KRS 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, poss essed, 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 int ent 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 th e 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 sub section (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 b y 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 th is 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.
(c) If the department determines that the possession, dispensing, or transportation
of untax -paid cigarettes was willful or intentiona l, 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.