117
297E.10EXTENSIONS FOR FILING RETURNS AND PAYING TAXES.
297E.11LIMITATIONS ON TIME FOR ASSESSMENT OF TAX.
297E.12CIVIL PENALTIES.
297E.13TAX-RELATED CRIMINAL PENALTIES.
297E.14INTEREST.
297E.15Repealed, 2005 c 151 art 1 s 117
297E.16CONTRABAND.
297E.17DISTRIBUTOR'S BOND.
297E.01 DEFINITIONS.
    Subdivision 1. Scope. Unless otherwise defined in this chapter, or unless the context clearly
indicates otherwise, the terms used in this chapter have the meaning given them in chapter 349.
The definitions in this section are for tax administration purposes and apply to this chapter.
    Subd. 2. Bingo. For purposes of this chapter "bingo" means the game of bingo as defined in
section 349.12, subdivision 4, and as conducted under chapter 349, and any other game that is
substantially the same as or similar to that game, including but not limited to a game where:
(1) players pay compensation for a game sheet, card, or paper that has spaces arranged
on it in columns and rows containing printed numbers or figures, or that has spaces in which
players are allowed to place their own numbers or figures, or for an electronic, mechanical, or
other facsimile of such sheets, cards, or paper;
(2) numbers or figures are randomly selected for comparison with the numbers or figures
on each game sheet, card, paper, or facsimile;
(3) game winners are those who have a game sheet, card, paper, or facsimile with some or all
of the randomly selected numbers or figures displayed thereon, in the same pattern or arrangement
that has been previously designated or understood to be a winning pattern or arrangement for
the game; and
(4) game winners receive or are eligible to receive a prize such as money, property, or
other reward or benefit.
    Subd. 3. Commissioner. "Commissioner" means the commissioner of revenue or a person to
whom the commissioner has delegated functions.
    Subd. 4. Contraband. For purposes of this chapter, "contraband" means all of the items
listed in section 349.2125, and all pull-tab or tipboard deals or portions of deals on which the tax
imposed under section 297E.02 has not been paid.
    Subd. 5. Distributor. "Distributor" means a distributor as defined in section 349.12,
subdivision 11
, or a person or linked bingo game provider who markets, sells, or provides
gambling product to a person or entity for resale or use at the retail level.
    Subd. 6. Fiscal year. "Fiscal year" means the period from July 1 to June 30.
    Subd. 7. Gambling product. "Gambling product" means bingo hard cards, bingo paper
sheets, or linked bingo paper sheets; pull-tabs; tipboards; paddletickets and paddleticket cards;
raffle tickets; or any other ticket, card, board, placard, device, or token that represents a chance,
for which consideration is paid, to win a prize.
    Subd. 8. Gross receipts. "Gross receipts" means all receipts derived from lawful gambling
activity including, but not limited to, the following items:
(1) gross sales of bingo hard cards and paper sheets before reduction for prizes, expenses,
shortages, free plays, or any other charges or offsets;
(2) the ideal gross of pull-tab and tipboard deals or games less the value of unsold and
defective tickets and before reduction for prizes, expenses, shortages, free plays, or any other
charges or offsets;
(3) gross sales of raffle tickets and paddle tickets before reduction for prizes, expenses,
shortages, free plays, or any other charges or offsets;
(4) admission, commission, cover, or other charges imposed on participants in lawful
gambling activity as a condition for or cost of participation; and
(5) interest, dividends, annuities, profit from transactions, or other income derived from the
accumulation or use of gambling proceeds.
Gross receipts does not include proceeds from rental under section 349.18, subdivision 3.
    Subd. 9. Ideal gross. "Ideal gross" means the total amount of receipts that would be received
if every individual ticket in the pull-tab or tipboard deal was sold at its face value. In the
calculation of ideal gross and prizes, a free play ticket shall be valued at face value.
    Subd. 9a. Linked bingo game. "Linked bingo game" means a bingo game played at two or
more locations where licensed organizations are authorized to conduct bingo, when there is a
common prize pool and a common selection of numbers or symbols conducted at one location,
and when the results of the selection are transmitted to all participating locations by satellite,
telephone, or other means by a linked bingo game provider.
    Subd. 9b. Linked bingo game provider. "Linked bingo game provider" means any person
who provides the means to link bingo prizes in a linked bingo game, who provides linked bingo
paper sheets to the participating organizations, who provides linked bingo prize management, and
who provides the linked bingo game system.
    Subd. 10. Manufacturer. "Manufacturer" means a manufacturer as defined in section
349.12, subdivision 26, or a person or entity who:
(1) assembles from raw materials, or from subparts or other components, a completed item
of gambling product for resale, use, or receipt in Minnesota; or
(2) sells, furnishes, ships, or imports completed gambling product from outside Minnesota
for resale, use, receipt, or storage in Minnesota; or
(3) being within the state, assembles, produces, or otherwise creates gambling products.
    Subd. 11. Prize. "Prize" means a thing of value, other than a free play, offered or awarded
to the winner of a gambling game.
    Subd. 12. Pull-tab. "Pull-tab" is a pull-tab as defined in section 349.12, subdivision 32, or
any other gambling ticket or device that is substantially the same as or similar to such a pull-tab,
including but not limited to, a ticket or card that:
(1) has one or more concealed numbers, figures, or symbols, or combination thereof, printed
on it;
(2) may be used in games where the player knows in advance, or can determine in advance,
what the predesignated winning numbers, figures, symbols, or combinations are; and
(3) may be played by revealing the concealed ticket information and comparing that
information with the predesignated winning numbers, figures, symbols, or combinations in order
to determine a winner.
    Subd. 13. Raffle. "Raffle" means a raffle as defined in section 349.12, subdivision 33, and
any other game that is played in a manner substantially similar to the play of such a raffle,
including but not limited to raffles in which compensation is paid for the chance to win a thing
of value, the chance is evidenced by a ticket, card, token, or equivalent item, and the winner is
selected by random drawing.
    Subd. 14. Retail level. "Retail level" means an activity where gambling product is sold to
players or participants in gambling games and where the players or participants give consideration
for a chance to win a prize.
    Subd. 15. Taxpayer. "Taxpayer" means a person subject to or liable for a tax imposed by this
chapter, a person required to file reports or returns with the commissioner under this chapter, a
person required to keep or retain records under this chapter, or a person required by this chapter
to obtain or hold a permit.
    Subd. 16. Ticket. "Ticket" means a valid token, card, or other tangible voucher, other than
bingo cards, sheets, or paper, that grants the holder a chance or chances to participate in a game of
gambling.
    Subd. 17. Tipboard. "Tipboard" means a tipboard as defined in section 349.12, subdivision
34
, and any game that is substantially the same as or similar to the game of tipboards authorized
under chapter 349, including but not limited to any of the following games:
(1) a game that consists of one or more boards, placards, or other devices in which (i) the
board, placard, or other device has been marked off into a grid or columns in which each section
represents a chance to win a prize, (ii) participants pay a consideration to select a section or
sections, (iii) all or some of the winning numbers, figures, symbols, or other winning criteria for
the game are concealed or otherwise not known by the player at the time the player obtains
a chance in the game, and (iv) the numbers, figures, symbols, or other criteria for winning the
game are later revealed for comparison with the information on the board, placard, or other
device in order to determine a winner;
(2) a game that consists of one or more boards, placards, or other devices that (i) have tickets
attached to or otherwise associated with them, and that have one or more concealed numbers,
figures, or combination thereof on the tickets; (ii) participants pay a consideration to obtain the
tickets, (iii) all or some of the winning numbers, figures, symbols, or other winning criteria for
the game are concealed or otherwise not known by the player at the time the player obtains
a chance in the game, and (iv) the numbers, figures, symbols, or other criteria for winning the
game are later revealed for comparison with the information on the game tickets in order to
determine a winner; or
(3) a game that consists of a deal or set of tickets that (i) have one or more concealed
numbers, figures, or symbols, or combination thereof, on the tickets, (ii) participants pay a
consideration to obtain the tickets, (iii) all or some of the winning numbers, figures, symbols, or
combination thereof, are concealed or otherwise not known to the player at the time the player
obtains the ticket, and (iv) the tickets are used in games where the numbers, figures, symbols,
or other winning criteria are later revealed for comparison with the information on the game
tickets in order to determine a winner.
"Tipboards" includes any game otherwise described in this subdivision in which the winning
chances are determined in whole or in part by the outcome of one or more sporting events.
"Tipboard" does not include boards, placards, tickets, or other devices lawfully used in connection
with the operation of the state lottery under chapter 349A or the lawful conduct of pari-mutuel
betting on horse racing under chapter 240.
    Subd. 17a. Business day. "Business day" means Monday through Friday, excluding any
holidays as defined in section 645.44.
    Subd. 18. Other words. Unless specifically defined in this chapter, or unless the context
clearly indicates otherwise, the words used in this chapter have the meanings given them in
chapter 349.
History: 1994 c 633 art 2 s 1; 1999 c 243 art 7 s 4; 2005 c 151 art 8 s 4-7; 2006 c 212
art 3 s 29
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
297E.03 SPORTS BOOKMAKING TAX.
    Subdivision 1. Imposition of tax. An excise tax of six percent is imposed on the value of
all bets received by, recorded by, accepted by, forwarded by, or placed with a person engaged in
sports bookmaking.
    Subd. 2. Bet defined. For purposes of this section, the term "bet" has the meaning given
it in section 609.75, subdivision 2.
    Subd. 3. Sports bookmaking defined. For purposes of this section, the term "sports
bookmaking" has the meaning given it in section 609.75, subdivision 7.
    Subd. 4. Amount of bet. In determining the value or amount of any bet for purposes of this
section, all charges incident to the placing of the bet must be included.
    Subd. 5. Tax returns. A person engaged in sports bookmaking shall file monthly tax returns
with the commissioner of revenue, in the form required by the commissioner, of all bookmaking
activity, and shall include information on all bets recorded, accepted, forwarded, and placed. The
returns must be filed on or before the 20th day of the month following the month in which the bets
reported were recorded, accepted, forwarded, or placed. The tax imposed by this section is due
and payable at the time when the returns are filed.
    Subd. 6. Persons liable for tax. Each person who is engaged in receiving, recording,
forwarding, or accepting sports bookmaking bets is liable for and shall pay the tax imposed
under this section.
    Subd. 7. Jeopardy assessment; jeopardy collection. The tax may be assessed by the
commissioner of revenue. An assessment made pursuant to this section shall 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.
    Subd. 8. Disclosure prohibited. (a) Notwithstanding any law to the contrary, neither the
commissioner nor a public employee may reveal facts contained in a sports bookmaking tax
return filed with the commissioner of revenue as required by this section, nor can any information
contained in the report or return be used against the tax obligor in any criminal proceeding, unless
independently obtained, except in connection with a proceeding involving taxes due under this
section, or as provided in section 270C.055, subdivision 1.
(b) Any person violating this section is guilty of a gross misdemeanor.
(c) This section does not prohibit the commissioner from publishing statistics that do not
disclose the identity of tax obligors or the contents of particular returns or reports.
History: 1994 c 633 art 2 s 3; 2005 c 151 art 2 s 17
297E.031 GAMBLING TAX PERMIT.
    Subdivision 1. Application and issuance. A distributor who sells gambling products
under this chapter must file an application with the commissioner, on a form prescribed by the
commissioner, for a gambling tax permit and identification number. The commissioner, when
satisfied that the applicant meets all applicable requirements under this chapter and chapter
349, shall issue the applicant a permit and number. A permit is not assignable and is valid only
for the distributor in whose name it is issued.
    Subd. 2. Suspension; revocation. (a) If a distributor fails to comply with this chapter or a
rule of the commissioner, or if a license issued under chapter 349 is revoked or suspended, the
commissioner, after giving notice, may for reasonable cause revoke or suspend a permit held by a
distributor. A notice must be sent to the distributor at least 15 days before the proposed suspension
or revocation is to take effect. The notice must give the reason for the proposed suspension or
revocation and must require the distributor to show cause why the proposed action should not be
taken. The notice may be served personally or by mail.
(b) The notice must inform the distributor of the right to a contested case hearing. If a
request in writing is made to the commissioner within 14 days of the date of the notice, the
commissioner shall defer action on the suspension or revocation and shall refer the case to the
Office of Administrative Hearings for the scheduling of a contested case hearing. The distributor
must be served with 20 days' notice in writing specifying the time and place of the hearing and the
allegations against the distributor.
(c) The commissioner shall issue a final order following receipt of the recommendation of
the administrative law judge.
(d) Under section 271.06, subdivision 1, an appeal to the Tax Court may be taken from the
commissioner's order of revocation or suspension. The commissioner may not issue a new permit
after revocation except upon application accompanied by reasonable evidence of the intention
of the applicant to comply with all applicable laws and rules.
History: 1994 c 633 art 2 s 4; 1995 c 264 art 17 s 6
297E.04 MANUFACTURER'S REPORTS AND RECORDS.
    Subdivision 1. Reports of sales. A manufacturer who sells gambling product for use or
resale in this state, or for receipt by a person or entity in this state, shall file with the commissioner,
on a form prescribed by the commissioner, a report of gambling product sold to any person in the
state, including the established governing body of an Indian tribe recognized by the United States
Department of the Interior. The report must be filed monthly on or before the 20th day of the
month succeeding the month in which the sale was made. The commissioner may require that the
report be submitted via magnetic media or electronic data transfer. The commissioner may inspect
the premises, books, records, and inventory of a manufacturer without notice during the normal
business hours of the manufacturer. A person violating this section is guilty of a misdemeanor.
    Subd. 2. Bar codes. The flare of each pull-tab and tipboard game must be imprinted by the
manufacturer with a bar code that provides all information prescribed by the commissioner.
The commissioner must require that the bar code include the serial number of the game. A
manufacturer must also affix to the outside of the box containing these games a bar code
providing all information prescribed by the commissioner. The commissioner may also prescribe
additional bar coding requirements.
No person may alter the bar code that appears on the outside of a box containing a deal of
pull-tabs and tipboards. Possession of a box containing a deal of pull-tabs and tipboards that has a
bar code different from the bar code of the deal inside the box is prima facie evidence that the
possessor has altered the bar code on the box.
    Subd. 3. Paddleticket card master flares. Each sealed grouping of 100 or fewer paddleticket
cards must have its own individual master flare. The manufacturer of the paddleticket cards must
affix to or imprint at the bottom of each master flare a bar code that provides:
(1) the name of the manufacturer;
(2) the first paddleticket card number in the group;
(3) the number of paddletickets attached to each paddleticket card in the group; and
(4) all other information required by the commissioner.
History: 1994 c 633 art 2 s 5; 1997 c 155 s 1
297E.05 DISTRIBUTOR REPORTS AND RECORDS.
    Subdivision 1. Business records. A distributor shall keep at each place of business complete
and accurate records for that place of business, including itemized invoices of gambling product
held, purchased, manufactured, or brought in or caused to be brought in from without this
state, and of all sales of gambling product. The records must show the names and addresses
of purchasers, the inventory at the close of each period for which a return is required of all
gambling product on hand, and other pertinent papers and documents relating to the purchase,
sale, or disposition of gambling product. Books, records, itemized invoices, and other papers and
documents required by this section must be kept 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 of
revenue authorizes in writing their destruction or disposal at an earlier date.
    Subd. 2. Sales records. A distributor must maintain a record of all gambling product that it
sells. The record must include:
(1) the identity of the person from whom the distributor purchased the product;
(2) the registration number of the product;
(3) the name, address, and license or exempt permit number of the organization or person to
which the sale was made;
(4) the date of the sale;
(5) the name of the person who ordered the product;
(6) the name of the person who received the product;
(7) the type of product;
(8) the serial number of the product;
(9) the name, form number, or other identifying information for each game; and
(10) in the case of bingo hard cards or sheets sold on and after January 1, 1991, the individual
number of each card or sheet.
    Subd. 3. Invoices. A distributor shall give with each sale of gambling product an itemized
invoice showing the distributor's name and address, the purchaser's name and address, the date
of the sale, description of the deals, including the ideal gross from every deal of pull-tabs and
every deal of tipboards.
    Subd. 4. Reports. A distributor shall report monthly to the commissioner, on a form the
commissioner prescribes, its sales of each type of gambling product. This report must be filed
monthly on or before the 20th day of the month succeeding the month in which the sale was made.
The commissioner may require that a distributor submit the monthly report and invoices required
in this subdivision via magnetic media or electronic data transfer.
    Subd. 5. Certified physical inventory. The commissioner may, upon request, require a
distributor to furnish a certified physical inventory of all gambling product in stock. The inventory
must contain the information required by the commissioner.
History: 1994 c 633 art 2 s 6
297E.06 ORGANIZATION REPORTS AND RECORDS.
    Subdivision 1. Reports. An organization must file with the commissioner, on a form
prescribed by the commissioner, a report showing all gambling activity conducted by that
organization for each month. Gambling activity includes all gross receipts, prizes, all gambling
taxes owed or paid to the commissioner, all gambling expenses, and all lawful purpose and
board-approved expenditures. The report must be filed with the commissioner on or before the
20th day of the month following the month in which the gambling activity takes place. The
commissioner may require that the reports be filed via magnetic media or electronic data transfer.
    Subd. 2. Business records. An organization shall maintain records supporting the gambling
activity reported to the commissioner. Records include, but are not limited to, the following items:
(1) all winning and unsold tickets, cards, or stubs for pull-tab, tipboard, paddlewheel, and
raffle games;
(2) all reports and statements, including checker's records, for each bingo occasion;
(3) all cash journals and ledgers, deposit slips, register tapes, and bank statements supporting
gambling activity receipts;
(4) all invoices that represent purchases of gambling product;
(5) all canceled checks or copies of substitute checks as defined in Public Law 108-100,
section 3, check recorders, journals and ledgers, vouchers, invoices, bank statements, and other
documents supporting gambling activity expenditures; and
(6) all organizational meeting minutes.
All records required to be kept by this section must be preserved by the organization for at
least 3-1/2 years and may be inspected by the commissioner of revenue at any reasonable time
without notice or a search warrant.
    Subd. 3. Accounts. All gambling activity transactions must be segregated from all other
revenues and expenditures made by the conducting organization.
    Subd. 4. Annual audit. (a) An organization licensed under chapter 349 with gross receipts
from lawful gambling of more than $300,000 in any year must have an annual financial audit of
its lawful gambling activities and funds for that year. An organization licensed under chapter 349
with gross receipts from lawful gambling of more than $150,000 but not more than $300,000 in
any year must have an annual financial review of its lawful gambling activities and funds for that
year. Audits and financial reviews under this subdivision must be performed by an independent
accountant licensed by the state of Minnesota.
(b) The commissioner of revenue shall prescribe standards for audits and financial review
required under this subdivision. The standards may vary based on the gross receipts of the
organization. The standards must incorporate and be consistent with standards prescribed by the
American Institute of Certified Public Accountants. A complete, true, and correct copy of the
audit report must be filed as prescribed by the commissioner.
History: 1994 c 633 art 2 s 7; 2001 c 96 s 5; 2005 c 151 art 8 s 8
297E.07 INSPECTION RIGHTS.
At any reasonable time, without notice and without a search warrant, the commissioner
may enter a place of business of a manufacturer, distributor, organization, or linked bingo game
provider; any site from which pull-tabs or tipboards or other gambling equipment or gambling
product are being manufactured, stored, or sold; or any site at which lawful gambling is being
conducted, and inspect the premises, books, records, and other documents required to be kept
under this chapter to determine whether or not this chapter is being fully complied with. If the
commissioner is denied free access to or is hindered or interfered with in making an inspection
of the place of business, books, or records, the permit of the distributor may be revoked by the
commissioner, and the license of the manufacturer, the distributor, the organization, or linked
bingo game provider may be revoked by the board.
History: 1994 c 633 art 2 s 8; 2005 c 151 art 8 s 9
297E.08 [Repealed, 2005 c 151 art 1 s 117]
297E.09 [Repealed, 2005 c 151 art 1 s 117]
297E.10 EXTENSIONS FOR FILING RETURNS AND PAYING TAXES.
If, in the commissioner's judgment, good cause exists, the commissioner may extend the
time for filing tax returns, paying taxes, or both, for not more than six months.
History: 1994 c 633 art 2 s 11
297E.11 LIMITATIONS ON TIME FOR ASSESSMENT OF TAX.
    Subdivision 1. General rule. Except as otherwise provided in this chapter, the amount of
taxes assessable must be assessed within 3-1/2 years after the return is filed, whether or not the
return is filed on or after the date prescribed. A return must not be treated as filed until it is in
processible form. A return is in processible form if it is filed on a permitted form and contains
sufficient data to identify the taxpayer and permit the mathematical verification of the tax liability
shown on the return.
    Subd. 2. False or fraudulent return. Notwithstanding subdivision 1, the tax may be
assessed at any time if a false or fraudulent return is filed or if a taxpayer fails to file a return.
    Subd. 3. Omission in excess of 25 percent. Additional taxes may be assessed within 6-1/2
years after the due date of the return or the date the return was filed, whichever is later, if the
taxpayer omits from a tax return taxes in excess of 25 percent of the taxes reported in the return.
    Subd. 4. Time limit for refunds. Unless otherwise provided in this chapter, a claim for a
refund of an overpayment of tax must be filed within the period prescribed in section 289A.40,
subdivision 1
. Interest on refunds must be computed at the rate specified in section 270C.405 from
the date of payment to the date the refund is paid or credited. For purposes of this subdivision, the
date of payment is the later of the date the tax was finally due or was paid.
    Subd. 5. Bankruptcy; suspension of time. The time during which a tax must be assessed
or collection proceedings begun is suspended during the period from the date of a filing of a
petition in bankruptcy until 30 days after either:
(1) notice to the commissioner that the bankruptcy proceedings have been closed or
dismissed; or
(2) the automatic stay has been ended or has expired, whichever occurs first.
The suspension of the statute of limitations under this subdivision applies to the person
the petition in bankruptcy is filed against, and all other persons who may also be wholly or
partially liable for the tax.
    Subd. 6. Extension agreement. If before the expiration of time prescribed in subdivisions
1 and 4 for the assessment of tax or the filing of a claim for refund, both the commissioner and
the taxpayer have consented in writing to the assessment or filing of a claim for refund after that
time, the tax may be assessed or the claim for refund filed at any time before the expiration of
the agreed upon period. The period may be extended by later agreements in writing before the
expiration of the period previously agreed upon.
History: 1994 c 633 art 2 s 12; 1995 c 264 art 13 s 19; 2005 c 151 art 2 s 17
297E.12 CIVIL PENALTIES.
    Subdivision 1. Penalty for failure to pay tax. If a tax 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 unpaid 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.
If the taxpayer has not filed a return, for purposes of this subdivision the time specified for
payment is the final date a return should have been filed.
    Subd. 2. Penalty for failure to make and file return. If a taxpayer fails to make and file a
return within the time prescribed or an extension, a penalty is added to the tax. The penalty is five
percent of the amount of tax not paid on or before the date prescribed for payment of the tax.
    Subd. 3.[Repealed, 1999 c 243 art 16 s 39]
    Subd. 4. 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 this chapter or rules
of the commissioner of revenue (but without intent to defraud), there is added to the tax an amount
equal to ten percent of the additional assessment.
    Subd. 5. 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 found 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. 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
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 sales after revocation, suspension, or expiration. A distributor who
engages in, or whose representative engages in, the offering for sale, sale, transport, delivery, or
furnishing of gambling equipment to a person, firm, or organization, after the distributor's license
or permit has been revoked or suspended, or has expired, and until such license or permit has been
reinstated or renewed, is liable for a penalty of $1,000 for each day the distributor continues to
engage in the activity. This subdivision does not apply to the transport of gambling equipment for
the purpose of returning the equipment to a licensed manufacturer.
    Subd. 8. Payment of penalties. The penalties imposed by this section must be 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.
    Subd. 10.[Repealed, 2005 c 151 art 1 s 117; art 8 s 20]
History: 1994 c 633 art 2 s 13; 1995 c 264 art 13 s 20; 2005 c 151 art 2 s 17
297E.13 TAX-RELATED CRIMINAL PENALTIES.
    Subdivision 1. Penalty for failure to file or pay. (a) A person required to file a return,
report, or other document with the commissioner, who knowingly fails to file it when required, is
guilty of a gross misdemeanor. A person required to file a return, report, or other document who
willfully attempts to evade or defeat a tax by failing to file it when required is guilty of a felony.
(b) A person required to pay or to collect and remit a tax, who knowingly fails to do so when
required, is guilty of a gross misdemeanor. A person required to pay or to collect and remit
a tax, who willfully attempts to evade or defeat a tax law by failing to do so when required
is guilty of a felony.
    Subd. 2. False or fraudulent returns; penalties. (a) A person required to file a return,
report, or other document with the commissioner, who delivers to the commissioner a return,
report, or other document known by the person to be fraudulent or false concerning a material
matter is guilty of a felony.
(b) A person who knowingly aids or assists in, or advises in the preparation or presentation of
a return, report, or other document that is fraudulent or false concerning a material matter, whether
or not the falsity or fraud committed is with the knowledge or consent of the person authorized or
required to present the return, report, or other document, is guilty of a felony.
    Subd. 3. False information. A person is guilty of a felony if the person:
(1) is required by section 297E.05 to keep records or to make returns, and falsifies or fails
to keep the records or falsifies or fails to make the returns; or
(2) knowingly submits materially false information in any report, document, or other
communication submitted to the commissioner in connection with lawful gambling or with
this chapter.
    Subd. 4. Sales without permit; violations. (a) A person who engages in the business
of selling gambling product in Minnesota without the licenses or permits required under this
chapter or chapter 349, or an officer of a corporation who so engages in the sales, is guilty of a
gross misdemeanor.
(b) A person selling gambling product in Minnesota after revocation of a license or permit
under this chapter or chapter 349, when the commissioner or the board has not issued a new
license or permit, is guilty of a felony.
    Subd. 5. Untaxed gambling equipment. It is a gross misdemeanor for a person to possess
gambling equipment for resale in this state that has not been stamped or bar-coded in accordance
with this chapter and chapter 349 and upon which the taxes imposed by chapter 297A or section
297E.02, subdivision 4, have not been paid. The director of alcohol and gambling enforcement or
the commissioner or the designated inspectors and employees of the director or commissioner
may seize in the name of the state of Minnesota any unregistered or untaxed gambling equipment.
    Subd. 6. Criminal penalties. (a) Criminal penalties imposed by this section are in addition
to civil penalties imposed by this chapter.
(b) A person who violates a provision of this chapter for which another penalty is not
provided is guilty of a misdemeanor.
(c) A person who violates a provision of this chapter for which another penalty is not
provided is guilty of a gross misdemeanor if the violation occurs within five years after a previous
conviction under a provision of this chapter.
(d) A person who in any manner violates a provision of this chapter to evade a tax imposed
by this chapter, or who aids and abets the evasion of a tax, or hinders or interferes with a seizing
authority when a seizure is made as provided by section 297E.16 is guilty of a gross misdemeanor.
(e) This section does not preclude civil or criminal action under other applicable law or
preclude any agency of government from investigating or prosecuting violations of this chapter
or chapter 349. County attorneys have primary responsibility for prosecuting violations of this
chapter, but the attorney general may prosecute a violation of this chapter.
    Subd. 7. Statute of limitations. Notwithstanding section 628.26, or 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.
History: 1994 c 633 art 2 s 14; 1995 c 264 art 17 s 7; 1997 c 129 art 2 s 15
297E.14 INTEREST.
    Subdivision 1. Interest rate. If an interest assessment is required under this section, interest
is computed at the rate specified in section 270C.40.
    Subd. 2. Late payment. If a tax is not paid within the time specified 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. If 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. If 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 any extension allowed, until the
date the tax is paid.
    Subd. 5. Erroneous refunds. In the case of an erroneous refund, interest accrues from the
date the refund was paid unless the erroneous refund results from a mistake of the department,
then 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, the judgment bears interest at the rate specified
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 297E.12, subdivision 1,
2, 3, 4, or 5, 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 notice. In that case interest is imposed from the date of notice to the date of
payment.
History: 1994 c 633 art 2 s 15; 2005 c 151 art 2 s 17
297E.15 [Repealed, 2005 c 151 art 1 s 117]
297E.16 CONTRABAND.
    Subdivision 1. Seizure. Contraband may be seized by the commissioner or by any sheriff or
other police officer, hereinafter referred to as the "seizing authority," with or without process, and
is subject to forfeiture as provided in subdivision 2.
    Subd. 2. Inventory; judicial determination; appeal; disposition of seized property. (a)
Within ten days after the seizure of alleged contraband described in section 349.2125, subdivision
1
, the person making the seizure shall serve by certified mail an inventory of the property seized
on the person from whom the property was seized, 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 or the director of alcohol and gambling enforcement. 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 judicial determination of 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 or the director of alcohol and gambling
enforcement, 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 or director, and no court fees may be charged
for the commissioner's or director'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 hear the action without a jury and determine the issues of fact and law involved.
(d) If a judgment of forfeiture is entered, the seizing authority may, unless the judgment is
stayed pending an appeal, either (1) cause the forfeited property, other than a vehicle, to be
destroyed; or (2) cause it to be sold at a 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 70 percent to the seizing authority for deposit as a supplement to its operating fund or
similar fund for official use, and 20 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. The remaining ten percent of the proceeds must be
forwarded within 60 days after resolution of the forfeiture to the Department of Human Services
to fund programs for the treatment of compulsive gamblers. If there is no prosecuting authority
involved in the forfeiture, the 20 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 seizing authority by operation of law and may be disposed of by the seizing
authority as provided where there has been a judgment of forfeiture.
    Subd. 3.[Repealed, 1Sp2001 c 5 art 18 s 11]
History: 1994 c 633 art 2 s 17; 1997 c 129 art 2 s 15; 1Sp2001 c 5 art 18 s 4,5
297E.17 DISTRIBUTOR'S BOND.
On finding it necessary to ensure compliance with this chapter, the commissioner may require
that a distributor deposit with the commissioner security in the form and amount determined by
the commissioner, but not more than the lesser of (1) twice the estimated average monthly tax
liability for the previous 12 months, or (2) $10,000.
In lieu of security, the commissioner may require a distributor to file a bond issued by a
surety company authorized to transact business in this state and approved by the commissioner of
commerce as to solvency and responsibility.
The commissioner may make claim against this security or bond for all taxes, penalties,
and interest owed by the distributor.
History: 1994 c 633 art 2 s 18

Official Publication of the State of Minnesota
Revisor of Statutes