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138.132 Contraband tobacco products -- Property used in substantial connection
with knowing violation of KRS 138.130 to 138.205 -- Seizure -- Sale -Remission of forfeiture -- Appeal.
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It is the declared legislative intent of KRS 138.130 to 138.205 that any untax-paid
tobacco products held, owned, possessed, or in control of any person other than as
provided in KRS 138.130 to 138.205 are contraband and subject to seizure and
forfeiture as set out in this section.
(a) If a retailer, who is not a licensed retail distributor, purchases tobacco
products from a licensed distributor and the purchase invoice does not contain
the separate identification and display of the excise tax required by KRS
138.140(4)(d)3., the retailer shall, within twenty-four (24) hours, notify the
department in writing.
(b) The notification shall include the name and address of the person from whom
the tobacco products were purchased and a copy of the purchase invoice.
(c) The tobacco products for which the required information was not included on
the invoice shall be retained by the retailer, and not sold, for a period of fifteen
(15) days after giving the proper notice as required by this subsection.
(d) After the fifteen (15) day period, the retailer may pay the tax due on the
tobacco products described in paragraph (c) of this subsection according to
administrative regulations promulgated by the department, and after which
may proceed to sell the tobacco products.
If a retailer, who is not a licensed retail distributor, purchases tobacco products for
resale from a person not licensed under KRS 138.195(7), which is prohibited by
KRS 138.140(4)(c), the retailer may not sell those tobacco products until the retailer
applies for and is granted a retail distributor's license under KRS 138.195(7)(b).
If, upon examination, the department determines that the retailer has failed to
comply with the provisions of subsection (3) of this section, the retailer shall pay all
tax and interest and applicable penalties due and the following shall apply:
(a) For the first offense, an additional penalty shall be assessed equal to ten
percent (10%) of the tax due;
(b) For a second offense within three (3) years or less of the first offense, an
additional penalty shall be assessed equal to twenty-five percent (25%) of the
tax due; and
(c) For a third offense or subsequent offense within three (3) years or less of the
first offense, the tobacco products shall be contraband and subject to seizure
and forfeiture as provided in subsection (5) of this section.
(a) Whenever a representative of the department finds contraband tobacco
products within the borders of this state, the tobacco products shall be
immediately seized and stored in a depository to be determined by the
representative.
(b) At the time of seizure, the representative shall deliver to the person in whose
custody the tobacco products are found a receipt for the seized products. The
receipt shall state on its face that any inquiry concerning any tobacco products
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seized shall be directed to the commissioner of the Department of Revenue,
Frankfort, Kentucky.
(c) Immediately upon seizure, the representative shall notify the commissioner of
the nature and quantity of the tobacco products seized. Any seized tobacco
products shall be held for a period of twenty (20) days, and if after that period
no person has claimed the tobacco products as his or her property, the
commissioner shall cause the tobacco products to be destroyed.
All fixtures, equipment, materials, and personal property used in substantial
connection with the sale or possession of tobacco products involved in a knowing
and intentional violation of KRS 138.130 to 138.205 shall be contraband and
subject to seizure and forfeiture as follows:
(a) The department's representative shall seize the property and store the property
in a safe place selected by the representative; and
(b) The representative shall proceed as provided in KRS 138.165(2). The
commissioner shall cause the property to be sold after notice published
pursuant to KRS Chapter 424. The proceeds from the sale shall be applied as
provided in KRS 138.165(2).
The owner or any person having an interest in the fixtures, materials, or personal
property that has been seized as provided by subsection (6) of this section may
apply to the commissioner for remission of the forfeiture for good cause shown. If it
is shown to the satisfaction of the commissioner that the owner or person having an
interest in the property was without fault, the department shall remit the forfeiture.
Any party aggrieved by an order entered under this section may appeal to the
Kentucky Board of Tax Appeals in the manner provided by law.
Effective: January 1, 2014
History: Created 2013 Ky. Acts ch. 97, sec. 5, effective January 1, 2014.
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