138.165 Contraband cigarettes -- Vending machines and motor vehicles -- Seizure -- Sale -- Remission of forfeiture -- Appeal

138.165 Contraband cigarettes -- Vending machines and motor vehicles -- Seizure -

- Sale -- Remission of forfeiture -- Appeal.

(1) It is declared to be the legislative intent of KRS 138.130 to 138.205 that any untax-

paid cigarettes 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.

(2) (a) Whenever any peace officer of this state, or any representative of the

department, finds any untax-paid cigarettes within the borders of this state in

the possession of any person other than a licensee authorized to possess untax-

paid cigarettes by the provisions of KRS 138.130 to 138.205, those cigarettes

shall be immediately seized and stored in a depository to be selected by the

officer or agent.

(b) At the time of seizure, the officer or agent shall deliver to the person in whose

custody the cigarettes are found a receipt for the cigarettes. The receipt shall

state on its face that any inquiry concerning any goods seized shall be directed

to the commissioner of the Department of Revenue, Frankfort, Kentucky.

(c) Immediately upon seizure, the officer or agent shall notify the commissioner

of the department of the nature and quantity of the goods seized.

(d) Any seized goods shall be held for a period of twenty (20) days and if after

that period no person has claimed the cigarettes, the commissioner shall cause

the same to be exposed to public sale to any person authorized to purchase

untax-paid cigarettes. The sale shall be on notice published pursuant to KRS

Chapter 424. All proceeds, less the cost of sale, from the sale shall be paid

into the Kentucky State Treasury for general fund purposes.

(3) It is declared to be the legislative intent that any vending machine used for

dispensing cigarettes on which Kentucky cigarette tax has not been paid is

contraband and subject to seizure and forfeiture. In the event any peace officer or

agent of the department finds any vending machine within the borders of this state

dispensing untax-paid cigarettes, the officer or agent shall immediately seize the

vending machine and store the vending machine in a safe place selected by the

officer or agent. The officer or agent shall proceed as provided in subsection (2) of

this section and the commissioner of the department shall cause the vending

machine to be sold, and the proceeds applied, as established in subsection (2) of this

section.

(4) No untax-paid cigarettes shall be transported within this state by any person other

than a manufacturer or a person licensed under the provisions of KRS 138.195. It is

declared to be the legislative intent that any motor vehicle used to transport any

such cigarettes by other persons is contraband and subject to seizure and forfeiture.

If any peace officer or agent of the department finds any such motor vehicle, the

vehicle shall be seized immediately and stored in a safe place. The peace officer or

agent of the department shall proceed as provided in subsection (2) of this section,

and the commissioner of the department shall cause the motor vehicle to be sold,

and the proceeds applied, as established in subsection (2) of this section.

(5) (a) The owner or any person having an interest in any goods, machines, or

vehicles seized as provided under subsections (1) to (4) of this section may

apply to the commissioner of the department for remission of the forfeiture for

good cause shown.

(b) If it is shown to the satisfaction of the department that the owner was without

fault in the possession, dispensing, or transportation of the untax-paid

cigarettes, the department shall remit the forfeiture.

nes, or

vehicles seized as provided under subsections (1) to (4) of this section may

apply to the commissioner of the department for remission of the forfeiture for

good cause shown.

(b) If it is shown to the satisfaction of the department that the owner was without

fault in the possession, dispensing, or transportation of the untax-paid

cigarettes, the department shall remit the forfeiture.

(c) If the department determines that the possession, dispensing, or transportation

of untax-paid cigarettes was willful or intentional, the department may

nevertheless remit the forfeiture on condition that the owner pay a penalty to

be prescribed by the department of not more than fifty percent (50%) of the

value of the property forfeited. All taxes due on untax-paid cigarettes shall be

paid in addition to the penalty, if any.

(6) Any party aggrieved by an order entered hereunder may appeal to the Board of Tax

Appeals pursuant to KRS 49.220.