Tobacco Transition Program; Final Assessment Procedures, 46905-46908 [2013-18671]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 78, Number 149 (Friday, August 2, 2013)]
[Notices]
[Pages 46905-46908]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18671]


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Notices
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Federal Register / Vol. 78, No. 149 / Friday, August 2, 2013 / 
Notices

[[Page 46905]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation


Tobacco Transition Program; Final Assessment Procedures

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Notice.

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SUMMARY: This notice provides information about the final quarterly 
assessments for the Tobacco Transition Program (TTP). Through the 
Tobacco Transition Payment Program (TTPP), which is part of the TTP, 
eligible former tobacco quota holders and tobacco producers receive 
payments in 10 annual installments in fiscal years (FY) 2005 through 
2014. To fund TTPP, the Commodity Credit Corporation (CCC) collects 
quarterly assessments from domestic manufacturers and importers of 
tobacco products. As specified in the Fair and Equitable Tobacco Reform 
Act of 2004 (FETRA), the Secretary must ensure the final assessment is 
collected no later than September 30, 2014. Also, as specified in the 
TTP regulations, the final two calendar quarterly payments are both due 
to CCC on September 30, 2014. This notice provides information about 
the final monthly reporting date by domestic manufacturers and 
importers, the final date for revisions of volume or tax data by 
domestic manufacturers and importers of tobacco products, and other 
information about how the assessment part of TTP will be operated in 
the final months. TTP will continue to operate as specified in existing 
regulations, which are not changing with this notice.

DATES: Effective August 2, 2013.

ADDRESSES: USDA Farm Service Agency, Economic and Policy Analysis 
Staff, 1400 Independence Ave. SW., Room 3722-S, STOP 0515, Washington, 
DC 20250-0515.

FOR FURTHER INFORMATION CONTACT: Darlene Soto; telephone: (202)720-
0542. Persons with disabilities who require alternative means for 
communications (Braille, large print, audio tape, etc.) should contact 
the USDA Target Center at (202)720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

    The TTP regulations are located in 7 CFR part 1463; TTP was 
authorized by Title VI of the American Jobs Creation Act of 2004 (Pub. 
L. 108-357). Title VI is also known as FETRA (7 U.S.C. 518-519a). FETRA 
repealed the tobacco marketing quota and related price support programs 
authorized by Title III of the Agricultural Adjustment Act of 1938 and 
by the Agricultural Act of 1949 and provides for payments to persons 
who were owners of farms with tobacco quotas (referred to as tobacco 
quota holders), or who produced regulated tobacco. As specified in 
FETRA, TTPP is funded using assessments collected quarterly from 
domestic tobacco manufacturers and importers.
    This notice provides the following information, for domestic 
manufacturers and importers of tobacco products, about the conclusion 
of the TTP:
     Issuance of the final quarterly TTP assessment invoice,
     Final monthly reports (including final revisions of 
individual monthly reports),
     Final revisions of quarterly assessment calculations,
     Calculation of CCC estimated interest and actual daily net 
interest in calendar year 2014,
     Penalty calculations for calendar year 2014,
     Appeals or disputes, and
     Archiving of TTP assessment documents.

Issuance of Final Quarterly TTP Assessment Invoice

    The 40th quarterly assessment (quarter ending December 2014 
assessment) will be the final TTP assessment. FETRA and the TTP 
regulations in 7 CFR 1463.9(c) specify that the last assessment payment 
must be sent to CCC by September 30, 2014. CCC will issue the 40th 
(final) quarterly assessment invoice on September 1, 2014, along with 
the 39th quarterly assessment. Consequently, no assessment invoice will 
be issued in December 2014. Section 625(d)(3)(A) of FETRA specifies 
that the Secretary must ensure that the final assessment is collected 
no later than September 30, 2014, and the TTP regulations in 7 CFR 
1463.8(b) specify that manufacturers and importers will receive the 
assessment invoice for each quarter 30 calendar days before the end of 
the quarter. For these reasons, as noted above, the final assessment 
notification must be no later than September 1, 2014.
    The adjusted market share for the 39th and 40th quarterly 
assessment payments due on September 30, 2014, will be based on the 
assessed entity's market activity during April 1 to June 30, 2014. The 
40th quarterly assessment will be initially determined by using the 
same adjusted market share of an entity that was used to determine the 
39th quarterly assessment; this is the ``original'' adjusted market 
share for the 40th quarterly assessment (see below for information on 
revisions to quarterly assessments). Adjusted market share is the 
market share of a domestic manufacturer or domestic importer of tobacco 
products adjusted to reflect such entity's share of a class of tobacco 
during the immediately preceding calendar year quarter.

Final Individual Entity Monthly Reports

    The final TTP monthly report (Tobacco Products Subject to Tax for 
the Tobacco Transition Assessment Program) for September 2014 will be 
due to CCC no later than October 20, 2014. The monthly reporting 
requirements are described in 7 CFR 1463.6, ``Determination of Persons 
Liable for Payment of Assessments.'' The reporting requirements for the 
final report are the same as for previous months of TTP, which are 
specified in the regulations.
    In the event of an error on any monthly tobacco report submitted to 
CCC in 2014, tobacco manufacturers or importers may submit corrected or 
revised reports up to the final date of November 30, 2014. After this 
date, no revisions will be accepted.

Final Revisions of 2014 Quarterly Assessment Calculations

    As noted above, the original adjusted market shares for the 40th 
(final) quarterly assessment payment, which is due to CCC on September 
30, 2014, will

[[Page 46906]]

be identical to the market shares used for the 39th quarterly 
assessment.
    Revised quarterly assessments for 2014 will be issued no later than 
June 1, 2015. The process is as follows. First, CCC will revise the 
December 2014 adjusted market shares to reflect actual removals, using 
monthly reports submitted by domestic tobacco manufacturers and 
importers for July through September 2014, and issue a revised December 
2014 assessment. Next, CCC will further revise all 4 quarters of 2014 
based on the actual program costs and actual interest for 2014, any 
revisions to any monthly tobacco reports, and will include tax and 
volume data received from domestic tobacco manufacturers and importers 
not included in previous assessment calculations (such as late reports 
and tax and volume data from the U.S. Department of Treasury's Alcohol 
and Tobacco Tax and Trade Bureau and the U.S. Department of Homeland 
Security's Customs and Border Protection for nonreporting entities).

Calculation of CCC Estimated Interest Costs for 2014

    Though the majority of TTPP annual payments to eligible former 
tobacco quota holders and producers are made in January of each year, 
the assessment payments are not collected until March 30th, June 30th, 
September 30th, and December 30th. Therefore, CCC borrows funds, 
upfront, from the U.S. Treasury to cover these payments. Accordingly, 
CCC's estimated interest costs are included in the quarterly 
assessments. Due to the fact that the final assessment will be 
collected on September 30, 2014, the calculation formula for CCC's 
estimated interest costs will be slightly different for 2014. At the 
beginning of each calendar year, CCC estimates the amount of interest 
that will be incurred. At the end of the calendar year, CCC revises 
these estimates to reflect actual daily net interest, and provides 
revised quarterly assessments for the entire previous fiscal year. The 
following paragraphs explain how these calculations will be made for 
2014.
    The Example of Estimated Interest Computation table below shows how 
CCC will compute estimated quarterly interest in 2014, using an example 
interest rate of 0.125 percent. The actual interest rate may be higher 
or lower than 0.125 percent; CCC's interest borrowing rate from the 
United States Treasury for 2014 will be published by the USDA Farm 
Service Agency in January 2014 and will be available from the following 
Web page: https://www.fsa.usda.gov/FSA/webapp?area=about&subject=landing&topic=sao-cc-cr. The key element the 
table below shows is how the estimated interest will be calculated for 
the final 2 quarters of calendar year 2014. In the example shown, if 
interest rates are 0.125 percent, CCC interest rate costs will be 
approximately $75,000 less than if the 40th payment were due December 
30, 2014. The table shows the overall calculations at the national 
level, with the estimated national assessment divided for the four 
estimated quarterly assessments.
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    In order to provide quarterly revised--or true--assessments, CCC 
will recalculate the estimated interest based on the daily net interest 
for the calendar year, as well as determine the final payment amount 
dispersed to tobacco quota holders and producers of tobacco. After each 
FY closes, CCC runs a query against the accounting system to retrieve 
the daily TTPP disbursements paid to former tobacco quota holders and 
producers throughout the year. Next, CCC calculates the cumulative 
daily disbursements and reduces the

[[Page 46908]]

cumulative quarterly tobacco assessments from that activity. CCC 
computes daily interest against the net value of the disbursements 
minus the assessments. Daily interest is based on the CCC's borrowing 
rate from the U.S. Treasury as of January 1.
    Although the last assessment payment of TTP is due on September 30, 
2014, the total net interest calculations based on actual interest will 
include the daily net interest through December 31, 2014.

Penalty Calculations for 2014

    Penalties will be issued to any manufacturer or importer that fails 
to submit monthly reports to CCC for any month during October 2013 
through September 2014. The penalties for the failure to submit monthly 
tobacco reports and supporting documentation, providing false reports, 
or providing late reports (after the deadline of October 20, 2014) will 
be determined by CCC in accordance with 7 CFR 1463.10.

Appeals or Disputes

    If a manufacturer or importer wishes to appeal its 39th estimated 
quarterly assessment (which, as noted above, will also be used as the 
40th quarterly assessment), a written statement must be submitted to 
CCC within 30 business days from the date the manufacturer or importer 
received the assessment notification. CCC mails out its assessment 
notices several days before the end of the month; absent evidence to 
the contrary, the date the assessment notification was received will be 
deemed September 2, 2014. As a result, the deadline for appeals will be 
October 14, 2014, or 30 business days after actual receipt of the 
notice, whichever is later.
    If a manufacturer or importer wishes to appeal its revised--or 
true--2014 quarterly assessments, it must submit a written statement 
within 30 business days from the date the manufacturer or importer 
received its revised assessment notification. Absent evidence to the 
contrary, the date the revised assessment notification was received 
will be deemed June 1, 2015. As a result, the deadline for appeals will 
be July 13, 2015, or 30 business days after actual receipt of the 
notice, whichever is later.
    Appeals of TTP assessments and penalties must be in made in 
accordance with the provisions of 7 CFR 1463.11, except as regarding 
the address for submission of appeals, as noted above.

Archiving of TTP Assessment Documents

    CCC will archive all records related to the assessment portion of 
TTP at a Federal Records Center. CCC will archive FY 2014 tobacco 
records on or about December 30, 2015.

    Signed on: July 29, 2013.
Juan M. Garcia,
Administrator, Farm Service Agency, and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 2013-18671 Filed 8-1-13; 8:45 am]
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