2 2004. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

AN ACT PUBLIC LAW NO. 14-35 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.

# Public Law No. **14~35**



# HOUSE BILL NO.l4-180,

HSI Section

3. Repealer

and Reenactment. Sections

1 1 03 through 1106
of Chapter

1 

# of
4 2 CMC Division

1 (Revenue

and Taxation)

are hereby repealed

and reenacted

to read: 3

.. CHAPTER

I. 

# 4

GENERAL. 5

§1101. ShortTitle 

# 6 7 

# 8 

# 9 10 II 12 

# 13 14 

# 15 16 

# 17 18 

# 19 

# 20 21 22 

# 23 24 

# 25 26 27 

# 28 

# 29

§ 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 Page

22345678910II12131415161718192021222324252627BILLNO.HSIincludinganoptiontoacqu1rethesame.oranyinterestdefinedm§897(c)(l)(A)(ii)oftheNMTIT;(d)'Commonwealth',forpurposesofthisDivision,meanstheCommonwealthoftheNorthernMarianaIslands,includingthegovernmentthereof,whichlieswithinthearean011hof14degreesnorthlatitude,southof21degreesnorthlatitude,westof!50degreeseastlongitudeandeastof144degreeseastlongitude,asextendedbytheMarineSovereigntyAct(commencingatSection1101ofTitle2ofthisCode).(e)'Covenant'meanstheCovenanttoEstablishaCommonwealthoftheNorthernMarianaIslandsinPoliticalUnionwiththeUnitedStatesofAmerica.(f)'Division'forpurposesofthisActandPub.L.9-22meansChapterthroughChapter9andChapterIIofTitle4oftheCommonwealthCodeexceptasexpresslyprovidedotherwise.(g)'Employee'meansanyindividual,whoundertheusualcommonlawrulesapplicableindeterminingtheemployer-employeerelationship,hasthestatusofanemployee.(h)'Employer'meansthepersonforwhomanemployeeperformsorperfonnedanyserviceofwhatevernature.(i)'Financialinstitution'meansanysavingsandloanassociation,oranyincorporatedsavingsandloancompany,trustcompany,mortgagebankingcompany,consumerfinancecompanyorotherfinancialcorporation.G)GrossRevenue.(I)'GrossRevenue'means:(A)thetotalamountofmoneyorthevalueofotherconsideration,withoutdeductionforanyexpenses,receivedoraccruedfrom:Page32345678910II121314151617181920212223242526272829(i)sellingorleasinganyinterestinrealproperty,includingtheassignmentofanyCNMI,realpropertyinterest,inthecourseofcarryingonabusiness;(ii)sellinganyinterestinpersonalproperty,tangibleorintangible,intheCommonwealthinthecourseofcarryingonabusiness;(iii)leasinganyinterestinpersonalproperty,tangibleorintangible,includingtheassignmentofanylease,locatedintheCommonwealthinthecourseofcarryingonabusiness;(iv)performingservicesintheCommonwealthinthecourseofcarryingonabusiness;and(v)sellingmorethanoneproperty,asprovidedunderSection1301.(B)thetotalamountofmoneyorthevalueofotherconsideration,withoutdeductionforanyexpenses.receivedoraccruedasinterest,dividends,rents.royalties,grossreceiptsofabusinessderivedfromtrade,business,commerce,orsales,orsimilarincomeearnedinandderivedfromapersonintheCommonwealthandreceivedbyaresidentinthecourseofcarryingonabusiness.(C)thatportionofthedistributiveshareofgrossrevenueofapartnership,asprovidedintheNMTITontheeffectivedateofthisAct,thatisderivedfromtheconductofabusinessintheCommonwealth,toapminerwhoisnotanindividual.SuchportionshallbedeterminedunderregulationsprescribedbytheSecretary.(2)Grossrevenueincludesthetotalrevenuereceivedoraccrued,asrecognizedunderthetaxpayer'ssystemoftaxaccountingthatisconsistentwiththePage42 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180. HS1 Secretary's regulations,

and without deduction

for any expenses.

by

a person who
by ocean-going
vessel delivers property

or transports individuals

in or out of the Commonwealth.

The gross revenue included

by this paragraph
shall
be no more than 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, Page

52345678910II1213141516171819202122232425262728raffle.orothergamblingevent,transaction,orotheractivitydoesnotincludethewager.Noothercostorexpensemaybedeductedfromthewinningsofthatevent,transactionorotheractivity.(t)'Individual'means,unlessotherwiseprovided,anaturalperson,anestate,atrust,orafiduciaryactingforanaturalperson,trust,orestate.(m)'LeasingorRenting'meansanyarrangementwhereby,foraconsideration.propertyisemployedfororbyanypersonotherthantheowneroftheproperty.(n)'LocalTerritorialIncomeTax'meanstheincometaxlawsinforceintheUnitedStateswhichcameintoeffectintheCommonwealthpursuanttoSection601oftheCovenantasalocalincometaxoftheCommonwealthandmaybecitedasthe'NorthernMarianasTerritorialIncomeTax'('NMTIT').(o)'Manufacturer'meansanypersonengagedincombiningorprocessing componentsormaterialsinlargequantitiesbymeansofindustrialmachinestoincreasetheirvalueforsaleintheordinarycourseofbusinessandwhosellssuchitemstoothersforresaleandnottothefinalconsumer.Thisdefinitionoftheterm'Manufacturer'doesnotrequirethatthe'Manufacturer'betheactualentitythatsellstheitemsmanufactured.Thedefinitionappliestotheactualprocessofcombiningandprocessingcomponentsandmaterialsinlargequanthiesbymeansofindustrialmachinesandapplieswhetherthe'Manufacturer'isprovidingtheservicestoanotherentity,orisasubsidiaryoftheselleroractuallysellstheitemsitself.(p)'Month'meanscalendarmonth.(q)'Off-shoreBankingCorporation'meansanentityincorporatedintheCommonwealth,whoseprincipalpurposeis:(l)negotiating,makingandextendingloanstoborrowerswhoarenotresidentsorcitizensoftheCommonwealth;orPage62 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(2) borrowing
from lenders who are not residents

or citizens

of the Commonwealth; and who

is not transacting business

as

a retail bank within

the 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.

Page

7

### 2 3 

### 4 5 

### 6 7 8 

### 9 

### IO II I2 I3 

### I4 IS 

### I6 I7 I8 I9 20 2I 

### 22 23 24 25 

### 26 27 28 

### Public Law No. **14~35**



### HOUSE BILL NO. 14-180, HS1 (w) 'Secretary' means
the Secretary

of Finance. (x) 'Taxpayer' means any person subject

to tax under this Division. 

### (y) 'Transient Occupant

of

a Room

or Rooms



### in

a Hotel, Lodging 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 PageS2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

college credit(s)

for the performance

of the services

and the services must further

the student's education, curriculum,

or course

of study. (7) any benefit payment from the United States, Trust Territory, 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.

Page

923456789§I106.TaxExemptionforBondsandOtherObligations.Allbondsandotherobligations(includingcertificatesofparticipation)issuedbytheGovernmentoftheNorthernMarianaIslandsorbyitsauthoritythroughitscorporations,instrumentalities,orpoliticalsubdivisionsshallbeexempted,astoprincipalandinterestfromtaxationbytheGovernmentoftheNorthernMarianaIslands,itsgovernmentcorporations,instrumentalities,orpoliticalsubdivisions.Thistaxexemptionshall extendtothesaleandtransferoftheprincipalorinterestorbothduringthelifeofthebondsorotherdebtobligations."10Section4.RepealerandReenactment.Chapter8of4CMCDivisionI(RevenueandIITaxation)isherebyrepealedandreenactedtoread:12"CHAPTER813ADMINISTRATIVEPROVISIONS14SUBCHAPTERA15GENERALPROVISIONS1617181920212223242526272829§1801.§1802.§1803.§1804.§1805.§1806.§1807.§1808.§1809.LegalTenderGeneralFundReservedDistributionofRevenuesNon-NMTITApplicationDelegationofAuthorityTaxformsTransactiontobeRecordedRecordRetentionandConflictofInterest§1810.AuthoritytoReduceandNegotiateTaxandPenalties;AuthoritytoMakeCreditsorRefunds.§\811.ServicebyPublication§1812.PrivateLetterRulings§1813.TimelyMailingTreatedasTimelyFilingandPayingPage102 3 4 5 6 7 8 9 !0 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

§ 1814. Time
for Performance

of Acts Where Last Day Falls On Saturday. Sunday,

or Legal Holiday § 1815. Extensions

To File Tax Returns §

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 Page

ll

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# 4 5 6 

# 7 

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# 10 II 12 

# 13 14 

# 15 16 

# 17 18 

# 19 

# 20 21 

# 22 23 24 25 

# 26 27 

# 28 

# 29 Public Law No. 

# 14-35



# HOUSE BILL NO.l4-180,

HSl Resolution 10-36. The funds shall

be non lapsing

to the extent required

to be maintained

as

a reserve

in the Building Fund and
as otherwise required

by law or contract. 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 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 Page

122 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 responsibilities,

tasks

or duties conferred
upon the Secretary herein may also
be delegated

to the Director

of Revenue

and Taxation. Subject

to the overall direction

of the Secretary,

the Director shall have supervision

and be responsible

for all matters 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. Page

13

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# 3 4 5 6 

# 7 8 

# 9 10 

# II 

# 12 13 14 

# 15 16 

# 17 18 

# 19 

# 20 21 22 

# 23 24 

# 25 26 27 

# 28 Public Law 

# No. 14-35



# BILL NO. § 

# 1808. Transaction

to be Recorded. 

# (a) Every person, engaging

in any transaction subject

to

a tax, fee or charge imposed under this Division shall keep

a complete

and accurate record 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.

Page

142 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(a) The Secretary
may waive any additions

to tax, additional amounts. or penalties,

or any part thereof attaching

to acts performed

or not performed by any taxpayer acting

in reasonable reliance

on this Division

or on any rules 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 Page

15234567891011121314151617181920212223242526272829PublicLawNo.14-35tobemade.thedateoftheUnitedStatespostmarkstampedonthecoverinwhichsuchreturn,claim,statement,orotherdocument,orpayment,ismailedshallbedeemedtobethedateofdeliveryorthedateofpayment,asthecasemaybe.(2)MailingRequirements.Thissubsectionshallapplyonlyif:(A)thepostmarkdatefallswithintheprescribedperiodoronorbeforetheprescribeddate:(i)forthefiling(includinganyextensiongrantedforsuchfiling)ofthereturn,claim,statement,orotherdocument,or(ii)formakingthepayment(includinganyextensiongrantedformakingsuchpayment),and(B)thereturn,claim,statement,orotherdocument,orpaymentwas,withinthetimeprescribedinsubparagraph(A).depositedinthemailintheUnitedStatesinanenvelopeorotherappropriatewrapper,postageprepaid,properlyaddressedtotheagency,officer,orofficewithwhichthereturn,claim,statement,orotherdocumentisrequiredtobefiled,ortowhichsuchpaymentisrequiredtobemade.(b)Postmarks.ThissectionshallapplyinthecaseofpostmarksnotmadebytheUnitedStatesPostalServiceonlyifandtotheextentprovidedbyregulationsprescribedbytheSecretary.(c)RegisteredandCertifiedMailing:ElectronicFiling.(1)RegisteredMail.Forpurposesofthissection,ifanysuchreturn,claim,statement,orotherdocument,orpayment,issentbyUnitedStatesregisteredmail;(A)suchregistrationshallbeprimafacieevidencethatthereturn,claim,statement,orotherdocumentwasdeliveredtotheagency,officer,orofficetowhichaddressed,andPage\62 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 (B) the date
of registration

shall

be deemed

the postmark
date. (2) Certified
Mail: Electronic Filing.

The Secretary

is 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 Page

17234567891011121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1(includinganyextensionoftimegrantedformakingsuchdeposit),and(B)thedepositwas,onorbeforesuchsecondday,mailedbyUnitedStatesmailinanenvelopeorotherappropriatewrapper,postageprepaid,properlyaddressedtothebank,trustcompany.domesticbuildingandloanassociation,orcreditunionauthorizedtoreceivesuchdeposit.Inapplyingsubsection(c)forpurposesofthissubsection,theterm'payment'includes'deposit',andthereferencetothepostmarkdatereferstothedateofmailing.(3)NoApplicationToCertainDeposits.Paragraph(I)shallnotapplywithrespecttoanydepositof$20,000ormorebyanypersonwhoisrequiredtodepositanytaxmorethanonceamonth.(f)Treatmentofprivatedeliveryservices.(I)Ingeneral.AnyreferenceinthissectiontotheUnitedStatesmailshallbetreatedasincludingareferencetoanydesignateddeliveryservice.andanyreferenceinthissectiontoapostmarkbytheUnitedStatesPostalServiceshallbetreatedasincludingareferencetoanydaterecordedormarkedasdescribedinparagraph(2)(C)byanydesignateddeliveryservice.(2)Designateddelivervserv1ce.Forpurposesofthissubsection,theterm"designateddeliveryservice"meansanydeliveryserviceprovidedbyatradeorbusinessifsuchserviceisdesignatedbytheSecretaryforpurposesofthissection.TheSecretarymaydesignateadeliveryserviceundertheprecedingsentenceonlyiftheSecretarydeterminesthatsuchservice-(A)isavailabletothegeneralpublic,(B)isatleastastimelyandreliableonaregularbasisastheUnitedStatesmaiI,Page18Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 (C) records electronically

to its data base, kept

in the 2

regular course

of its business,

or marks

on the cover

in which 3

any item referred

to in this section

is to be delivered,

the date 4

on which such item was given

to such trade

or business

for 5

delivery,

and 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.

Page

19234567891011121314151617181920212223242526272829PublicLawNo.14-35(a)DepartmentofFinancePersonneLEveryofficeroremployeeoftheDepartmentofFinancedesignatedbytheSecretaryforthatpurposeisauthorizedtoadministersuchoathsoraffirmationsandtocertifytosuchpapersasmaybenecessaryundertheCNMItaxtawsorregulationsmadethereunder.(b)Others.AnyoathoraffirmationrequiredorauthorizedunderanyCNMItaxlaworunderanyregulationsmadethereundermaybeadministeredbyanypersonauthorizedtoadministeroathsforgeneralpurposesofthelawoftheCommonwealth,whereinsuchoathoraffirmationisadministered.Thissubsectionshatlnotbeconstruedasanexclusiveenumerationofthepersonswhomayadministersuchoathsoraffirmations.(c)TheSecretaryshal!havetheauthoritytoissueregulationsgoverningpracticebeforetheDivisionofRevenueandTaxation.§1817.ClosingAgreements:Compromises.(a)Closin!lAgreements.TheSecretaryisauthorizedtoenterintoanagreementinwritingwithanypersonrelatingtotheliabilityofsuchperson(orofthepersonorestateforwhomheacts)inrespectofanyCommonwealthtaxforanytaxableperiod.IfsuchagreementisapprovedbytheSecretary(withinsuchtimeasmaybestatedinsuchagreement,orlateragreedto)suchagreementshallbefinalandconclusive,andexceptuponashowingoffraud,malfeasance,ormisrepresentationofamaterialfact,(I)thecaseshallnotbereopenedastothemattersagreedupon,and(2)inanysuit,action,orproceeding,suchagreement,oranydetermination,assessment,collection,payment,abatement,refund,orcreditmaybemadeinaccordancetherewith,sha!lnotbeannulled,modified,setaside,ordisregarded.(b)Compromises.TheSecretarymaycompromtseanycivilorcriminalcasearisingundertheCommonwealthtaxlawspriortoreferencetoPage202 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

the Attorney General's Office

for prosecution

or defense.

and the Attorney General

or his delegate
may compromise

any such case after reference

to it. § 18

I 8. Jurisdiction

of Superior Court

as Tax Court.

In addition

to such other 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. Page

212345678910II121314151617181920212223242526272829NO.HS!(a)WithholdimzbvtheEmployer.ThetaximposedbySection1201ofthisDivisionshallbecollectedthroughdeductionsandwithholdingsupontheemployee'swages,asandwhenpaidorcreditedtotheemployee,bytheemployerofsuchemployee,inaccordancewithtablesorcomputationalproceduresprescribedbytheSecretary.Everyemployerrequiredtodeductandwithholdthe taxherebyimposedisliableforthepaymentandshallpaysuchtaxtotheSecretary.AnyemployerwhoviolatesanyoftheprovisionsofthissectionshallbesubjecttothepenaltiesprescribedinthisDivision.(b)EmployertoFileReturnCoveringTaxonCompensation.(1)EmployerPayOverofWithholding.(A)PayOverofWithholding.TheemployershalLonorbeforethelastdayofthemonthfollowingthecloseofeachquarter.towit:onorbeforeApril30,July31,October31,andJanuary31,payoverthe taxwithheld,andmakeafull,trueandcorrectreturnshowingallwagesandsalarieswithheldandpaidoverduringtheprecedingquarter.SuchreturnshallbefiledforpayoverofthetaxandshallincludesuchotherinformationasmayberequiredorprescribedbytheSecretary.WithholdingreturnsfiledbyemployerswithoutremittingtotheSecretarytherequiredamounttobedeductedandwithheldshallbeacceptedbytheSecretary;provided,thatsuchreturnsubmittedshallnotbeconsideredfileduntiltheactualremittanceoftheamountdueispaidtotheSecretary.(B)Regulations.TheSecretaryathisdiscretionmayprescribespecialformsfor,anddifferentproceduresandtimesfor,thefilingofsuchreturnsbyemployerspayingsuchcompensationandthepayoveroftaxeswithheld,ormay,uponsuchconditionsandsubjecttosuchmlesashemayprescribefromtimetotime,waivethefilingofanysuchreturns.ThePage222 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

BILL NO. Secretary
may require more frequent returns
and pay overs

as he in his discretion
feels
are advisable,

but

in no case shall

an employer

be required

to make returns more frequently

than 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 Page

23

# 2 3 

# 4 5 

# 6 7 

# 8 9 

# 10 II 12 

# 13 14 

# 15 16 17 

# 18 19 

# 20 21 22 

# 23 

# 24 

# 25 26 27 

# 28 29

amount

of the tax, which amount shall (whether

or not tax \Vithholdings constituting

trust funds have been commingled

\Vith said employer's assets) 

# form

a lien on the employer's entire assets. Any employer
may recover from 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. Page
242 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

§ 1822. Withholding Earnings

at the Source
and Filing Returns. (a) Requirement

of Withholding. (I)
In General.

A withholding

tax

at the maximum

rate 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 Page

252345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1onorbeforeJanuary31ofthesucceedingcalendaryearawrittenstatementinaformprescribedbytheSecretary,showingtheearningsofsuchpersonpaidbythewithholdingagentfortheyearorothertimeperiod.asthecasemaybe.andthetaxwithheldwithrespecttosuchperson.(C)Everypersonrequiredtodeductandwithholdtaxontheearningsofanyperson,shallfileonorbeforeFebruary28,ofthesucceedingcalendaryearaduplicatecopyofeachsuchstatementwiththeSecretary.(4)NoCauseofActionAgainstPavorforWithholding.Nopersonshallhaveanyrightofactionagainstthewithholdingagentwithrespecttoanymoniesdeductedfromsuchperson'seamingsincomplianceorintendedcompliancewiththisSectionandpaidtotheSecretary.(5)TaxPaidbvRecipient.Ifthewithholdingagent,mviolationofthewithholdingandfilingprovisionsherein,failstodeductandwithholdthetax,andthereafterthetaxagainstwhichsuchtaxiscreditedispaid,the taxsorequiredtobedeductedandwithheldshallnotbecollectedfromthewithholdingagent;butthissubsectionshallinnocaserelievethewithholdingagentfromliabilityforanypenaltiesoradditionstothe taxotherwiseapplicableinrespecttosuchfailuretodeductandwithhold.(b)PaymentofEstimatedTaxinLieuofWithholding.Wherethereisgainonthesaleofpersonalproperty,theresidentsellerisrequiredtopayaquarterlyestimatedtaxinlieuofwithholding.§1823.WithholdingOnRealEstate"l'ransactions.(a)InGeneral.InthecaseofanytransferofaCNMIrealpropertyinterest,thetaximposedbySection1301or1202ofthisDivision,onthegrossrevenueofatransferorofsuchaninterestshallbecollectedbythetransfereeasfollows.ThetransfereeshalldeductandwithholdthetaxforthePage262 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

account

of the transferor
upon every payment

of money

or other consideration to be made

to the transferor.

The amount

to be deducted

and withheld
shall

be equal

to the tax imposed

by Section

130

I of this Division

on every such 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 Page
272345678910II1213141516171819202122232425262728mcomplianceorintendedcompliancewiththisSectionandpaidtotheSecretary.(d)TaxPaidbvTransferor.Ifthetransferee.inviolationofthewithholdingandfilingprovisionsherein,failstodeductandwithholdthetax,andthereafterthe taxagainstwhichsuchtaxiscreditedispaid,thetaxsorequiredtobedeductedandwithheldshallnotbecollectedfromthetransferee;butthissubsectionshallinnocaserelievethetransfereefromliabilityforanypenaltiesoradditionstothe taxotherwiseapplicableinrespecttosuchfailuretodeductandwithhold.(e)Penaltv.Anytransfereewhofailstodeduct,withholdandcollect,and/orfailstoreport.accountforandpayoverthe taxrequiredhereinshallbepersonallyliableforthetotalamountofsuchtaxplusinterestandpenaltiesasprovidedinthisChapter.(f)Definitions.Forpurposesofthissection,thefollowingdefinitionsshallapply:(I)(2)CNMIRealPropertyInterest.Theterm'CNMIrealpropertyinterest'meansafeesimpleestate,estateforlifeoramulti-yearleaseinanyrealpropertylocatedwithintheCommonwealthincludinganoptiontoacquirethesame,oranyinterestdefinedinNMTIT§897(c)(I)(A)(ii).(2)Multi-yearLease.ForpurposesofthisDivision,theterm'multi-yearlease'meansanyleaseofaCNMJrealpropertyinterestextendingbeyondaperiodoffive(5)years.(3)Transfer.Theterm'transfer'meansanysale,multi-yearleaseorotherdispositionofaCNMIrealpropertyinterestformoneyorotherconsideration.AtransferincludesanyassignmentofaPage282 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Media. **multi~year**
lease

of

a CNMI real prope1ty interest,

but does not include the granting

of

a security interest

in

a CNMI real property interest. (4) Transferor.

The term 'transferor' means
any person

or 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

-- Page
29

### 2 3 4 5 

### 6 7 8 

### 9 10 

### II 

### 12 13 

### 14 

### 15 16 

### 17 

### 18 19 

### 20 21 

### 22 23 24 

### 25 26 27 28 

### 29 Public Law No. 

### 14-35

HOUSE BILL NO. 14-180. HS1 (I) shall not require any person

to file returns

on magnetic media unless such person

is required

to file
at least 250 returns during the calendar year, and (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

Page
302 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

§ 1831. § 1832. § 1833. § 1834. § 1835. § 1836. § 1837. § 1838. § 1839. § 1840. §1841. § 1842. Authority Erroneous Prepayment Credits Taxes Assessed 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. Page

312345678910II12131415161718192021222324252627PublicLawNo.14-35§1835.SupplementalAssessments.TheSecretarymay,atanytimewithinsuchperiodsasmaybeprescribedforassessments,makesuchsupplementaloradditionalassessmentwheneveritisasce11ainedthatanyassessmentisimperfectorincomplete.TheSecretarymayalsomakeanassessmentfortherecoveryofanyerroneousrefundorrebatemade.§1836.Assessment:NoReturnFiled.(a)Notice.UponthefailureofanypersontomakeandfileareturnrequiredbythisDivisionwithinthetimeandthemannerandformprescribed,oruponfailuretopayanyamountdue,theSecretarymaynotifysuchpersonofsuchfailureanddemandthatareturnbemadeandfiledandthe taxpaidasrequiredbythisDivision.(b)PreparationofReturnbvSecretarv.IfanypersonshallfailtomakearetumrequiredbythisDivisionorbyregulationsprescribedthereunder,butshallconsenttodiscloseallinformationnecessaryforthepreparationthereof,then,andinthatcase,theSecretarymaypreparesuchreturn,whichbeingsignedbysuchperson,maybereceivedbytheSecretaryasthereturnofsuchperson.(c)ExecutionofReturnbvSecretary.IfanypersonfailstomakeanyreturnrequiredbyanyCommonwealthtaxlaworregulationsmadethereunderatthetimeprescribedtherefore,andifsuchpersonuponnoticeanddemandmadebytheSecretary,failsorrefuseswithin30daysaftersaidnoticeanddemandtomakeandfileareturnandpaythetaxrequiredaftersaidnoticeanddemandhasbeenmailedtothetaxpayer'slastknownaddressorwithin30daysaftersaidnoticehasbeenotherwisecausedtobedeliveredtothetaxpayer,theSecretarymaymakeareturnforsuchpersonsfromhisownknowledgeandfromsuchinformationashecanobtainthroughtestimonyorotherwise,andmayassesstheappropriateamountoftax.Page322 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-!80, HSl (d) Status

of Returns.

Any return

so made and subscribed

by the Secretary pursuant

to this section shall

be prima facie good and sufficient

for a illegal purposes. § 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 Page

332345678910111213141516171819202122232425262728shalltakeintoaccountanypriordeterminationmadeunderthissectionwithrespecttosuchcurrenttaxableyear.(c)TreatmentofAmountsCollected.Anyamountscollectedasaresultofanyassessmentsunderthissectionshall,totheextentthereof,betreatedasapaymentoftaxforsuchtaxableyear.(d)DepartureofNonresidentAlien.SubjecttosuchexceptionsasmaybyregulationsbeprescribedbytheSecretary-(I)No"Nonresidentalien"asdefinedby§7701(b)oftheNMTITshalldepartfromtheCNMIunlesshefirstprocuresfromtheSecretaryacertificatethathehascompliedwithallobligationsimposeduponhimbytheCNMItaxlaws.(2)Paymentoftaxesshallnotbeenforcedbyanyproceedingsundertheprovisionsofthissectionpriortotheexpirationofthetimeotherwiseallowedforpayingsuchtaxes,ifinthecaseofanalienabouttodepartfromtheCNMI,theSecretarydetenninesthatthecollectionofthetaxwillnotbejeopardizedbythedepartureofthealien.(e)Limitation.This.sectionshallnotauthorizeanyassessmentoftaxfortheprecedingtaxableyearwhichismadeaftertheduedateofthetaxpayer'sreturnforsuchtaxableyear(determinedwithregardtoanyextensionsoftimetofileareturn).§1839.NoticeofAssessmentIftheSecretarydeterminesthatthere1sadeficiencyinrespectofanytaximposedbythisDivision,heisauthorizedtosendnoticeofassessmenttothetaxpayerbycet1ifiedmailorregisteredmailatthetaxpayer'slastknownaddressorshallotherwisecausenoticetobedeliveredtothetaxpayer.SuchnoticemaybesentwiththeNoticeandDemandForTaxunderj1852.§1840.Abatement.TheSecretaryisauthorizedtoabatetheunpaidportionoftheassessmentofanytaxoranyliabilityinrespectthereof,(a)isexcessiveinamount;Page342 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(b)

is assessed after the expiration

of the period

of limitations properly applicable thereto; (c)

is erroneously

or illegally assessed;

or (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. Page

352345678910II121314151617181920212223242526272829PublicLawNo.l4-35HOUSEBILLNO.14-180,HS1(B)Inanyactionundersubparagraph(A).ifthecourtfinds-(i)thataCNMItaxreturnpreparerhas-(a)engagedinanyconductsubjecttopenaltyunder1922or1923,orsubjecttoanycriminalpenaltyprovidedbythisDivision,(b)misrepresentedhiseligibilitytopracticebeforetheDivisionofRevenueandTaxationorotherwisemisrepresentedhisexperienceoreducationasataxreturnpreparer,(c)guaranteedthepaymentofanytaxrefundortheallowanceofanycredit,or(d)engagedinanyotherfraudulentordeceptiveconductwhichsubstantiallyinterfereswiththeproperadministrationoftheCNMItaxlaws,and(ii)thatinjunctivereliefisappropriatetopreventtherecurrenceofsuchconduct,thecourtmayenjoinsuchpersonfromfurtherengaginginsuchconduct.IfthecourtfindsthataCNMItaxreturnpreparerhascontinuallyorrepeatedlyengagedinanyconductdescribedinsubparagraph(B)(i)(a-d)ofthissubsectionandthataninjunctionprohibitingsuchconductwouldnotbesufficienttopreventsuchperson'sinterferencewiththeproperadministrationofthisDivision,thecom1mayenjoinsuchpersonfromactingasaCNMItaxreturnpreparer.(3)Thissectionshallnotapplyincasesofjeopardyasdefinedby§1871(d)(2).Page362 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(b) Criminal Actions.

The CNMJ Attorney General shall have the authority

to commence

a criminal action

to collect
any taxes assessed under this Division

in the name

of the Commonwealth. (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 Page
3723456789!01112131415161718192021222324252627HOUSEBILLNO.HSItheregulationsoftheSecretaryestablishedmpursuancethereof.(B)ProtestorDuress.Suchsuitorproceedingmaybemaintainedwhetherornotsuchtax,penalty,orsumhasbeenpaidunderprotestorduress.(C)SuitsAgainstCollectionOfficeraBar.AsuitagainstanyofficeroremployeeoftheCommomvealth(orformerofficeroremployee)orhispersonalrepresentativefortherecoveryofanyCommonwealthtaxallegedtohavebeenerroneouslyorillegallyassessedorcollected,orofanypenaltyclaimedtohavebeencollectedwithoutauthority,orofanysumallegedtohavebeenexcessiveorinanymannerwrongfullycollectedshallbetreatedasiftheCommonwealthhadbeenapartytosuchsuitinapplyingthedoctrineofresjudicatainallsuitsinrespectofanyCNMItax,andinallproceedingsintheTaxCom1andonreviewordecisionsoftheTaxCourt.(D)CreditTreatedasPayment.Thecreditofanoverpaymentofanytaxinsatisfactionofanytaxliabilityshall.forthepurposeofanysuitforrefundofsuchtaxliabilitysosatisfied,bedeemedtobeapaymentinrespectofsuchtaxliabilityatthetimesuchcreditisallowed.§1842.TransferredAssets(a)MethodofCollection.TheamountsofNonMNMTITliabilities,atlaworinequity,ofatransfereeofpropertyshall,exceptashereinafterprovidedinthissection,beassessed,paidandco!lcctcdinthesamemannerandsubjecttothesameprovisionsandlimitationsasinthecaseofthetaxeswithrespecttowhichtowhichtheliabilitieswereincurred.Page382 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180, HSI (b) Liability.

Any non-NMTIT liability

at law
or in equity,

of

a transferee

of property
may
be either

as to the amount

of tax shmvn

on

a return or as to any deficiency

or underpayment

of tax. (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 Page
392345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1transfereeoroverpaymentsoftaxmadebythetransferorofwhichthetransfereeislegallyentitledtocreditorrefund,suchagreementandanyextensionthereofshallbedeemedanagreementandextensionthereofreferredtoinsection1904.(2)ExtensionofTimeforCreditorRefund.Iftheagreementisexecutedaftertheexpirationoftheperiodoflimitationsforassessmentagainstthetaxpayerwithreferencetowhomtheliabilityofsuchtransfereearises,theninapplyingthelimitationsundersection1904ontheamountofthecreditorrefund,theperiodsspecifiedin1904shallbeincreasedbytheperiodfromthedateofsuchexpirationtothedateoftheagreement.(e)PeriodforAssessmentAgainstTransferor.Forpurposesofthissection.ifanypersonisdeceased,orisacorporationwhichhasterminateditsexistence,theperiodoflimitationforassessmentagainstsuchpersonshallbetheperiodthatwouldbeineffecthaddeathorterminationofexistencenotoccurred.(f)SuspensionofRunningofPeriodofLimitations.Therunningoftheperiodoflimitationsupontheassessmentoftheliabilityofatransfereeorfiduciaryshall,afterthemailingtothetransfereeofthenoticeprovidedforinsection1839besuspendedfortheperiodduringwhichtheSecretaryisprohibitedfrommakingtheassessmentinrespectoftheliabilityofthetransferee(andinanyevent,ifaproceedinginrespectoftheliabilityisplacedonthedocketoftheTaxCourt,untilthedecisioniftheTaxCourtbecomesfinal),andfor60daysthereafter.(g)AddressforNoticeofLiability.Anynoticeofliabilityenforceableunderthissectionrequiredtobemailedtosuchperson,shall.ifmailedtothepersonsubjecttotheliabilityathislastknownaddress,besufficientforpurposesofthisDivision,evenifsuchpersonisdeceased,orisunderlegaldisability,or,inthecaseofacorporation,hasterminateditsexistence.Page402 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

HOUSE BILL NO.

HSI (h) Definition

of Transferee.

As used

in this section.

the term "transferee" includes donee, heir, legatee, devisee,
and distributee. (i) Burden

of Proof.

In proceedings before

the Tax Court
the burden 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 Page

412 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

§ 1853. § 1854. § 1855. Collection

of Certain Liability Agreement

for Payment

of Tax Liability

in Installments Extension

of Time for Paying Tax § 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 Page
422 3 4 5 6 7 8 9 lO II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Law No. 14-35

BILL NO. to the agency.
The Secretary

may prescribe regulations

to determine the requirements

of certification received
from other government agencies.

For purposes

of this section 1853,
the term "agency'' 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; Page
4323456789101112131415!6!7!8!920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSI(B)PaytheamountbywhichsuchrebateorotheroverpaymentoftaxansingunderthisDivision,includingChapter7,isreducedundersubsection(A)tosuchperson;(C)NotifysuchpersonthattherebateorotheroverpaymentoftaxarisingunderthisDivision,includingChapter7,hasbeenreducedbyanamountnecessarytosatisfythepast-duechildsupportdebt;and(D)RemitthereducedrebateorotheroverpaymentoftaxarisingunderthisDivision,includingChapter7,amountevidencingthepast-duechi!dsupportpaymenttothepersonstatedontheNotice.(2)NoticeRequirement.ThenoticefromtheCommonwealthSuperiorCourtofafinaljudgmentshallinclude--(A)acopyofthejudgment;(B)astatementastotheamountofpast-duechildsupportdebt;and(C)thenameofthepersontowhomthereducedrebateorotheroverpaymentoftaxarisingunderthisDivision.includingChapter7,amountevidencingthepast-duechildsupportpaymentistoberemitted.(c)ReviewofReductions.NoreductionshallbesubjecttoreviewbytheSecretaryinanadministrativeproceeding.NoactionbroughtagainsttheCommonwealthtorecovertheamountofanysuchreductionshallbeconsideredtobeasuitforrefundoftax.Thissubsectiondoesnotprecludeanylegal,equitable,oradministrativeactionagainsttheCommonweallhgovernmentagencytowhichtheamountofsuchreductionwaspaid.§1854.AgreementsforPaymentofTaxLiabilityinInstallments(a)AuthorizationofAgreements.TheSecretaryisauthorizedtoenterintowrittenagreementswithanytaxpayerunderwhichsuchtaxpayerisPage442345678910II12131415161718192021222324252627No.14-35allowedtosatisfyliabilityforpaymentofanytaxininstallmentpaymentsiftheSecretarydeterminesthatsuchagreementwillfacilitatecollectionofsuchliability.(b)ExtenttoWhichAgreementsRemaininEffect.(l)InGeneral.Exceptasotherwiseprovidedinthissubsection,anyagreemententeredintobytheSecretaryundersubsection(a)shallremainineffectforthetermoftheagreement.(2)InadequateInformationorJeopardy.TheSecretarymayterminateanyagreemententeredintobytheSecretaryundersubsection(a)if--(A)informationwhichthetaxpayerprovidedtotheSecretarypriortothedatesuchagreementwasenteredintowasinaccurateorincomplete,or(B)theSecretarybelievesthatcollectionofanytaxtowhichanagreementunderthissectionrelatesisinjeopardyasdefinedin1871(d)(2).(3)SubsequentChangeinFinancialConditions.(A)fnGeneraLJftheSecretarymakesadeterminationthatthefinancialconditionufataxpayerwithwhomtheSecretaryhasenteredintoanagreementundersubsection(a)hassignificantlychanged,theSecretarymayalter,modify,orterminatesuchagreement.(B)Notice.ActionmaybetakenbytheSecretaryundersubparagraph(A)only(i)noticeofsuchdeterminationisprovidedtothetaxpayernolaterthan30dayspriortothedateofsuchaction,andPage452345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSI(ii)suchnoticeincludesthereasonswhytheSecretarybelievesasignificantchangeinthefinancialconditionofthetaxpayerhasoccurred.(4)FailuretoPayanlnstatlmentorAnyOtherTaxLiabilityWhenDueorToProvideRequestedFinancialInformation.TheSecretarymayalter,modify.orterminateanagreemententeredintobytheSecretaryundersubsection(a)inthe caseofthefailureofthetaxpayer--(A)topayanyinstallmentatthetimesuchinstallmentpaymentisdueundersuchagreement.(B)topayanyothertaxliabilityatthetimesuchliabilityisdue,or(C)toprovideafinancialconditionupdateasrequestedbySecretary.§1855ExtensionofTimeforPayingTax.(a)GeneralRule.TheSecretary,exceptasotherwiseprovidedinthisDivision,mayextendthetimeforpaymentoftheamountofthetaxshown,orrequiredtobeshown,onanyreturnordeclarationrequiredunderauthorityofthisDivision(oranyinstallmentthereof),orforanydeficiencyofnon-NMTITimposedbythisDivisionforareasonableperiodnottoexceed6monthsfromthedatefixedforpaymentthereof.Suchextensionmayexceed6monthsinthecaseofataxpayerwhoisabroad.Theextensionofapaymentofadeficiencymayextendbeyond6monthsofthedatefixedforpaymentifthedatefixedforpaymentthereofwillresultinunduehardshiptothetaxpayer.(b)NoExtensionforCertainDeficiencies.Noextensionshallbegrantedunderthissectionforanydeficiencyifthedeficiencyisduetonegligence,tointentionaldisregardoftherulesandregulations,ortofraudwithintenttoevadetax.ARTICLEIIPage462 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 LIEN FOR TAXES § 1860. § 1861. § 1862. § 1863. § 1864. § 1865. § 1866. § 1867. Lien.

§ Notice and Oppottunitv

for Hearing Upon Filing

of Notice

of Lien 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); Page
472345678910II12131415161718192021222324252627282930(C)theadministrativeappealsavailabletothetaxpayerwithrespecttosuchlienandtheproceduresrelatingtosuchappeals;'"'(D)theprovisionsofthistitleandproceduresrelatingtothereleaseofliensonproperty.(b)Righttofairhearing.(1)Ingeneral.Ifthepersonrequestsahearingundersubsection(a)(3)(8),suchhearingshallbeheldbytheTechnical,ResearchandAppealsBranchoftheDivisionofRevenueandTaxation.(2)Onehearingperperiod.Apersonshallbeentitledtoonlyonehearingunderthissection\Vithrespecttothetaxableperiodtowhichtheunpaidtaxspecifiedinsubsection(a)(3)(A)relates.(3)Impartialoflicer.Thehearingunderthissubsectionshallbeconductedbyanofficeroremployeewhohashadnopriorinvolvementwithrespecttotheunpaidtaxspecifiedinsubsection(a)(3)(A)beforethefirsthearingunderthissectionor§1870.Ataxpayermaywaivetherequirementofthisparagraph.(4)Coordinationwith§1870.Totheextentpracticable,ahearingunderthissectionshallbeheldinconjunctionwithahearingundersection1870.(c)Conductofhearing:review;suspensions.Forpurposesofthissection,subsections(c).(d)(otherthanparagraph(2)(8)thereof),and(c)ofsection1870shallapply.§1861.Lien.Ifanypersonliabletopayanytaxneglectsorrefusestopaythesameafterdemand,theamount(includinganyinterest.additionalamount,additiontotax,orassessablepenalty,togetherwithanycoststhatmayaccrueinadditionthereto)shallbealieninfavoroftheCommonwealthPage482 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

upon

all property

and rights

to property, whether

real
or personal, belonging

to such person. § 1862. Period

of Lien. The lien imposed

by Section
1861
of this Division 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 Page
49234567891011121314151617181920212223242526272829properlycreateandperfecttheinterestclaimedinthetaxpayer'spropertyorincome,andsaidinterestisnotothenvisecontrarytoorinviolationofCommonwealthlaw.§I865.ReleaseofLienorDischargeofProperty.(a)ReleaseofLien.SubjecttosuchregulationsastheSecretarymayprescribe.theSecretaryshallissueacertificateofreleaseofanylienimposedwithrespecttoanynon-NMTITtaxnotlaterthan30daysafterthedayonwhich:(J)LiabilitySatisfiedorUnenforceable.TheSecretaryfindsthattheliabilityfortheamountassessed,togetherwithallinterestinrespectthereof,hasbeenfullysatisfiedorhasbecomelegallyunenforceable,or(2)BondAccepted.TherehasbeenfurnishedtotheSecretaryandacceptedbyhimabondthatisconditioneduponthepaymentoftheamountassessed,togetherwithallinterestinrespectthereof.withinthetimeprescribedbylaw(includinganyextensionsofsuchtime).andthatisinaccordancewithsuchrequirementsrelatingtoterms,conditions,andformofthebondandsuretiesthereon,asmaybespecifiedbysuchregulations.(b)DischargeofProperty.(I)Propertydoubletheamountoftheliability.SubjecttosuchregulationsastheSecretarymayprescribe,theSecretarymayissueacertificateofdischargeofanypartofthepropertysubjecttoanylienimposedunderthischapteriftheSecretaryfindsthatthefairmarketvalueofthatpartofsuchpropertyremainingsubjecttothelienisatleastdoubletheamountoftheunsatisfiedliabilitysecuredbysuchlienandtheamountofallotherliensuponsuchpropertywhichhavepriorityoversuchlien.(2)Partpayment:interestofCNMIvalueless.SubjecttosuchregulationsastheSecretarymayprescribe,theSecretarymayissueacertificateofdischargeofanypartoftheprope11ysubjecttothelienif-(A)thereispaidovertotheSecretaryinpartialsatisfactionoftheliabilitysecuredbythelienanamountPage502 3 4 5 6 7 8 9 to II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 determined

by the Secretary. 'Nhich shall not be less the value, as determined

by the Secretary,

of the interest

of the CNMI

in the part
to be so discharged,

or (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. Page

512345678910II121314151617IS1920212223242526272829(d)Effectofcertificate.(l)Conclusiveness.Exceptasprovidedinparagraphs(2)and(3),ifacertificateisissuedpursuanttothissectionbytheSecretaryandisfiledinthesameofficeasthenoticeoflientowhichitrelates(ifsuchnoticeoflienhasbeenfiled)suchcertificateshallhavethefollowingeffect:(A)inlhecaseofacertificateofrelease.suchcertificateshallbeconclusivethatthelienreferredtoinsuchce1tificateisextinguished;(B)inthecaseofacertificateofdischarge,suchcertificateshallbeconclusivethatthepropettycoveredbysuchcertificateisdischargedfromthelien;and(C)inthecaseofsubordination,suchcertificateshallbeconclusivethatthelienorinteresttowhichthelienoftheCNMIissubordinatedissuperiortothelienoftheCNMI.(2)Revocationofcertificateofrelease.IftheSecretarydeterminesthatacertificateofreleaseoflienimposedbysection1861wasissuederroneouslyorimprovidently,orifacertificateofreleaseofsuchlienwasissuedpursuanttoacollateralagreemententeredinto·inconnectionwithacompromiseundersection1817(b)whichhasbeenbreached,andiftheperiodoflimitationoncollectionafterassessmenthasnotexpired,theSecretarymayrevokesuchcertificateandreinstatethelien-(A)bymailingnoticeofsuchrevocationtothepersonagainstwhomthetaxwasassessedathislastknownaddress,and(B)byfilingnoticeofsuchrevocationinthesameofficeinwhichthenoticeoflientowhichitrelateswasfiled(ifsuchnoticeoflienhadbeenfiled).Page522 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

HOUSE

HSI Such reinstated

lien (i) shall
be effective upon the date notice

of revocation

is mailed

to the taxpayer

in accordance

with the provisions

of subparagraph

(A), but not earlier than the date
on which any required filing

of notice

of revocation

is filed

in 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. Page

532345678910II121314151617181920212223242526272829(a)Appeal.InsuchformandatsuchtimeastheSecretaryshallprescribebyregulations,anypersonshallbeallowedtoappealtotheSecretaryafterthefilingofanoticeofalienunderthischapterontheprope11yortherightstopropertyofsuchpersonforreleaseofsuchlienalleginganerrorinthefilingofthenoticeofsuchlien.(b)CertificateofRelease.IftheSecretarydeterminesthatthefilingofthenoticeofanylienwaserroneous,theSecretaryshallexpeditiouslyissueacertificateofreleaseofsuchlienandshallincludeinsuchcertificateastatementthatsuchfilingwaserroneous.§1870.§1871.§1872.§1873.§1874.§1875.§1876.§1877.RealProperty§1878.§1879.§1880.§1881.ARTICLEIIISEIZUREOFPROPERTYFORCOLLECTIONOFTAXESNoticeandOpportunityforHearingBeforeLevyLevyandDistraintSurrenderofPropertySubjecttoLevyPropertyExemptFromLevySaleofSeizedPropertyRedemptionofPropertyCertificateofSale;DeedofRealPropertyLegalEffectofCertificateofSaleofPersonalPropertyandDeedofRecordsofSaleExpenseofLevyandSaleApplicationofProceedsofLevyAuthoritytoReleaseLevyandReturnProperty§1870.NoticeandOpportunityforHearingBeforeLevy.(a)Requirementofnoticebeforelevy.Page542 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(I) No levy may
be made

on any propetty

or right

to property

of any person unless
the Secretary

has notified such person

in writing

of their right

to a hearing under this section before such levy

is made. Such notice shall

be 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; Page

552345678910111213141516171819202122232425262728(iv)thealternativesavailabletotaxpayerswhichcouldpreventlevyonproperty(includinginstallmentagreementsundersection1854);and(v)theprovisionsofthistitleandproceduresrelatingtoredemptionofpropertyandreleaseofliensonproperty.(b)Righttofairhearing.(1)InIfthepersonrequestsahearingundersubsection(a)(3)(8),suchhearingshallbeheldbytheTechnical,Research,andAppealsBranchoftheDivisionofRevenueandTaxation.(2)Onehearingperperiod.ApersonshaHbeentitledtoonlyonehearingunderthissectionwithrespecttothetaxableperiodto-.vhichtheunpaidtaxspecifiedinsubsection(a)(3)(A)relates.(3)Impartialofficer.Thehearingunderthissubsectionshallbeconductedbyanofficeroremployeewhohashadnopriorinvolvementwithrespecttotheunpaidtaxspecifiedinsubsection(a)(3)(A)beforethefirsthearingunderthissectionorsection1860.Ataxpayermaywaivetherequirementofthisparagraph.(c)Mattersconsideredathearing.Inthecaseofanyhearingconductedunderthissection-(I)Requirementofinvestigation.TheappealsofficershallatthehearingobtainverificationfromtheSecretarythattherequirementsofanyapplicablelaworadministrativeprocedurehavebeenmet.(2)Issuesathearing.(A)lngeneral.Thepersonmayraiseatthehearinganyrelevantissuerelatingtotheunpaidtaxortheproposedlevy,including(i)appropriatespousaldefenses;Page562345678910II12131415161718192021222324252627282930(ii)challengestotheappropriatenessofcollectionactions;and(iii)offersofcollectionalternatives,whichmayincludethepostingofabond.thesubstitutionofotherassets.aninstallmentagreement,oranoffer-in-compromise.(B)Underlyingliabilitv.Thepersonmayalsoratseatthehearingchallengestotheexistenceoramountoftheunderlyingtaxliabilityforanytaxperiodifthepersondidnotreceiveanystatulorynoticeofdeficiencyforsuchtaxliabilityordidnototherwisehaveanopportunitytodisputesuchtaxliability.(3)Basisforthedetermination.Thedeterminationbyanappealsofficerunderthissubsectionshalltakeintoconsideration-(A)theverificationpresentedunderparagraph(1);(B)theissuesraisedunderparagraph(2);and(C)whetheranyproposedcollectionactionbalancestheneedfortheefficientcollectionoftaxeswiththelegitimateconcernofthepersonthatanycollectionactionbenomoreintrusivethannecessary.(4)Certainissuesprecluded.Anissuemaynotberaisedatthehearingif-(A)theissuewasraisedandconsideredataprevioushearingundersection1860orinanyotherpreviousadministrativeorjudicialproceeding;and(B)thepersonseekingtoraisetheissueparticipatedmeaningfullyinsuchhearingorproceeding.Thisparagraphshallnotapplytoanyissuewithrespecttowhichsubsection(d)(2)(B)applies.(d)Proceedingafterhearing.(I)Judicialreviewofdetennination.Thepersonmay,within30daysofadeterminationunderthissection,appealsuchdetenninationtotheCommonwealthSuperiorCourt.Page57PublicLawNo.14-35HOUSEBILLNO.14-180,HSI(2)JurisdictionretainedatRevenueandTaxAppealsBranch.The2Technical,Research,andAppealsBranchshallretainjurisdictionwith3respecttoanydeterminationmadeunderthissection,including4subsequenthearingsrequestedbythepersonwhorequestedthe5originalhearingonissuesregarding-6(A)collectionactionstakenorproposedwithrespectto7suchdetermination;and8(B)afterthepersonhasexhaustedalladministrative9remedies,achangeincircumstanceswithrespecttosuchI0personwhichaffectssuchdetermination.II121314151617181920212223242526272829(e)Suspensionofcollectionsandstatuteoflimitations.(I)Ingeneral.Exceptasprovidedinparagraph(2),ifahearingisrequestedundersubsection(a)(3)(8),thelevyactionswhicharethesubjectoftherequestedhearingandtherunningofanyperiodoflimitationsundersection!902(relatingtocollectionafterassessment),section1905(relatingtocriminalprosecutions),orsection1906(relatingtoothersuits)shallbesuspendedfortheperiodduringwhichsuchhearing,andappealstherein,arepending.Innoeventshallanysuchperiodexpirebeforethe90thdayafterthedayonwhichthereisafinaldeterminationinsuchhearing.ThebeginningofalevyorproceedingduringthetimethesuspensionunderthisparagraphisinforcemaybeenjoinedbyaproceedingintheCommonwealthSuperiorCourt.TheCommonwealthSuperiorCourtshallhavenojurisdictionunderthisparagraphtoenjoinanyactionorproceedingunlessatimelyappealhasbeenfiledundersubsection(d)(l)andthenonlyinrespectoftheunpaidtaxorproposedlevytowhichthedeterminationbeingappealedrelates.(2)Levyuponappeal.Paragraph(1)shallnotapplytoalevyactionwhileanappealispendingiftheunderlyingtaxliabilityisnotatPage582 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

tssue

in the appeal
and the court determines

that the Secretary

has shown good cause not to suspend

the levy. (f) Jeopardy

and refund collection.

If- ( 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 Page

59

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# 3 4 

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# 8 9 10 II 

# 12 13 14 

# 15 

# 16 17 

# 18 19 

# 20 21 

# 22 23 

# 24 25 

# 26 27 

# 28 

# 29 Public Law No. 

# 14-35



# HOUSE BILL NO. 14-180, HSI otherwise provided,

a levy shall extend only

to property possessed

and obligations existing

at the time thereof.

In any case

in which
the Secretary
may levy upon property

or rights

to property,

he may seize and sell such property 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: Page
602345678910II121314151617181920212223242526272829HOUSEBILLNO.HSI(A)theprovisionsofthisDivisionrelatingtolevyandsaleofprope1ty;(B)theproceduresapplicabletothelevyandsaleofpropertyunderthischapter;(C)theadministrativeappealsavailabletothetaxpayerwithrespecttosuchlevyandsaleandtheproceduresrelatingtosuchappeals;(D)Thealternativesavailabletotaxpayerswhichcouldpreventlevyontheproperty(includinginstallmentagreements);(E)theprovisionsofthisDivisionrelatingtoredemptionofpropertyandreleaseofliensonproperty;and(F)theproceduresapplicabletotheredemptionofprope1tyandthereleaseofalienonpropertyunderthischapter.(e)Continuinglevvonsalarvandwages.Theeffectofalevyonsalaryorwagespayabletoorreceivedbyataxpayershallbecontinuousfromthedatesuchlevyisfirstmadeuntilsuchlevyisreleasedundersection1881.(f)Uneconomicallevy.Nolevy maybemadeonanypropertyiftheamountoftheexpenseswhichtheSecretaryestimates(atthetimeoflevy)wouldbeincurredbytheSecretarywithrespecttothelevyandsaleofsuchpropertyexceedsthefairmarketvalueofsuchpropertyatthetimeoflevy.(g)Levyonappearancedateofsummons.(I)InGeneral.Nolevymaybemadeonthepropertyofanypersononanydayonwhichsuchperson(orofficeroremployeeofsuchperson)isrequiredtoappearinresponsetoasummonsissuedbytheSecretaryforthepurposeofcollectinganyunderpaymentoftax.(2)Noapplicationincaseofjeopardv.ThissubsectionshallnotapplyiftheSecretaryfindsthatthecollectionoftaxisinjeopardy.Page6112345678910II121314151617181920212223242526272829§1872.SurrenderofPropertySubjecttoLevv.(a)Requirement.Exceptasotherwiseprovidedmthissection,anypersoninpossessionof(orobligatedwithrespectto)propertyorrightstopropertysubjecttolevyuponwhichalevyhasbeenmadeshall,upondemandoftheSecrctat)',surrendersuchpropertyorrights(ordischargesuchobligation)totheSecretary,exceptsuchpartofthepropertyorrightsasis,atthetimeofsuchdemand,subjecttoanattachmentorexecutionunderanyjudicialprocess.(b)SpecialRuleforBanks.Anybankorfinancialinstitutionshallsurrender(subjecttoanattachmentorexecutionunderjudicialprocess)anydeposits(includinginterestthereon)insuchbankonlyafter21daysafterserviceofievy.(c)EnforcementofLevv.(I)ExtentofPersonalLiabilitv.Anypersonwhofailsorrefusestosurrenderanypropertyorrightstopropertysubjecttolevy,upondemandbytheSecretary.shallbeliableinhisownpersonandestatetotheCommonwealthinasumequaltothevalueofthepropertyorrightsnotsosurrendered,butnotexceedingtheamountoftaxesforthecollectionofwhichsuchlevyhasbeenmade,togetherwithcostsandinterestonsuchsumfromthedateofsuchlevy.Anyamount(otherthancosts)recoveredunderthisparagraphshaHbecreditedagainstthetaxliabilityforthecollectionofwhichsuchlevywasmade.(2)PenaltyForViolation.Inadditiontothepersonalliabilityimposedbyparagraph(1),ifanypersonrequiredtosurrenderprope11yorrightstopropertyfailsorrefusestosurrendersuchprope1tyorrightstopropertywithoutreasonablecause,suchpersonshallbeliableforapenaltyequalto50percentoftheamountrecoverableunderparagraph(I).Nopartofsuchpenaltyshallbecreditedagainstthetaxliabilityforthecollectionofwhichsuchlevywasmade.Page622 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

(d) Effect

of Honoring Levy. Any person

in possession

of (or obligated
with respect

to) property

or rights

to property subject

to levy upon which

a levy has been made who, upon demand

by the Secretary, surrenders 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 Page

632 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public
profession

of the taxpayer

as do not exceed

in amount

in the aggregate that allowed under
the NMTJT; (4) Undelivered

Mail. Mail, addressed

to any person, which 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 Page
642 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

seizure

to the valuation fixed

by the officer making

the seizure,

the Secretary shall summon
two disinterested individuals

who shall make the valuation. (c) No Other Property Exempt. Notwithstanding

any other law of the 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 Page

652345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSIundersubsection(a)(7)shallbeanamount(determinedundersuchregulations)whichasnearlyaspossiblewillresultinthesametotalexemptionfromlevytOrsuchindividualoveraperiodoftimeashewould haveunderparagraph(l)if(duringsuchperiodoftime)hewerepaidorreceivedsuchwages.salary.andotherincomeonaregularweeklybasis.(e)LevyAllowedonPrincipalresidenceinCaseofJeopardyorCertainApproval.Propertydescribedinsubsection(a)(8)shallnotbeexemptfromlevyif--(1)theSecretarypersonallyapproves(inwriting)thelevyofsuchproperty,or(2)TheSecretaryfindsthattheco!lectionoftaxisinjeopardy.asdefinedin§1871(d)(2).§1874.SaleofSeizedProperty.(a)NoticeofSeizure.Assoonaspracticableafterseizureofproperty,noticeinwritingshallbegivenbytheSecretarytotheowneroftheproperty(or,inthecaseofpersonalproperty,thepossessor),orshallbeleftattheowner/taxpayer'susualplaceofabodeorbusiness.Iftheowner/taxpayercannotbereadilylocatedorhasnodwellingorplaceofbusinessintheCommonwealth,thenoticemaybemailedtohislastknownaddress.Suchnoticeshallspecifythesumdemandedandshallcontain,inthecaseofpersonalproperty,anaccountofthepropertyseized,andinthecaseofrealproperty,adescriptionwithreasonablecertaintyofthepropertyseized.(b)NoticeofSale.TheSecretaryshallassoonaspracticableaftertheseizureofthepropertygivenoticetotheowner,inthemannerdescribedinsubsection(a)andshallcauseanotificationtobepublishedinagenerallycirculatedlocalnewspaperandpostthenoticesattheUnitedStatesPostOfficesintheCommonwealth.Suchnoticeshallspecifythepropertytobesoldandthetime,place,manner,andconditionsofthesale.Wheneverlevyismadewithoutregardtothe10dayperiodprovidedin§187l(a),publicnoticePage662345678910II121314151617181920212223242526272829PublicLawNo.14-35ofthesaleofthepropertyseizedshallnotberequiredtobemadewithinsuchI0dayperiodunlessthegoodsareperishableandrequireimmediatesale.(c)TimeofSale.Thetimeofthesaleshallnotbelessthan10daysnormorethan40daysfromthetimeofgivingpublicnotice.(d)MannerandConditionsofSale.Ifanypropertyliabletolevyisnotdivisible,soastoenabletheSecretarybysaleofapartthereoftoraisethewholeamountofthetaxandexpenses,thewholeofsuchpropertyshallbesold.Themannerandconditionsofthesaleshallbereasonableunderthecircumstances.TheSecretarymayprescriberegulationsforreasonablemannerandconditionsofsale.§1875.RedemptionofPropertv.(a)BeforeSale.Beforethesaleofseizedproperty,anypersonwhosepropertyhasbeenlevieduponshallhavetherighttopaytheamountdue.togetherwiththeexpensesoftheproceeding,ifany,totheSecretaryatanytimepriortothesalethereof,anduponsuchpaymenttheSecretaryshallrestoresuchpropertytohimandallfurtherproceedingsinconnectionwiththelevyonsuchpropertyshallceasefromthetimeofsuchpayment.(b)RedemptionofRealEstateAfterSale.(1)Period.TheownersofanyrealpropertylocatedintheCommonwealthsoldasprovidedinSection1874ofthisDivision,theirheirs.executors,oradministrators,oranypersonhavinganyinteresttherein,oralienthereon,oranypersonintheirbehalf,shallbepermittedtoredeemthepropertysold,oranyparticulartractofsuchproperty,atanytimewithin180daysafterthesalethereof.(2)Price.Suchpropertyortractofproperlysba!lbepermittedtoberedeemeduponpaymenttothepurchaser,orincasehecannotbefoundthentotheSecretary,fortheuseofthepurchaser,hisheirs,orassigns.oftheamountpaidbysuchpurchaserandinterestthereonattherateof20percentperannum.Page67

### 2 3 

### 4 5 6 

### 7 8 9 10 

### II 

### 12 13 14 

### 15 16 

### 17 18 19 

### 20 

### 21 22 23 24 

### 25 

### 26 27 Public Law No.



### HSI 

### (c) Record. When any lands sold are redeemed

as provided

in this section,

the Secretary
shall cause entry
of the fact

to be made upon the record maintained

by the Secretary.

and such entry shall

be evidence

of such 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: Page
682 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

(1) As Evidence.
Shall

be prima facie evidence

of the right
of the officer

to make such sale, and conclusive evidence

of the regularity of his proceedings

in making

the sale; and (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: Page

692345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1(1)DeedAsEvidence.ThedeedofsalegivenpursuanttoSection1876ofthisDivisionshallbeprimafacieevidenceofthefactsthereinstated;and(2)DeedAsConveyanceofTitle.IftheproceedingsoftheSecretaryassetforthhavebeensubstantiallyinaccordancewiththeprovisionsofCommonwealthlaw,suchdeedshallbeconsideredandoperateasaconveyanceofalltheright,title,andinterestthedelinquentpartyhadinandtotherealpropertythussoldatthetimethelienoftheCommonwealthattachedthereto.(c)EffectofJuniorEncumbrances.ACertificateofSaleofpersonalpropertygivenoradeedtorealpropertyexecutedpursuanttoSection1876ofthisDivisionshalldischargesuchpropertyfromallliens.encumbrances,andtitlesoverwhichthelienoftheCommonwealthwithrespecttowhichthelevywasmadehadpriority.§1878.RecordsofSale.(a)Requirement.TheSecretaryshallkeeparecordofallsalesofrealpropertyunderSection1874ofthisDivisionandofredemptionsofsuchproperty.Therecordshallsetforththetaxforwhichanysuchsalewasmade,thedatesofseizureandsale,thenameofthepartyassessedandallproceedingsinmakingsuchsale,theamountofexpenses,thenamesofthepurchasers,andthedateofthedeed.(b)CopyasEvidence.Acopyofsuchrecord,oranypartthereof,certifiedbytheSecretaryshallbeevidencein anycourtofthetruthofthefactsthereinstated.(c)AccountingtoTaxpayer.Thetaxpayerwithrespecttowhoseliabilitythesalewasconductedorwhoredeemedthepropertyshallbefurnished-(1)therecordundersubsection(a)(otherthanthenamesofthepurchasers);Page702345678910111213141516171819202122232425262728(2)theamountfromsuchsaleappliedtothetaxpayer'sliability;and(3)theremainingbalanceofsuchliability.§1879.ExpenseofLevyandSale.TheSecretaryshalldeterminetheexpensestobeallowedinallcasesoflevyandsale.§1880.ApplicationofProceedsofLevy.(a)CollectionofLiability.Anymoneyrealizedbyproceedingsunderthischapter(whetherbyseizure,bysurrenderunderSection1872ofthisDivision,orbysaleofseizedproperty)orbysaleofprope11yredeemedbytheCommonwealth(iftheinterestoftheCommonwealthinsuchpropertywasalienarisingundertheprovisionsofthisDivision)shallbeappliedasfollows:(1)ExpenseofLevvandSale.First,againsttheexpensesoftheproceedings;(2)SpecificTaxLiabilityonSeizedPrope11v.IfthepropertyseizedandsoldissubjecttoataximposedbyanyCommonwealthlawwhichhasnotbeenpaid,theamountremainingafterapplyingparagraph(I)shallthenbeappliedagainstsuchtaxliability(and,ifsuchtaxwasnotpreviouslyassessed,itshallthenbeassessed);(3)LiabilitvofDelinquentTaxpayer.Theamount,ifany,remainingafterapplyingparagraphs(1)and(2)sha!lthenbeappliedagainsttheliabilityinrespectofwhichthelevywasmadeorthesalewasconducted.(b)SurplusProceeds.Anysurplusproceedsremammgaftertheapplicationofsubsection(a)shall,uponapplicationandsatisfactoryproofinsupportthereof,becreditedorrefundedbytheSecretarytothepersonorpersonslegallyentitledthereto.§1881.AuthoritvtoReleaseLevyandReturnProperty.(a)ReleaseofLevvandNoticeofRelease.Page712345678910II1213141516171819202122232425262728PublicLawNo.14-35(I)InGeneral.UnderregulationsprescribedbytheSecretary,theSecretaryshallreleasethelevyuponall,orpartof,thepropertyorrightstopropertylevieduponandshallpromptlynotifythepersonuponwhomsuchlevywasmade(ifany)thatsuchlevyhasbeenreleasedif:(A)theliabilityforwhichsuchlevywasmadeissatisfiedorbecomesunenforceablebyreasonoflapseoftime,(B)releaseofsuchlevywillfacilitatethecollectionofsuchliability,(C)thetaxpayerhasenteredintoanagreementwiththeSecretaryunder§1854tosatisfysuchliabilitybymeansofinstallmentpayments,unlesssuchagreementprovidesothenvise,(D)theSecretaryhasdeterminedthatsuchlevyiscreatinganeconomichardshipduetothe financialconditionofthetaxpayer,or(E)thefairmarketvalueofthepropertyexceedssuchliabilityandreleaseofthelevyonapartofsuchpropertycouldbemadewithouthinderingthecol!ectionofsuchliability.Forpurposesofsubparagraph(C).theSecretaryisnotrequiredtoreleasesuchlevyifsuchreleasewouldjeopardizethesecuredcreditorstatusoftheSecretary.(2)ExpeditedDeterminationonCertainBusinessProperty.Inthecaseofanytangiblepersonalpropertyessentialincarryingonthetradeorbusinessofthetaxpayer,theSecretaryshallprovideforanexpediteddeterminationunderparagraph(1)iflevyonsuchtangiblepersonalpropertywouldpreventthetaxpayerfromcarryingonsuchtradeorbusiness.Page722 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(3) Subsequent
Levv.
The release

of levy
on any property under paragraph

(1) shall not prevent

any subsequent

levy
on such property. (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 Page

7323456789tot t121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1§1896.§t897.§t898.EntryofPremisesforExaminationofTaxableObjectsSpecialProceduresforThirdPartySummonsFeesandCostsforWitnesses§1891.CanvassofCNMIforTaxablePersonsandObjects(a)GeneralRule.TheSecretaryshall,totheextenthedeemsitpracticable,causeofficersoremployeesoftheDepartmentofFinancetoproceed,fromtimetotime.throughtheCommonwealthandinquireafterandconcemingallpersonsthereinwhomaybeliabletopayanyCommonwealthtax,andallpersonsowningorhavingthecareandmanagementofanyobjectswithrespecttowhichanytaxisimposed.(b)Penalties.ForpenaltiesapplicabletoforcibleobstructionorhindranceofDepartmentofFinanceofficersoremployeesintheperformanceoftheirduties,seesection1938ofthisDivision.§1892.ExaminationOfBooksandWitnesses.(a)AuthoritvtoSummon.Forthepurposeofascertainingthecorrectnessofanyreturn,makingareturnwherenonehasbeenmade,determiningtheliabilityofanypersonforanyCommonwealthtaxortheliabilityatlaworinequityofanytransfereeorfiduciaryofanypersoninrespectofanyCommonwealthtaxorcollectinganysuchliability,theSecretaryisauthorized:(1)toexamineanybooks,papers,records,orotherdatawhichmayberelevantormaterialtosuchinquiry;(2)tosummonthepersonliablefortaxorrequiredtoperformtheact,oranyofficeroremployeeofsuchperson,oranypersonhavingpossession,custody,orcareofbooksofaccountscontainingentriesrelatingtothebusinessofthepersonliablefortaxorrequiredtoperformtheact,oranyotherpersontheSecretarymaydeemproper,toappearbeforetheSecretaryatatimeandplacenamedinthePage742 3 4 5 6 7 8 9 10 II !2 13 !4 !5 !6 !7 !8 !9 20 2! 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 Summons

and
to produce such books, papers. records

or other data and to give such testimony, under oath

as may be relevant

or materia!

to such inquiry;

and (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 Page

75234567891011121314151617181920212223242526272829(C)withrespecttoanypendingcriminalinvestigation.§1893.ServiceofSummons.(a)Ingeneral.AsummonsshallbeservedbytheSecretarybyanattestedcopydeliveredinhandtothepersontowhomitisdirectedorleftathislastandusualplaceofabode;andthecertificateofservicesignedbythepersonservingthesummonsshallbeevidenceofthefactsitstatesonthehearingofanapplicationoftheenforcementofthesummons.Whenthesummonsrequirestheproductionofbooks,recordsorotherdata,itshallbesufficientifsuchbooks,papers,records,orotherdataaredescribedwithreasonablecertainty.(b)Servicebymailtothird-partyrecordkeepers.(1)Ingeneral.Asummonsreferredtoinsubsection(a)fortheproductionofbooks,papers,records,orotherdatabyathirdRpartyrecordkeepermayalsobeservedbycertifiedorregisteredmai!tothelastknownaddressofsuchrecordkeeper.(2)Third-partyrecordkeeper.Forpurposesofparagraph(1},theterm"third-partyrecordkeeper"meansR(A)anymutualsavingsbank,cooperativebank,domesticbuildingandloanassociation,orothersavingsinstitutionchmteredandsupervisedasasavingsandloanorsimilarassociationunderFederalorStatelaw,anybank,oranycreditunion,(B)anyconsumerreportingagency,(C)anypersonextendingcreditthroughtheuseofcreditcardsorsimilardevices,(D)anybroker,(E)anyattorney,(F)anyaccountant,(G)anybarterexchange,Page762 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Public Law No. 14-35

HOUSE BILL NO. 14-!80, HSI (H) any regulated investment company and any agent

of such regulated investment company when acting

as an agent thereof,

(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. Page

7723456789101112131415161718192021222324252627282930PublicLawNo.(a)TimeandPlace.Thetimeandplaceofexaminationofsummonedbooks,papers.records,orotherdatashallbesuchtimeandplaceasmaybefixedbytheSecretaryandasarereasonableunderthecircumstances.InthecaseofasummonsunderauthorityofSection1892ofthisDivision.thedatefixedforappearancebeforetheSecretaryshallnotbelessthanI0daysfromthedateofthesummons.(b)RestrictiononExaminationofTaxpayer.Notaxpayershallbesubjectedtounnecessaryexaminationorinvestigations.andonlyoneinspectionofataxpayer'sbooksofaccountshallbemadeforeachtaxableyearunlessthetaxpayerrequestsotherwiseorunlesstheSecretary,afterinvestigation,notifiesthetaxpayerinwritingthatanadditionalinspectionisnecessary.§1896.EntryofPremisesforExaminationofTaxableObjects.(a)EntryDuringDay.TheSecretarymayenter,inthedaytime,anybuildingorplacewhereanyarticlesorobjectssubjecttotaxaremade,produced,orkept,sofarasitmaybenecessaryforthepurposeofexaminingsaidarticlesorobjects.(b)EntryatNight.Whensuchpremisesareopenatnight,theSecretarymayenterthemwhilesoopen,intheperformanceofhisofficialduties.§1897.SpecialProceduresforThirdPartySummons.(a)Notice.(I)Ingeneral.lfanysummonstowhichthissectionappliesrequiresthegivingoftestimonyonorrelatingto,theproductionofanyportionofrecordsmadeorkeptonorrelatingto,ortheproductionofanycomputersoftwaresourcecode(asdefinedin7612(d)(2))oftheNMTIT)withrespecttoanyperson(otherthanthepersonsummoned)whoisidentified_inthesummons,thennoticeofthesummonsshallbegiventoanypersonsoidentifiedwithin3daysofPage782 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

the day on which such service

is made,
but no later than the 23rd day before

the day fixed

in the summons

as the day upon which

such records

are to be examined.

Such notice shall

be accompanied

by

a 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 Page
792345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSIundersubsection(a)shallhavetherighttobeginaproceedingtoquashsuchsummonsnotlaterthanthe20thdayafterthedaysuchnoticeisgiveninthemannerprovidedinsubsection(a)(2).Inanysuchproceeding,theSecretarymayseektocompelcompliancewiththesummons.(B)RequirementofNoticetoPersonSummonedandtoSecretary.Ifanypersonbeginsaproceedingundersubparagraph(A)withrespecttoanysummons,notlaterthanthecloseofthe20-dayperiod,suchpersonshallmailbyregisteredorcertifiedmailacopyofthepetitiontothepersonsummonedandtosuchofficeastheSecretarymaydirectinthenoticereferredtoinsubsection(a)(I).(C)Intervention;Etc.Notwithstandinganyotherlaworruleoflaw,thepersonsummonedshallhavetherighttointerveneinanyproceedingundersubparagraph(A).Suchpersonshallbeboundbythedecisioninsuchproceeding(whetherornotthepersonintervenesinsuchproceeding).(c)Summonstowhichsectionapplies.(l)Tnl!eneral.Exceptasprovidedinparag'raph(2),thissectionshallapplytoanysummonsauthorizedunderthisDivision.(2)Exceptions.Thissectionshallnotapplytoanysummons-(A)servedonthepersonwithrespecttowhoseliabilitythesummonsisissued,oranyofficeroremployeeofsuchperson;(B)issuedtodeterminewhetherornotrecordsofthebusinesstransactionsoraffairsofanidentifiedpersonhavebeenmadeorkept;(C)issuedsolelytodeterminetheidentityofanypersonhavinganumberedaccount(orsimilararrangement)Page802 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law

with

a bank

or other institution described

in section 7603(b)(2)(A)

of the NMTIT; (D) issued

in aid of the collection

**of~**

HSI (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 Page

81requirements

of subsection (b)(2)(B)
have been met, except

in 2

accordance

with

an order

of the court having jurisdiction

of such 3

proceeding

or with the consent

of the person beginning

the proceeding 4

to quash. 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, Page

822 3 4 5 6 7 8 9 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(2) there

is
a reasonable
basis for believing

that such person

or group

or class
of persons may fail or may have failed

to comply with any provision

of any Commonwealth

tax law, and (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 Page

832345678910II12131415161718192021222324252627PublicLawNo.14-35theSecretarymayprescribe,andshallbepreparedtoproducetherecordspursuanttothesummonsonthedayonwhichtherecordsaretobeexamined.(2)SecretaryMayGiveSummonedPa1tvCertificate.TheSecretarymayissueacertificatetothesummonedpartythattheperiodprescribedforbeginningaproceedingtoquashasummonshasexpiredandthatnosuchproceedingbeganwithinsuchperiod,orthatthetaxpayerconsentstotheexamination.(3)ProtectionforSummonedPartyWhoDiscloses.Anysummonedparty,oragentoremployeethereof,makingadisclosureofrecordsortestimonypursuanttothissectioningood-faithrelianceonthecertificateoftheSecretaryoranorderofacourtrequiringproductionofrecordsorthegivingofsuchtestimonyshal!notbeliabletoanycustomerorotherpersonforsuchdisclosure.(4)NoticeofSuspensionofStatuteofLimitationsintheCaseofaJohnDoeSummons.lnthecaseofasummonsdescribedinsubsection(e)withrespecttowhichanyperiodoflimitationshasbeensuspendedundersubsection(d)(2),thesummonedpartyshallprovidenoticeofsuch:suspensiontoanypersondescribedinsubsection(e).(i)Useofsummonsnotrequired.NothinginthissectionshallbeconstruedtolimittheSecretary'sabilitytoobtaininformation,otherthanbysummons.§1898.FeesandCostsforWitnesses.(a)InGeneral.TheSecretarymaybyregulationestablishtheratesandconditionsunderwhichpaymentmaybemadeof:(1)feesandmileagetopersonswhoaresummonedtoappearbeforetheSecretary,andPage842 3 4 5 6 7 8 9 10 ll 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(2) reimbursement

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 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 Page

85234567891011121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1§1901.LimitationsonAssessmentsandCollections.(a)GeneralRule.Exceptasotherwiseprovidedinthissection.theamountoftaximposedbythisDivisionshallbeassessedwithin3yearsafterthereturnwasfiled(whetherornotsuchreturnwasfiledonorafterthedateprescribed)andnoproceedingincourtwithoutassessmentforthecollectionofsuchtaxsha!lbebegunaftertheexpirationofsuchperiod.(b)TimeReturnDeemedFiled.(I)EarlyReturn.Forpurposesofthischapter,areturnoftaximposedbythisDivision.filedbeforethelastdayprescribedbylaworbyregulationsprescribedbytheSecretaryforfilingthereof.shallbeconsideredasfiledonsuchlastday.(2)ReturnExecutedbytheSecretary.TheexecutionofareturnbytheSecretarypursuanttotheauthorityconferredbythisDivisionshallnotstarttherunningoftheperiodoflimitationsonassessmentandcollection.(c)Exceptions.(1)FalseReturn.Inthecaseofafalseorfraudulentreturnwiththeintenttoevadetax,thetaxmaybeassessed,oraproceedingincomtforcollectionofsuchtaxmaybebegunwithoutassessmentatanytime.(2)WillfulAttempttoEvadeTax.Inthecaseofawillfulattemptinanymannertodefeatorevadetaximposedbythistitle,thetaxmaybeassessedoraproceedingincourtforthecollectionofsuchtaxmaybebegunwithoutassessment,atanytime.(3)NoReturn.Inthecaseoffailuretofileareturn,the taxmaybeassessed,oraproceedingincourtforthecolleclionofsuchtaxmaybebegunwithoutassessment,atanytime.(4)ExtensionbyAgreement.(A)InGeneral.WherebeforetheexpirationofthetimeprescribedinthissectionfortheassessmentofanytaxPage862 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

imposed

by this Division,
both the Secretary

and the taxpayer have consented

in writing

to its assessment

after such time. the tax 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

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 Page

872345678910II1213141516171819202122232425262728PublicLawNo.14-35HOUSEBILLNO.14-180,HSl(2)(A)thereisaninstallmentagreementbetweenthetaxpayerandtheSecretary,priortothedatewhichis90daysaftertheexpirationofanyperiodforcollectionagreeduponinwritingbytheSecretaryandthetaxpayeratthetimetheinstallmentagreementwasenteredinto;or(B)thereisareleaseoflevyundersection1881aftersuch10-yearperiod,priortotheexpirationofanyperiodforcollectionagreeduponinwritingbytheSecretaryandthetaxpayerbeforesuchrelease.!fatimelyproceedingincourtforthecollectionofataxiscommenced,theperiodduringwhichsuchtaxmaybecollectedbylevyshallbeextendedandshallnotexpireuntiltheliabilityforthetax(orajudgmentagainstthetaxpayerarisingfromsuchliability)issatisfiedorbecomesunenforceable.(b)DateWhenLevyIsConsideredMade.Forpurposesofthissection,thedateonwhichalevyonpropertyorrighttoprope11yismadeshallbethedateonwhichthenoticeofseizureisgiven.§1903.SuspensionOfTheRunningOfPeriodOfLimitation.TherunningoftheperiodoflimitationsoncollectionsafterassessmentshallbesuspendedfortheperiodduringwhichthetaxpayerisoutsidetheCommonwealthifsuchperiodofabsenceisforacontinuousperiodofatleast6months.Iftheprecedingsentenceappliesandatthetimeofthetaxpayer'sreturntotheCommonwealth,theperiodoflimitationsoncollectionafterassessmentwouldexpirebeforetheexpirationof6monthsfromthedateofhisreturn,suchperiodshallnotexpirebeforetheexpirationofsuch6months.§1904.PeriodofLimitationonFilingClaimforRefund.(a)PeriodofLimitationonFilingaClaim.ClaimforcreditorrefundofanoverpaymentofanytaximposedbythisDivisioninrespectofwhichtaxPage882345678910II121314151617181920212223242526272829thetaxpayerisrequiredtofileareturnshallbefiledbythetaxpayerwithin1yearaftertheendofthecalendaryearfromthetimeprescribedforthefilingsofsuchreturn(includingextensions)orfromthetimethetaxwaspaid,whicheverofsuchperiodsexpiresthelater.(b)AmountSubjecttoRefund.Subjecttosubsection(a),ifitisshownuponthewrittenapplicationofataxpayerthatithaspaidanamountnotdueastaxunderthisDivisionorgreaterthanthe taxleviedunderthisDivision,thentheSecretaryshallrefundtheamountfoundtohavebeenoverpaidorotherwisenotdueandshallpaysuchrefundoutofcurrenttaxcollections.(c)Limitations.Priortograntinganyrefund,theSecretaryshalldetermineafterawrittenapplicationforrefundissubmittedthat:(1)theamountsooverpaidorotherwisenotduehasbeenpaidtotheCommonwealth;(2)theamountofrefundclaimedhasnotbeenusedasacreditordeductionagainstanytaxortaxesdueandpayabletotheCommonwealth;(3)allrefundclaimsarewithintheperiodoflimitationsdescribedmsubsection(a);and(4)thetaxpayerclaimingarefunddoesnothaveapastduetax,orlegallyenforceabledebttoanyCommonwealthgovernmentagency,includinganyexecutivedepartment,asrecognizedanddeterminedbytheSecretary.§1905.PeriodsofLimitationonCriminalProsecutions.Nopersonshallbeprosecuted,tried.orpunishedforanyofthevariousoffensesarisingundertheCommonwealthtaxlawsunlesstheinformationisinstitutedwithin3yearsafterthecommissionoftheoffense,exceptthattheperiodoflimitationshallbe6years-(a)foroffensesinvolvingthedefraudingorattemptingtodefraudtheCommonwealthoranyagencyorinstrumentalitythereof,whetherbyconspiracyornot,andinanymanner;Page892345678910II121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSI(b)fortheoffenseofwillfullyattemptinginanymannertoevadeordefeatanytaxorthepaymentthereof;(c)fortheoffenseofwillfullyaidingorassistingin.orprocuring,counseling,oradvising,thepreparationorpresentationunder,orinconnectionwithanymatterarisingunder,theCommonwealthtaxlaws,ofafalseorfraudulentreturn,affidavit,claim,ordocument(whetherornotsuchfalsityorfraudiswiththeknowledgeorconsentofthepersonauthorizedorrequiredtopresentsuchreturn,affidavit,claim,ordocument);(d)fortheoffenseofwillfullyfailingtopayanytax,ormakeanyreturn(otherthaninformationreturns)atthetimeortimesrequiredbylaworregulations;(e)foroffensesdescribed111Sections1935(a)and1936(relatingtofalsestatementsandfraudulentdocuments)ofthisDivision;(t)fortheoffensedescribedinSection\938(a)(relatingtointimidationofofficersandemployeesoftheCommonwealth)ofthisDivision.(g)foroffensesdescribedinsection1939committedbyofficersandemployeesoftheCommonwealth;and(h)foroffensesarisingunderCommonwealthlaw,wheretheobjectofthecriminalconspiracyi-stoattemptinanymannertoevadeordefeatanytaxorthepaymentthereof.ThetimeduringwhichthepersoncommittinganyofthevariousoffensesarisingundertheCommonwealthtaxlawsisoutsidetheCommonwealthorisafugitivefromjusticeshallnotbetakenasanypartofthetimelimitedbylawforthecommencementofsuchproceedings.WhereacomplaintisinstitutedbeforetheCommonwealthSuperiorCourtwithintheabovelimitationperiod,thetimeshaHbeextendeduntilthedatewhichis9monthsafterthedateofthemakingofthecomplaintbeforetheCommonwealthSuperiorComt.Forthepurposeofdeterminingtheperiodsoflimitationoncriminalprosecutions,therulesofSection1901(b)(Timereturndeemedfiled)ofthisDivisionshallbeapplicable.Page902 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Law No. 14-35 § 1906. Period

of Limitations

on Suits. (a) Suits
by Taxpayers

for Refund

or Rebate. (I) General Rule. The period

of limitations

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 Page

91234567891011121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HSI§1919.§1920.SpecialrulesforAccuracyRelatedPenaltiesLiabilityforTaxesWithheldorCollected;FailuretoCollectandPayOverTax,orAttempttoEvadeorDefeatTax§192I.FrivolousReturn§1922UnderstatementofTaxpayer'sLiabilitybyCNMITaxReturnPreparer.§1923OtherAssessablePenaltiesWithRespecttothePreparationofCNMITaxReturnsforOtherPersons.§1924.§1925.ReasonableCauseExceptionSpecialRuleonDualRequirement§191I.PenaltyAssessedasaTax.(a)Unlessotherwiseprovided,anypenaltyandliabilityimposedbythisArticleshallbepaiduponnoticeanddemandbytheSecretary,andshallbeassessedandcollectedinthesamemannerastaxesexceptthatthefollowingpenaltiesshallnotbesubjecttotheprovisionsof§1841(c):(1)Penaltyimposedby§1912;however,§184l(c)shallapplytothepmtionofapenaltyimposedby§1912whichisattributabletoadeficiencyintax;and(2)Penaltiesimposedby§§1913,1914, 1915, 1916,1920,192l,l922.and1923.(b)Exceptasotherwiseprovided,anyreferenceinthisDivisionto'tax'imposedbythisDivisionshallbedeemedalsotorefertothepenaltiesandliabilitiesprovidedbythisChapter.(c)PersonDefined.Theterm"person",asusedinthissubchapter,includesanofficeroremployeeofacorporationoramemberoremployeeofapartnershipwhoassuchofficer,employee,ormemberisunderadutytoperformtheactinrespectofwhichtheviolationoccurs.§1912.FailuretoFileTaxReturnorPayTax.(a)AdditiontotheTax.Incaseoffailure:Page922 3 4 5 6 7 8 9 IO II I2 I3 I4 I5 I6 I7 I8 I9 20 2I 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-!80, HSI (I)
to file any return required

by this Division

on the date prescribed therefore (detennined

with regard

to any extension

of time for filing), 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 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 Page

932 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

under paragraph

1 shall not be less than the lesser

of $1 00 or 100 percent

of the amount required

to be shown

as tax on such return. (b) Penalty Imposed

on Underpayment

of Tax. For purposes

of: (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.

Page
942 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(d) Increase

in Penaltv

for Fraudulent Failure

to File.

If any failure

to file any return

is fraudulent, paragraph

(I) of subsection

(a) shall
be applied: (1) by substituting

'15 percent'

for

'5 percent' each place

it appears,

and (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.

Page

952 

### 3 

### 4 5 

### 6 7 8 9 

## to It 

### 12 13 14 

### 15 16 

### 17 18 19 

### 20 21 

### 22 

### 23 24 

### 25 

### 26 27 

### 28 29 Public Law No. 

### 14R35

HOUSE BILL NO. 14-180, HS1 (c) Pena!tv

In Case

of Intentional Disregard.

If

I or more failures described

in subsection
(a)(2)
are due

to intentional disregard

of the filing requirement

(or the correct information reporting requirement),

then, with 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: Page
962 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO.I4-I80,

HSI (I) the penalty imposed under subsection

(a) shall

be $1 00: and (2)
in the case
of any penalty determined
under paragraph

(l): (A) the $100,000 limitation 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.

Page
97234567891011121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1§1917.ImpositionofAccuracy-RelatedPenalty.(a)ImpositionofPenaltv.IfthissectionappliestoanyportionofanunderpaymentoftaxrequiredtobeshownonareturnthereshaHbeaddedtothetaxanamountequalto20percentoftheportionoftheunderpaymentto\.Vhichthissectionapplies.(b)PortionofUnderpavmenttoWhichSectionApplies.Thissectionshallapplytotheportionofanyunderpaymentwhichisattributableto1ormoreofthefollowing:(I)Negligenceordisregardofrulesorregulations.(2)Anysubstantialunderstatementof!.ax.(3)Anysubstantialunderstatementoftaxesestimatedascorrectwhenfilingforanautomaticextensiontofileareturn.ThissectionshallnotapplytoanyportionofanunderpaymentonwhichapenaltyisimposedunderSection1918ofthisDivision.(c)Negligence.Forpurposesofthissection,theterm'negligence'includesanyfailuretomakeareasonableattempttocomplywiththeprovisionsofthisDivision,andtheterm'disregard'includesanycareless,reckless,orintentionaldisregard.(d)SubstantialUnderstatementofTax.(I)SubstantialUnderstatement.Forpurposesofthissection,thereisasubstantialunderstatementoftaxforanytaxableyeariftheamountoftheunderstatementforthetaxableyearexceedsthegreaterof:(A)I0percentofthetaxrequiredtobeshownonthereturnforthetaxableyearorpaidasanestimateoftaxdue,or(B)$5,000.(2)Understatement.(A)InGeneral.Forpurposesofparagraph(1),theterm'understatement'meanstheexcessof:Page982345678910II121314151617181920212223242526272829HOUSEBILLNO.HSI(i)theamountofthe taxrequiredtobeshownonthereturnforthetaxableyear,over(ii)theamountofthetaximposedwhichisshownonthereturnreducedbyanyrebate.(B)ReductionfortheUnderstatementDuetoPositionofTaxpayerorDisclosedItem.Theamountoftheunderstatementundersubparagraph(A)shallbereducedbythatpmtionoftheunderstatementwhichisattributableto:(i)the taxtreatmentofanyitembythetaxpayerifthereisorwassubstantialauthority,asdeterminedbyregulationsprescribedbytheSecretary,forsuchtreatment,or(ii)anyitemwithrespecttowhichrelevantfactsaffectingtheitem'staxtreatmentareadequatelydisclosedinthereturnorinastatementattachedtothereturnandthereisreasonablebasisforthe taxtreatmentofsuchitembythetaxpayer.§1918.lmpositionofFraudPenalty.(a)Imposition-ofPenalty.Ifanypartofanyunderpaymentoftaxrequiredtobeshownonareturnisduetofraud,thereshallbeaddedtothetaxanamountequalto75percentoftheportionoftheunderpaymentwhichisattributabletofraud.(b)DeterminationofPortionAttributabletoFraud.IftheSecretaryestablishesthatanyportionofanunderpaymentisattributabletofraud,theentireunderpaymentshallbetreatedasattributabletofraud,exceptwithrespecttoanyportionoftheunderpaymentwhichthetaxpayerestablishes(byapreponderanceoftheevidence)isnotattributabletofraud.Inthecaseofajointreturn,thissectionshallnotapplywithrespecttoaspouseunlesssomepartoftheunderpaymentisduetothefraudofsuchspouse.Page992 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Public Law No. 14-35

HOUSE BILL NO. 14-!80. HS! § 1919. Special Rules
for Accuracy Related Penalties. (a) Penalties Applicable

Only Where Return Filed.
The penalties provided

in Sections
1917 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. Page 1002 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Public Law No. 14-35

HOUSE BILL NO. 14-180. HS1 (2) Timing

of notice. The mailing

of the notice described

in paragraph (I) (or,

in the case
of such

a notice delivered

in person. such delivery) shall precede

any 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 Page 1012345678910II121314151617181920212223242526272829LawNo.14-35(8)adesire(whichappearsonthepurportedreturn)todelayorimpedetheadministrationoftheCommonwealthtaxlaws,thensuchindividualshallpayapenaltyof$500.(b)PenaltyinAdditiontoOtherPenalties.Thepenaltyimposedbysubsection(a)shallbeinadditiontoanyotherpenaltyprovidedbylaw.§1922.UnderstatementofTaxpayer'sLiabilitybvCNMITaxReturnPreparer.(a)Understatementsduetounrealisticpositions.lf-(1)anypartofanyunderstatementofliabilitywithrespecttoanyreturnorclaimforrefundisduetoapositionforwhichtherewasnotarealisticpossibilityofbeingsustainedonthemerits,(2)anypersonwhoisaCNMItaxreturnprcparerwithrespecttosuchreturnorclaimknew(orreasonablyshouldhaveknown)ofsuchposition,and(3)suchpositionwasnotdisclosedasprovidedmsection1917(d)(2)(B)(ii)orwasfrivolous,suchpersonshallpayapenaltyof$250withrespecttosuchreturnorclaimunlessitisshownthatthereisreasonablecausefortheunderstatementandsuchpersonactedingoodfaith.(b)Willfulorrecklessconduct.Ifanypartofanyunderstatementofliabilitywithrespecttoanyreturnorclaimforrefundisdue-(1)toawillfulattemptinanymannertounderstatetheliabilityfortaxbyapersonwhoisaCNMItaxreturnpreparerwithrespecttosuchreturnorclaim,or(2)toanyrecklessorintentionaldisregardofrulesorregulationsbyanysuchperson,suchpersonshallpayapenaltyof$1000withrespecttosuchreturnorclaim.Withrespecttoanyreturnorclaim,theamountofthepenaltypayablebyanypersonbyreasonofthissubsectionshallbereducedbytheamountofthepenaltypaidbyPage1022 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

such person

by reason

of subsection

(a). (c) Extension

of period

of collection \Vhere preparer pays

15 percent

of penalty.

(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 Page 1032345678910111213141516171819202122232425262728PublicLawNo.14-35HOUSEBILLNO.14-180,HSIanypenaltydescribedinparagraph(1)shallbesuspendedfortheperiodduringwhichtheSecretaryisprohibitedfromcollectingbylevyoraproceedingincourt.(d)Abatementofpenaltywheretaxpayer'sliabilitynotunderstated.Ifatanytimethereisafinaladministrativedeterminationorafinaljudicialdecisionthattherewasnounderstatementofliabilityinthecaseofanyreturnorclaimforrefundwithrespecttowhichapenaltyundersubsection(a)or(b)hasbeenassessed,suchassessmentshallbeabated.andifanyportionofsuchpenaltyhasbeenpaidlheamountsopaidshallberefundedtothepersonwhomadesuchpaymentasanoverpaymentoftaxwithoutregardtoanyperiodoflimitationswhich.butforthissubsectionwouldapplytothemakingofsuchrefund.(e)Understatementofliabilitydefined.Forpurposesofthissection,theterm"understatementofliability"meansanyunderstatementofthenetamountpayablewithrespecttoanytaximposedbythisDivisionoranyoverstatementofthenetamountcreditableorrefundablewithrespecttoanysuchtax.Exceptasotherwiseprovidedinsubsection(d).thedeterminationofwhetherornotthereisanunderstatementofliabilityshallbemadewithoutregardtoanyadministrativeorjudicialactioninvolvingthetaxpayer.(f)CNMItaxreturnpreparer.(I)Ingeneral.Theterm"CNMItaxreturnpreparer"forpurposesofthisDivisionmeansanypersonwhopreparesforcompensation,orwhoemploysoneormorepersonstoprepareforcompensation,anyreturnoftaximposedbytheDivisionoranyclaimforrefundoftaximposedbythisDivision.Forpurposesoftheprecedingsentence,thepreparationofasubstantialportionofareturnorclaimforrefundshallbetreatedasifitwerethepreparationofsuchreturnorclaimforrefund(2)Exceptions.Apersonshallnotbea'CNMItaxreturnpreparer"merelybecausesuchpersonPage1042 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

(A) furnishes typing, reproducing.

or other mechanical assistance.
(B) prepares

a return

or claim

for refund

of the 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. Page 1052345678910II1213141516171819202122232425262728PublicLawNo.14-35HOUSEBILLN0.14-180,HS!(c)Negotiationofcheck.AnypersonwhoisaCNMItaxreturnpreparerwhoendorsesorotherwisenegotiates(directlyorthroughanagent)anycheckmadeinrespectoftaxesimposedbythis Division.includingrebatechecks,whichisissuedtoataxpayer(otherthantheCNMItaxreturnpreparer)shallpayapenaltyof$500withrespecttoeachsuchcheck.Theprecedingsentenceshallnotapplywithrespecttothedepositbyabankofthefullamountofthecheckinthetaxpayer'saccountinsuchbankforthebenefitofthetaxpayer.§1924.ReasonableCauseException.TheSecretarymaywaivethepenaltiesimposedunderthisArticlewithrespecttoanyportionofanunderpaymentoranyfailurebyanypersonifitisshownthattherewasareasonablecauseandnotwillfulneglectforsuchportionorsuchfailureandthatthetaxpayeractedingoodfaithwithrespecttosuchportionorfailure.TheSecretarymayprescriberegulationstocarryouttheintentofthissection.§1925.SpecialRuleonDualRequirement.WherethesameinformationisrequiredinareturnforbothNMTITandtaxesotherthantheNMTIT,theSecretaryshallprescriberegulationsastotheenforcementofapplicabledualpenalties.ARTICLEIICRIMINALPENALTIES§1931.AttempttoEvadeorDefeatTax§1932.WillfulFailuretoCollectorPayOverTax§1933.WillfulFailuretoFileReturn,SupplyInformation,orPayTax§1934.FraudulentStatementorFailuretoMakeStatementtoEmployee,Transferee,orAnyOtherPersonEntitledtoReceiveaStatement§1935.FraudandFalseStatement§1936.FraudulentReturns,StatementsorOtherDocument§1937.FaituretoObeySummonsPage1062345678910II121314151617181920212223242526272829LawsHOUSEBILLNO.HSl§1938.AttemptstoInterferewithAdministrationofCommoO\veatthTax§1939.OffensesbyOfficersandEmployeesoftheCommonwealth§1940.UnauthorizedDisclosureofInformation§1941.FalseStatementstoPurchasersorLesseesRelatingtoTax§1931.AttempttoEvadeorDefeatTax.AnypersonwhowillfullyattemptsinanymannertoevadeordefeatanytaximposedbythisDivisionorthepaymentthereofshall,inadditiontootherpenaltiesprovidedbylaw,beguiltyofafelonyand,uponconvictionthereof,shallbefinednotmorethan$100,000($500,000inthecaseofacorporation).orimprisonednotmorethan5years,orboth,togetherwiththecostsofprosecution.§1932.WillfulFailuretoCollectorPayOverTax.AnypersonrequiredunderthisDivisiontocollect,accountfor,andpayoveranytaximposedbythisDivisionwhowillfullyfailstocollectortruthfullyaccountforandpayoversuchtaxshall,inadditiontootherpenaltiesprovidedbylaw,beguiltyofafelonyand.uponconvictionthereof,shallbefinednotmorethan$10,000,orimprisonednotmorethan5years,orboth.togetherwiththecostsofprosecution.§1933.·WillfulFailuretoFileReturn.SupplyInformation.orPayTax.AnypersonrequiredunderthisDivisiontopayanyestimatedtaxortax,orrequiredbythisDivisionorbyregulationsmadeunderauthoritythereoftomakeareturn,keepanyrecords,orsupplyanyinformation,whowillfullyfailstopaysuchestimatedtaxortax,makesuchreturn,keepsuchrecords,orsupplysuchinformation,atthetimeortimesrequiredbylaworregulations,sha!l,inadditiontootherpenaltiesprovidedbylaw,beguiltyofamisdemeanorand,uponconvictionthereof,shallbefinednotmorethan$25,000($100,000inthecaseofacorporation),orimprisonednotmorethanyear,orboth,togetherwiththecostsofprosecution.§1934.FraudulentStatementorFailuretoMakeStatementtoEmployee.Transferee.orAnyOtherPersonEntitledtoReceiveaStatement.InlieuofanyotherPage1072345678910II121314151617181920212223242526272829penaltyprovidedbylawanypersonrequiredundertheprovisionsofSection1821,or1822,or1823ofthisDivisiontofumishastatementwhowillfullyfurnishesafalseorfraudulentstatementorwhowillfullyfailstofurnishastatementinthemanner,attherequiredtime,orwhowillfullyfailstoshowtheinformationonthestatementthatisrequiredunderSection1821or1822,or1823ofthisDivision,orregulationsprescribedthereunder,shall,foreachsuchoffense,uponconvictionthereof,befinednotmorethan$1,000,orimprisonednotmorethanIyear,orboth.§1935.FraudandFalseStatement.Anypersonwho:(a)DeclarationUnderPenaltiesofPerjurv.Willfullymakesandsubscribesanyreturn,statement,orotherdocument.whichcontainsorisverifiedbyawrittendeclarationthatitismadeunderthepenaltiesofpetjury.andwhichhedocsnotbelievetobetrueandcorrectastoeverymaterialmatter;or(b)AidorAssistance.Willfullyaidsorassistsm,orprocures.counsels,oradvisesthepreparationorpresentation under.orinconnectionwithanymatterarisingunderthisDivision,ofareturn,affidavit,claim,orotherdocument,whichisfraudulentorisfalseastoanymaterialmatter,whetherornotsuchfalsityorfraudiswiththeknowledgeorconsentofthepersonauthorizedorrequiredto·presentsuchreturn,affidavit,claim.ordocument;or(c)FraudulentBonds.Permits.andEntries.Simulatesorfalselyorfraudulentlyexecutesorsignsanybond,permit,entry,orotherdocumentrequiredbytheprovisionsofthisDivision,orbyanyregulationmadeinpursuancethereof,orprocuresthesametobefalselyorfraudulentlyexecuted,oradvises,aidsin,orconnivesatsuchexecutionthereof;or(d)RemovalorConcealmentWithIntenttoDefraud.Remo\·es,deposits,orconceals,orisconcernedinremoving,depositing,orconcealing,anygoodsorcommoditiesfororinrespectwhereofanytaxisorshallbeimposed,oranypropertyuponwhichlevyisauthorizedbySection1871ofPage1082 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

this Division,
with intent

to evade

or defeat
the assessment

or collection

of any tax imposed

by this Division;

or (e) Compromises

and Closing Agreements.

In connection

with any 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 Page 1092345678910II121314151617181920212223242526272829PublicLawNo.14-35papers.shall.uponconvictionthereof,befinednotmorethan$1.000.orimprisonednotmorethan1year,orboth,togetherwithcostsofprosecution.§1938.AttemptstoInterfereWithAdministrationofCommonwealthTax(a)CorruptorForcibleInterference.Whoevercorruptlyorbyforceorthreatsafforce(includinganythreateningletterorcommunication)endeavorstointimidateorimpedeanyofficeroremployeeoftheCommonwealthactinginanofficialcapacityunderthisDivision,orinanyotherwaycorruptlyorbyforceorthreatsofforce(includinganythreateningletterorcommunication)obstructsorimpedesorendeavorstoobstructorimpede.thedueadministrationofthisDivision,shalluponconvictionthereof,befinednotmorethan$5,000,orimprisonednotmorethan3years,orboth.Theterm'threatsofforce',asusedinthissubsection,meansthreatsofbodilyharmtotheofficeroremployeeoftheCommonwealthortoamemberofhisfamilyorhousehold.(b)ForcibleRescueofSeizedPropertv.Anypersonwhoforciblyrescuesorcausestoberescuedanyprope11yafteritshallhavebeenseizedunderthisDivision,orshallattemptorendeavorsotodo,shall,exceptingincasesotherwiseprovidedfor,foreverysuchoffense,befinednotmorethan$500,ornotmorethandoublethevalueoftheprope1tysorescued,whicheveristhegreater,orbeimprisonednotmorethan2years.§1939.OffensesbyOfficersandEmployeesoftheCommonwealth.AnyofficeroremployeeoftheCommonwealthactinginconnectionwithanytaxlawoftheCommonwealth--(a)whoisguiltyofanyextortionorwillfuloppressionundercoloroflaw;or(b)whoknowinglydemandsotherorgreatersumsthanareauthorizedbylaw,orreceivesanyfee,compensation,orreward,exceptasbylawprescribed,fortheperformanceofanyduty;orPage1102 3 4 5 6 7 8 9 !0 II !2 l3 14 !5 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35

HOUSE BILL NO. 14-180, HS1 (c) who with intent

to defeat
the application

of any provision

of this Division
fails

to perform

any of the duties

of his office

or employment;

or (d) who conspires

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. Page Ill234567891011121314151617181920212223242526272829PublicLawNo.14-35HOUSEBILLNO.14-180,HS1(I)CNMIEmploveesandOtherPersons.ltshallbeunlawfulforanyofficeroremployeeoftheCommonwealthoranypersondescribedinsection6103(n)oftheNMTIT(oranofficeroremployeeofsuchperson).oranyfannerofficeroremployee.willfullytodisclosetoanyperson,exceptasauthorizedinthisDivision,anyreturnorreturninformation.Anyviolationofthisparagraphshallbeafelonypunishableuponconvictionbyafineinanamountnottoexceed$5,000,orimprisonmentofnotmorethan5years,orboth,togetherwiththecostsofprosecution,andifsuchoffenseiscommittedbyanyofficeroremployeeoftheCommonwealth,heshall,inadditiontoanyotherpunishment,bedismissedfromofficeordischargedfromemploymentuponconvictionforsuchoffense.(2)OtherPersons.ItshallbeunlawfulforanypersontowhomanyreturnorreturninformationisdisclosedinanymannerunauthorizedbythisDivisionthereafterwillfullytoprintorpublishinanymannernotprovidedbylawanysuchreturnorreturninformation.Anyviolationofthisparagraphshallbeafelonypunishablebyatineinanyamountnotexceeding$5,000,orimprisonmentofnotmorethan5years,orboth,togetherwiththecostsofprosecution.(3)Solicitation.Itshallbeunlawfulforanypersonwillfullytoofferanyitemofmaterialvalueinexchangeforanyreturnorreturninformation(asdefinedinSubchapterH)andtoreceiveasaresultofsuchsolicitationanysuchreturnorreturninformation.Anyviolationofthisparagraphshallbeafelonypunishablebyafineintheamountnotexceeding$5,000,orimprisonmentofnotmorethan5years,togetherwiththecostsofprosecution.(4)Shareholders.Itshallbeunlawfulforanypersontowhomareturnorreturninformation(asdefinedinSubchapterH)isdisclosedpursuanttotheprovisionsofsection6103(e)(l)(D)(iii)oftheNMTITPage1122345678910II1213141516171819202122232425262728PublicLawNo.HOUSEBILLNO.14-180,HSIwillfullytodisclosesuchreturnorreturninformationin anymannernotprovidedbylaw.Anyviolationofthisparagraphshallbeafelonypunishablebyafineinanyamountnottoexceed$5.000,orimprisonmentofnotmorethan5years,orboth,togetherwiththecostsofprosecution.(b)DisclosureofOperationsofManufacturerorProducer.AnyofficeroremployeeoftheCommonwealthwhodivulgesormakesknowninanymannerwhatevernotprovidedbylawtoanypersontheoperations,styleofwork,orapparatusofanymanufacturerorproducervisitedbyhiminthedischargeofhisofficialdutiesshallbeguiltyofamisdemeanorand.uponconvictionthereof, shallbetinednotmorethan$1.000.orimprisonednotmorethanIyear,orboth,togetherwiththecostsol'prosecution;andtheoffendershallbedismissedfromofftceordischargedfromemployment.(c)DisclosuresbvCertainDelegatesoftheGovernor.Allprovisionsoflawrelatingtothedisclosureofinformation,andallprovisionsoflawrelatingtopenaltiesforunauthorizeddisclosureofinformation,whichareapplicableinrespectofanyfunctionunderthisDivisionwhenperformedbyanofficeroremployeeoftheDepartmentofFinancearelikewiseapplicableinrespectofsuchfunctionwhenperformedbyanypersonwhoisa"delegate".A"delegate"shallincludeanyofficeroremployeeofanyotherdepartment,agency,orinstrumentalityoftheCommonwealthdulyauthorizedbytheGovernor(directlyorindirectlybyoneormorerede!egationsofauthority)toperformsuchfunctions.(d)Disclosureofsoftware.Anyperson•..vhowillfullydivulgesormakesknownsoftware(asdeiinedinsection7612(d)(l)oftheNMTIT)toanypersoninviolationofCommonwealthlawshallbeguiltyofafelonyand,uponconvictionthereof,shallbefinednotmorethan$5.000,orimprisonednotmorethan5years,orboth,togetherwiththecostsofprosecution.ThetermPage1132 3 4 5 6 7 g 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "software" includes computer software source code and computer software executable
code. § 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 Page ll42 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Public Law No. 14-35 or under the provisions

of this Division.

For purposes

of this section.

the term "officer or employee" includes

a former officer

or employee. § 1952. Definitions.
Unless otherwise provided,

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, Page 115

# 2 3 4 5 

# 6 

# 7 8 9 10 

# II 

# 12 13 

# 14 15 16 

# 17 18 

# 19 

# 20 21 

# 22 23 

# 24 25 

# 26 27 

# 28 

# 29

but such term does not include data

in

a form '..vhich cannot

be associated
with, or otherwise identify, directly

or indirectly,

a particular taxpayer. Nothing

in the 

# preceding sentence,

or in any other provisions oflaw, shall
be construed

to 

# require

the 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. Pagell62345678910I I12131415161718!920212223242526272829(f)'Taxpayeridentity'meansthenameofapersonwithrespecttowhomareturnisfiled,hismailingaddress.histaxpayeridentifyingnumber,oracombinationthereof.(g)'Inspected'and'inspection'meananyexaminationofareturnorreturninformation.(h)'Disclosure'meansthemakingknowntoanyperson,manymanner,whateverareturnorreturninformation.(i)'Chiefexecutiveofficer'meansanelectedofficialofamunicipalityorthechiefexecutiveofamunicipality.§1953.AuthorizedDisclosures.(a)Exceptasprovidedinsubsection(b),anofficeroremployeeoftheCommonwealthisauthorizedtodisclosereturnandreturninformationpertainingtoanyprovisionofthisDivisiononlyasauthorizedby§6103oftheNMTIT.(b)AnofficeroremployeeoftheCommonwealthmay,inconnectionwithhisofficialduties,disclosereturnorreturninformationobtainedunderanyprovisionofthisDivisiontohimselfortootherofficersoremployeesoftheCommonwealthtotheextentnecessarytoobtainorgiveinformationnecessaryfortheenforcementofanyprovisionofthisDivision.(c)TheSecretarymayprescribebyregulationthemannerbywhichtomirrortheprovisionsof§6103oftheNMTITforthepurposeofitsproperapplicationtothedisclosureofreturnandreturninformationpertainingtoallprovisionsofthisDivision.§1954.CivilDamagesforUnauthorizedDisclosureofReturnsandReturnInformation.(a)InGeneral.(1)DisclosurebvEmployeeofCommonwealth.IfanyofficeroremployeeoftheCommonwealthknowingly,orbyreasonofnegligence,disclosesanyreturnorreturninformationwithrespecttoaPagel172345678910II121314151617181920212223242526272829taxpayerinviolationofanyprovisionofsection6103oftheNMTITorofthissubchapter,suchtaxpayermaybringacivilactionfordamagesagainsttheCommonwealthintheCommonwealthSuperiorCourt.(2)DisclosurebyaPersonWhoIsNotanEmployeeoftheCommonwealth.IfanypersonwhoisnotanofficeroremployeeoftheCommonwealthknowingly,orbyreasonofnegligence,inspectsordisclosesanyreturnorreturninformationwithrespecttoataxpayerinviolationofanyprovisionofsection6103oftheNMTITorofthissubchapter,suchtaxpayermaybringcivilactionfordamagesagainstsuchpersonintheCommonwealthSuperiorCourt.(b)NoLiabilityforGoodFaithButErroneousInterpretation.Noliabilityshallariseunderthissectionwithrespecttoanyinspectionordisclosurewhichresultsfromagoodfaith,buterroneous,interpretationofsection6103oftheNMTITorofthissubchapter,oranyinspectionordisclosurerequestedbythetaxpayer.(c)Damages.Inanyactionbroughtundersubsection(a),uponafindingofliabilityonthepartofthedefendant,thedefendantshallbeliabletotheplaintiffinanamountequaltothesumof--(1)thegreaterof--(A)$1,000foreachactofunauthorizedinspectionordisclosureofareturnorreturninformationwithrespecttowhichsuchdefendantisfoundliable,or(B)thesumof--(i)theactualdamagessustainedbytheplaintiffasaresultofsuchunauthorizedinspectionordisclosure,plus(ii)inthecaseofawillfuldisclosureoraninspectionordisclosurewhichistheresultofgrossnegligence,punitivedamages,plusPageliS2 3 4 5 6 7 8

(2) the costs

of the action and reasonable attorneys

fees

if the plaintiff

is the prevailing
party

in the action and the defendant
does not include

the Commonwealth. (d) Period

for Bringing Action. Notwithstanding

any other provision 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 I3 I4 I5 I6 I7 IS I9 20 2I 22 23 24 25 26 27 28

§ 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 Page 119

# 2 3 4 

# 5 

# 6 

# 7 8 

# 9 10 

# 11 12 

# 13 14 

# 15 16 17 

# 18 

# 19 

# 20 21 

# 22 23 24 

# 25 26 27 

# 28 Public Law No. 

# 14-35

HOUSE BILL NO. 14-180, HS1 made

at such time and

in such manner

as the Secretary
shall
by regulations

or forms prescribe." 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 Page 1202 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 jurisdictions:

the United States,

the Virgin Islands, American Samoa. Puerto Rico. and Guam:· (I) Section
1505
of

4 CMC

as enacted

by P.L. 9-22 entitled "Criminal 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. Page121PublicLawNo.14-35HOUSEBILLNO.14-180,HSI2Section8.SavingsClause.ThisActandanyrepealercontainedhereinshallnotbe3construedasaffectinganyexistingrightacquiredundercontractoracquiredunderstatutes4repealedorunderanyrule,regulationororderadoptedunderthestatutes.Repealers5containedinthisActshallnotaffectanyproceedinginstitutedunderorpursuanttopriorlaw.6TheenactmentofthisActshallnothavetheeffectofterminating,orinany\'.'aymodifying,7anyliabilitycivilorcriminal,whichshallalreadybeinexistenceatthedatethisActbecomes8effective.910Section9.EffectiveDate.ThisActshalltakeeffect,uponapprovalbytheGovernor11oruponitbecominglawwithoutsuchapproval,onJanuaryI.2005.CERTIFIEDBY:lsiBENIGNOR.FITIALSPEAKEROFTilEHOUSEATTESTEDTOBY:lsiEVELYNC.FLEMINGHOUSECLERKApprovedonthis12thdayofOctober,2004lsiJt:ANN.BABAt:TAGOVERNORCOMMONWEALTIIOFTI-lENORTHERNMARIANAISLANDSPage122