| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to liquor; regulating direct shippers of wine; imposing sales and use taxes, |
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| 3 | 3 | | 1.3 liquor gross receipts taxes, and excise taxes on direct shipments of wine; providing |
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| 4 | 4 | | 1.4 for licensing; providing for classification of data; requiring reports; amending |
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| 5 | 5 | | 1.5 Minnesota Statutes 2022, sections 13.6905, by adding a subdivision; 295.75, |
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| 6 | 6 | | 1.6 subdivision 4; 297A.83, subdivision 1; 297G.07, subdivision 1; 299A.706; |
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| 7 | 7 | | 1.7 340A.304; 340A.417; proposing coding for new law in Minnesota Statutes, chapter |
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| 8 | 8 | | 1.8 340A. |
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| 9 | 9 | | 1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 10 | 10 | | 1.10 Section 1. Minnesota Statutes 2022, section 13.6905, is amended by adding a subdivision |
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| 11 | 11 | | 1.11to read: |
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| 12 | 12 | | 1.12 Subd. 36.Direct wine shipments.Data obtained and shared by the commissioner of |
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| 13 | 13 | | 1.13public safety relating to direct shipments of wine are governed by sections 340A.550 and |
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| 14 | 14 | | 1.14340A.555. |
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| 15 | 15 | | 1.15 EFFECTIVE DATE.This section is effective the day following final enactment. |
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| 16 | 16 | | 1.16 Sec. 2. Minnesota Statutes 2022, section 295.75, subdivision 4, is amended to read: |
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| 17 | 17 | | 1.17 Subd. 4.Tax collection required.A liquor retailer with nexus in Minnesota or a |
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| 18 | 18 | | 1.18direct-ship winery as defined in section 340A.550, who is not subject to tax under subdivision |
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| 19 | 19 | | 1.192, is required to collect the tax imposed under subdivision 3 from the purchaser of the liquor |
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| 20 | 20 | | 1.20and give the purchaser a receipt for the tax paid. The tax collected must be remitted to the |
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| 21 | 21 | | 1.21commissioner in the same manner prescribed for the taxes imposed under chapter 297A. |
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| 22 | 22 | | 1.22 EFFECTIVE DATE.This section is effective for sales and purchases occurring on or |
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| 23 | 23 | | 1.23after July 1, 2023. |
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| 24 | 24 | | 1Sec. 2. |
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| 25 | 25 | | REVISOR JSK/HL 23-0067612/06/22 |
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| 26 | 26 | | State of Minnesota |
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| 27 | 27 | | This Document can be made available |
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| 28 | 28 | | in alternative formats upon request |
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| 29 | 29 | | HOUSE OF REPRESENTATIVES |
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| 30 | 30 | | H. F. No. 417 |
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| 31 | 31 | | NINETY-THIRD SESSION 2.1 Sec. 3. Minnesota Statutes 2022, section 297A.83, subdivision 1, is amended to read: |
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| 32 | 32 | | 2.2 Subdivision 1.Persons applying.(a) A retailer required to collect and remit sales taxes |
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| 33 | 33 | | 2.3under section 297A.66 or a direct-ship winery as defined in section 340A.550 shall file with |
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| 34 | 34 | | 2.4the commissioner an application for a permit under this section. |
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| 35 | 35 | | 2.5 (b) A retailer making retail sales from outside this state to a destination within this state |
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| 36 | 36 | | 2.6who is not required to obtain a permit under paragraph (a) may nevertheless voluntarily file |
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| 37 | 37 | | 2.7an application for a permit. |
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| 38 | 38 | | 2.8 (c) The commissioner may require any person or class of persons obligated to file a use |
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| 39 | 39 | | 2.9tax return under section 289A.11, subdivision 3, to file an application for a permit. |
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| 40 | 40 | | 2.10 EFFECTIVE DATE.This section is effective for permits applied for after June 30, |
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| 41 | 41 | | 2.112023. |
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| 42 | 42 | | 2.12 Sec. 4. Minnesota Statutes 2022, section 297G.07, subdivision 1, is amended to read: |
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| 43 | 43 | | 2.13 Subdivision 1.Exemptions.The following are not subject to the excise tax: |
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| 44 | 44 | | 2.14 (1) Sales by a manufacturer, brewer, or wholesaler for shipment outside the state in |
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| 45 | 45 | | 2.15interstate commerce. |
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| 46 | 46 | | 2.16 (2) Alcoholic beverages sold or transferred between Minnesota wholesalers. |
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| 47 | 47 | | 2.17 (3) Sales to common carriers engaged in interstate transportation of passengers, except |
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| 48 | 48 | | 2.18as provided in this chapter. |
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| 49 | 49 | | 2.19 (4) Malt beverages served by a brewery for on-premise consumption at no charge, or |
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| 50 | 50 | | 2.20distributed to brewery employees for on-premise consumption under a labor contract. |
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| 51 | 51 | | 2.21 (5) Shipments of wine to Minnesota residents under section 340A.417. |
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| 52 | 52 | | 2.22 (6) (5) Fruit juices naturally fermented or beer naturally brewed in the home for family |
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| 53 | 53 | | 2.23use and not sold or offered for sale. |
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| 54 | 54 | | 2.24 (7) (6) Sales of wine for sacramental purposes under section 340A.316. |
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| 55 | 55 | | 2.25 (8) (7) Alcoholic beverages sold to authorized manufacturers of food products or |
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| 56 | 56 | | 2.26pharmaceutical firms. The alcoholic beverage must be used exclusively in the manufacture |
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| 57 | 57 | | 2.27of food products or medicines. For purposes of this clause, "manufacturer" means a person |
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| 58 | 58 | | 2.28who manufactures food products intended for sale to wholesalers or retailers for ultimate |
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| 59 | 59 | | 2.29sale to the consumer. |
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| 60 | 60 | | 2.30 (9) (8) Liqueur-filled candy. |
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| 61 | 61 | | 2Sec. 4. |
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| 62 | 62 | | REVISOR JSK/HL 23-0067612/06/22 3.1 (10) (9) Sales to a federal agency, that the state of Minnesota is prohibited from taxing |
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| 63 | 63 | | 3.2under the Constitution or laws of the United States or under the Constitution of Minnesota. |
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| 64 | 64 | | 3.3 (11) (10) Sales to Indian tribes as defined in section 297G.08. |
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| 65 | 65 | | 3.4 (12) (11) Shipments of intoxicating liquor from foreign countries to diplomatic personnel |
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| 66 | 66 | | 3.5of foreign countries assigned to service in this state. |
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| 67 | 67 | | 3.6 (13) (12) Shipments of bulk distilled spirits or bulk wine to farm wineries licensed under |
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| 68 | 68 | | 3.7section 340A.315 for input to the final product. |
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| 69 | 69 | | 3.8 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 70 | 70 | | 3.9 Sec. 5. Minnesota Statutes 2022, section 299A.706, is amended to read: |
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| 71 | 71 | | 3.10 299A.706 ALCOHOL ENFORCEMENT ACCOUNT; APPROPRIATION. |
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| 72 | 72 | | 3.11 An alcohol enforcement account is created in the special revenue fund, consisting of |
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| 73 | 73 | | 3.12money credited to the account by law. Money in the account may be appropriated by law |
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| 74 | 74 | | 3.13for (1) costs of the Alcohol and Gambling Division related to administration and enforcement |
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| 75 | 75 | | 3.14of sections 340A.403, subdivision 4; 340A.414, subdivision 1a; and 340A.504, subdivision |
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| 76 | 76 | | 3.157; and 340A.550, subdivisions 2, 4, 5, and 6; and (2) costs of the State Patrol. |
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| 77 | 77 | | 3.16 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 78 | 78 | | 3.17 Sec. 6. Minnesota Statutes 2022, section 340A.304, is amended to read: |
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| 79 | 79 | | 3.18 340A.304 LICENSE SUSPENSION AND REVOCATION. |
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| 80 | 80 | | 3.19 The commissioner shall revoke, or suspend for up to 60 days, a license issued under |
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| 81 | 81 | | 3.20section 340A.301 or, 340A.302, or 340A.550, or impose a fine of up to $2,000 for each |
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| 82 | 82 | | 3.21violation, on a finding that the licensee has violated a state law or rule of the commissioner |
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| 83 | 83 | | 3.22relating to the possession, sale, transportation, or importation of alcoholic beverages. A |
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| 84 | 84 | | 3.23license revocation or suspension under this section is a contested case under sections 14.57 |
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| 85 | 85 | | 3.24to 14.69 of the Administrative Procedure Act. |
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| 86 | 86 | | 3.25 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 87 | 87 | | 3.26 Sec. 7. Minnesota Statutes 2022, section 340A.417, is amended to read: |
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| 88 | 88 | | 3.27 340A.417 WINE SHIPMENTS INTO MINNESOTA. |
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| 89 | 89 | | 3.28 (a) Notwithstanding section 297G.07, subdivision 2, or any provision of this chapter |
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| 90 | 90 | | 3.29except for section 340A.550, a winery licensed in a state other than Minnesota, or a winery |
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| 91 | 91 | | 3.30located in Minnesota, may ship, for personal use and not for resale, not more than two 12 |
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| 92 | 92 | | 3Sec. 7. |
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| 93 | 93 | | REVISOR JSK/HL 23-0067612/06/22 4.1cases of wine, containing a maximum of nine liters per case, in any calendar year to any |
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| 94 | 94 | | 4.2resident of Minnesota age 21 or over. Delivery of a shipment under this section may not be |
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| 95 | 95 | | 4.3deemed a sale in this state. |
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| 96 | 96 | | 4.4 (b) The shipping container of any wine sent under this section must be clearly marked |
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| 97 | 97 | | 4.5"Alcoholic Beverages: adult signature (over 21 years of age) required." |
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| 98 | 98 | | 4.6 (c) It is not the intent of this section to impair the distribution of wine through distributors |
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| 99 | 99 | | 4.7or importing distributors, but only to permit shipments of wine for personal use. |
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| 100 | 100 | | 4.8 (d) Except for a violation of section 295.75 or chapters 297A and 297G, no criminal |
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| 101 | 101 | | 4.9penalty may be imposed on a person for a violation of this section or section 340A.550 |
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| 102 | 102 | | 4.10other than a violation described in paragraph (e) or (f). Whenever it appears to the |
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| 103 | 103 | | 4.11commissioner that any person has engaged in any act or practice constituting a violation of |
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| 104 | 104 | | 4.12this section or section 340A.550, and the violation is not within two years of any previous |
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| 105 | 105 | | 4.13violation of this section, the commissioner shall issue and cause to be served upon the person |
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| 106 | 106 | | 4.14an order requiring the person to cease and desist from violating this section. The order must |
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| 107 | 107 | | 4.15give reasonable notice of the rights of the person to request a hearing and must state the |
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| 108 | 108 | | 4.16reason for the entry of the order. Unless otherwise agreed between the parties, a hearing |
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| 109 | 109 | | 4.17shall be held not later than seven 20 days after the request for the hearing is received by the |
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| 110 | 110 | | 4.18commissioner after which and within 20 days after the receipt of the administrative law |
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| 111 | 111 | | 4.19judge's report and subsequent exceptions and argument, the commissioner shall issue an |
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| 112 | 112 | | 4.20order vacating the cease and desist order, modifying it, or making it permanent as the facts |
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| 113 | 113 | | 4.21require. If no hearing is requested within 30 days of the service of the order, the order |
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| 114 | 114 | | 4.22becomes final and remains in effect until modified or vacated by the commissioner. All |
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| 115 | 115 | | 4.23hearings shall be conducted in accordance with the provisions of chapter 14. If the person |
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| 116 | 116 | | 4.24to whom a cease and desist order is issued fails to appear at the hearing after being duly |
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| 117 | 117 | | 4.25notified, the person shall be deemed in default, and the proceeding may be determined |
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| 118 | 118 | | 4.26against the person upon consideration of the cease and desist order, the allegations of which |
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| 119 | 119 | | 4.27may be deemed to be true. |
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| 120 | 120 | | 4.28 (e) Any person who violates this section or section 340A.550 within two years of a |
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| 121 | 121 | | 4.29violation for which a cease and desist order was issued under paragraph (d), is guilty of a |
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| 122 | 122 | | 4.30misdemeanor. |
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| 123 | 123 | | 4.31 (f) Any person who commits a third or subsequent violation of this section or section |
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| 124 | 124 | | 4.32340A.550 within any subsequent two-year period is guilty of a gross misdemeanor. |
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| 125 | 125 | | 4.33 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 126 | 126 | | 4Sec. 7. |
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| 127 | 127 | | REVISOR JSK/HL 23-0067612/06/22 5.1 Sec. 8. [340A.550] DIRECT SHIPMENTS OF WINE; LICENSING, TAXATION, |
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| 128 | 128 | | 5.2AND RESTRICTIONS. |
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| 129 | 129 | | 5.3 Subdivision 1.Definitions.(a) "Direct-ship purchaser" means a person who purchases |
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| 130 | 130 | | 5.4wine for personal use and not for resale from a winery located in a state other than Minnesota |
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| 131 | 131 | | 5.5for delivery to a Minnesota address. |
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| 132 | 132 | | 5.6 (b) "Direct-ship winery" means a winery licensed in a state other than Minnesota that |
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| 133 | 133 | | 5.7manufactures and makes a retail sale of wine and ships the wine to a direct-ship purchaser |
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| 134 | 134 | | 5.8as authorized under section 340A.417. |
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| 135 | 135 | | 5.9 Subd. 2.License requirements.(a) A direct-ship winery must apply to the commissioner |
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| 136 | 136 | | 5.10for a direct-ship license. The commissioner must not issue a license under this section unless |
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| 137 | 137 | | 5.11the applicant: |
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| 138 | 138 | | 5.12 (1) is a licensed winery in a state other than Minnesota and provides a copy of its current |
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| 139 | 139 | | 5.13license in any state in which it is licensed to manufacture wine; |
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| 140 | 140 | | 5.14 (2) provides a shipping address list, including all addresses from which it intends to ship |
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| 141 | 141 | | 5.15wine; |
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| 142 | 142 | | 5.16 (3) agrees to comply with the requirements of subdivision 4; and |
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| 143 | 143 | | 5.17 (4) consents to the jurisdiction of the Departments of Public Safety and Revenue; the |
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| 144 | 144 | | 5.18courts of this state; and any statute, law, or rule in this state related to the administration or |
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| 145 | 145 | | 5.19enforcement of this section, including any provision authorizing the commissioners of public |
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| 146 | 146 | | 5.20safety and revenue to audit a direct-ship winery for compliance with this and any related |
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| 147 | 147 | | 5.21section. |
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| 148 | 148 | | 5.22 (b) A direct-ship winery obtaining a license under this section must annually renew its |
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| 149 | 149 | | 5.23license by January 1 of each year and must inform the commissioner at the time of renewal |
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| 150 | 150 | | 5.24of any changes to the information previously provided in paragraph (a). |
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| 151 | 151 | | 5.25 (c) The application fee for a license is $50. The fee for a license renewal is $50. The |
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| 152 | 152 | | 5.26commissioner must deposit all fees received under this subdivision in the alcohol enforcement |
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| 153 | 153 | | 5.27account in the special revenue fund established under section 299A.706. |
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| 154 | 154 | | 5.28 Subd. 3.Direct-ship wineries; restrictions.(a) A direct-ship winery may only ship |
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| 155 | 155 | | 5.29wine from an address provided to the commissioner as required in subdivision 2, paragraph |
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| 156 | 156 | | 5.30(a), clause (2), or through a third-party provider whose name and address the licensee |
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| 157 | 157 | | 5.31provided to the commissioner in the licensee's application for a license. |
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| 158 | 158 | | 5Sec. 8. |
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| 159 | 159 | | REVISOR JSK/HL 23-0067612/06/22 6.1 (b) A direct-ship winery or its third-party provider may only ship wine from the |
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| 160 | 160 | | 6.2direct-ship winery's own production. |
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| 161 | 161 | | 6.3 Subd. 4.Taxation.A direct-ship winery must: |
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| 162 | 162 | | 6.4 (1) collect and remit the liquor gross receipts tax as required in section 295.75; |
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| 163 | 163 | | 6.5 (2) apply for a permit as required in section 297A.83 and collect and remit the sales and |
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| 164 | 164 | | 6.6use tax imposed as required in chapter 297A; |
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| 165 | 165 | | 6.7 (3) remit the tax as required in chapter 297G; and |
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| 166 | 166 | | 6.8 (4) provide a statement to the commissioner, on a form prescribed by the commissioner, |
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| 167 | 167 | | 6.9detailing each shipment of wine made to a resident of this state and any other information |
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| 168 | 168 | | 6.10required by the commissioner. |
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| 169 | 169 | | 6.11 Subd. 5.Private or nonpublic data; classification and sharing.(a) Data collected, |
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| 170 | 170 | | 6.12created, or maintained by the commissioner as required under this section are classified as |
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| 171 | 171 | | 6.13private data on individuals or nonpublic data, as defined in section 13.02, subdivisions 9 |
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| 172 | 172 | | 6.14and 12. |
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| 173 | 173 | | 6.15 (b) The commissioner must share data classified as private or nonpublic under this |
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| 174 | 174 | | 6.16section with the commissioner of revenue for purposes of administering section 295.75 and |
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| 175 | 175 | | 6.17chapters 289A, 297A, and 297G. |
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| 176 | 176 | | 6.18 Subd. 6.Enforcement; penalties.Section 340A.417, paragraphs (d), (e), and (f), apply |
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| 177 | 177 | | 6.19to this section. |
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| 178 | 178 | | 6.20 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 179 | 179 | | 6.21 Sec. 9. [340A.555] COMMON CARRIER REGULATIONS FOR DIRECT |
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| 180 | 180 | | 6.22SHIPMENTS OF WINE. |
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| 181 | 181 | | 6.23 Subdivision 1.Monthly report required.Each common carrier that contracts with a |
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| 182 | 182 | | 6.24winery under section 340A.417 for delivery of wine into this state must file with the |
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| 183 | 183 | | 6.25commissioner a monthly report of known wine shipments made by the carrier. The report |
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| 184 | 184 | | 6.26must be made in a form and manner as prescribed by the commissioner and must contain: |
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| 185 | 185 | | 6.27 (1) the name of the common carrier making the report; |
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| 186 | 186 | | 6.28 (2) the period of time covered by the report; |
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| 187 | 187 | | 6.29 (3) the name and business address of the consignor; |
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| 188 | 188 | | 6.30 (4) the name and address of the consignee; |
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| 189 | 189 | | 6Sec. 9. |
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| 190 | 190 | | REVISOR JSK/HL 23-0067612/06/22 7.1 (5) the weight of the package delivered to the consignee; |
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| 191 | 191 | | 7.2 (6) a unique tracking number; and |
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| 192 | 192 | | 7.3 (7) the date of delivery. |
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| 193 | 193 | | 7.4 Subd. 2.Record availability and retention.Upon written request by the commissioner, |
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| 194 | 194 | | 7.5any records supporting the report in subdivision 1 must be made available to the |
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| 195 | 195 | | 7.6commissioner within 30 days of the request. Any records containing information relating |
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| 196 | 196 | | 7.7to a required report must be retained and preserved for a period of two years, unless |
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| 197 | 197 | | 7.8destruction of the records prior to the end of the two-year period is authorized in writing |
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| 198 | 198 | | 7.9by the commissioner. All retained records must be open and available for inspection by the |
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| 199 | 199 | | 7.10commissioner upon written request. The commissioner must make the required reports |
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| 200 | 200 | | 7.11available to any law enforcement agency or regulatory body of any local government in the |
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| 201 | 201 | | 7.12state in which the common carrier making the report resides or does business. |
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| 202 | 202 | | 7.13 Subd. 3.Penalty.If a common carrier willfully violates the requirement to report a |
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| 203 | 203 | | 7.14delivery under this section or violates any rule related to the administration and enforcement |
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| 204 | 204 | | 7.15of this section, the commissioner must notify the common carrier in writing of the violation. |
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| 205 | 205 | | 7.16The commissioner may impose a fine in an amount not to exceed $500 for each subsequent |
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| 206 | 206 | | 7.17violation. |
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| 207 | 207 | | 7.18 Subd. 4.Exemptions.This section does not apply to common carriers regulated as |
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| 208 | 208 | | 7.19provided by United States Code, title 49, section 10101, et. seq.; or rail |
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| 209 | 209 | | 7.20trailer-on-flatcar/container-on-flatcar (TOFC/COFC) service, as provided by Code of Federal |
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| 210 | 210 | | 7.21Regulations, title 49, section 1090.1; or highway TOFC/COFC service provided by a rail |
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| 211 | 211 | | 7.22carrier, either itself or jointly with a motor carrier, as part of continuous intermodal freight |
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| 212 | 212 | | 7.23transportation, including but not limited to any other TOFC/COFC transportation as defined |
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| 213 | 213 | | 7.24under federal law. |
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| 214 | 214 | | 7.25 Subd. 5.Private or nonpublic data; classification and sharing.(a) Data collected, |
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| 215 | 215 | | 7.26created, or maintained by the commissioner as required under subdivision 1, clauses (4) to |
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| 216 | 216 | | 7.27(6), are classified as private data on individuals or nonpublic data, as defined in section |
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| 217 | 217 | | 7.2813.02, subdivisions 9 and 12. |
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| 218 | 218 | | 7.29 (b) The commissioner must share data classified as private or nonpublic under this |
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| 219 | 219 | | 7.30section with the commissioner of revenue for purposes of administering section 295.75 and |
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| 220 | 220 | | 7.31chapters 289A, 297A, and 297G. |
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| 221 | 221 | | 7.32 EFFECTIVE DATE.This section is effective July 1, 2023. |
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| 222 | 222 | | 7Sec. 9. |
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| 223 | 223 | | REVISOR JSK/HL 23-0067612/06/22 |
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