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AN ACT 

H. B. No. 14-180, HSI 

To repeal and reenact Sections 1103 through 1106 of Chapter 1, Chapter 8, 

and Chapter 9 of 4 CMC Division 1 (Revenue and Taxation); to make 

technical corrections to the Revenue and Taxation Code; and for other 

purposes. 

BE IT ENACTED BY THE FOURTEENTH NORTHERN MARIANAS COMl\IONWEALTH 

LEGISLATURE: 

Section I. Short Title. This Act may be cited as the Revenue and Taxation Act of 

Section 2. Purposes. The purposes of this Act are: 

(a) To repeal and reenact the provisions of the revenue and taxation laws in 

effect in the Commonwealth found in Chapter L Chapter 8, and Chapter 9 of 4 

CMC, Division I of the Commonwealth Code; 

(b) To amend, clarify, and amplify the definitions utilized in the general 

revenue and taxation laws in the Commonwealth found in Division I, 4 CMC; 

(c) To provide for detailed administrative provisions necessary for the 

application and enforcement of the general revenue and taxation laws including liens, 

levies, examinations, and summons; 

(d) To provide for specific statutes of limitations upon the assessment of 

taxes, claims for tax refunds, collection of tax liability, and tax litigation 

proceedings; 

(e) To restructure civil and criminal tax penalty provisions and provide for a 

waiver for reasonable cause; 

(t) To amend, clarify, and amplify the tax disclosure provisions; and 

(g) To make technical corrections to the Revenue and Taxation Code. 
4 GENERAL. 

5 §1101. ShortTitle 

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§ 1102. Purposes 

§ 1103. Definitions 

§ II 04. Other Definitions 

§ 1105. Government Exemption 

§ 1106. Tax Exemption for Bonds and Other Obligations 

§ 11 03. Definitions. In this Division, unless otherwise specifically 

expressed: 

(a) 'Amusement machines' means any mechanical, electrical or other 

device, contrivance or machine which, upon insertion of a coin, token or 

similar object in it, or upon payment of any consideration, is available to play 

or operate, the play or operation of which, whether by reason of the skill of the 

operator or application of the element of chance. or both, may deliver or 

entitle the person playing or operating the machine to receive cash. premiums, 

merchandise, tokens, extra games or use, or anything of value, whether the 

payoff is made automatically from the machine or in any other manner. 

(b) 'Business' shall have the same meaning as a "trade or business" as 

that term is applied under§ 162 of the Northern Marianas Territorial income 

Tax; thus, "business" normally means any regular and continuous activity 

carried on by a person for the purpose of earning a profit. Except as otherwise 

provided, an employee shall not be considered as operating a business and a 

partnership or a corporation shall be considered as operating a business. 

(c) 'CNMI Real Property Interest' means any "interest (other than as a 

creditor) in real property" located in the Commonwealth. An "interest in real 

property" includes a fee simple estate, an estate for life, a multi~year lease 

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Commonwealth of the Northern Mariana Islands, including the government 

thereof, which lies within the area n011h of 14 degrees north latitude, south of 

21 degrees north latitude, west of !50 degrees east longitude and east of 144 

degrees east longitude, as extended by the Marine Sovereignty Act 

(commencing at Section 1101 of Title 2 of this Code). 

(e) 'Covenant' means the Covenant to Establish a Commonwealth of 

the Northern Mariana Islands in Political Union with the United States of 

America. 

(f) 'Division' for purposes of this Act and Pub. L. 9-22 means Chapter 

through Chapter 9 and Chapter I I of Title 4 of the Commonwealth Code 

except as expressly provided otherwise. 

(g) 'Employee' means any individual, who under the usual common 

law rules applicable in determining the employer-employee relationship, has 

the status of an employee. 

(h) 'Employer' means the person for whom an employee performs or 

perfonned any service of whatever nature. 

(i) 'Financial institution' means any savings and loan association, or 

any incorporated savings and loan company, trust company, mortgage banking 

company, consumer finance company or other financial corporation. 

G) Gross Revenue. 

(I) 'Gross Revenue' means: 

(A) the total amount of money or the value of other 

consideration, without deduction for any expenses, received or 

accrued from: 

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(ii) selling any interest in personal property, 

tangible or intangible, in the Commonwealth in the 

course of carrying on a business; 

(iii) leasing any interest in personal property, 

tangible or intangible, including the assignment of any 

lease, located in the Commonwealth in the course of 

carrying on a business; 

(iv) performing services in the Commonwealth 

in the course of carrying on a business; and 

(v) selling more than one property, as provided 

under Section 1301. 

(B) the total amount of money or the value of other 

consideration, without deduction for any expenses. received or 

accrued as interest, dividends, rents. royalties, gross receipts of a business derived from trade, business, commerce, or sales, or 

similar income earned in and derived from a person in the 

Commonwealth and received by a resident in the course of 

carrying on a business. 

(C) that portion of the distributive share of gross 

revenue of a partnership, as provided in the NMTIT on the 

effective date of this Act, that is derived from the conduct of a 

business in the Commonwealth, to a pminer who is not an 

individual. Such portion shall be determined under regulations 

prescribed by the Secretary. 

(2) Gross revenue includes the total revenue received or accrued, as 

recognized under the taxpayer's system of tax accounting that is consistent with the 

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the amount that according to regulations prescribed by the Secretary bears a 

reasonable relationship to the activity performed by the person in the Commonwealth. 

(3) Gross revenue includes: 

(A) for inventory property, the amount of money or 

other consideration received by a resident as insurance 

proceeds for tire or other casualty, theft, embezzlement. and the 

like; and 

(B) for all property other than inventory property. the 

amount of money or other consideration received by a resident 

as insurance proceeds for fire or other casualty, theft, 

embezzlement, and the like of such prope11y to the extent the 

amount of money or other consideration received exceeds the 

adjusted basis of such property. 

(4) Gross revenue shall not include: 

(A) refunds and cash discounts allowed and taken; or 

(B) money received and held in a fiduciary capacity; or 

(C) the amount of money or the value of other 

consideration received by an employee as wages and salaries. 

(D) income subject to the Earnings Tax. 

(k) 'Gross Winnings' means: 

(I) the total amount of money or the fair market value of other 

property received from each gaming, lottery, raffle, or other gambling 

event, transaction, or other activity, less the amount of the wager which 

directly results in winnings; or 

(2) the total amount of money or the fair market value of other 

property received, if the amount received from any gaming, lottery, 

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event, transaction or other activity. 

(t) 'Individual' means, unless otherwise provided, a natural person, an 

estate, a trust, or a fiduciary acting for a natural person, trust, or estate. 

(m) 'Leasing or Renting' means any arrangement whereby, for a 

consideration. property is employed for or by any person other than the owner 

of the property. 

(n) 'Local Territorial Income Tax' means the income tax laws in force 

in the United States which came into effect in the Commonwealth pursuant to 

Section 601 of the Covenant as a local income tax of the Commonwealth and 

may be cited as the 'Northern Marianas Territorial Income Tax' ('NMTIT'). 

(o) 'Manufacturer' means any person engaged in combining or 

processing components or materials in large quantities by means of industrial 

machines to increase their value for sale in the ordinary course of business and 

who sells such items to others for resale and not to the final consumer. This 

definition of the term 'Manufacturer' does not require that the 'Manufacturer' 

be the actual entity that sells the items manufactured. The definition applies to 

the actual process of combining and processing components and materials in 

large quanthies by means of industrial machines and applies whether the 

'Manufacturer' is providing the services to another entity, or is a subsidiary of 

the seller or actually sells the items itself. 

(p) 'Month' means calendar month. (q) 'Off-shore Banking Corporation' means an entity incorporated in 

the Commonwealth, whose principal purpose is: 

(l) negotiating, making and extending loans to borrowers who 

are not residents or citizens of the Commonwealth; or 

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Commonwealth. 

(r) 'Person' means: 

( 1) An individual, corporation, partnership, cooperative 

association, chest, fund, foundation, or other association or entity; or 

(2) A foreign country, the United States, any state, 

commonwealth, territory, or possession of the United States, the Trust 

Territory of the Pacific Islands or any governmental unit or 

subdivision, or agency. department, or instrumentality thereof. 

(s) 'Property' means any interest in real property, tangible personal 

property, or intangible personal property. Intangible personal property 

includes. but is not limited to. licenses, franchises. patents. trademarks, 

copyrights, stocks, bonds, or other commercial paper and partnership interests. 

(t) 'Rebate offset' means an adjustment, reduction, return, credit, 

nontaxable refund, or other nontaxable payment of all or pa11 of any tax, as 

provided by the Commonwealth of such amount of the taxes paid by a person. 

The term 'rebate offset" shall apply only to any tax imposed on income from 

sources within the Commonwealth. The tenn 'rebate offset' shall not apply to 

any tax imposed on income exempted by subsection (z)(l) of this section. 

means: 

(u) 'Resident' for purposes other than the NMTIT and Chapter 7, 

(1) an individual who is domiciled in the Commonwealth; or 

(2) a business which is located, directed. or managed in the 

Commonwealth. 

(v) 'Sale' means the transferring, giving, or exchanging of personal or 

real property or services of any kind for an agreed sum of money or other 

valuable consideration. 

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1--louse or Similar Facility' means those persons who occupy such facilities in a 

specific location for less than 90 consecutive days. 

(z) 'Wages and Salaries' means the total amount of money or the value 

of other consideration received by an employee to lhe extent that such money 

or other consideration is received for services sourced \Vithin the 

Commonwealth. Wages and salaries shall not include: 

(I) wages and salaries received from the United States by 

active members of the Armed Forces of the United States. 

(2) reasonable per diem and travel allowances to the extent 

that they do not exceed any comparable Commonwealth Government 

rates. 

(3) rental value of a home furnished to any employee or a 

reasonable rental allowance paid to any employee to the extent the 

allowance is used by the employee to rent or provide a home. 

(4) any payment of medical or hospitalization expenses or 

insurance premium paid by an employer or insurance company to or 

on behalf of an employee or insured. 

(5) payments made to or on behalf of an employee or to his beneficiary from 

the CNMI Retirement program or a plan that qualifies under Subchapter D, Subtitle A 

of the NMTIT to the extent allowed under NMTIT § 402(G)(l). 

(6) any payment in the form of a scholarship, fellowship, grant, 

stipend or the like made to any student while he is a full~time, bona 

fide student at an educational institution as defined by 

§ I70(b)(I)(A)(ii) of the NMTIT. Provided. however, that if the 

payment is made for services rendered, the student must receive 

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or Northern Marianas Social Security Administration. 

(aa) 'Wholesaler' means any person engaged in the sale of large 

quantities of tangible personal property to another for resale for direct or 

indirect economic benefit. A wholesaler does not sell to the final consumer. 

(bb) 'Year' or 'yearly' means calendar year. 

§ II 04. Other Definitions. In the event it is appropriate to further define the 

terms used in this Division, the Secretary may further define the terms by regulation, 

and may in defining those tenns take into account the definitions and use of the terms 

in the United States Internal Revenue Code of 1986, as amended, and the applicable 

regulations, thereto. 

§ 1105. Government Exemption. 

(a) Except as provided m subsection (b), the United States and 

Commonwealth Governments, their departments, agencies and 

instrumentalities, but not their contractors, are specifically exempt from any 

liability to pay any tax imposed by this Division other than such taxes required 

to be withheld from another person and paid over to the Secretary. 

(b) Taxes imposed by this Division shall apply to the Commonwealth 

Governments, its depm1ments, agencies and instrumentalities for income or 

revenue derived from tbe conduct of activities or goods, merchandise or 

commodities brought into the Commonwealth for purposes of excise tax 

which are not substantially related to the exercise or performance of such 

department, agency, or instrumentality's government purpose. The Secretary 

shall prescribe regulations to clarify what activities are substantially related to 

the exercise or performance of a department, agency, or instrumentality's 

government purpose. 

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instrumentalities, or political subdivisions shall be exempted, as to principal and interest from taxation by the Government of the Northern Mariana Islands, its 

government corporations, instrumentalities, or political subdivisions. This tax 

exemption shall extend to the sale and transfer of the principal or interest or both 

during the life of the bonds or other debt obligations." 

10 Section 4. Repealer and Reenactment. Chapter 8 of 4 CMC Division I (Revenue and 

II Taxation) is hereby repealed and reenacted to read: 

12 "CHAPTER 8 

13 ADMINISTRATIVE PROVISIONS 

14 SUBCHAPTER A 

15 GENERAL PROVISIONS 

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§ 1801. § 1802. 

§ 1803. 

§ 1804. 

§ 1805. 

§ 1806. 

§ 1807. 

§ 1808. 

§1809. 

Legal Tender 

General Fund 

Reserved Distribution of Revenues 

Non-NMTIT Application 

Delegation of Authority 

Tax forms Transaction to be Recorded 

Record Retention and Conflict of Interest 

§ 1810. Authority to Reduce and Negotiate Tax and Penalties; Authority to 

Make Credits or Refunds. 

§ \811. Service by Publication 

§ 1812. Private Letter Rulings 

§ 1813. Timely Mailing Treated as Timely Filing and Paying 

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§ I 816. Authority to Administer Oaths and Certify; Authority to Regulate 

Practice 

§ 1817. 

§ 1818. 

§ 1819. 

§ 1820. 

Closing Agreements; Compromises 

Jurisdiction of Superior Court as Tax Court 

Interest 

Regulations 

§ 180 I. Legal Tender. The legal tender of the Commonwealth shall be that 

of the United States. 

§ 1802. General Fund. There is created a General Fund into which all 

revenues raised pursuant to the tax laws and other revenues Jaws, and all monies 

received by the Commonwealth, its departments, agencies and instrumentalities shall 

be deposited, unless otherwise provided by law. The Secretary may make such 

disbursements from the General Fund as may be authorized by appropriation. No 

money shall be paid out of the General Fund except on appropriation enacted by law, 

or by the operation of Article III, Section 9(a) of the Commonwealth Constitution. 

§ 1803. Reserved. 

§ 1804. Distribution of Revenues. 

(a) Except as provided by this Division, all revenues raised pursuant to 

this Division shall be deposited into the General Fund. 

(b) The Secretary shall cause the Department of Finance to annually 

deposit up to $2,000,000 collected from the liquid fuel tax imposed under 4 

CMC § 1403(a) into the Public School System Building Fund established in 1 

CMC § 2281. Such funds shall be continually appropriated to the Public 

School System for the sole purpose of paying the principal and interest on any 

financing entered into by the Public School System pursuant to House Joint 

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and interest on all financing has been paid in full and discharged, any funds 

remaining in the Public School System Building Fund shall lapse to the 

general fund. 

(c) Notwithstanding any law to the contrary, and beginning when the 

Commonwealth initially obtains the interim or other financing authorized by 

Public Law 13-39, the Department of Finance shall deposit the balance of the 

amount of the liquid fuel tax collected under 4 CMC § 1403(a) and the entire 

amount of the aviation tax collected under 4 CMC § 1403(b) into the Land 

Compensation Fund to the extent necessary to maintain a balance in such Fund 

at all times sufficient to pay all principal of and interest on the bonds 

becoming due during the next succeeding 12 months. Such funds are 

continually appropriated for the sole purpose of paying the principal and 

interest on any financing, including any interim financing, authorized by this 

Act. Provided, that, in the event the amount in the Land Compensation Fund 

is insufficient to cover any requisite payment upon such financing, the 

Governor shall, notwithstanding· any law to the contrary, pay the remaining 

balance of such payment from the general fund. The funds in the Land 

Compensation Fund shall be nonlapsing, except upon certification by the 

Secretary of Finance that all principal and interest on all financing has been 

paid in full and discharged, any funds remaining in the Land Compensation 

Fund shall lapse to the general fund. 

§ 1805. Non-NMT1T Application. Unless otherwise specifically provided, 

the provisions in this chapter shall apply to taxes other than taxes under Chapter 7 of 

this Division. 

§ 1806. Delegation of Authority. The administration and enforcement of this 

entire Division shall be under the supervision of the Secretary. Any of the 

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concerning revenue and taxation on a day to day basis. These responsibilities, tasks, 

or duties conferred upon the Director may also be subdelegated by the Director. The 

delegations of authority prescribed herein apply to Non-NMTIT, and apply under 

Chapter 7 of this Division to the extent delegated by the Governor. 

§ 1807. Tax Forms. 

(a) The Secretary shall prescribe the forms for all returns required to 

be furnished under the provisions of this Division or provide for other methods 

of filing returns and may provide in such forms for the giving of such 

information as may be deemed necessary or advisable. A!! information 

required by the form of any return must be included in the return by the 

person, employer, company, or business responsible for making the return. 

No return shall be complete unless and until it is signed by or for the 

employer, business or other person liable to make the return. or by someone 

authorized to do so on behalf of such employer, business or other person. 

Evety return shall be signed by a natural person. The Secretary may develop 

procedures for the acceptance of signatures in digital or other electronic form. 

(b) Except as otherwise provided by the Secretary, any return, 

declaration, statement, or other document required to be made under any 

provision of this Division or regulations shall contain or be verified by a 

written declaration that it is made under the penalty or penalties of perjury. 

(c) The Secretary may require that, if any person or persons actually 

prepare or sign a return tOr another employer, business or other person. a fOrm 

stating those facts and authorizing that person to sign the return be signed by 

the person so preparing or signing the return, and the employer, business or 

other person in whose name the return is filed. The Secretary may by 

regulations define the classes of persons to whom this provision shall apply. 

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of each transaction in English and such record shall be available for 

inspection, examination and audit by the Secretary. A person may maintain a 

duplicate of such records in a language or languages other than English. 

(b) Any person willfully failing to keep or make available for 

inspection, examination and audit by the Secretary such records, in addition to 

the other sanctions provided in this chapter. shall be subject to revocation of 

any relevant existing license to do business within the Commonwealth, 

following notice and an opportunity for prior hearing on any such proposed 

revocation by the Secretary or his designee. 

§ 1809. Record Retention and Conflict oflnterest. 

(a) The Commonwealth shall preserve the information contained in 

reports and returns filed under this Division until the Secretary orders them to 

be destroyed. 

(b) The Director of the Division of Revenue and Taxation, every 

employee of that Division, and every employee of the Commonwealth 

involved in tax administration or tax litigation, \Vhile in such employment, 

shall not directly or indirectly engage in the business or profession of tax 

accounting or accept employment or compensation, from any person, firm, or 

corporation for the purpose of preparing the tax returns required by the 

Commonwealth. Nor shall such person accept any employment for the 

purpose of advising or preparing materials or data, or the auditing of books or 

records to be used as an effort to defeat or cancel any tax or part thereof' that 

has been assessed by the Commonwealth. 

§ 1810. Authority to Reduce and Negotiate Tax and Penalties; Authority to 

Make Credits or Refunds. 

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or regulations promulgated hereunder. The Secretary shall have the authority 

to prescribe by regulation standards necessary to carry out the intent and 

purpose of this section. 

(b) In the case of any overpayment or rebate, lhe Secretary, within the 

applicable period of limitations, may credit the amount of such overpayment 

or rebate, including any interest allowed thereon, against any liability in 

respect of any CNMl tax or fee on the part of the person who made the 

overpayment or is entitled to the rebate, and shall, subject to section 1853. 

refund any balance to such person. 

§ 1811. Service By Publication. For all tax actions, including Chapter 7 of 

this Division, where service of process is required, the Commonwealth Government 

or its designee may serve process on a party not found within the Northern Mariana 

Islands under the same circumstances and in the same manner as the laws or court 

rules of the Northern Mariana Islands authorize service of process by private 

plaintiffs. 

§ 1812. Private Letter Rulings. The procedures for private letter rulings shall 

follow that form prescribed in Section 1707 of this Division. 

§ 1813. Timely Mailin!l Treated As Timely Filing and Payin!l. 

(a) General Rule. 

(I) Date Of Delivery. If any return, claim, statement, or other 

document required to be filed, or any payment required to be made, 

within a prescribed period or on or befOre a prescribed date under 

authority of any provision of the Commonwealth tax laws is, after such 

period or such date, delivered by United States mail to the agency, 

officer, or office with which such return, claim, statement, or other 

document is required to be filed, or to which such payment is required 

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date of payment, as the case may be. 

(2) Mailing Requirements. This subsection shall apply only if: 

(A) the postmark date falls within the prescribed period 

or on or before the prescribed date: 

(i) for the filing (including any extension 

granted for such filing) of the return, claim, statement, 

or other document, or 

(ii) for making the payment (including any 

extension granted for making such payment), and 

(B) the return, claim, statement, or other document, or 

payment was, within the time prescribed in subparagraph (A). 

deposited in the mail in the United States in an envelope or 

other appropriate wrapper, postage prepaid, properly addressed 

to the agency, officer, or office with which the return, claim, 

statement, or other document is required to be filed, or to which 

such payment is required to be made. 

(b) Postmarks. This section shall apply in the case of postmarks not 

made by the United States Postal Service only if and to the extent provided by 

regulations prescribed by the Secretary. 

(c) Registered and Certified Mailing: Electronic Filing. 

(1) Registered Mail. For purposes of this section, if any such 

return, claim, statement, or other document, or payment, is sent by 

United States registered mail; 

(A) such registration shall be prima facie evidence that 

the return, claim, statement, or other document was delivered to 

the agency, officer, or office to which addressed, and 

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authorized to provide by regulations the extent to which the provisions 

of paragraph (I) of this subsection with respect to prima facie evidence 

of delivery and the postmark date shall apply to certified mail and 

electronic filing. 

(d) Exceptions. This section shall not apply with respect to: 

(1) the filing of a document in, or the making of a payment to 

the Commonwealth Superior Court, 

(2) currency or other medium of payment unless actually 

received and accounted for, or 

(3) returns, claims, statements, or other documents, or 

payments, which are required under any provision of the 

Commonwealth tax laws or the regulations thereunder to be delivered 

by any method other than by mailing. 

(e) Mailing of Deposits. 

(I) Date Of Deposit. If any deposit required to be made (by a 

manner determined by regulations prescribed by the Secretary) on or 

before a prescribed date is, after such date, delivered by the United 

States mail to the bank, trust company, domestic building and loan 

association, or credit union authorized to receive such deposit, such 

deposit shall be deemed received by such bank, trust company, 

domestic building and loan association, or credit union on the date the 

deposit was mailed. 

(2) Mailing Requirements. Paragraph (1) shall apply only if the 

person required to make the deposit establishes that: 

(A) the date of mailing falls on or before the second 

day before the prescribed date for making the deposit 

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mailed by United States mail in an envelope or other 

appropriate wrapper, postage prepaid, properly addressed to the 

bank, trust company. domestic building and loan association, or 

credit union authorized to receive such deposit. 

In applying subsection (c) for purposes of this subsection, the term 

'payment' includes 'deposit', and the reference to the postmark date refers to 

the date of mailing. 

(3) No Application To Certain Deposits. Paragraph (I) shall not 

apply with respect to any deposit of $20,000 or more by any person 

who is required to deposit any tax more than once a month. 

(f) Treatment of private delivery services. 

(I) In general. Any reference in this section to the United 

States mail shall be treated as including a reference to any designated 

delivery service. and any reference in this section to a postmark by the 

United States Postal Service shall be treated as including a reference to 

any date recorded or marked as described in paragraph (2)(C) by any 

designated delivery service. 

(2) Designated deliverv serv1ce. For purposes of this 

subsection, the term "designated delivery service" means any delivery service provided by a trade or business if such service is designated by 

the Secretary for purposes of this section. The Secretary may designate 

a delivery service under the preceding sentence only if the Secretary 

determines that such service -

(A) is available to the general public, 

(B) is at least as timely and reliable on a regular basis as 

the United States mai I, 

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6 (D) meets such other criteria as the Secretary may 

7 prescribe. 

8 (3) Equivalents of registered and certified mail. The Secretary 

9 may provide a rule similar to the rule of paragraph (1) with respect to 

I 0 any service provided by a designated delivery service which IS 

II substantially equivalent to United States registered or certified mail. 

12 § 1814. Time For Performance Of Acts Where Last Dav Falls On Saturday, 

13 Sunday, Or Legal Holiday. When the last day prescribed under authority of the 

14 Commonwealth Tax laws for performing any act falls on Saturday, Sunday, or a legal 

15 holiday, the performance of such act shall be considered timely if it is performed on 

16 the next succeeding day which is not a Saturday, Sunday, or a legal holiday. For 

17 purposes of this section, the last day for the performance of any act shall be 

18 determined by including any authorized extension of time; the term "legal holiday" 

19 · means a legal holiday in the CNMI. 

20 § 1815. Extensions to File Tax Returns. 

21 (a) For purposes of the Wage and Salary Tax and the Earnings Tax, 

22 there shall be an extension to file a tax return as provided by regulations 

23 prescribed by the Secretary. 

24 (b) In the case of the Gross Revenue Tax, there shall be no extension to 

25 file, but a waiver or abatement of the failure to file penalty under § 1912 shall 

26 be permitted tOr reasonable cause, as provided at Section 1924 of this 

27 Division. 

28 § 1816. Authority to Administer Oaths and Certify: Authority to Regulate 

29 Practice. 

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papers as may be necessary under the CNMI tax taws or regulations made 

thereunder. 

(b) Others. Any oath or affirmation required or authorized under any 

CNMI tax law or under any regulations made thereunder may be administered 

by any person authorized to administer oaths for general purposes of the law 

of the Commonwealth, where in such oath or affirmation is administered. 

This subsection shatl not be construed as an exclusive enumeration of the 

persons who may administer such oaths or affirmations. 

(c) The Secretary shal! have the authority to issue regulations 

governing practice before the Division of Revenue and Taxation. 

§ 1817. Closing Agreements: Compromises. 

(a) Closin!l Agreements. The Secretary is authorized to enter into an 

agreement in writing with any person relating to the liability of such person 

(or of the person or estate for whom he acts) in respect of any Commonwealth 

tax for any taxable period. If such agreement is approved by the Secretary 

(within such time as may be stated in such agreement, or later agreed to) such 

agreement shall be final and conclusive, and except upon a showing of fraud, 

malfeasance, or misrepresentation of a material fact, 

(I) the case shall not be reopened as to the matters agreed upon, 

and 

(2) in any suit, action, or proceeding, such agreement, or any 

determination, assessment, collection, payment, abatement, refund, or credit may be made in accordance therewith, sha!l not be annulled, 

modified, set aside, or disregarded. 

(b) Compromises. The Secretary may compromtse any civil or 

criminal case arising under the Commonwealth tax laws prior to reference to 

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jurisdiction as the Superior Court of the Northern Mariana Islands has with respect to 

the NMTIT and Chapter 7 as the Tax Court of the United States has with respect to 

the United States income tax, it sha!l also have the same jurisdiction as a tax court 

over non~NMTIT matters. The Superior Court of the Northern Mariana Islands shall 

implement this jurisdiction, as may be necessary, by adopting the United States Tax 

Court Rules of Practice and Procedure to the extent not inconsistent or incompatible 

with this Division. 

§ 1819. Interest. In addition to the penalties imposed by Subchapter G of this 

Division, interest at the rate and manner provided under NMTIT § 6621 shall be 

imposed on all unpaid taxes, penalties, fees and charges imposed by this Division. 

§ 1820. Regulations. The Secretary may adopt by regulation, interpretations, 

procedures, and regulations issued under the U.S. Internal Revenue Code ("IRC") as 

adopted under Chapter 7, that are not clearly inconsistent with this Division and that 

are deemed necessary for the proper administration and enforcement of 

Commonwealth taxes and this Division. 

SUBCHAPTER B 

WITHHOLDING PROVISIONS 

§ 1821. Withholding of Wage and Salary Tax 

§ 1822. 

§ 1823. 

§ 1824. 

§ 1825. 

Withholding Earnings at the Source and Filing Returns 

Withholding on Real Estate Transactions 

Regulations Requiring Returns on Magnetic Media 

CNMI Tax Return Preparer Must Furnish Copy of Return to 

Taxpayer and Must Retain a Copy or List 

§ 1821. Withholding of Wage and Salarv Tax. 

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employer of such employee, in accordance with tables or computational 

procedures prescribed by the Secretary. Every employer required to deduct 

and withhold the tax hereby imposed is liable for the payment and shall pay 

such tax to the Secretary. Any employer who violates any of the provisions of 

this section shall be subject to the penalties prescribed in this Division. 

(b) Employer to File Return Covering Tax on Compensation. 

(1) Employer Pay Over of Withholding. 

(A) Pay Over of Withholding. The employer shalL on 

or before the last day of the month following the close of each quarter. to wit: on or before April 30, July 31, October 31, and 

January 31, pay over the tax withheld, and make a full, true and 

correct return showing all wages and salaries withheld and paid 

over during the preceding quarter. Such return shall be filed for 

pay over of the tax and shall include such other information as 

may be required or prescribed by the Secretary. Withholding 

returns filed by employers without remitting to the Secretary 

the required amount to be deducted and withheld shall be 

accepted by the Secretary; provided, that such return submitted 

shall not be considered filed until the actual remittance of the 

amount due is paid to the Secretary. 

(B) Regulations. The Secretary at his discretion may 

prescribe special forms for, and different procedures and times 

for, the filing of such returns by employers paying such 

compensation and the pay over of taxes withheld, or may, upon 

such conditions and subject to such mles as he may prescribe 

from time to time, waive the filing of any such returns. The 

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monthly. The Secretary, for good cause, may extend the time 

for making returns and payovers but not beyond the last day of 

the first month succeeding the regular due date. 

(2) Final Statement. 

(A) Payee Statement. Every employer required to 

deduct and withhold any tax on the salaries and wages of any 

employee shall furnish to each such employee on or before 

January 31 of the succeeding year (or. if his employment is 

terminated before the close of such calendar year, on the day on 

which the last payment of compensation is made) a written 

statement, showing the wages or salaries paid by the employer 

to such employee during the year, and the amount of tax 

deducted and withheld or paid with respect to such 

compensation. 

(B) Statement to Secretary. Such employer shall file on 

or before February 28, of the succeeding calendar· year a 

duplicate copy of each such statement with the Secretary. 

(3) Any employer who violates any provision of this Section is subject to 

penalties prescribed in this Chapter. 

(c) Taxes Withheld by Emplover Held in Trust: Employer's Liabilitv. 

All taxes withheld by any employer under Section 1201 of this Division shall 

be held in trust by the employer for the Commonwealth and for payment to the 

Secretary in the manner and at the time required by this Division. If any 

employer shall fail, neglect, or refuse to deduct and withhold from the 

compensation paid to an employee, or to pay over, the amount of the tax 

imposed, such employer shall be liable to pay to the Commonwealth the 

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an employee any amount which he should have withheld but did not withhold 

from such employee's wages and salaries, if he has been required to pay and 

has paid the amount to the Commonwealth out of his own funds pursuant to 

this section. 

(d) No Cause of Action Against Employer for Withholding. No 

employee shall have any right of action against his employer with respect to 

any monies deducted from such employee's salaries and wages in compliance 

or intended compliance with this Chapter and paid to the Secretary. 

(e) Individual to File Return of Earned Income. Any individual who is 

paid or credited wages or salaries from an employer who does not have a place 

of business in the Commonwealth and does not have an agent within the 

Commonwealth responsible for making the returns. withholdings, and 

payments of taxes on compensation required by this Division, or where any 

employer has failed to deduct and withhold taxes, shall file a return with and 

pay the tax due under this Division to the Secretary. Any individual who is 

paid or credited wages from the United States or an instrumentality thereof 

shall be under the same duty as an individual who is paid or credited wages 

and salaries from an employer who does not have a place of business in the 

Commonwealth. 

(f) Tax Paid by Recipient. If the employer, in violation of the 

provisions of this Chapter, fails to deduct and withhold the tax under this 

Chapter, and thereafter the tax against which such tax may be credited is paid, 

the tax so required to be deducted and withheld shall not be collected from the 

employer; but this subsection shall in no case relieve the employer from 

liability for any penalties or additions to the tax otherwise applicable in respect 

of such failure to deduct and withhold. 

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pursuant to 4 CMC § 1204 is imposed on earnings as defined by § 

1202(b) of this Division for any transaction in which the amount 

realized is in excess of $1,000. The withholding tax shall be collected 

by the withholding agent when paid or credited to the payee and paid 

over to the Secretary within 1 0 calendar days from the date of 

withholding. For purposes of this subsection, a withholding agent is 

the resident payor. Every person required to deduct and withhold the 

tax hereby imposed is liable for the payment and shall pay such tax to 

the Secretary. 

(2) Gambling Winnings. Gambling Winnings from any gaming activity in 

amount of $1 ,000 and over sha!l be subject to withholding at the maximum rate 

pursuant to 4 CMC § 1204, except if such winnings are subject to withholding under 

the Gaming Machine Jackpot Tax imposed by§ 1505 of this Division. 

(3) Withholding Agent To File Information Returns Covering 

Tax On Earnings. 

(A) Except as otherwise provided. the withholding 

agent shall within I 0 days of the required withholding pay the 

tax withheld, and on or before January 31 of the calendar year 

following payment, make a full, true and correct information 

return showing all earnings taxes withheld and paid over by 

him during the preceding year for each transaction, providing 

with the return the receipts issued by the Treasurer for each 

payment. The return shall include such other information as 

required by the Secretary. 

(B) Every person required to deduct and withhold tax 

on the earnings of any person, shall furnish to each such person 

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agent for the year or other time period. as the case may be. and 

the tax withheld with respect to such person. 

(C) Every person required to deduct and withhold tax 

on the earnings of any person, shall file on or before February 

28, of the succeeding calendar year a duplicate copy of each 

such statement with the Secretary. 

(4) No Cause of Action Against Pavor for Withholding. No person shall have 

any right of action against the withholding agent with respect to any monies deducted 

from such person's eamings in compliance or intended compliance with this Section 

and paid to the Secretary. 

(5) Tax Paid bv Recipient. If the withholding agent, m 

violation of the withholding and filing provisions herein, fails to 

deduct and withhold the tax, and thereafter the tax against which such 

tax is credited is paid, the tax so required to be deducted and withheld 

shall not be collected from the withholding agent; but this subsection 

shall in no case relieve the withholding agent from liability for any 

penalties or additions to the tax otherwise applicable in respect to such 

failure to deduct and withhold. 

(b) Payment of Estimated Tax in Lieu of Withholding. Where there is 

gain on the sale of personal property, the resident seller is required to pay a 

quarterly estimated tax in lieu of withholding. 

§ 1823. Withholding On Real Estate "l'ransactions. 

(a) In General. In the case of any transfer of a CNMI real property 

interest, the tax imposed by Section 1301 or 1202 of this Division, on the 

gross revenue of a transferor of such an interest shall be collected by the 

transferee as follows. The transferee shall deduct and withhold the tax for the 

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payment of money or other consideration. The transferee shall deduct and 

withhold said amount before any payment of money or other consideration is 

made to the transferor. and the transferee shall report and remit the withheld 

tax to the Secretary as provided below. 

(b) Payment of Tax and Filing an Information Return. 

(I) The transferee shall within 10 days of the transfer pay the 

tax withheld. 

(2) On or before January 31 of the calendar year following payment, the 

transferee shall make a fulL true and correct information return showing a!\ taxes 

withheld and paid by him during the proceeding year for each transaction, providing 

with the return the receipts issued by the Treasurer for each payment. The return shall 

include such other information as required by the Secretary. 

(3) The transferee required to deduct and withhold tax on the 

transfer of a real property interest, shall furnish to the transferor on or 

before January 31 of the succeeding calendar year a written statement 

in a fonn prescribed by the Secretary, showing the transfer of a real 

property interest of the transferor and money or other consideration 

paid by the transferee for the year and the tax withheld with respect to 

such transferor. 

(4) Every person required to deduct and withhold tax on the transfer of a real 

property interest, shall file on or before February 28, of the succeeding calendar year a 

duplicate copy or each such statement described in subsection (b)(3) with the 

Secretary. 

(c) No Cause of Action Against Transferee for Withholding. No 

person shall have any right of action against the transferee with respect to any 

monies deducted from such person on the transfer of the real property interest 

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withholding and filing provisions herein, fails to deduct and withhold the tax, 

and thereafter the tax against which such tax is credited is paid, the tax so 

required to be deducted and withheld shall not be collected from the 

transferee; but this subsection shall in no case relieve the transferee from 

liability for any penalties or additions to the tax otherwise applicable in respect 

to such failure to deduct and withhold. 

(e) Penaltv. Any transferee who fails to deduct, withhold and collect, 

and/or fails to report. account for and pay over the tax required herein shall be 

personally liable for the total amount of such tax plus interest and penalties as 

provided in this Chapter. 

(f) Definitions. For purposes of this section, the following definitions 

shall apply: 

(I) 

(2) 

CNMI Real Property Interest. The term 'CNMI real 

property interest' means a fee simple estate, estate 

for life or a multi-year lease in any real property 

located within the Commonwealth including an 

option to acquire the same, or any interest defined in 

NMTIT §897(c)(I)(A)(ii). 

(2) Multi-year Lease. For purposes of this Division, 

the term 'multi-year lease' means any lease of a 

CNMJ real property interest extending beyond a 

period of five (5) years. 

(3) Transfer. The term 'transfer' means any sale, multi-year 

lease or other disposition of a CNMI real property interest for money 

or other consideration. A transfer includes any assignment of a 

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Media. 

persons disposing of a CNMI real property interest. (5) Transferee. The term 'transferee' means any person or persons acquiring a CNMI real property interest. (6) Other Consideration. The term 'other consideration' means: (A) the fair market value of any property transferred or to be transferred to the transferor; and (B) the outstanding amount of any liability assumed by the transferee or to which the CNMI real prope11y interest is subject immediately before and after the transfer. (g) Regulations. The Secretary shall have broad authority to prescribe such regulations as may be necessary to ensure that the withholding tax imposed on the transfers of CNMI real property interests will be properly determined, reported and collected. Such regulations shall include, but not be limited to, the enactment of provisions for establishing the method by which withholding tax shall be determined, reported and collected upon the payment of other consideration as defined above. § 1824 Regulations Requiring Returns Filed Electronically or on Magnetic 

(a) ln General. The Secretary shall prescribe regulations providing 

standards for determining which returns must be filed electronically or on 

magnetic media or in other machine-readable form. The Secretary may not 

require returns of any tax imposed on natural persons to be other than on paper 

forms supplied by the Secretary. 

(b) Requirements of Regulations. In prescribing regulations under 

paragraph (a), the Secretary --

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(2) shall take into account (among other relevant factors) the 

ability of the taxpayer to comply at reasonable cost with the 

requirements of such regulations. 

§ 1825 CNMI Tax Return Preparer Must Furnish Copy of Return to Taxpaver 

and Must Retain a Copy or List. 

(a) Furnishing a copy to taxpayer. Any person who is a CNMI tax 

return preparer with respect to any return or claim for refund shall furnish a 

completed copy of such return or claim to the taxpayer not later than the time 

such return or claim is presented for such taxpayer's signature. 

(b) Copy or list to be retained by CNMI tax return preparer. Any 

person who is a CNMI tax return preparer with respect to a return or claim for 

refund shall, for the period ending 3 years after the close of the return period 

(1) retain a completed copy of such return or claim, or retain, 

on a list, the name and taxpayer identification number of the taxpayer 

for whom such return or claim was prepared, and 

(2) make such copy or list available for inspection upon request 

by the Secretary. 

(c) The Secretary shall prescribe regulations under which, in cases 

where 2 or more persons are tax return preparers with respect to the same 

return or claim for refund, compliance with the requirements of subsection (a) 

or (b), as the case may be, of one such person shall be deemed to be 

compliance with the requirements of such subsection by the other persons. 

SUBCHAPTER C 

ASSESSMENTS 

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§ 1834. 

§ 1835. 

§ 1836. 

§ 1837. 

§ 1838. 

§ 1839. 

§ 1840. 

§1841. 

§ 1842. 

Method of Assessment 

Supplemental Assessments 

Assessment: No Return Filed 

Assessment: Erroneous Return Filed 

Tennination Assessment 

Notice of Assessment 

Abatement 

Commencement of Proceedings 

Transferred Assets 

§ 1831. Authority. The Secretary of Finance or his delegate is authorized to 

make inquiries, determinations and assessments of all taxes (including interest, 

additional amounts, additions to the tax. and penalties) imposed by this Division. 

§ 1832. Erroneous Prepayment Credits. If on any return or claim for refund of 

taxes imposed by this Division, there is an overstatement of the credit for tax withheld 

at the source, or of the amount paid as estimated tax, the amount so overstated which 

is allowed against the tax shown on the return or which is allowed as a credit or 

refund may be assessed by the Secretary. 

§ 1833. Taxes Assessed. The Secretary shall assess all taxes determined by 

the Secretary as to which returns, schedules, lists or entry certificates are required to 

be made. Taxes and all other amounts indicated as due on returns filed by a taxpayer 

are deemed assessed on the date the return is filed. 

§ 1834. Method of Assessment. Secretary's assessments shall be made by 

recording the liability of the taxpayer in the Office of the Secretary in accordance with 

rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the 

Secretary shall furnish the taxpayer a copy of the Secretary's record of assessment. 

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incomplete. The Secretary may also make an assessment for the recovery of any 

erroneous refund or rebate made. 

§ 1836. Assessment: No Return Filed. 

(a) Notice. Upon the failure of any person to make and file a return 

required by this Division within the time and the manner and form prescribed, 

or upon failure to pay any amount due, the Secretary may notify such person 

of such failure and demand that a return be made and filed and the tax paid as 

required by this Division. 

(b) Preparation of Return bv Secretarv. If any person shall fail to 

make a retum required by this Division or by regulations prescribed 

thereunder, but shall consent to disclose all information necessary for the 

preparation thereof, then, and in that case, the Secretary may prepare such 

return, which being signed by such person, may be received by the Secretary 

as the return of such person. 

(c) Execution of Return bv Secretary. If any person fails to make any 

return required by any Commonwealth tax law or regulations made thereunder 

at the time prescribed therefore, and if such person upon notice and demand 

made by the Secretary, fails or refuses within 30 days after said notice and 

demand to make and file a return and pay the tax required after said notice and 

demand has been mailed to the taxpayer's last known address or within 30 

days after said notice has been otherwise caused to be delivered to the 

taxpayer, the Secretary may make a return for such persons from his own 

knowledge and from such information as he can obtain through testimony or 

otherwise, and may assess the appropriate amount of tax. 

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§ 1837. Assessment: Erroneous Return Filed. In the event any taxpayer 

makes and files a return, schedule or list required by this Division, and the Secretary 

determines that said return, schedule or Jist is untrue, erroneous, incomplete or 

incorrect in any respect, or does not otherwise conform to law, the Secretary may 

assess the proper amount of tax in accordance with the procedures of this Division. 

§ t 838. Termination Assessment. 

(a) In General. If the Secretary believes that a taxpayer designs 

quickly to depart from the Commonwealth or to remove his property 

therefrom, or to conceal himself or his property therein. or to do any other act 

(including in the case of a corporation distributing all or a part of its assets in 

liquidation or otherwise) tending to prejudice or to render who!ly or partially 

ineffectual proceedings to collect tax by this Division for the current or the 

immediately preceding taxable year unless such proceeding be brought 

without delay, the Secretary shall immediately make a determination of tax for 

the current taxable year or for the preceding taxable year, or both, as the case 

may be, and notwithstanding any other provision of law, such tax shall 

become immediately due and payable. The Secretary shall immediately assess 

the amount of the tax so determined (together with all interest, additional 

amounts, and additions to the tax provided by law) for the current taxable year 

or such preceding taxable year, or both, as the case may be, and shall cause 

notice of such determination and assessment to be given the taxpayer, together 

with a demand for immediate payment of such tax. 

(b) Computation of Tax. In the case of a current taxable year. the 

Secretary shall determine the tax for the period beginning on the first day of 

such current taxable year and ending on the date of the determination under 

subsection (a) as though such period were a taxable year of the taxpayer and 

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result of any assessments under this section shall, to the extent thereof, be 

treated as a payment of tax for such taxable year. 

(d) Departure of Nonresident Alien. Subject to such exceptions as 

may by regulations be prescribed by the Secretary-

( I) No "Nonresident alien" as defined by §7701(b) of the NMTIT shall depart 

from the CNMI unless he first procures from the Secretary a certificate that he has 

complied with all obligations imposed upon him by the CNMI tax laws. 

(2) Payment of taxes shall not be enforced by any proceedings 

under the provisions of this section prior to the expiration of the time 

otherwise allowed for paying such taxes, if in the case of an alien about 

to depart from the CNMI, the Secretary detennines that the collection 

of the tax will not be jeopardized by the departure of the alien. 

(e) Limitation. This. section shall not authorize any assessment of tax 

for the preceding taxable year which is made after the due date of the 

taxpayer's return for such taxable year (determined with regard to any 

extensions oftime to file a return). 

§ 1839. Notice of Assessment If the Secretary determines that there 1s a 

deficiency in respect of any tax imposed by this Division, he is authorized to send 

notice of assessment to the taxpayer by cet1ified mail or registered mail at the 

taxpayer's last known address or shall otherwise cause notice to be delivered to the 

taxpayer. Such notice may be sent with the Notice and Demand For Tax under 

j 1852. 

§ 1840. Abatement. The Secretary is authorized to abate the unpaid portion 

of the assessment of any tax or any liability in respect thereof, 

(a) is excessive in amount; 

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(d) is a small unpaid tax balance if the SecretaJ)' determines under 

regulations that the administration and collection costs involved •vould not 

warrant collection of the amount due. 

§ 184!. Commencement of Proceedinu-s. 

(a) Civil Actions. 

(I) The Attorney General shall have the authority to commence civil actions 

to collect any taxes assessed under this Division either in the name of the 

Commonwealth or in the name of the Secretary. It shall not be a defense to the 

commencement of such actions that the taxpayer has not received any administrative 

conferences or hearings from the Secretary before the commencement of such actions, 

or that an administrative conference or hearing was on-going or pending at the time 

such actions were commenced. In such a civil action, a written statement by the 

Secretary or his delegate as to the amount of tax due, the fact that it is unpaid and who 

is authorized to collect it shall be sufficient evidence of these matters unless it is 

expressly shown to the contrary. 

(2) Action to enjoin income tax return preparers. 

(A) Authority to seek injunction. A civil action in the 

name of the CNMI to enjoin any person who is a CNMI tax 

return preparer from further engaging in any conduct described 

in subparagraph (B) or from further acting as an income tax 

return preparer may be commenced at the request of the 

Secretary. Any aclion under this section shall be brought in the 

Commonwealth Superior Court. The court may exercise its 

jurisdiction over such action separate and apart from any other 

action brought by the CNMI against such income tax preparer 

or any taxpayer. 

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( a) engaged in any conduct subject to 

penalty under 1922 or 1923, or subject to any 

criminal penalty provided by this Division, 

(b) misrepresented his eligibility to 

practice before the Division of Revenue and 

Taxation or otherwise misrepresented his 

experience or education as a tax return preparer, 

(c) guaranteed the payment of any tax 

refund or the allowance of any credit, or 

(d) engaged in any other fraudulent or 

deceptive conduct which substantially interferes 

with the proper administration of the CNMI tax 

laws, and 

(ii) that injunctive relief is appropriate to prevent 

the recurrence of such conduct, the court may enjoin 

such person from further engaging in such conduct. If 

the court finds that a CNMI tax return preparer has 

continually or repeatedly engaged in any conduct 

described in subparagraph (B)(i)(a - d) of this 

subsection and that an injunction prohibiting such 

conduct would not be sufficient to prevent such person's 

interference with the proper administration of this 

Division, the com1 may enjoin such person from acting 

as a CNMI tax return preparer. 

(3) This section shall not apply in cases of jeopardy as defined by 

§ 1871(d)(2). 

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(c) Taxpayer Commenced Proceedings. 

(1) Tax Court Proceedings. Within 90 days, or ISO days if the notice is 

addressed to a person outside the CNMI, after mailing of notice of assessment as 

authorized in section 1839 to the taxpayer's last known address, the taxpayer may file 

a petition with the Tax Court (Superior Court acting as Tax Court as authorized in 

section 1818) for a redetermination of the assessment. The tiling of a petition with 

the tax court also requires the taxpayer to file a stay of collection with the Secretary. 

A stay of collection for purposes of this subsection means that a taxpayer may stay the 

collection process during the pendency of a tax court proceeding brought under this 

section by posting with the Secretary and continuously maintaining in effect during 

the pendency of the court proceeding a surety bond, property or cash satisfactory to 

the Secretary and upon terms and conditions satisfactory to the Secretary, in an 

amount or having a value of I 00% of the amount of the assessment, plus additional 

amounts as in the judgment of the Secretary are necessary to cover penalties, interest 

and other charges that may accrue during the pendency of the court proceeding. Said 

bond, property or cash shall serve as collateral to secure payment of such amounts as 

may be determined in the court proceeding to be due the CNMI Government 

(2) Superior Court Proceedings. 

(A) No Suit Prior to Filing a Claim for Refund. No suit 

or proceeding shall be maintained in any court for the recovery 

of any non-NMTIT alleged to have been erroneously or 

illegaUy assessed or collected, or of any penalty claimed to 

have been collected without authority, or of any sum alleged to 

have been excessive or in any manner wrongfully collected, 

until a claim for refund or credit has been duly filed with the 

Secretary, according to the provisions oflaw in that regard, and 

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maintained whether or not such tax, penalty, or sum has been 

paid under protest or duress. 

(C) Suits Against Collection Officer a Bar. A suit 

against any officer or employee of the Commomvealth (or 

former officer or employee) or his personal representative for 

the recovery of any Commonwealth tax alleged to have been 

erroneously or illegally assessed or collected, or of any penalty 

claimed to have been collected without authority, or of any sum 

alleged to have been excessive or in any manner wrongfully 

collected shall be treated as if the Commonwealth had been a 

party to such suit in applying the doctrine of res judicata in all 

suits in respect of any CNMI tax, and in all proceedings in the 

Tax Com1 and on review or decisions of the Tax Court. 

(D) Credit Treated as Payment. The credit of an 

overpayment of any tax in satisfaction of any tax liability shall. 

for the purpose of any suit for refund of such tax liability so 

satisfied, be deemed to be a payment in respect of such tax 

liability at the time such credit is allowed. 

§ 1842. Transferred Assets 

(a) Method of Collection. The amounts of NonMNMTIT liabilities, at 

law or in equity, of a transferee of property shall, except as hereinafter 

provided in this section, be assessed, paid and co!lcctcd in the same manner 

and subject to the same provisions and limitations as in the case of the taxes 

with respect to which to which the liabilities were incurred. 

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(c) Period of Limitations. The period of limitations for assessment of 

any such liability of a transferee or a fiduciary shall be as follows. 

(1) Initial Transferee. Tn the case of the liability of an initial 

transferee, within 1 year after the expiration of the period of limitation 

for assessment against the transferor; 

(2) Transferee of Transferee. In the case of the liability of a 

transferee of a transferee, within I year after the expiration of the 

period of limitation for assessment against the preceding transferee, but 

not more than 3 years after the expiration of the period of limitation for 

assessment against the initial transferor; 

except that is, before the expiration of the period of limitations for the 

assessment of the liability of the transferee, a court proceeding for the collection of 

the tax or liability in respect thereof has been begun against the initial transferor or the 

last preceding transferee, respectively, the period of limitations for assessment of the 

liability of the transferee shaH expire 1 year after the return of the execution in the 

court proceeding. 

(d) Extension by Agreement. 

(1) Extension of the Time for Assessment. If before the 

expiration of the time prescribed in subsection (c) for the assessment of 

the liability. the Secretary and the transferee have both consented in 

writing to its assessment after such time, the liability may be assessed 

at any time prior to the expiration of the period agreed upon. The 

period so agreed upon may be extended by subsequent agreements in 

writing made before the expiration of the period previously agreed 

upon. For the purpose of determining the period of limitation on 

credit, refund to the transferee of overpayments of tax made by such 

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thereof referred to in section 1904. 

(2) Extension of Time for Credit or Refund. If the agreement 

is executed after the expiration of the period of limitations for 

assessment against the taxpayer with reference to whom the liability of 

such transferee arises, then in applying the limitations under section 

1904 on the amount of the credit or refund, the periods specified in 

1904 shall be increased by the period from the date of such expiration 

to the date of the agreement. 

(e) Period for Assessment Against Transferor. For purposes of this 

section. if any person is deceased, or is a corporation which has terminated its 

existence, the period of limitation for assessment against such person shall be 

the period that would be in effect had death or termination of existence not 

occurred. 

(f) Suspension of Running of Period of Limitations. The running of 

the period of limitations upon the assessment of the liability of a transferee or 

fiduciary shall, after the mailing to the transferee of the notice provided for in 

section 1839 be suspended for the period during which the Secretary is 

prohibited from making the assessment in respect of the liability of the 

transferee (and in any event, if a proceeding in respect of the liability is placed 

on the docket of the Tax Court, until the decision if the Tax Court becomes 

final), and for 60 days thereafter. 

(g) Address for Notice of Liability. Any notice of liability enforceable 

under this section required to be mailed to such person, shall. if mailed to the 

person subject to the liability at his last known address, be sufficient for 

purposes of this Division, even if such person is deceased, or is under legal 

disability, or, in the case of a corporation, has terminated its existence. 

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of proof shall be upon the Secretary to show that a petitioner is liable as a 

transferee of property of a taxpayer, but not to show that the taxpayer was 

liable for the tax. 

G) Evidence. Upon application to the Tax Com1, a transferee of 

property of a taxpayer shall be entitled, under the rules prescribed by the Tax 

Court, to a preliminary examination of books, papers. documents, 

correspondence, and other evidence of the taxpayer or a preceding transferee 

of the taxpayer's property, if the transferee making the application is a 

petitioner before the Tax Court for the redetermination of his liability in 

respect of the ta'l: (including interest, additional amounts, and additions to the 

tax provided by law) imposed upon the taxpayer. Upon such application, the 

Tax court may require be subpoena, ordered by the Tax Court or any division 

thereof and signed by a judge, the production of all such books, papers, 

documents, correspondence, and other evidence within the CNMI the 

production of which, in the opinion of the Tax Court or divisions thereof, is 

necessary to enable the· transferee to ascertain the liability of the taxpayer or 

preceding transferee and will not result in undue hardship to the taxpayer or 

preceding transferee, Such examination shall be had at such time and place as 

may be designated in the subpoena. 

SUBCHAPTER D 

COLLECTIONS 

ARTICLE I 

GENERAL PROVlSlONS 

§ 1851. Collection Authority 

§ 1852. Notice and Demand for Tax 

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§ 1851. Collection Authority. The Secretary shall collect the taxes imposed 

by this Division. If the mode or time of collecting any tax is not provided for, the 

Secretary may establish the same by regulations. The Secretary shall provide 

procedures and regulations for fair tax collection practices. 

§ 1852. Notice and Demand for Tax. Unless otherwise provided, the 

Secretary shall, as soon as practicable after the making of an assessment of a tax 

pursuant to Section \831 of this Division give notice to each person liable for the 

unpaid tax, stating the amount and demanding payment thereof. Such notice shall be 

left with a responsible person at the dwelling or usual place of business of such 

person, or shall be sent by U.S. mail to such person's last known address. 

§ 1853. Collection of Certain Liabilitv. 

(a) Collection of Debts Owed to Another Commonwealth Government 

Agencv. 

(I) In General. The Secretary upon rece1vmg certification 

from another Commonwealth government agency with respect to any 

person which has a past-due legally enforceable debt. the collection of 

which would be creditable to the general fund of the Commonwealth 

government, and after appropriate administrative procedures have been 

followed, the collection of such debt may be made by the Secretary by 

reducing the amount of the rebate or other overpayment of tax, 

including rebates or overpayment of taxes arising under of this 

Division, including Chapter 7, that are payable to such person by the 

amount of such debt. The Secretary may pay to the general fund the 

amount by which the rebate or other overpayment of tax is reduced 

under this section to offset the past-due legally enforceable debt owed 

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includes executive department or departments. 

(2) Priorities for Offset. A rebate or other overpayment of tax 

arising under this Division, including Chapter 7. of any person shall be 

reduced pursuant to this subsection after such rebate or other 

overpayment of tax arising under this Division, including Chapter 7, is 

reduced pursuant to subsection (b) with respect to past-due support 

collected pursuant to a final judgment of the Commonwealth Superior 

Court. If the Secretary receives notice from a Commonwealth agency 

or agencies of more than one debt subject to this subsection that is 

owed by a person to such agency or agencies. any rebate or other 

overpayment of tax arising under this Division, including Chapter 7, of 

such person shall be applied against such debts in the order in which 

such debts accrued. 

(3) Notice. When practicable the Secretary shall provide notice 

to such person that the rebate or other overpayment of tax was reduced 

under this Section. 

(b) Collection of Debts owed for Past~Due Child Suppmt. 

(1) In General. The Secretary, upon receiving notice from the 

Commonwealth Superior Comt of a final judgment that a named 

person owes past-due child support, the Secretary shall when 

practicable--

(A) Reduce lhe amount of any rebate or other 

overpayment of tax arising under this Division, including 

Chapter 7, payable to such persons by the amount of such debt; 

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(C) Notify such person that the rebate or other 

overpayment of tax arising under this Division, including 

Chapter 7, has been reduced by an amount necessary to satisfy 

the past-due child support debt; and 

(D) Remit the reduced rebate or other overpayment of 

tax arising under this Division, including Chapter 7, amount 

evidencing the past-due chi!d support payment to the person 

stated on the Notice. 

(2) Notice Requirement. The notice from the Commonwealth Superior Court 

of a final judgment shall include--

( A) a copy of the judgment; 

(B) a statement as to the amount of past-due child 

support debt; and 

(C) the name of the person to whom the reduced rebate 

or other overpayment of tax arising under this Division. 

including Chapter 7, amount evidencing the past-due child 

support payment is to be remitted. 

(c) Review of Reductions. No reduction shall be subject to review by 

the Secretary in an administrative proceeding. No action brought against the 

Commonwealth to recover the amount of any such reduction shall be 

considered to be a suit for refund of tax. This subsection does not preclude 

any legal, equitable, or administrative action against the Commonweallh 

government agency to which the amount of such reduction was paid. 

§ 1854. Agreements for Payment of Tax Liability in Installments 

(a) Authorization of Agreements. The Secretary is authorized to enter 

into written agreements with any taxpayer under which such taxpayer is 

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(b) Extent to Which Agreements Remain in Effect. 

(l) In General. Except as otherwise provided in this 

subsection, any agreement entered into by the Secretary under 

subsection (a) shall remain in effect for the term of the agreement. 

(2) Inadequate Information or Jeopardy. The Secretary may 

terminate any agreement entered into by the Secretary under 

subsection (a) if--

(A) information which the taxpayer provided to the 

Secretary prior to the date such agreement was entered into was 

inaccurate or incomplete, or 

(B) the Secretary believes that collection of any tax to 

which an agreement under this section relates is in jeopardy as 

defined in 1871(d)(2). 

(3) Subsequent Change in Financial Conditions. 

(A) fn GeneraL Jfthe Secretary makes a determination 

that the financial condition uf a taxpayer with whom the 

Secretary has entered into an agreement under subsection (a) 

has significantly changed, the Secretary may alter, modify, or 

terminate such agreement. 

(B) Notice. Action may be taken by the Secretary 

under subparagraph (A) only 

(i) notice of such determination is provided to 

the taxpayer no later than 30 days prior to the date of 

such action, and 

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(4) Failure to Pay an lnstatlment or Any Other Tax Liability 

When Due or To Provide Requested Financial Information. The 

Secretary may alter, modify. or terminate an agreement entered into by 

the Secretary under subsection (a) in the case of the failure of the 

taxpayer--

(A) to pay any installment at the time such installment 

payment is due under such agreement. 

(B) to pay any other tax liability at the time such 

liability is due, or 

(C) to provide a financial condition update as requested 

by Secretary. 

§ 1855 Extension of Time for Paying Tax. 

(a) General Rule. The Secretary, except as otherwise provided in this 

Division, may extend the time for payment of the amount of the tax shown, or 

required to be shown, on any return or declaration required under authority of 

this Division (or any installment thereof), or for any deficiency of non-NMTIT 

imposed by this Division for a reasonable period not to exceed 6 months from 

the date fixed for payment thereof. Such extension may exceed 6 months in 

the case of a taxpayer who is abroad. The extension of a payment of a 

deficiency may extend beyond 6 months of the date fixed for payment if the 

date fixed for payment thereof will result in undue hardship to the taxpayer. 

(b) No Extension for Certain Deficiencies. No extension shall be 

granted under this section for any deficiency if the deficiency is due to 

negligence, to intentional disregard of the rules and regulations, or to fraud 

with intent to evade tax. 

ARTICLE II 

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§ 1862. 

§ 1863. 

§ 1864. 

§ 1865. 

§ 1866. 

§ 1867. 

Lien. 

§ 

Period of Lien 

Place for Filing Notice 

Validity and Priority of the Tax Lien 

Release of Lien; Discharge of Property 

Refiling of Notice 

Administrative Appeal of Liens 

1860. Notice and Opportunity for Hearing upon Filing of Notice of 

(a) Requirement of notice. 

(1) In general. The Secretary shall notify in writing the 

person described in section 1861 of the filing of a notice of lien 

under section 1863. 

(2) Time and method for notice. The notice required under 

paragraph (I) shall be -

(A) given in person; 

(B) left at the dwelling or usual place of business of such 

person; or 

(C) sent by certified or registered mail to such person's last 

known address, 

not more than 5 business days after the day of the filing of the 

notice oflien. 

(3) Information included with notice. The notice required under 

paragraph (I) shall include in simple and nontechnical terms-

(A) the amount of unpaid tax; 

(B) the right of the person to request a hearing during the 

30-day period beginning on the day after the 5-day period described 

in paragraph (2); 

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 (D) the provisions of this title and procedures relating to 

the release of liens on property. 

(b) Right to fair hearing. 

(1) In general. If the person requests a hearing under 

subsection (a)(3)(8), such hearing shall be held by the 

Technical, Research and Appeals Branch of the Division of 

Revenue and Taxation. 

(2) One hearing per period. A person shall be entitled to 

only one hearing under this section \Vith respect to the taxable 

period to which the unpaid tax specified in subsection (a)(3)(A) 

relates. 

(3) Impartial oflicer. The hearing under this subsection 

shall be conducted by an officer or employee who has had no 

prior involvement with respect to the unpaid tax specified in 

subsection (a)(3)(A) before the first hearing under this section 

or § 1870. A taxpayer may waive the requirement of this 

paragraph. 

(4) Coordination with§ 1870. To the extent practicable, a 

hearing under this section shall be held in conjunction with a 

hearing under section 1870. 

(c) Conduct of hearing: review; suspensions. For purposes of this 

section, subsections (c). (d) (other than paragraph (2)(8) thereof), and 

(c) of section 1870 shall apply. 

§ 1861. Lien. If any person liable to pay any tax neglects or refuses 

to pay the same after demand, the amount (including any interest. additional 

amount, addition to tax, or assessable penalty, together with any costs that 

may accrue in addition thereto) shall be a lien in favor of the Commonwealth 

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shall arise at the time the assessment is made and shall continue until the liability for 

the amount so assessed (or a judgment against the taxpayer arising out of such 

liability) is satisfied, the assessment expires under applicable Commonwealth law or 

the lien is discharged or released by the Secretary. 

§ 1863. Place for Filing Notice. Notice of a tax lien shall be recorded with 

the Commonwealth Recorder's Office. A notice of a tax lien so recorded shall be 

perfected as to all of a taxpayer's real property located within the Commonwealth, to 

all tangible and intangible personal property and income of a taxpayer residing within 

the Commonwealth, and to all tangible and intangible personal property and income 

located in the Commonwealth of a taxpayer residing without the Commonwealth. 

§ 1864. Validity and Prioritv of the Tax Lien. The validity and priority of a 

tax lien of the Commonwealth Government in the property and income of a taxpayer 

for unpaid taxes, additions to tax, penalties and interest (and any cost that may accrue 

in addition thereto) shall, as against anyone else claiming an interest in the sarne 

property or income of the taxpayer, be determined in accordance with applicable 

Commonwealth law (including 1 CMC §3711 and 2 CMC §4520). No tax lien of the 

Commonwealth Government in a taxpayer's prope1ty and income shall have priority 

over a bona fide purchaser or lessee of the taxpayer for valuable consideration, a bona 

fide holder of a security interest for value, a bona fide judgment lien creditor or holder 

of another bona fide interest or encumbrance for value, unless the Commonwealth 

Government's tax lien has been recorded previously or the party claiming the 

competing interest in Lhe prope1ty or income of the Laxpayer has actual notice of the 

tax lien. No interest claimed by a competing party in property or income of a 

taxpayer shall prevail over a tax lien of the Commonwealth Government unless the 

party claiming such competing interest has taken all steps under applicable law to 

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(a) Release of Lien. Subject to such regulations as the Secretary 

may prescribe. the Secretary shall issue a certificate of release of any lien 

imposed with respect to any non-NMTIT tax not later than 30 days after the 

day on which: 

(J) Liability Satisfied or Unenforceable. The Secretary finds 

that the liability for the amount assessed, together with all interest in respect thereof, has been fully satisfied or has become legally unenforceable, or 

(2) Bond Accepted. There has been furnished to the Secretary 

and accepted by him a bond that is conditioned upon the payment of the 

amount assessed, together with all interest in respect thereof. within the time 

prescribed by law (including any extensions of such time). and that is in 

accordance with such requirements relating to terms, conditions, and form of 

the bond and sureties thereon, as may be specified by such regulations. 

(b) Discharge of Property. 

(I) Property double the amount of the liability. Subject to such 

regulations as the Secretary may prescribe, the Secretary may issue a 

certificate of discharge of any part of the property subject to any lien imposed 

under this chapter if the Secretary finds that the fair market value of that part 

of such property remaining subject to the lien is at least double the amount of 

the unsatisfied liability secured by such lien and the amount of all other liens 

upon such property which have priority over such lien. 

(2) Part payment: interest ofCNMI valueless. Subject to such 

regulations as the Secretary may prescribe, the Secretary may issue a 

certificate of discharge of any part of the prope11y subject to the lien if-

( A) there is paid over to the Secretary in partial 

satisfaction of the liability secured by the lien an amount 

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(B) the Secretary determines at any time that the 

interest of the CNMI in the part to be so discharged has no 

value. 

In determining the value of the interest of the CNMI in the part 

to be so discharged, the Secretary shall give consideration to 

the value of such part and to such liens thereon as have priority 

over the lien of the CNML 

(3) Substitution of proceeds of sale. Subject to such 

regulations as the Secretary may prescribe, the Secretary may issue a 

certificate of discharge of any part of the property subject to the lien if such 

pm1 of the property is sold and. pursuant to an agreement with the Secretary, 

the proceeds of such sale are to be held, as a fund subject to the liens and 

claims of the CNMI, in the same manner and with the same priority as such 

liens and claims had with respect to the discharged property. 

(c) Subordination of lien. Subject to such regulations as the Secretary 

may prescribe, the Secretary may issue a certificate of subordination of any 

lien imposed by this Division upon any part of the property subject to such 

lien if-

(I) there is paid over to the Secretary an amount equal to the 

amount of the lien or interest to which the certificate subordinates the 

lien of the CNMI, or 

(2) the Secretary believes that the amount realizable by the 

CNMI from the property to which the certificate relates, or from any 

other property subject to the lien, will ultimately be increased by 

reason of the issuance of such certificate and that the ultimate 

collection of the tax liability will be facilitated by such subordination. 

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and is filed in the same office as the notice of lien to which it relates (if 

such notice of lien has been filed) such certificate shall have the 

following effect: 

(A) in lhe case of a certificate of release. such 

certificate shall be conclusive that the lien referred to in such 

ce1tificate is extinguished; 

(B) in the case of a certificate of discharge, such 

certificate shall be conclusive that the propetty covered by such 

certificate is discharged from the lien; and 

(C) in the case of subordination, such certificate shall 

be conclusive that the lien or interest to which the lien of the 

CNMI is subordinated is superior to the lien of the CNMI. 

(2) Revocation of certificate of release. If the Secretary 

determines that a certificate of release of lien imposed by section 1861 

was issued erroneously or improvidently, or if a certificate of release of 

such lien was issued pursuant to a collateral agreement entered into ·in 

connection with a compromise under section 1817(b) which has been 

breached, and if the period of limitation on collection after assessment 

has not expired, the Secretary may revoke such certificate and reinstate 

the lien-

(A) by mailing notice of such revocation to the person 

against whom the tax was assessed at his last known address, 

and 

(B) by filing notice of such revocation in the same 

office in which the notice of lien to which it relates was filed (if 

such notice of lien had been filed). 

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accordance with the provisions of subparagraph (B), and (ii) shall have the same force 

and effect (as if such date) until the expiration of the period of limitation on collection 

after assessment, as a lien imposed by section \861 (relating to lien for taxes). lien~- (3) Certificates void under certain conditions. Notwithstanding any other provision of this Chapter, any lien imposed by this Chapter shall attach to any property with respect to which a certificate of discharge has been issued if the person liable for the tax reacquires such property after such certificate has been issued. § 1866. Refiling of Notice. For purposes of validity and priority of the tax 

(a) General Rule. Unless notice of lien is refiled in the manner 

prescribed in subsection (b) during the required filing period, such notice of 

lien shall be treated as filed on the date on which it is refiled (in accordance 

with section 1863) after the expiration of such refiling period. 

(b) Place for filing. A notice of lien refiled during the required 

refiling period shall be effective only if such notice of lien is refiled in the 

Commonwealth Recorder's Office. 

(c) Required Refiling Period. In the case of any notice of lien, the 

term "required refiling period" means-~ 

(I) the one~ year period ending 30 days after the expiration of 

10 years after the date of the assessment of the tax, and 

(2) the one~ year period ending with the expiration of 10 years 

after the close of the preceding required refiling period for such notice 

of lien. 

§ 1867. Administrative Appeal of Liens. 

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or the rights to property of such person for release of such lien alleging an 

error in the filing of the notice of such lien. 

(b) Certificate of Release. If the Secretary determines that the filing of 

the notice of any lien was erroneous, the Secretary shall expeditiously issue a 

certificate of release of such lien and shall include in such certificate a 

statement that such filing was erroneous. 

§1870. 

§ 1871. § 1872. § 1873. 

§ 1874. 

§ 1875. § 1876. 

§ 1877. 

Real Property 

§ 1878. § 1879. 

§ 1880. 

§ 1881. 

ARTICLE III 

SEIZURE OF PROPERTY FOR COLLECTION OF TAXES 

Notice and Opportunity for Hearing Before Levy 

Levy and Distraint 

Surrender of Property Subject to Levy 

Property Exempt From Levy 

Sale of Seized Property 

Redemption of Property 

Certificate of Sale; Deed of Real Property 

Legal Effect of Certificate of Sale of Personal Property and Deed of 

Records of Sale 

Expense of Levy and Sale 

Application of Proceeds of Levy 

Authority to Release Levy and Return Property 

§ 1870. Notice and Opportunity for Hearing Before Levy. 

(a) Requirement of notice before levy. 

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required only once for the taxable period to which the unpaid tax specified in 

paragraph (3)(A) relates. 

(2) Time and method for notice. The notice required under paragraph 

(I) shall be-

(A) g1ven m person; 

(B) left at the dweHing or usual place of business of such 

person; or 

(C) sent by ce1tified or registered mail. return receipt 

requested, to such person's last known address; 

not less than 30 days before the day of the first levy with respect to the 

amount of the unpaid tax for the taxable period. 

(3) Information included with notice. The notice required under 

paragraph ( l) shall include in simple and nontechnical terms~ 

(A) the amount of unpaid tax; 

(B) the right of the person to request a hearing during the 30-

day period under paragraph (2); and 

(C) the proposed action by the Secretary and the rights of the 

person with respect to such action, including a brief statement which 

sets forth -

(i) the provisions of this title relating to levy and sale of 

property; 

(ii) the procedures applicable to the levy and sale of 

property under this title; 

(iii) the administrative appeals available to the taxpayer 

with respect to such levy and sale and the procedures relating to 

such appeals; 

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(v) the provisions of this title and procedures relating 

to redemption of property and release of liens on property. 

(b) Right to fair hearing. 

(1) In If the person requests a hearing under 

subsection (a)(3)(8), such hearing shall be held by the Technical, 

Research, and Appeals Branch of the Division of Revenue and 

Taxation. 

(2) One hearing per period. A person shaH be entitled to only 

one hearing under this section with respect to the taxable period to 

-.vhich the unpaid tax specified in subsection (a)(3)(A) relates. 

(3) Impartial officer. The hearing under this subsection shall 

be conducted by an officer or employee who has had no prior 

involvement with respect to the unpaid tax specified in subsection 

(a)(3)(A) before the first hearing under this section or section 1860. A 

taxpayer may waive the requirement of this paragraph. 

(c) Matters considered at hearing. In the case of any hearing 

conducted under this section-

(I) Requirement of investigation. The appeals officer shall at 

the hearing obtain verification from the Secretary that the requirements 

of any applicable law or administrative procedure have been met. 

(2) Issues at hearing. 

(A) ln general. The person may raise at the hearing any 

relevant issue relating to the unpaid tax or the proposed levy, including 

(i) appropriate spousal defenses; 

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the posting of a bond. the substitution of other assets. an 

installment agreement, or an offer-in-compromise. 

(B) Underlying liabilitv. The person may also ratse at the 

hearing challenges to the existence or amount of the underlying tax 

liability for any tax period if the person did not receive any statulory 

notice of deficiency for such tax liability or did not otherwise have an 

opportunity to dispute such tax liability. 

(3) Basis for the determination. The determination by an appeals 

officer under this subsection shall take into consideration -

(A) the verification presented under paragraph ( 1 ); 

(B) the issues raised under paragraph (2); and 

(C) whether any proposed collection action balances the need 

for the efficient collection of taxes with the legitimate concern of the 

person that any collection action be no more intrusive than necessary. 

( 4) Certain issues precluded. An issue may not be raised at the 

hearing if-

(A) the issue was raised and considered at a previous hearing 

under section 1860 or in any other previous administrative or judicial 

proceeding; and 

(B) the person seeking to raise the issue participated 

meaningfully in such hearing or proceeding. 

This paragraph shall not apply to any issue with respect to which 

subsection (d)(2)(B) applies. 

(d) Proceeding after hearing. 

(I) Judicial review of detennination. The person may, within 30 days of a 

determination under this section, appeal such detennination to the Commonwealth 

Superior Court. 

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6 (A) collection actions taken or proposed with respect to 

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8 (B) after the person has exhausted all administrative 

9 remedies, a change in circumstances with respect to such 

I 0 person which affects such determination. 

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(e) Suspension of collections and statute oflimitations. 

(I) In general. Except as provided in paragraph (2), if a 

hearing is requested under subsection (a)(3)(8), the levy actions which 

are the subject of the requested hearing and the running of any period 

of limitations under section !902 (relating to collection after 

assessment), section 1905 (relating to criminal prosecutions), or 

section 1906 (relating to other suits) shall be suspended for the period 

during which such hearing, and appeals therein, are pending. In no 

event shall any such period expire before the 90th day after the day on 

which there is a final determination in such hearing. The beginning of 

a levy or proceeding during the time the suspension under this 

paragraph is in force may be enjoined by a proceeding in the 

Commonwealth Superior Court. The Commonwealth Superior Court 

shall have no jurisdiction under this paragraph to enjoin any action or 

proceeding unless a timely appeal has been filed under subsection 

(d)(l) and then only in respect of the unpaid tax or proposed levy to 

which the determination being appealed relates. 

(2) Levy upon appeal. Paragraph (1) shall not apply to a levy 

action while an appeal is pending if the underlying tax liability is not at 

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( l) the Secretary has made a finding under the last sentence of 

section 1871 (a) that the collection of tax is in jeopardy; or 

(2) the Secretary has served a levy on the CNMI Treasury to 

collect a CNMI tax liability from a CNMI tax refund, 

this section shall not apply, except that the taxpayer shall be given the 

oppmiunity for the hearing described in this section within a reasonable period 

of time after the levy. 

§ 1871. Levv and Distraint. 

(a) Authority. If any person liable to pay any tax neglects or refuses to 

pay the same within l 0 days after notice and demand, it shall be lawful for the 

Secretary to collect such tax (and such further sums as shall be sufficient to 

cover the expenses of the levy) by levy upon all property and rights to 

property (except such property as is exempt under Section 1873 of this 

Chapter) belonging to such person or on which there is a lien for the payment 

of such tax. Levy may be made upon the accrued salary or wages of any 

officer, employee, or elected official, of the United States, the District of 

Columbia. the Commonwealth, or any agency or instrumentality of the United 

States or the District of Columbia, or the Commonwealth by serving a notice 

of levy on the employer (as defined in section 340l(d)) of the NMTIT) of such 

officer, employee. or elected official. If the Secretary makes a finding that the 

collection of such tax is in jeopardy, as defined in §187l(d)(2), notice and 

demand for immediate payment of such tax may be made by the Secretary and 

upon failure or refusal to pay such tax, collection thereof by levy shall be 

lawful without regard to the I 0 day period provided in this section. 

(b) Seizure and Sale of Property. The term 'levy' as used m the 

Division includes the power of distraint and seizure by any means. Except as 

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or rights to property (whether real or personal, tangible or intangible). 

(c) Successive Seizures. Whenever any property or right to property 

upon which levy has been made by virtue of subsection (a) is not sufficient to 

satisfy the claim of the Commonwealth for which levy is made, the Secretary 

may, thereafter, and as often as may be necessary, proceed to levy in like 

manner upon any other property liable to levy of the person against whom 

such claim exists, until the amount due from him. together with all expenses, 

is ful!y paid. 

(d) Requirement of Notice Before Levy. 

(l) Notice. A levy under subsection (a) may only be made 

after the Secretary has notified the person in writing of his intention. 

Such notice must be made at least 30 days before the day of levy by 

giving the taxpayer the notice in person, leaving the notice at the 

taxpayer's dwelling or usual place of business, or by sending the notice 

by certified or registered mail to such taxpayer's last knmvn address. 

(2) Jeopardy. Paragraph (I) shall not apply to a levy in cases of 

"jeopardy". "Jeopardy" is defined as a determination by the Secretary 

that a taxpayer designs quickly to depart from the Commonwealth or to 

remove his property therefrom, or to conceal himself or his prope1ty 

therein, or to do any other act (including in the case of a corporation 

distributing all or a part of its assets in liquidation or otherwise) 

tending to prejudice or to render wholly or partially ineffectual 

proceedings to collect tax by this Division. 

(3) Contents of Notice. The notice required under paragraph 

(I) shall include a brief statement which sets forth in simple and 

nontechnical terms: 

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property under this chapter; 

(C) the administrative appeals available to the taxpayer 

with respect to such levy and sale and the procedures relating to 

such appeals; 

(D) The alternatives available to taxpayers which could 

prevent levy on the property (including installment 

agreements); 

(E) the provisions of this Division relating to 

redemption of property and release of liens on property; and 

(F) the procedures applicable to the redemption of 

prope1ty and the release of a lien on property under this 

chapter. 

(e) Continuing levv on salarv and wages. The effect of a levy on 

salary or wages payable to or received by a taxpayer shall be continuous from 

the date such levy is first made until such levy is released under section 1881. 

(f) Uneconomical levy. No levy may be made on any property if the 

amount of the expenses which the Secretary estimates (at the time of levy) 

would be incurred by the Secretary with respect to the levy and sale of such 

property exceeds the fair market value of such property at the time of levy. 

(g) Levy on appearance date of summons. 

(I) In General. No levy may be made on the property of any 

person on any day on which such person (or officer or employee of 

such person) is required to appear in response to a summons issued by 

the Secretary for the purpose of collecting any underpayment of tax. 

(2) No application in case of jeopardv. This subsection shall 

not apply if the Secretary finds that the collection of tax is in jeopardy. 

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property subject to levy upon which a levy has been made shall, upon demand 

of the Secrctat)', surrender such property or rights (or discharge such 

obligation) to the Secretary, except such part of the property or rights as is, at 

the time of such demand, subject to an attachment or execution under any 

judicial process. 

(b) Special Rule for Banks. Any bank or financial institution shall 

surrender (subject to an attachment or execution under judicial process) any 

deposits (including interest thereon) in such bank only after 21 days after 

service of ievy. 

(c) Enforcement ofLevv. 

(I) Extent of Personal Liabilitv. Any person who fails or 

refuses to surrender any property or rights to property subject to levy, 

upon demand by the Secretary. shall be liable in his own person and 

estate to the Commonwealth in a sum equal to the value of the property 

or rights not so surrendered, but not exceeding the amount of taxes for 

the collection of which such levy has been made, together with costs 

and interest on such sum from the date of such levy. Any amount 

(other than costs) recovered under this paragraph shaH be credited 

against the tax liability for the collection of which such levy was made. 

(2) Penalty For Violation. In addition to the personal liability 

imposed by paragraph ( 1 ), if any person required to surrender prope11y 

or rights to property fails or refuses to surrender such prope1ty or rights 

to property without reasonable cause, such person shall be liable for a 

penalty equal to 50 percent of the amount recoverable under paragraph 

(I). No part of such penalty shall be credited against the tax liability 

for the collection of which such levy was made. 

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such property or rights to property (or discharges such obligation) to the 

Secretary (or who pays a liability under subsection (c)(l)) shall be discharged 

from any obligation or liability to the delinquent taxpayer and any other 

person with respect to such property or rights to property arising from such 

surrender or payment. 

(e) Person Defined. The term "person,tt as used in this section, 

includes an officer or employee of a corporation or a member or employee of a 

partnership, who as such officer, employee, or member is under a duty to 

surrender the property or rights to property, or to discharge the obligation. 

(f) If a levy has been made or is about to be made on any property, or 

right to property, any person having custody or control of any books or 

records, containing evidence or statements relating to the property or right to 

property subject to levy, shall, upon demand of the Secretary, exhibit such 

books or records to the Secretary. 

§ I 873. Prope1ty Exempt From Levy. 

(a) Enumeration. There shall be exempt from levy: 

(I) Wearing Apparel And School Books. Such items of 

wearing apparel and such school books as are necessary for the 

taxpayer or for members of his family; 

(2) Fuel, Provisions. Furniture. and Personal Effects. If the taxpayer is the 

head of a family, so much of the fuel, provisions, furniture, and personal effects in his 

household, and of the arms for personal use, livestock, and poultry of the taxpayer, as 

does not exceed in amount that allowed under the NMTIT; 

(3) Books and Tools of a Trade. Business. or Profession. So 

many of the books and tools necessary for the trade, business, or 

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has not been delivered to the addressee. 

(5) Worker's Compensation. Any amount payable to an 

individual as worker's compensation (including any portion thereof 

payable with respect to dependents) under a worker's compensation 

law of the Commonwealth, the United States, or any state, possession, 

or territory of the United States. 

(6) Judgments for Support of Minor Children. If the taxpayer is 

required by judgment of a court of competent jurisdiction, entered 

prior to the date of levy. to contribute to the suppm1 of his minor 

children, so much of his salary, wages, or other income as is necessary 

to comply with such judgment. 

(7) Minimum Exemption for Wages. Salary. and Other Income. 

Any amount payable to or received by an individual as wages or salary 

for personal services, or as income derived from other sources, during 

any period, to the extent that the total of such amounts payable to or 

received by him during such period does not exceed the applicable 

exempt amount determined under subsection (d). 

(8) Principal Residence Exempt in Absence of Certain 

Approval or Jeopardv. Except to the extent provided in subsection (e), 

the principal residence of the taxpayer (within the meaning of section 

1034 of the NMTIT). 

(9) Other Items. Such other property as is exempt from levy 

under NMTIT § 6334. 

(b) AppraisaL The officer seizing property of the type described in 

subsection (a) shaH appraise and set aside to the owner the amount of such 

property declared to be exempt. If the taxpayer objects at the time of the 

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Commonwealth, no property or rights to property shall be exempt from levy 

other than the property specifically made exempt by subsection (a). 

(d) Exempt Amount of Wages, Salarv. m· Other Income. 

(1) Individuals on Weeklv Basis. In the case of an individual 

who is paid or receives all of his wages, salary, and other income on a 

weekly basis, the amount of the wages, salary, and other income 

payable to or received by him during any week which is exempt from 

levy under subsection (a)(7) shall be the exempt amount. 

(2) Exempt Amount. For purposes of paragraph(!), the term 

exempt amount means an amount equal to: 

(A) the sum of: 

(i) the "standard deduction" as defined under the 

NMTIT, and 

(ii) the aggregate amount of the deductions for 

personal exemptions allowed the taxpayer under Section 

!51 of the NMTIT in the taxable year in which such 

levy occurs, divided by 

(B) 52. 

Unless the taxpayer submits to the Secretary a written and properly verified 

statement specifying the facts necessary to determine the proper amount under 

subparagraph (A), subparagraph (A) shall be applied as if the taxpayer were a married 

individual filing a separate return with only I personal exemption. 

(3) Individuals on Basis Other Than Weekly. ln the case of any individual not 

described in paragraph (I), the amount of the wages, salary. and other income payable 

to or received by him during any applicable pay period or other fiscal period (as 

detennined under regulations prescribed by the Secretary) which is exempt from levy 

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period of time) he were paid or received such wages. salary. and other income on a 

regular weekly basis. 

(e) Levy Allowed on Principal residence in Case of Jeopardy or 

Certain Approval. Property described in subsection (a)(8) shall not be exempt 

from levy if--

( 1) the Secretary personally approves (in writing) the levy of 

such property, or 

(2) The Secretary finds that the co!lection of tax is in jeopardy. 

as defined in §1871(d)(2). 

§ 1874. Sale of Seized Property. 

(a) Notice of Seizure. As soon as practicable after seizure of property, 

notice in writing shall be given by the Secretary to the owner of the property 

(or, in the case of personal property, the possessor), or shall be left at the 

owner/taxpayer's usual place of abode or business. If the owner/taxpayer 

cannot be readily located or has no dwelling or place of business in the 

Commonwealth, the notice may be mailed to his last known address. Such 

notice shall specify the sum demanded and shall contain, in the case of 

personal property, an account of the property seized, and in the case of real 

property, a description with reasonable certainty of the property seized. 

(b) Notice of Sale. The Secretary shall as soon as practicable after the 

seizure of the property give notice to the owner, in the manner described in 

subsection (a) and shall cause a notification to be published in a generally 

circulated local newspaper and post the notices at the United States Post 

Offices in the Commonwealth. Such notice shall specify the property to be 

sold and the time, place, manner, and conditions of the sale. Whenever levy is 

made without regard to the 10 day period provided in §187l(a), public notice 

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nor more than 40 days from the time of giving public notice. 

(d) Manner and Conditions of Sale. If any property liable to levy is not 

divisible, so as to enable the Secretary by sale of a part thereof to raise the 

whole amount of the tax and expenses, the whole of such property shall be 

sold. The manner and conditions of the sale shall be reasonable under the 

circumstances. The Secretary may prescribe regulations for reasonable 

manner and conditions of sale. 

§ 1875. Redemption ofPropertv. 

(a) Before Sale. Before the sale of seized property, any person whose 

property has been levied upon shall have the right to pay the amount due. 

together with the expenses of the proceeding, if any, to the Secretary at any 

time prior to the sale thereof, and upon such payment the Secretary shall 

restore such property to him and all further proceedings in connection with the 

levy on such property shall cease from the time of such payment. 

(b) Redemption of Real Estate After Sale. 

(1) Period. The owners of any real property located in the 

Commonwealth sold as provided in Section 1874 of this Division, their 

heirs. executors, or administrators, or any person having any interest 

therein, or a lien thereon, or any person in their behalf, shall be 

permitted to redeem the property sold, or any particular tract of such 

property, at any time within 180 days after the sale thereof. 

(2) Price. Such property or tract of properly sba!l be permitted 

to be redeemed upon payment to the purchaser, or in case he cannot be 

found then to the Secretary, for the use of the purchaser, his heirs, or 

assigns. of the amount paid by such purchaser and interest thereon at 

the rate of 20 percent per annum. 

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redemption. 

§ 1876. Certificate of Sale; Deed of Real Property. 

(a) Certificate of Sale. In the case of property sold as provided in 

Section 1874 of this Division, the Secretary shall give to the purchaser a 

Certificate of Sale upon payment in full of the purchase price. In the case of 

real property, such ce1tificate shall set forth the real property purchased, for 

whose taxes the same was sold, the name of the purchaser, and the price paid 

therefore. 

(b) Deed to Real Property. In the case of any real property sold as 

provided in Section 1874 of this Division and not redeemed in the manner and 

within the time provided in Section 1875 of this Division, the Secretary shall 

execute to the purchaser of such real property at such sale, upon his surrender 

of the Certificate of Sale, a deed of the real property so purchased by him, 

reciting the facts set forth in the certificate. 

(c) Real Property Purchased by Commonwealth. If real property is 

declared purchased by the Commonwealth at a- sale pursuant to Section 1874 

of this Division, the Secretary shaH at the proper time execute a deed therefor, 

and without delay cause such deed to be duly recorded in the Commonwealth 

Recorder's Office. 

§ 1877. Legal Effect of Certificate of Sale of Personal Property and Deed of 

Real Property. 

(a) Certificate of Sale of Propertv Other Than Real Propertv. In all 

cases of sale pursuant to Section 1874 of this Division of property (other than 

real property), the certificate of such sale: 

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(2) As Conveyances. Shall transfer to the purchaser all right, 

title, and interest of the party delinquent in and to the property sold: 

and 

(3) As AuthoritY For Transfer Of Corporate Stock. If such 

property consists of stocks, shall be notice, when received, to any 

corporation. company, or association of such transfer and shall be 

authority to such corporation, company, or association to record the 

transfer on its books and records in the same manner as if the stocks 

were transferred or assigned by the party holding the same. in lieu of 

any original or prior certificate, which shall be void, whether canceled 

or not: and 

(4) As Receipts. If the subject of sale is securities or other 

evidences of debt, shall be a good and valid receipt to the person 

holding the same, as against any person holding or claiming to hold 

possession of such securities or other evidences of debt; and 

(5) As Authority For Transfer Of Title To Motor Vehicle. If 

such property consists of a motor vehicle, shall be notice, when 

received, to any public official charged with the registration of title to 

motor vehicles, of such transfer and shall be authority to such official 

to record the transfer on his books and records in the same manner as if 

the certificate of title to such motor vehicle were transferred or 

assigned by the party holding the same, in lieu of any original or prior 

certificate, which shall be void, whether canceled or not. 

(b) Deed of Real Property. In the case of the sale of real prope~ty 

pursuant to Section 1874 of this Division: 

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(2) Deed As Conveyance of Title. If the proceedings of the 

Secretary as set forth have been substantially in accordance with the 

provisions of Commonwealth law, such deed shall be considered and 

operate as a conveyance of all the right, title, and interest the 

delinquent party had in and to the real property thus sold at the time the 

lien of the Commonwealth attached thereto. 

(c) Effect of Junior Encumbrances. A Certificate of Sale of personal 

property given or a deed to real property executed pursuant to Section 1876 of 

this Division shall discharge such property from all liens. encumbrances, and 

titles over which the lien of the Commonwealth with respect to which the levy 

was made had priority. 

§ 1878. Records of Sale. 

(a) Requirement. The Secretary shall keep a record of all sales of real 

property under Section 1874 of this Division and of redemptions of such 

property. The record shall set forth the tax for which any such sale was made, 

the dates of seizure and sale, the name of the party assessed and all 

proceedings in making such sale, the amount of expenses, the names of the 

purchasers, and the date of the deed. 

(b) Copy as Evidence. A copy of such record, or any part thereof, 

certified by the Secretary shall be evidence in any court of the truth of the 

facts therein stated. 

(c) Accounting to Taxpayer. 

The taxpayer with respect to whose liability the sale was conducted or 

who redeemed the property shall be furnished-

(1) the record under subsection (a) (other than the 

names of the purchasers); 

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§ 1879. Expense of Levy and Sale. The Secretary shall determine the 

expenses to be allowed in all cases of levy and sale. 

§ 1880. Application of Proceeds of Levy. 

(a) Collection of Liability. Any money realized by proceedings under 

this chapter (whether by seizure, by surrender under Section 1872 of this 

Division, or by sale of seized property) or by sale of prope11y redeemed by the 

Commonwealth (if the interest of the Commonwealth in such property was a 

lien arising under the provisions of this Division) shall be applied as follows: 

(1) Expense of Levv and Sale. First, against the expenses of 

the proceedings; 

(2) Specific Tax Liability on Seized Prope11v. If the property 

seized and sold is subject to a tax imposed by any Commonwealth law 

which has not been paid, the amount remaining after applying 

paragraph (I) shall then be applied against such tax liability (and, if 

such tax was not previously assessed, it shall then be assessed); 

(3) Liabilitv of Delinquent Taxpayer. The amount, if any, 

remaining after applying paragraphs (1) and (2) sha!l then be applied 

against the liability in respect of which the levy was made or the sale 

was conducted. 

(b) Surplus Proceeds. Any surplus proceeds remammg after the 

application of subsection (a) shall, upon application and satisfactory proof in 

support thereof, be credited or refunded by the Secretary to the person or 

persons legally entitled thereto. 

§ 1881. Authoritv to Release Levy and Return Property. 

(a) Release ofLevv and Notice of Release. 

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upon whom such levy was made (if any) that such levy has been 

released if: 

(A) the liability for which such levy was made is 

satisfied or becomes unenforceable by reason oflapse of time, 

(B) release of such levy will facilitate the collection of 

such liability, 

(C) the taxpayer has entered into an agreement with the 

Secretary under § 1854 to satisfy such liability by means of 

installment payments, unless such agreement provides 

othenvise, 

(D) the Secretary has determined that such levy is 

creating an economic hardship due to the financial condition of 

the taxpayer, or 

(E) the fair market value of the property exceeds such 

liability and release of the levy on a part of such property could 

be made without hindering the col!ection of such liability. 

For purposes of subparagraph (C). the Secretary is not required 

to release such levy if such release would jeopardize the secured 

creditor status of the Secretary. 

(2) Expedited Determination on Certain Business Property. In 

the case of any tangible personal property essential in carrying on the 

trade or business of the taxpayer, the Secretary shall provide for an 

expedited determination under paragraph (1) if levy on such tangible 

personal property would prevent the taxpayer from carrying on such 

trade or business. 

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(b) Return of Propertv. If the Secretary determines that property has 

been wrongfully levied upon, it shaH be lawful for the Secretary to return: 

(I) the specific property levied upon, 

(2) an amount of money equal to the amount of money levied 

upon, or 

(3) an amount of money equal to the amount of money received 

by the Commonwealth from a sale of such property. 

Property may be returned at any time. An amount equal to the amount 

of money levied upon or received from such sale may be returned at any time 

before the expiration of9 months from the date of such levy. 

(c) Interest. For purposes of this section, interest shall be allowed and 

paid at the rate established under Section 1819: 

(1) in a case described in subsection (b)(2), from the date the 

Secretary receives the money to a date (to be determined by the 

Secretary) preceding the date of return by not more than 30 days, or 

(2) in a· case described in subsection (b)(J), from the date of 

the sale of the property to a date (to be detennined by the Secretary) 

preceding the date of return by not more than 30 days. 

SUBCHAPTER E 

EXAMINATION AND INSPECTION 

§ J 891. Canvass of CNMI for Taxable Persons and Objects 

§ 1892. Examination of Books and Witnesses 

§ 1893. Service of Summons 

§ 1894. Enforcement of Summons 

§ 1895. Time and Place of Examination 

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§ 1891. Canvass of CNMI for Taxable Persons and Objects 

(a) General Rule. The Secretary shall, to the extent he deems it 

practicable, cause officers or employees of the Department of Finance to proceed, from time to time. through the Commonwealth and inquire after and 

conceming all persons therein who may be liable to pay any Commonwealth 

tax, and all persons owning or having the care and management of any objects 

with respect to which any tax is imposed. 

(b) Penalties. For penalties applicable to forcible obstruction or 

hindrance of Department of Finance officers or employees in the performance 

of their duties, see section 1938 of this Division. 

§ 1892. Examination Of Books and Witnesses. 

(a) Authoritv to Summon. For the purpose of ascertaining the 

correctness of any return, making a return where none has been made, 

determining the liability of any person for any Commonwealth tax or the 

liability at law or in equity of any transferee or fiduciary of any person in 

respect of any Commonwealth tax or collecting any such liability, the 

Secretary is authorized: 

( 1) to examine any books, papers, records, or other data which 

may be relevant or material to such inquiry; 

(2) to summon the person liable for tax or required to perform 

the act, or any officer or employee of such person, or any person 

having possession, custody, or care of books of accounts containing 

entries relating to the business of the person liable for tax or required 

to perform the act, or any other person the Secretary may deem proper, 

to appear before the Secretary at a time and place named in the 

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(3) to place such person subject to summons under oath; 

(4) to take such testimony of the person concerned, under oath, 

as may be relevant or material to such inquiry. 

(b) Purpose May Include Inquiry Into Northern Mariana Territorial 

Income Tax. In addition to the Non-NMTIT, the purpose for which the 

Secretary may take action described in paragraph (1), (2), (3), or (4) of 

subsection (a) also includes the purpose of acquiring information m 

connection with the administration or enforcement of the Northern Mariana 

Territorial Income Tax. 

(c) Notice of contact of third parties. 

(I) General notice. An officer or employee of the Division of 

Revenue and Taxation may not contact any person other than the 

taxpayer with respect to the determination or collection of the tax 

liability of such taxpayer without providing reasonable notice in 

advance to the taxpayer that contacts with persons other than the 

taxpayer may be made. 

(2) Notice of specific contacts. The Secretary shall periodically 

provide to a taxpayer a record of persons contacted during such period 

by the Secretary with respect to the determination or collection of the 

tax liability of such taxpayer, Such record shall also be provided upon 

request of the taxpayer. 

(3) Exceptions. This subsection shall not apply -

(A) to any contact which the taxpayer has authorized; 

(B) if the Secretary determines for good cause shown 

that such notice would jeopardize collection of any tax or such 

notice may involve reprisal against any person; or 

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attested copy delivered in hand to the person to whom it is directed or left at 

his last and usual place of abode; and the certificate of service signed by the 

person serving the summons shall be evidence of the facts it states on the 

hearing of an application of the enforcement of the summons. When the 

summons requires the production of books, records or other data, it shall be 

sufficient if such books, papers, records, or other data are described with 

reasonable certainty. 

(b) Service by mail to third-party recordkeepers. 

(1) In general. A summons referred to in subsection (a) for the 

production of books, papers, records, or other data by a thirdRparty 

recordkeeper may also be served by certified or registered mai! to the 

last known address of such recordkeeper. 

(2) Third-party recordkeeper. For purposes of paragraph ( 1 }, 

the term "third-party record keeper" means R 

(A) any mutual savings bank, cooperative bank, 

domestic building and loan association, or other savings 

institution chmtered and supervised as a savings and loan or 

similar association under Federal or State law, any bank, or any 

credit union, 

(B) any consumer reporting agency, 

(C) any person extending credit through the use of 

credit cards or similar devices, 

(D) any broker, (E) any attorney, 

(F) any accountant, 

(G) any barter exchange, 

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(I) any enrolled agent, and 

(J) any owner or developer of a computer software 

source code. Subparagraph (J) shall apply only with respect to a 

summons requiring the production of the source code referred 

to in subparagraph (J) or the program and data to which such 

source code relates. 

§ 1894. Enforcement of Summons. 

(a) Jurisdiction of Commonwealth Superior Court. If any person is 

summoned under the tax laws of the Commonwealth to appear, to testify, or to 

produce books. papers, records or other data, the Commonwealth Superior 

Court shall have jurisdiction by appropriate process to compel such 

attendance, testimony. or production of books, papers, records or other data. 

(b) Enforcement. Whenever any person summoned neglects or refuses 

to obey such summons or to produce books. papers. records, or other data, or 

to give testimony, as required, the Secretary may apply to a judge of the 

Commonwealth Superior Court for an attachment against him for contempt. It 

shall be the duty of a judge to hear the appHcation, and if satisfactory proof is 

made, to issue an attachment. directed to some proper officer, for the arrest of 

such person, and upon his being brought before him to proceed to a hearing of 

the case and upon such hearing a judge shall have the power to make such 

order as he slwll deem proper, not inconsistent with the law for the punishment 

of contempt, to enforce obedience to the requirement of the summons and to 

punish such person for default or disobedience. 

§ 1895. Time and Place of Examination. 

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case of a summons under authority of Section 1892 of this Division. the date 

fixed for appearance before the Secretary shall not be less than I 0 days from 

the date of the summons. 

(b) Restriction on Examination of Taxpayer. No taxpayer shall be 

subjected to unnecessary examination or investigations. and only one 

inspection of a taxpayer's books of account shall be made for each taxable year 

unless the taxpayer requests otherwise or unless the Secretary, after 

investigation, notifies the taxpayer in writing that an additional inspection is 

necessary. 

§ 1896. Entry of Premises for Examination of Taxable Objects. 

(a) Entry During Day. The Secretary may enter, in the daytime, any 

building or place where any articles or objects subject to tax are made, 

produced, or kept, so far as it may be necessary for the purpose of examining 

said articles or objects. 

(b) Entry at Night. When such premises are open at night, the 

Secretary may enter them while so open, in the performance of his official 

duties. 

§ 1897. Special Procedures for Third Party Summons. 

(a) Notice. 

(I) In general. 

lf any summons to which this section applies requires the 

giving of testimony on or relating to, the production of any portion of 

records made or kept on or relating to, or the production of any 

computer software source code (as defined in 7612(d)(2)) of the 

NMTIT) with respect to any person (other than the person 

summoned) who is identified_in the summons, then notice of the 

summons shall be given to any person so identified within 3 days of 

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copy of the summons which has been served and shall contain an 

explanation of the right under subsection (b)(2) to bring a proceeding 

to quash the summons. 

(2) Sufficiency of Notice. Such notice shall be sufficient if, on 

or before such third day, such notice is served in the manner provided 

in Section 1893 of this Division (relating to service of summons) upon 

the person entitled to notice, or is mailed by certified or registered mail 

to the last known address of such person, or in the absence of a last 

known address, is left with the person summoned. If such notice is 

mailed, it shall be sufficient if mailed to the last known address of the 

person entitled to notice even if such person is then deceased, under a 

legal disability, or no longer in existence. 

(3) Nature of summons. Any summons to which this 

subsection applies (and any summons in aid of collection described 

in this section) shall identify the taxpayer to whom the summons 

relates or the other person to whom the records pet1ain and shall 

provide such other information as will enable the person summoned 

to locate the records required under the summons. 

(b) Right to Intervene; Right to a Proceeding to Quash. 

{I) Intervention. Notwithstanding any other law or rule of law, 

any person who is entitled to notice of a summons under subsection (a) 

shall have the right to intervene in any proceeding with respect to the 

enforcement of such summons. 

(2) Proceeding to Quash. 

(A) In General. Notwithstanding any other law or rule 

of law, any person who is entitled to notice of a summons 

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(a)(2). In any such proceeding, the Secretary may seek to 

compel compliance with the summons. 

(B) Requirement of Notice to Person Summoned and to 

Secretary. If any person begins a proceeding under 

subparagraph (A) with respect to any summons, not later than 

the close of the 20-day period, such person shall mail by 

registered or certified mail a copy of the petition to the person 

summoned and to such office as the Secretary may direct in the 

notice referred to in subsection (a)( I). 

(C) Intervention; Etc. Notwithstanding any other law 

or rule of law, the person summoned shall have the right to 

intervene in any proceeding under subparagraph (A). Such 

person shall be bound by the decision in such proceeding 

(whether or not the person intervenes in such proceeding). 

(c) Summons to which section applies. 

(l) Tn l!eneral. Except as provided in parag'raph (2), this section 

shall apply to any summons authorized under this Division. 

(2) Exceptions. This section shall not apply to any summons -

(A) served on the person with respect to whose liability 

the summons is issued, or any officer or employee of such 

person; 

(B) issued to determine whether or not records of the 

business transactions or affairs of an identified person have 

been made or kept; 

(C) issued solely to determine the identity of any 

person having a numbered account (or similar arrangement) 

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(i) an assessment made or judgment rendered 

against the person with respect to whose liability the 

summons is issued; or 

(ii) the liability at law or in equity of any 

transferee or fiduciary of any person referred to in 

clause (i); 

(E) 

(i) issued by a criminal investigator of the CNMl 

in connection with the investigation of an offense 

connected with the administration or enforcement of the 

CNMI tax laws; and 

(ii) served on any person who is not a third-party 

recordkeeper (as defined in section 7603(b of the 

NMTIT)); or 

(F) described in subsection (f) or (g). 

(3) Records. For purposes of this section, the term "records" 

includes books, papers, and other data. 

(d) Restriction on Examination of Records. No examination of any 

records required to be produced under a summons as to which notice as 

required under subsection (a) may be made: 

(1) before the close of the 23rd day after the day notice with 

respect to the summons is given in the manner provided in subsection 

(a)(2), or 

(2) where a proceeding under subsection (b)(2)(A) was begun 

within the 20-day period referred to in such subsection and the 

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5 (e) Suspension of Statute of limitations. 

6 (I) Subsection (b) Action. If any person takes any action as provided in 

7 subsection (b) and such person is the person with respect to whose liability the 

8 summons is issued (or is the agent, nominee, or other person acting under the 

9 direction or control of such person), then the running of any period of limitations 

10 under Section 190 I of this Division (relating to assessments and collections) or under 

11 Section 1905 of this Division (relating to criminal prosecutions) with respect to such 

12 person shall be suspended for the period during which a proceeding and appeals 

13 therein, with respect to the enforcement of such summons is pending. 

14 (2) Suspension After 6 Months of Service of Summons. In the absence of the 

15 resolution of the summoned party's response to the summons, or the summoned 

16 party's response to a summons described in subsection (e), the running of any period 

17 of limitations with respect to any person with respect to whose liability the summons 

18 is issued (other than a person taking action as provided in subsection (b)) shall be 

I 9· suspended for the period: 

20 (A) beginning on the date which is 6 months after the 

21 service of such summons, and 

22 (B) ending with the final resolution of such response. 

23 (f) Additional Requirement in the Case of a John Doe Summons. Any 

24 summons which does not identify the person with respect to whose liability 

25 the summons is issued may be served only after a court proceeding in which 

26 the Secretary establishes that: 

27 (1) the summons relates to the investigation of a particular 

28 person or ascertainable group or class of persons, 

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(3) the information sought to be obtained from the examination 

of the records (and the identity of the person or persons with respect to 

whose liability the summons is issued) is not readily available from 

other sources. 

(g) Special Exception for Ce11ain Summonses. In the case of any 

summons, the provisions of subsection (a)(l) and (b) shall not apply iL upon 

petition by the Secretary, the court determines, on the basis of the facts and 

circumstances alleged, that there is reasonable cause to believe the giving of 

notice may lead to attempts to conceal, destroy, or alter records relevant to the 

examination, to prevent the communication of information from other persons 

through intimidation, bribery, or collusion, or to flee to avoid prosecution, 

testifying, or production of records. 

(h) Jurisdiction of Commonwealth Superior Court Etc. 

(l) Jurisdiction. The Commonwealth Superior Court shall have 

jurisdiction to hear and detennine any proceedings brought under this 

section. An order denying the petition shall be deemed a fmal order 

which may be appealed. 

(2) Special Rule for Proceedings Under Subsections (e) and fO. 

The determinations required to be made under subsections (e) and (f) 

shall be made ex pm1e and shall be made solely on the petition and 

supporting affidavits. 

(h) Duty of Summoned Party. 

(I) Recordkeeper Must Assemble Records and Be Prepared to 

Produce Records. On receipt of a summons, to which this section 

applies for the production of records, the summoned party shall 

proceed to assemble the records requested, or such portion thereof as 

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(2) Secretary May Give Summoned Pa1tv Certificate. The 

Secretary may issue a certificate to the summoned party that the period 

prescribed for beginning a proceeding to quash a summons has expired 

and that no such proceeding began within such period, or that the 

taxpayer consents to the examination. 

(3) Protection for Summoned Party Who Discloses. Any 

summoned party, or agent or employee thereof, making a disclosure of 

records or testimony pursuant to this section in good-faith reliance on 

the certificate of the Secretary or an order of a court requiring 

production of records or the giving of such testimony shal! not be 

liable to any customer or other person for such disclosure. 

(4) Notice of Suspension of Statute of Limitations in the Case 

of a John Doe Summons. ln the case of a summons described in 

subsection (e) with respect to which any period of limitations has been 

suspended under subsection (d)(2), the summoned party shall provide 

notice of such: suspension to any person described in subsection (e). 

(i) Use of summons not required. Nothing in this section shall be 

construed to limit the Secretary's ability to obtain information, other than by 

summons. 

§ 1898. Fees and Costs for Witnesses. 

(a) In General. The Secretary may by regulation establish the rates and 

conditions under which payment may be made of: 

(1) fees and mileage to persons who are summoned to appear 

before the Secretary, and 

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produced by summons. 

(b) Exceptions. No payment may be made under paragraph (2) of 

subsection (a) if: 

(1) the person with respect to whose liability the summons is 

issued has a proprietary interest in the books, papers, records or other 

data required to be produced, or 

(2) the person summoned is the person with respect to whose liability the 

summons is issued or an officer. employee, agent. accountant, or attorney of such 

person who, at the time the summons is served, is acting as such. 

(c) Cost Recovery From Taxpayer. The Secretary may requtre 

reimbursement from the taxpayer for such costs that are reasonably necessary 

which have been directly incurred in searching for, reproducing, or 

transporting books, papers, records, or other data required to be produced by 

the third~party record keeper pursuant to a summons where the taxpayer fails 

to timely provide such information in a complete and accurate manner. 

(d) Summons to Which Section Applies. This section applies with respect to 

any summons authorized under this Division. 

SUBCHAPTER F 

STATUTE OF LIMITATIONS 

§ 190 I. Limitations on Assessments and Collections 

§ 1902. 

§ 1903. 

§ 1904. 

§ 1905. 

§ 1906. 

Collection After Assessment 

Suspension of the Running of Period of Limitation 

Period of Limitation on Filing Claim for Refund 

Periods of Limitation on Criminal Prosecutions 

Period of Limitations on Suits 

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the return was filed (whether or not such return was filed on or after the date 

prescribed) and no proceeding in court without assessment for the collection 

of such tax sha!l be begun after the expiration of such period. 

(b) Time Return Deemed Filed. 

(I) Early Return. For purposes of this chapter, a return of tax 

imposed by this Division. filed before the last day prescribed by law or 

by regulations prescribed by the Secretary for filing thereof. shall be 

considered as filed on such last day. 

(2) Return Executed by the Secretary. The execution of a 

return by the Secretary pursuant to the authority conferred by this 

Division shall not start the running of the period of limitations on 

assessment and collection. 

(c) Exceptions. 

(1) False Return. In the case of a false or fraudulent return with the intent to 

evade tax, the tax may be assessed, or a proceeding in comt for collection of such tax 

may be begun without assessment at any time. 

(2) Willful Attempt to Evade Tax. In the case of a willful 

attempt in any manner to defeat or evade tax imposed by this title, the 

tax may be assessed or a proceeding in court for the collection of such 

tax may be begun without assessment, at any time. 

(3) No Return. In the case of failure to file a return, the tax 

may be assessed, or a proceeding in court for the colleclion of such tax 

may be begun without assessment, at any time. 

(4) Extension by Agreement. 

(A) In General. Where before the expiration of the 

time prescribed in this section for the assessment of any tax 

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period agreed upon. The period so agreed upon may be 

extended by subsequent agreements in ·writing made before the 

expiration for the period previously agreed upon. 

(B) Notice to taxpayer of right to refuse or limit 

extension. The Secretary shall notify the taxpayer of the 

taxpayer's right to refuse to extend the period of limitations. or 

to limit such extension to particular issues or to a particular 

period of time. on each occasion when the taxpayer is 

requested to provide consent. 

(d) Substantial Omission of Items. Except as othe1wise provided for in 

subsection (c), if a taxpayer omits an amount properly subject to tax which is 

in excess of25 percent of the total amounts stated in the return, the tax may be 

assessed, or a proceeding in court for the collection of such tax may be begun 

without assessment at any time within 6 years after the return was filed. For 

purposes of this· subsection, in determining the amount omitted, there shaH not 

be taken into account any amount which is omitted in the return if such 

amount is disclosed in the return, or in a statement attached to the return, in a 

manner adequate to apprise the Secretary of the nature and amount of such 

item. 

§ 1902. Collection After Assessment. 

(a) Length of Period. Where the assessment of any tax imposed by 

this Division has been made within the period of limitation properly applicable 

thereto, such tax may be collected by levy or by a proceeding in court, but 

only if the levy is made or the proceeding begun: 

(I) within I 0 years after the assessment of the tax, or 

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the Secretary and the taxpayer at the time the installment agreement 

was entered into; or 

(B) there is a release of levy under section 1881 after 

such 1 0-year period, prior to the expiration of any period for 

collection agreed upon in writing by the Secretary and the 

taxpayer before such release. 

!fa timely proceeding in court for the collection of a tax is 

commenced, the period during which such tax may be collected by 

levy shall be extended and shall not expire until the liability for the tax 

(or a judgment against the taxpayer arising from such liability) is 

satisfied or becomes unenforceable. 

(b) Date When Levy Is Considered Made. For purposes of this section, 

the date on which a levy on property or right to prope11y is made shall be the 

date on which the notice of seizure is given. 

§ 1903. Suspension Of The Running Of Period Of Limitation. The running of 

the period of limitations on collections after assessment shall be suspended for the 

period during which the taxpayer is outside the Commonwealth if such period of 

absence is for a continuous period of at least 6 months. If the preceding sentence 

applies and at the time of the taxpayer's return to the Commonwealth, the period of 

limitations on collection after assessment would expire before the expiration of 6 

months from the date of his return, such period shall not expire before the expiration 

of such 6 months. 

§ 1904. Period of Limitation on Filing Claim for Refund. 

(a) Period of Limitation on Filing a Claim. Claim for credit or refund 

of an overpayment of any tax imposed by this Division in respect of which tax 

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whichever of such periods expires the later. 

(b) Amount Subject to Refund. Subject to subsection (a), if it is shown 

upon the written application of a taxpayer that it has paid an amount not due as 

tax under this Division or greater than the tax levied under this Division, then 

the Secretary shall refund the amount found to have been overpaid or 

otherwise not due and shall pay such refund out of current tax collections. 

(c) Limitations. Prior to granting any refund, the Secretary shall 

determine after a written application for refund is submitted that: 

( 1) the amount so overpaid or otherwise not due has been paid 

to the Commonwealth; 

(2) the amount of refund claimed has not been used as a credit 

or deduction against any tax or taxes due and payable to the 

Commonwealth; 

(3) all refund claims are within the period of limitations described m 

subsection (a); and 

(4) the taxpayer claiming a refund does not have a past due tax, 

or legally enforceable debt to any Commonwealth government agency, 

including any executive department, as recognized and determined by 

the Secretary. 

§ 1905. Periods of Limitation on Criminal Prosecutions. No person shall be 

prosecuted, tried. or punished for any of the various offenses arising under the 

Commonwealth tax laws unless the information is instituted within 3 years after the 

commission of the offense, except that the period of limitation shall be 6 years-

( a) for offenses involving the defrauding or attempting to defraud the 

Commonwealth or any agency or instrumentality thereof, whether by 

conspiracy or not, and in any manner; 

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counseling, or advising, the preparation or presentation under, or in connection 

with any matter arising under, the Commonwealth tax laws, of a false or 

fraudulent return, affidavit, claim, or document (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to 

present such return, affidavit, claim, or document); 

(d) for the offense of willfully failing to pay any tax, or make any 

return (other than information returns) at the time or times required by law or 

regulations; 

(e) for offenses described 111 Sections 1935(a) and 1936 (relating to 

false statements and fraudulent documents) of this Division; 

(t) for the offense described in Section \938(a) (relating to intimidation 

of officers and employees of the Commonwealth) of this Division. 

(g) for offenses described in section 1939 committed by officers and 

employees of the Commonwealth; and 

(h) for offenses arising under Commonwealth law, where the object of 

the criminal conspiracy i-s to attempt in any manner to evade or defeat any tax 

or the payment thereof. 

The time during which the person committing any of the various offenses 

arising under the Commonwealth tax laws is outside the Commonwealth or is a 

fugitive from justice shall not be taken as any part of the time limited by law for the 

commencement of such proceedings. Where a complaint is instituted before the 

Commonwealth Superior Court within the above limitation period, the time shaH be 

extended until the date which is 9 months after the date of the making of the 

complaint before the Commonwealth Superior Comt. For the purpose of determining 

the periods of limitation on criminal prosecutions, the rules of Section 1901 (b) (Time 

return deemed filed) of this Division shall be applicable. 

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mitations for filing a claim 

for the recovery of any non-NMTIT tax, penalty or other sum shall be 

altowed as provided by § 6532(a)(l) of the NMTIT with respect to 

section § 1841 of this Division. 

(2) Extension of Time. The period prescribed in paragraph (I) 

shaH be extended for a period as may be agreed upon in writing 

between the taxpayer and the Secretary. 

(b) Suits bv the Commonwealth for Recoverv of EIToneous Refunds or 

Rebate. Recovery of an erroneous refund or rebate by suit shall be allowed 

only if such suit is begun within 3 years after the making of such refund or 

rebate, except that such suit may be brought at any time within 6 years from 

the making of the refund if it appears that any part of the refund was induced 

by fraud or misrepresentation of a material fact. 

§ 1911. 

§ 1912. 

§ 1913. 

§ 1914. 

§ 1915. 

SUBCHAPTER G 

PENALTIES 

ARTICLE I 

CIVIL PENAL TIES 

Penalty Assessed as a Tax 

Failure to File Tax Return or Pay Tax 

Failure to File Correct Information Returns 

Failure to Furnish Correct Payee Statements 

Fraudulent Statement or Failure to furnish Statement to 

Employee, Transferee. or Any Other Person Entitled To Receive a Statement 

§ 1916. False Information With Respect to Withholding 

§ 1917. 

§ 1918. 

Imposition of Accuracy-Related Penalty 

Imposition of Fraud Penalty 

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§ 192 I. Frivolous Return 

§ 1922 Understatement of Taxpayer's Liability by CNMI Tax Return Preparer. 

§ 1923 Other Assessable Penalties With Respect to the Preparation of CNMI 

Tax Returns for Other Persons. 

§ 1924. 

§ 1925. 

Reasonable Cause Exception 

Special Rule on Dual Requirement 

§ 191 I. Penalty Assessed as a Tax. 

(a) Unless otherwise provided, any penalty and liability imposed by 

this Article shall be paid upon notice and demand by the Secretary, and shall 

be assessed and collected in the same manner as taxes except that the 

following penalties shall not be subject to the provisions of§ 1841 (c): 

(1) Penalty imposed by§ 1912; however,§ 184l(c) shall 

apply to the pmtion of a penalty imposed by § 1912 which is 

attributable to a deficiency in tax; and 

(2) Penalties imposed by§§ 1913, 1914, 1915, 1916, 1920, 

192l,l922.and 1923. 

(b) Except as otherwise provided, any reference in this Division to 

'tax' imposed by this Division shall be deemed also to refer to the penalties and 

liabilities provided by this Chapter. 

(c) Person Defined. The term "person", as used in this subchapter, 

includes an officer or employee of a corporation or a member or employee of a 

partnership who as such officer, employee, or member is under a duty to 

perform the act in respect of which the violation occurs. 

§ 1912. Failure to File Tax Return or Pay Tax. 

(a) Addition to the Tax. In case of failure: 

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cause and not due to willful neglect. there shall be added to the amount 

required to be shown as tax due on such return 5 percent of the amount 

of such tax if the failure is not more than 1 month, with an additional 5 

percent for each additional month or fraction thereof during which 

such failure continues, not exceeding twenty-five percent in the 

aggregate. 

(2) to pay the amount shown as tax due on any return required by this Division 

on or before the date prescribed for payment of such tax (determined with regard to 

any extension of time for payment), unless it is shown that such failure is due to 

reasonable cause and not due to willful neglect there shaH be added to the amount 

shown as tax due on such return 0.5 percent of the amount of such tax if the failure is 

for not more than 1 month, with an additional 0.5 percent for each additional month or 

fraction thereof during which such failure continues; or 

(3) to pay any amount in respect of any tax required to be 

shown on a return required by this Division which is not so shown 

within 21 days of the date of the notice and demand therefore, unless it 

is shown that such failure is due to reasonable cause and not due to 

willful neglect, there shall be added to the amount of tax stated in such 

notice and demand 0.5 percent of the amount of such tax if the failure 

is for not more than I month, with an additional 0.5 percent for each 

additional month or fraction thereof during which such failure 

continues. but not exceeding 25 percent in the aggregate. 

In the case of a failure to file a return of tax imposed by this Division 

within 60 days of the date prescribed for filing of such return (determined with 

regard to any extensions of time for filing), unless it is shown that such failure 

is due to reasonable cause and not due to willful neglect, the addition to tax 

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(I) subsection (a)( I), the amount of tax required to be shown on 

the return shal! be reduced by the amount of any pm1 of the tax which 

is paid on or before the date prescribed for payment of the tax, 

(2) subsection (a)(2), the amount of tax shown on the return 

shall, for purposes of computing the addition for any month. be 

reduced by the amount of any part of the tax which is paid on or before 

the beginning of such month, and 

(3) subsection (a)(3), the amount of tax stated in the notice and demand shall, 

for the purpose of computing the addition for any month, be reduced by the amount of 

any part of the tax which is paid before the beginning of such month. 

(c) Limitations And Special Rule. 

(1) Additions under more than one paragraph. With respect to 

any return, the amount of the addition under paragraph (I) of 

subsection (a) shall be reduced by the amount of the addition under 

paragraph (2) of subsection (a) for any month (or fraction thereof) to 

which an addition to tax applies under both paragraphs (I) and (2). In 

any case described in the last sentence of subsection (a), the amount of 

the addition under paragraph (I) of subsection (a) shall not be reduced 

under the preceding sentence below the amount provided in such last 

sentence. 

(2) Amounts of tax shown more than amount required to be 

shown. if the amount required to be shown as tax on a return is 

less than the amount shown as tax on such return, subsections 

(a)(2) and (b)(2) shall be applied by substituting such lower 

amount. 

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(2) any limitation set forth in subsection (a)( I) and (c)( I) shall 

not apply. 

§ 1913. Failure to File Correct Information Returns. 

(a) Imposition of Penalty. 

(l) In GeneraL rn the case of a failure described in paragraph 

(2) by any person required to file with respect to an information return, 

such person shall pay a penalty of $50 for each return with respect to 

which such a failure occurs, but the total amount imposed on such 

person for all such failures during any calendar year shall not exceed 

$250,000. 

(2) Failures Subject to Penalty. For purposes of paragraph (I) 

the failures described in this paragraph are: 

(A) any failure to file an information return with the 

Secretary on or before the required filing date, and 

(B) any failure to include all of the information required 

to be shown on the return or the inclusion of incorrect 

information. 

(b) Reduction Where Correction in a 30 day Period. If any failure 

described in subsection (a)(2) is corrected on or before the day 30 days after 

the required filing date: 

(I) the penalty imposed by subsection (a) shall be $15 in lieu of 

$50, and 

(2) the total amount imposed on the person for a!l such failures 

during any calendar year which are so corrected shall not exceed 

$75,000. 

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respect to each such failure: 

(I) Subsection (b) shaU not apply. 

(2) The penalty imposed under subsection (a) shall be $100, 

and no limitation shall apply. 

(3) Section 1924 of this Division sha!! not apply. 

(d) Information Return. Such term includes any form, statement, or 

schedule required to be filed with the Secretary with respect to any amount 

from which tax was required to be deducted and withheld under this Division 

or any other return as required by the Secretary prescribed in regulations. 

§ 1914. Failure to Furnish Correct Payee Statements. 

(a) General Rule. In the case of each failure described in subsection (b) 

by any person with respect to a payee statement, such person shall pay a 

penalty of $50 for each statement with respect to which such a failure occurs, 

but the total amount imposed on such person for all such failures during any 

calendar year shall not exceed $100,000. 

(b) Failures Subject ·to Penalty. For purposes of subsection (a), the 

failures described in this subsection are: 

(I) any failure to furnish a payee statement on or before the 

date prescribed therefore to the person to whom such statement is 

required to be furnished, and 

(2) any failure to include all of the information required to be 

shown on a payee statement or the inclusion of incorrect information. 

(c) Penalty in Case of Intentional Disregard. If I or more failures to 

which subsection (a) applies are due to intentional disregard of the 

requirement to furnish a payee statement (or correct information reporting 

requirement), then with respect to each failure: 

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under subsection (a) shall 

not apply, and 

(B) such penalty shall not be taken into account in 

applying such limitation to penalties not determined under 

paragraph (I). 

(C) Section 1924 of this Division shall not apply. 

(d) Payee Statement. The term 'payee statement' means any statement 

required to be furnished to a person with respect to any amount which was 

required to be deducted and withheld from such person under any provision of 

this Division or any other return as required by the Secretary prescribed in 

regulations. 

§ 1915. Fraudulent Statement or Failure to Furnish Statement to Employee. 

Transferee or Any Other Person Entitled to Receive a Statement. In addition to the 

criminal penalty provided in section 1934, any person required under the provisions 

of section 1821 or 1822 or 1823 to furnish a statement to an employee, transferee or 

any other person entitled to receive a statement who willfully furnishes a false or 

fraudulent statement, or who willfully fails to furnish a statement in the manner, at the 

time, and showing the information required by sections 1821 or 1822 or 1823 or 

regulations prescribed thereunder, shall for each such failure be subject to a penalty 

under this Division of $50. 

§ 1916. False Information with Respect to Withholding. In addition to any 

criminal penalty provided by law, if--

( a) any individual makes a statement under section 1821 or 1822 or 

1823 which results in a decrease in the amounts deducted and withheld, and 

(b) as of the time such statement was made, there was no reasonable 

basis for such statement, such individual shall pay a penalty of $500 for such 

statement. 

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the tax an amount equal to 20 percent of the portion of the underpayment to 

\.Vhich this section applies. 

(b) Portion of Underpavment to Which Section Applies. This section 

shall apply to the portion of any underpayment which is attributable to 1 or 

more of the following: 

(I) Negligence or disregard of rules or regulations. 

(2) Any substantial understatement of !.ax. 

(3) Any substantial understatement of taxes estimated as correct 

when filing for an automatic extension to file a return. 

This section shall not apply to any portion of an underpayment on 

which a penalty is imposed under Section 1918 of this Division. 

(c) Negligence. For purposes of this section, the term 'negligence' 

includes any failure to make a reasonable attempt to comply with the 

provisions of this Division, and the term 'disregard' includes any careless, 

reckless, or intentional disregard. 

(d) Substantial Understatement of Tax. 

(I) Substantial Understatement. For purposes of this section, 

there is a substantial understatement of tax for any taxable year if the 

amount of the understatement for the taxable year exceeds the greater 

of: 

(A) I 0 percent of the tax required to be shown on the 

return for the taxable year or paid as an estimate of tax due, or 

(B) $5,000. 

(2) Understatement. 

(A) In General. For purposes of paragraph (1 ), the 

term 'understatement' means the excess of: 

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(ii) the amount of the tax imposed which is 

shown on the return reduced by any rebate. 

(B) Reduction for the Understatement Due to Position 

of Taxpayer or Disclosed Item. The amount of the 

understatement under subparagraph (A) shall be reduced by 

that pmtion of the understatement which is attributable to: 

(i) the tax treatment of any item by the taxpayer 

if there is or was substantial authority, as determined by 

regulations prescribed by the Secretary, for such 

treatment, or 

(ii) any item with respect to which relevant facts 

affecting the item's tax treatment are adequately 

disclosed in the return or in a statement attached to the 

return and there is reasonable basis for the tax treatment 

of such item by the taxpayer. 

§ 1918. lmpositionofFraudPenalty. 

(a) Imposition -of Penalty. If any part of any underpayment of tax 

required to be shown on a return is due to fraud, there shall be added to the tax 

an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud. 

(b) Determination of Portion Attributable to Fraud. If the Secretary 

establishes that any portion of an underpayment is attributable to fraud, the 

entire underpayment shall be treated as attributable to fraud, except with 

respect to any portion of the underpayment which the taxpayer establishes (by 

a preponderance of the evidence) is not attributable to fraud. In the case of a 

joint return, this section shall not apply with respect to a spouse unless some 

part of the underpayment is due to the fraud of such spouse. 

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7 and 19 I 8 of this Division shall apply only in cases 

where a return of tax is filed (other than a return prepared by the Secretary 

under the authority of Section 1836(b) or (c) of this Division). 

(b) Reasonable Cause Exception. No penalty shall be imposed under 

Sections 1917 & 1918 of this Division with respect to any portion of an 

underpayment if it is shown that there was a reasonable cause for such portion 

and that the taxpayer acted in good faith with respect to such portion. 

§ 1920. Liability for Taxes Withheld or Collected: Failure to Collect and Pay 

Over Tax. or Attempt to Evade or Defeat Tax. 

(a) Whenever any person is required to collect or withhold any tax from any 

other person and to pay over such tax to the Commonwealth, tbe amount of tax so 

collected or withheld shall be held to be a special fund in trust for the Commonwealth. 

The amount of such fund shall be assessed, collected. and paid in the same manner 

and subject to the same provisions and limitations (including penalties) as are 

applicable with respect to the taxes from which such fund arose. 

(b) Any person required to collect, truthfully account for, and pay oyer any 

"tax imposed by this Division who willfully fails to collect such tax, or truthfully 

account for and pay over such tax, or willfully attempts in any manner to evade or 

defeat any such tax or the payment thereof, shall, in addition to other penalties 

provided by law, be liable to a penalty equal to the total amount of the tax evaded. or 

not collected, or not accounted for and paid over. 

(c) Preliminary notice requirement. 

( 1) ln general. No penalty shall be imposed under subsection (b) 

unless the Secretary notifies the taxpayer in writing by mail to an address 

as determined under section 1839 or in person that the taxpayer shaH be 

subject to an assessment of such penalty. 

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y notice and demand of any penalty under subsection 

(b) by at least 60 days. 

(3) Statute of limitations. If a notice described in paragraph (I) with 

respect to any penalty is mailed or delivered in person before the 

expiration of the period provided by section 190 I for the assessment of 

such penalty (determined without regard to this paragraph), the period 

provided by such section for the assessment of such penalty shall not 

expire before the later of-

(A) the date 90 days after the date on which such notice was 

mailed or delivered in person, or 

(B) if there is a timely protest of the proposed assessment, the 

date 30 days after the Secretary makes a final administrative 

determination with respect to such protest. 

(4) Exception for jeopardy. This subsection shall not apply if the 

Secretary finds that the collection of the penalty is in jeopardy. 

§ 1921. Frivolous Return. 

(a) Civil Penalty. If: 

(I) any individual files what purports to be a return of the tax 

imposed by this Division but which: 

(A) does not contain information on which the 

substantial correctness of the self-assessment may be judged, or 

(B) contains information that on its face indicates that 

the setr:.. assessment is substantially incorrect; and 

(2) the conduct referred to in paragraph (I) is due to: 

(A) a position which is frivolous, or 

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(b) Penalty in Addition to Other Penalties. The penalty imposed by 

subsection (a) shall be in addition to any other penalty provided by law. 

§ 1922. Understatement of Taxpayer's Liability bv CNMI Tax Return 

Preparer. 

(a) Understatements due to unrealistic positions. lf-

(1) any part of any understatement of liability with respect to 

any return or claim for refund is due to a position for which there was 

not a realistic possibility of being sustained on the merits, 

(2) any person who is a CNMI tax return prcparer with respect 

to such return or claim knew (or reasonably should have known) of 

such position, and 

(3) such position was not disclosed as provided m section 

1917(d)(2)(B)(ii) or was frivolous, 

such person shall pay a penalty of $250 with respect to such return or claim 

unless it is shown that there is reasonable cause for the understatement and such 

person acted in good faith. 

(b) Willful or reckless conduct. If any part of any understatement of 

liability with respect to any return or claim for refund is due-

(1) to a willful attempt in any manner to understate the liability 

for tax by a person who is a CNMI tax return preparer with respect to 

such return or claim, or 

(2) to any reckless or intentional disregard of rules or 

regulations by any such person, 

such person shall pay a penalty of $1000 with respect to such return or claim. 

With respect to any return or claim, the amount of the penalty payable by any person 

by reason of this subsection shall be reduced by the amount of the penalty paid by 

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(I) In generaL If, within 30 days after the day on which notice 

and demand of any penalty under subsection (a) or (b) is made against 

any person who is a CNMI tax return preparer, such person pays an 

amount which is not less than 15 percent of the amount of such penalty 

and files a claim for refund of the amount so paid, no levy or 

proceeding in court for the collection of the remainder of such penalty 

shall be made, begun or prosecuted until the final resolution of a 

proceeding begun as provided in paragraph (2). The beginning of such 

proceeding or levy during the time such prohibition is in force may be 

enjoined by a proceeding in the Commonwealth Superior Court. 

Nothing m this paragraph shall be construed to prohibit any 

counterclaim for the remainder of such penalty in a proceeding begun 

as provided in paragraph (2). 

(2) Preparer must bring suit in Commonwealth Superior Court 

to determine his liability for penalty. If, within 30 days after the day 

on which his claim for refund of any partial payment of any penalty 

under subsection (a) or (b) is denied (or, if earlier, within 30 days after 

the expiration of 6 months after the day on which he filed the claim for 

refund), the CNMI tax return preparer fails to begin a proceeding in the 

Commonwealth Superior Court for the determination of his liability for 

such penalty, paragraph (I) shall cease to apply with respect to such 

penalty, effective on the day fOllowing the close of the applicable 30-

day period referred to in this paragraph. 

(3) Suspension of runnine: of period of limitations on 

collection. The running of the period of limitations provided in section 

1902 on the collection by levy or by a proceeding in court in respect of 

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(d) Abatement of penalty where taxpayer's liability not understated. If 

at any time there is a final administrative determination or a final judicial 

decision that there was no understatement of liability in the case of any return 

or claim for refund with respect to which a penalty under subsection (a) or (b) 

has been assessed, such assessment shall be abated. and if any portion of such 

penalty has been paid lhe amount so paid shall be refunded to the person who 

made such payment as an overpayment of tax without regard to any period of 

limitations which. but for this subsection would apply to the making of such 

refund. 

(e) Understatement of liability defined. For purposes of this section, 

the term "understatement of liability" means any understatement of the net 

amount payable with respect to any tax imposed by this Division or any 

overstatement of the net amount creditable or refundable with respect to any 

such tax. Except as otherwise provided in subsection (d). the determination of 

whether or not there is an understatement of liability shall be made without 

regard to any administrative or judicial action involving the taxpayer. 

(f) CNMI tax return preparer. 

(I) In general. The term "CNMI tax return preparer" for purposes of this 

Division means any person who prepares for compensation, or who employs one or 

more persons to prepare for compensation, any return of tax imposed by the Division 

or any claim for refund of tax imposed by this Division. For purposes of the 

preceding sentence, the preparation of a substantial portion of a return or claim for 

refund shall be treated as if it were the preparation of such return or claim for refund 

(2) Exceptions. A person shall not be a 'CNMI tax return 

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employer (or of an officer or employee of the employer) by 

whom he is regularly and continuously employed, 

(C) prepares as a fiduciary a return or claim for refund 

for any person, or 

(D) prepares a claim for refund for a taxpayer in 

response to any waiver of restriction after the commencement 

of an audit of such taxpayer or another taxpayer if a 

determination in such audit of such other taxpayer directly or 

indirectly affects the tax liability of such taxpayer. 

§ 1923. Other Assessable Penalties With Respect to the Preparation of CNMI 

Tax Returns for Other Persons. 

(a) Failure to furnish copy to taxpayer. Any person who is a CNMI 

tax return preparer with respect to any return or claim for refund who fails to 

comply with section 1825(a) with respect to such return or claim shall pay a 

penalty of $50 for such failure, unless it is shown that such failure is due to 

reasonable cause and not due to willful neglect. The maximum penalty 

imposed under this subsection on any person with respect to documents filed 

during any calendar year shall not exceed $25,000. 

(b) Failure to sign return. Any person who is a CNMI tax return 

preparer with respect to any return or claim for refund, who is required by 

regulations prescribed by the Secretary to sign such return or claim, and who 

fails to comply with such regulations with respect to such return or claim shall 

pay a penalty of$50 for such failure, unless it is shown that such failure is due 

to reasonable cause and not due to willful neglect. The maximum penalty 

imposed under this subsection on any person with respect to documents filed 

during any calendar year shall not exceed $25,000. 

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checks, which is issued to a taxpayer (other than the CNMI tax return 

preparer) shall pay a penalty of $500 with respect to each such check. The 

preceding sentence shall not apply with respect to the deposit by a bank of the 

full amount of the check in the taxpayer's account in such bank for the benefit 

of the taxpayer. 

§ 1924. Reasonable Cause Exception. The Secretary may waive the penalties 

imposed under this Article with respect to any portion of an underpayment or any 

failure by any person if it is shown that there was a reasonable cause and not willful 

neglect for such portion or such failure and that the taxpayer acted in good faith with 

respect to such portion or failure. The Secretary may prescribe regulations to carry 

out the intent of this section. 

§ 1925. Special Rule on Dual Requirement. Where the same information is 

required in a return for both NMTIT and taxes other than the NMTIT, the Secretary 

shall prescribe regulations as to the enforcement of applicable dual penalties. 

ARTICLE II 

CRIMINAL PENAL TIES 

§ 1931. Attempt to Evade or Defeat Tax 

§ 1932. Willful Failure to Collect or Pay Over Tax 

§ 1933. Willful Failure to File Return, Supply Information, or Pay Tax 

§ 1934. Fraudulent Statement or Failure to Make Statement to Employee, 

Transferee, or Any Other Person Entitled to Receive a Statement 

§ 1935. Fraud and False Statement 

§ 1936. Fraudulent Returns, Statements or Other Document § 1937. Faiture to Obey Summons 

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§ 1940. Unauthorized Disclosure of Information 

§ 1941. False Statements to Purchasers or Lessees Relating to Tax 

§ 1931. Attempt to Evade or Defeat Tax. Any person who willfully attempts 

in any manner to evade or defeat any tax imposed by this Division or the payment 

thereof shall, in addition to other penalties provided by law, be guilty of a felony and, 

upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case 

of a corporation). or imprisoned not more than 5 years, or both, together with the costs of prosecution. 

§ 1932. Willful Failure to Collect or Pay Over Tax. Any person required 

under this Division to collect, account for, and pay over any tax imposed by this 

Division who willfully fails to collect or truthfully account for and pay over such tax 

shall, in addition to other penalties provided by law, be guilty of a felony and. upon 

conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 

5 years, or both. together with the costs of prosecution. 

§ 1933. ·Willful Failure to File Return. Supply Information. or Pay Tax. Any 

person required under this Division to pay any estimated tax or tax, or required by this 

Division or by regulations made under authority thereof to make a return, keep any 

records, or supply any information, who willfully fails to pay such estimated tax or 

tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, sha!l, in addition to other penalties provided by 

law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more 

than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 

year, or both, together with the costs of prosecution. 

§ 1934. Fraudulent Statement or Failure to Make Statement to Employee. 

Transferee. or Any Other Person Entitled to Receive a Statement. In lieu of any other 

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required time, or who willfully fails to show the information on the statement that is 

required under Section 1821 or 1822, or 1823 of this Division, or regulations 

prescribed thereunder, shall, for each such offense, upon conviction thereof, be fined 

not more than $1,000, or imprisoned not more than I year, or both. 

§ 1935. Fraud and False Statement. Any person who: 

(a) Declaration Under Penalties of Perjurv. Willfully makes and 

subscribes any return, statement, or other document. which contains or is 

verified by a written declaration that it is made under the penalties of petjury. 

and which he docs not believe to be true and correct as to every material 

matter; or 

(b) Aid or Assistance. Willfully aids or assists m, or procures. 

counsels, or advises the preparation or presentation under. or in connection 

with any matter arising under this Division, of a return, affidavit, claim, or 

other document, which is fraudulent or is false as to any material matter, 

whether or not such falsity or fraud is with the knowledge or consent of the 

person authorized or required to ·present such return, affidavit, claim. or 

document; or 

(c) Fraudulent Bonds. Permits. and Entries. Simulates or falsely or 

fraudulently executes or signs any bond, permit, entry, or other document 

required by the provisions of this Division, or by any regulation made in 

pursuance thereof, or procures the same to be falsely or fraudulently executed, 

or advises, aids in, or connives at such execution thereof; or 

(d) Removal or Concealment With Intent to Defraud. Remo\·es, 

deposits, or conceals, or is concerned in removing, depositing, or concealing, 

any goods or commodities for or in respect whereof any tax is or shall be 

imposed, or any property upon which levy is authorized by Section 1871 of 

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compromise under Section 1817(b) of this Division, or offer of such 

compromise or in connection with any closing agreement under Section 

1817(a) of this Division, or offer to enter into any such agreement, willfully: 

(1) Concealment of property. Conceals from any officer or 

employee of the Commonwealth any property belonging to the 

taxpayer or other person liable in respect of the tax, or 

(2) Withholding. falsifying. and destroving records. Receives, 

withholds. destroys. mutilates, or falsifies any book, document, or 

record. or makes any false statement, relating to the estate or financial 

condition of the taxpayer or other person liable in respect of the tax; 

shall be guilty of a felony and, upon conviction thereof, shall be fined not 

more than $100,000 ($500,000 in the case of a corporation) or imprisoned not more 

than 3 years, or both, together with the costs of prosecution. 

§ 1936. Fraudulent Returns, Statements or Other Document. Any person 

who willfully delivers or discloses to the Secretary any list, return, account, statement, 

or other document, known by him to be fraudulent or to be false as to any material 

matter, shall be fined not more than $10,000 ($50,000 in the case of a corporation) or 

imprisoned not more than 1 year, or both. Any person required to furnish any 

information to the Secretary or any other person who willfully furnishes to the 

Secretary or such other person any information known by him to be fraudulent or to 

be false as to any material matter shall be fined not more than $10,000 ($50,000 in the 

case of a corporation) or imprisoned not more than I year, or both. 

§ 1937. Failure to Obey Summons. Any person who, being duly summoned 

to appear to testify, or to appear and produce books, accounts, records, memoranda, or 

other papers, as required under Sections 1892, 1893, 1894(b) of this Division, 

neglects to appear or to produce such books, accounts, records, memoranda, or other 

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(a) Corrupt or Forcible Interference. Whoever corruptly or by force or 

threats afforce (including any threatening letter or communication) endeavors 

to intimidate or impede any officer or employee of the Commonwealth acting 

in an official capacity under this Division, or in any other way corruptly or by 

force or threats of force (including any threatening letter or communication) 

obstructs or impedes or endeavors to obstruct or impede. the due 

administration of this Division, shall upon conviction thereof, be fined not 

more than $5,000, or imprisoned not more than 3 years, or both. The term 

'threats of force', as used in this subsection, means threats of bodily harm to 

the officer or employee of the Commonwealth or to a member of his family or 

household. 

(b) Forcible Rescue of Seized Propertv. Any person who forcibly 

rescues or causes to be rescued any prope11y after it shall have been seized 

under this Division, or shall attempt or endeavor so to do, shall, excepting in 

cases otherwise provided for, for every such offense, be fined not more than 

$500, or not more than double the value of the prope1ty so rescued, whichever 

is the greater, or be imprisoned not more than 2 years. 

§ 1939. Offenses by Officers and Employees of the Commonwealth. Any 

officer or employee of the Commonwealth acting in connection with any tax law of 

the Commonwealth--

( a) who is guilty of any extortion or willful oppression under color of 

law; or 

(b) who knowingly demands other or greater sums than are authorized 

by law, or receives any fee, compensation, or reward, except as by law 

prescribed, for the performance of any duty; or 

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es or colludes with any other person to defraud the 

Commonwealth; or 

(e) who knowingly makes opportunity for any person to defraud the 

Commonwealth; or 

(f) who does or omits to do any act with intent to enable any other 

person to defraud the Commonwealth, or 

(g) who make or signs any fraudulent entry in any book, or makes or 

signs any fraudulent certificate, return, or statement; or 

(h) who, having knowledge or information of the violation of any 

revenue law by any person, or of fraud committed by any person against the 

Commonwealth under any revenue law, fails to report, in writing, such 

knowledge or information to the Secretary; or 

(i) who demands. or accepts, or attempts to collect, directly or 

indirectly as payment or gift, or otherwise, any sum of money or other thing of 

value for the compromise, adjustment. or settlement of any charge or 

complaint for any violation or alleged violation of law. except as expressly 

authorized by law to do so; 

shall be dismissed from office or discharged from employment and, 

upon conviction thereof, shall be fined not more than $10,000, or imprisoned not 

more than 5 years, or both. 

The court may in its discretion award out of the fine so imposed an amount. 

not in excess of one-half thereof, for the use of the informer, if any, who shall be 

ascertained by the judgment of the court. The court also shall render judgment 

against the said officer or employee for the amount of damages sustained in favor of 

the pm1y injured, to be collected by execution. 

§ 1940. Unauthorized Disclosure of Information. 

(a) Returns and Return Information. 

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of such person). or any fanner officer or employee. willfully to 

disclose to any person, except as authorized in this Division, any return 

or return information. Any violation of this paragraph shall be a felony 

punishable upon conviction by a fine in an amount not to exceed 

$5,000, or imprisonment of not more than 5 years, or both, together 

with the costs of prosecution, and if such offense is committed by any 

officer or employee of the Commonwealth, he shall, in addition to any 

other punishment, be dismissed from office or discharged from 

employment upon conviction for such offense. 

(2) Other Persons. It shall be unlawful for any person to whom 

any return or return information is disclosed in any manner 

unauthorized by this Division thereafter willfully to print or publish in 

any manner not provided by law any such return or return information. 

Any violation of this paragraph shall be a felony punishable by a tine 

in any amount not exceeding $5,000, or imprisonment of not more than 

5 years, or both, together with the costs of prosecution. 

(3) Solicitation. It shall be unlawful for any person willfully to 

offer any item of material value in exchange for any return or return 

information (as defined in Subchapter H) and to receive as a result of 

such solicitation any such return or return information. Any violation 

of this paragraph shall be a felony punishable by a fine in the amount 

not exceeding $5,000, or imprisonment of not more than 5 years, 

together with the costs of prosecution. 

(4) Shareholders. It shall be unlawful for any person to whom 

a return or return information (as defined in Subchapter H) is disclosed 

pursuant to the provisions of section 6103(e)(l)(D)(iii) of the NMTIT 

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imprisonment of not more than 5 years, or both, together with the costs 

of prosecution. 

(b) Disclosure of Operations of Manufacturer or Producer. Any 

officer or employee of the Commonwealth who divulges or makes known in 

any manner whatever not provided by law to any person the operations, style 

of work, or apparatus of any manufacturer or producer visited by him in the 

discharge of his official duties shall be guilty of a misdemeanor and. upon 

conviction thereof, shall be tined not more than $1.000. or imprisoned not 

more than I year, or both, together with the costs ol' prosecution; and the 

offender shall be dismissed from offtce or discharged from employment. 

(c) Disclosures bv Certain Delegates of the Governor. All provisions 

of law relating to the disclosure of information, and all provisions of law 

relating to penalties for unauthorized disclosure of information, which are 

applicable in respect of any function under this Division when performed by 

an officer or employee of the Department of Finance are likewise applicable in 

respect of such function when performed by any person who is a "delegate". 

A "delegate" shall include any officer or employee of any other department, 

agency, or instrumentality of the Commonwealth duly authorized by the 

Governor (directly or indirectly by one or more rede!egations of authority) to 

perform such functions. 

(d) Disclosure of software. Any person •..vho willfully divulges or 

makes known software (as deiined in section 7612(d)(l) of the NMTIT) to any 

person in violation of Commonwealth law shall be guilty of a felony and, upon 

conviction thereof, shall be fined not more than $5.000, or imprisoned not 

more than 5 years, or both, together with the costs of prosecution. The term 

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§ 1941. False Statements to Purchasers or Lessees Relatina to Tax. Whoever 

in connection with the sale or lease, or offer for sale or tease. of any article, or for the 

purpose of making such sale or lease, makes any statement, written or oral~~ (a) intended or calculated to lead any person to believe that any part of 

the price at which such mticle is sold or leased, or offered for sale or lease, 

consists of a tax imposed under the authority of the Commonwealth, or 

(b) ascribing a particular part of such price to a tax imposed under the 

authority of the Commonwealth, 

knowing that such statement is false or that the tax is not so great as the 

portion of such price ascribed to such tax, shall be guilty of a misdemeanor and, upon 

conviction thereof, shall be punished by a fine of not more than $1,000, or by 

imprisonment for not more than I year, or both. 

SUBCHAPTER H 

CONFIDENTIALITY AND DISCLOSURE 

§ 1951. General Rule 

§ 1952. Definitions 

§ 1953. Authorized Disclosures. 

§ 1954. Civil Damages for Unauthorized Disclosure of Returns and Return 

Information. 

§ 1951. General Rule. Returns and return information shall be confidential, 

and except as authorized by this Subchapter no officer or employee of the 

Commonwealth shall disclose any return or return information obtained by him in any 

manner in connection with his service as such an officer or an employee or otherwise 

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ded, for purposes of this 

Subchapter: 

(a) 'Return' means any tax or information return, declaration of 

estimated tax, certificate of entry, or claim for refund required by, or provided 

for or permitted under, the provisions of this Division which is filed with the 

Secretary. on behalf of, or with respect to any person, and any amendment or 

supplement thereto, including suppm1ing schedules, attachments. or lists 

which are supplemental to, or part of, the return so filed. 

(b) 'Return information' means--

(!) a taxpayer's identity, the nature, source, or amount of his 

income, payments, receipts. deductions, exemptions, credits, assets, 

liabilities, net worth, tax liability, tax withheld, deficiencies, 

overassessments, or tax payments, whether the taxpayer's return was, is 

being, or will be examined or subject to other investigation or 

processing, or any other data. received by. recorded by, prepared by, 

furnished to, or collected by the Secretary with respect to a return or 

with respect to the determination of the existence, or possible 

existence, of liability (or the amount thereof) of any person under this 

Division for any tax, penalty. interest, fine, forfeiture, or other 

imposition, or offense, aH4 

(2) any part of any written determination or any background 

file document relating to such written determination (as such terms are 

defined in section 6!10(b) of the NMTIT) which is not open to public 

inspection under section 6110 of the NMTIT, and 

(3) any agreement under section 1817 and any similar 

agreement, and any background information related to such agreement 

or request for agreement, 

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disclosure of standards used or to be used for the selection of returns for examination, 

or data used or to be used for determining such standards. if the Secretary determines 

that such disclosure wiH seriously impair assessment, col!ection, or enforcement 

under the Commonwealth tax laws. 

(c) 'Taxpayer return information' means return information as defined 

in subsection (b) which is filed with. or furnished to, the Secretary by or on 

behalf of the taxpayer to whom such return information relates. 

(d) 'Tax administration': 

(I) means: 

(A) the administration, management. conduct direction, 

and supervision of the execution and application of the tax laws 

or related statutes (or equivalent taws and statutes of 

municipalities) and tax conventions to which the 

Commonwealth is a party, and 

(B) the development and formulation of Commonwealth 

tax policy relating to existing or proposed tax laws, related 

statutes, and tax conventions, and 

(2) includes assessment, collection, enforcement, litigation, 

publication, and statistical gathering functions under such laws. 

statutes, or conventions. 

(e) Municipality: 

(I) Rota, Saipan, Tinian, and other municipalities within the 

Commonwealth, and 

(2) any other jurisdiction outside the Commonwealth, including 

but not limited to Guam and the United States, with which the 

Governor has entered into a written agreement regarding disclosure. 

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(g) 'Inspected' and 'inspection' mean any examination of a return or 

return information. 

(h) 'Disclosure' means the making known to any person, m any 

manner, whatever a return or return information. 

(i) 'Chief executive officer' means an elected official of a municipality 

or the chief executive of a municipality. 

§ 1953. Authorized Disclosures. 

(a) Except as provided in subsection (b), an officer or employee of the 

Commonwealth is authorized to disclose return and return information 

pertaining to any provision of this Division only as authorized by §6103 of the 

NMTIT. 

(b) An officer or employee of the Commonwealth may, in connection 

with his official duties, disclose return or return information obtained under 

any provision of this Division to himself or to other officers or employees of 

the Commonwealth to the extent necessary to obtain or give information 

necessary for the enforcement of any provision of this Division. 

(c) The Secretary may prescribe by regulation the manner by which to 

mirror the provisions of §6103 of the NMTIT for the purpose of its proper 

application to the disclosure of return and return information pertaining to all 

provisions of this Division. 

§ 1954. Civil Damages for Unauthorized Disclosure of Returns and Return 

Information. 

(a) In General. 

(1) Disclosure bv Employee of Commonwealth. If any officer 

or employee of the Commonwealth knowingly, or by reason of 

negligence, discloses any return or return information with respect to a 

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(2) Disclosure by a Person Who Is Not an Employee of the 

Commonwealth. If any person who is not an officer or employee of 

the Commonwealth knowingly, or by reason of negligence, inspects or 

discloses any return or return information with respect to a taxpayer in 

violation of any provision of section 6103 of the NMTIT or of this 

subchapter, such taxpayer may bring civil action for damages against such person in the Commonwealth Superior Court. 

(b) No Liability for Good Faith But Erroneous Interpretation. No 

liability shall arise under this section with respect to any inspection or 

disclosure which results from a good faith, but erroneous, interpretation of 

section 6103 of the NMTIT or of this subchapter, or any inspection or 

disclosure requested by the taxpayer. 

(c) Damages. In any action brought under subsection (a), upon a 

finding of liability on the part of the defendant, the defendant shall be liable to 

the plaintiff in an amount equal to the sum of--

( 1) the greater of--

( A) $1,000 for each act of unauthorized inspection or 

disclosure of a return or return information with respect to 

which such defendant is found liable, or 

(B) the sum of--

(i) the actual damages sustained by the plaintiff 

as a result of such unauthorized inspection or 

disclosure, plus 

(ii) in the case of a willful disclosure or an 

inspection or disclosure which is the result of gross 

negligence, punitive damages, plus 

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of law, an action to enforce any liability created under this section may be 

brought. without regard to the amount in controversy. at any time within 2 

years after the date of discovery by the plaintiff of the unauthorized inspection 

or disclosure. 

9 Section 5. Repealer and Reenactment. Chapter 9 of 4 CMC, Division 1 (Revenue 

1 0 and Taxation) is hereby repealed and reenacted to read: 

II "CHAPTER 9 

I2 OTHER ADMINISTRA T!VE PROVISIONS 

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§ 200!. Regulations 

§ 200 I. Regulations. 

(a) Authorization. The Secretary is authorized to prescribe all needful 

rules and regulations to carry out the intent and purpose of this Division 

including Chapter 7. and for purposes of tax administration and enforcement. 

The rules and regulations under analogous provisions of the NMTIT shall 

serve as interpretative guidance in the absence of other rulings and regulations 

by the Secretary. 

(b) Retroactivity of Regulations or Rulings. The Secretary may 

prescribe the extent, if any. to which any ruling or regulation. relating to the 

CNMI tax laws including Chapter 7, shall be applied without retroactive 

effect. No criminal penalties shall be deemed to have, or be given by 

regulation, a retroactive effect. 

(c) Manner of Makin!! Elections Prescribed by Secretary. Except to 

the extent otherwise provided by this Act, any election under this Act shall be 

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Section 6. Technical Corrections to Revenue and Taxation Code. 

(a) 

as follows: 

(b) 

follows: 

Section 1203 of 4 CMC is amended to add a new subsection (c) to read 

"(c) earnings of a foreign sales corporation from its operations." 

The initial phrase in Section 1303(a) of 4 CMC is amended to read as 

··(a) In lieu of the tax rates of Section 1301(a), the tax imposed on 

manufacturers and wholesalers shall be in accordance with the following 

schedule:'' 

(c) Section 1406 of 4 CMC entilled "Beverage Container Tax" under 

Public Law 9~22 is renumbered as§ 1405. 

(d) Section 1703(c)(2)(ii) of 4 CMC is amended to read as follows: 

"'(ii) All personal property owned, directly or indirectly , immediately 

prior to and on January 1, 1985. by an individual bona fide resident of the 

Commonwealth immediately prior to and on January 1. 1985. the amount 

realized from the actual sale of which would have been Commonwealth 

Sourced Income and would not have been subject to income taxation on 

December 31, 1984 by any of the following jurisdictions: the United States, 

the Virgin Islands, American Samoa, Puetto Rico, and Guam; and" 

(e) Section 1703(c)(2)(iii) of 4 CMC is amended to read as follows: 

"(iii) all personal property owned, directly or indirectly immediately 

prior to and on January 1, 1985, by a corporation incorporate din or under the 

Jaws of the Commonwealth, the amount realized from the actual sate of which 

would have been Commonwealth Sourced Income and would not have been 

subject to income taxation on December 31, 1984 by any of the following 

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Penalty" is renumbered as Section 1506. 

(g) Section 1506 of 4 CMC as enacted by P.L. 9-22 entitled "Regulation" 

is renumbered as Section 1507. 

(h) Section 1507 of 4 CMC as enacted by P.L. 9-22 entitled ''Reservation 

of License Revenue" is renumbered as Section 1508. 

read: 

(i) Section 1708 is hereby amended to add a new subsection 1708(t) to 

"(f) The Secretary shall prescribe by regulation the procedure. 

manner, and requirements of obtaining a rebate under § 1708 ofNMTIT taxes 

claimed on amended returns filed after the due date prescribed by law for the 

filing of the original of such returns.·· 

(j) 4 CMC Section 1991 is repealed. 

(k) Section 6 of P .L. 13-42 is amended to add a new 4 CMC § 1402(g) not 

a§ l402(f). 

(I) Section 28(g) ofP.L. 12-20 is amended to add a new 4 CMC § 1717, 

19 nota·§1716. 

20 (m) Section 5 ofP.L. 12-79 is amended to add a new subsection (i), not (h) 

21 to4CMC§ 1305. 4CMC § l305(h)shallreadasamendedbyP.L.l2-20. 

22 (n) Section 2 of P.L. 13-59 is amended to add a new subsection (e) to 4 

23 CMC § 1401, not a subsection (g). The existing subsections (e) through (p) shall be 

24 redesignated as subsection (f) through (q) respectively. 

25 

26 Section 7. Severability. If any provision of this Act or the application of any such 

27 provision to any person or circumstance should be held invalid by a court of competent 

28 jurisdiction, the remainder of this Act or the application of its provisions to persons or 

29 circumstances other than those to which it is held invalid shall not be affected thereby. 

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4 repealed or under any rule, regulation or order adopted under the statutes. Repealers 

5 contained in this Act shall not affect any proceeding instituted under or pursuant to prior law. 

6 The enactment of this Act shall not have the effect of terminating, or in any \'.'ay modifying, 

7 any liability civil or criminal, which shall already be in existence at the date this Act becomes 

8 effective. 

9 

10 Section 9. Effective Date. This Act shall take effect, upon approval by the Governor 

11 or upon it becoming law without such approval, on January I. 2005. 

CERTIFIED BY: 

lsi 

BENIGNO R. FITIAL 

SPEAKER OF TilE HOUSE 

ATTESTED TO BY: 

lsi 

EVELYN C. FLEMING 

HOUSE CLERK 

Approved on this 12th day of October, 2004 

lsi 

Jt:AN N. BABAt:TA 

GOVERNOR 

COMMONWEALTII OF TI-lE NORTHERN MARIANA ISLANDS 

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