MOU 225-21-003
MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE U.S. DEPARTMENT OF THE TREASURY
ALCOHOL AND TOBACCO TAX AND TRADE BUREAU (TTB) AND THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES FOOD AND DRUG ADMINISTRATION (FDA)
I. PURPOSE.
The purpose of this MOU is to establish a framework for the sharing of information between TTB and the FDA Center for Tobacco Products (CTP) relating to tobacco products regulated by the respective agencies. This MOU addresses: (1) TTB’s sharing of information collected under the Internal Revenue Code (IRC) with CTP for CTP’s use in administration of section 919 of the Federal Food, Drug, and Cosmetic Act (FDCA), as amended by the Family Smoking Prevention and Tobacco Control Act (TCA); and (2) CTP’s sharing of information it collects through its administration of section 919 of the FDCA with TTB for TTB’s administration of the IRC.
II. AUTHORITY.
21 U.S.C. 387s(b)(7)
III. BACKGROUND.
FDA/CTP, as authorized under the TCA, regulates the manufacture, marketing, distribution, and sale of tobacco products. FDA/CTP’s authority includes, among other things, the assessment and collection of user fees from each domestic manufacturer and importer of tobacco products listed at section 919(b)(2)(B)(i) of the FDCA. FDA/CTP has set out regulations at 21 CFR Part 1150 that require domestic tobacco product manufacturers and importers to submit to FDA/CTP information needed to calculate the amount of user fees to assess each entity under the FDCA. FDA/CTP’s assessment and collection of user fees currently applies to cigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco.
FDA/CTP calculates tobacco user fee assessments in two steps: 1) the yearly class allocation and 2) individual quarterly market share percentages. For each fiscal year, FDA/CTP allocates the total assessment amongst the six classes of tobacco products. Every quarter, within each class, FDA/CTP then calculates the quarterly market share percentage for each domestic manufacturer or importer for that fiscal quarter and applies it to the yearly class allocation, establishing the individual quarterly assessment amount for each entity, for each of the tobacco classes subject to tobacco user fees.
As set out at 21 CFR § 1150.9(b), FDA/CTP makes any necessary adjustments to individual domestic manufacturer or importer assessments for prior assessment periods (if needed) to account for any corrections. As part of this, FDA/CTP compares data received from domestic manufacturers and importers subject to tobacco product user fees against the TTB and Customs and Border Protection (CBP) excise tax data records for tobacco products to ensure accuracy and completeness of the self-reported data. This comparison allows FDA/CTP to identify any errors in the self-reported company data as well as identify any non-reporting entities. This process is typically performed for the data the previous fiscal year as well as data for the fiscal year that closed three years prior. The data received from TTB is essential in order to execute this process.
TTB administers chapter 52 of the IRC, pursuant to section 1111(d) of the Homeland Security Act of 2002 (6 U.S.C. 531(d)). In addition, the Secretary of the Treasury has delegated certain IRC administrative and enforcement authorities to TTB through Treasury Order 120–01. Chapter 52 of the IRC imposes a Federal excise tax on all tobacco products (as defined in the IRC) manufactured in, or imported into, the United States, and further provides that manufacturers and importers of tobacco products must obtain a permit before engaging in such business. TTB collects the Federal excise tax on domestically manufactured tobacco products and administers the permit requirements and associated operational reporting requirements for applicable permit-holders.
IV. ROLES AND RESPONSIBILITIES.
A. FDA/CTP will:
1. Submit to TTB a written request for an annual Removal Data Report and Tax Data Report, as defined in Section V.A., prior to the end of the first quarter of each fiscal year.
2. Submit to TTB a written request for a quarterly Permit Data Report, as defined in Section V.B., on or before the first day of each fiscal quarter for the previous fiscal quarter.
3. Submit to TTB written requests for clarification of TTB data, when necessary. All questions regarding any data file will be consolidated to the extent practicable and submitted to TTB in a format agreed upon by both Parties.
4. Notify TTB, as soon as practicable, of any companies which FDA/CTP has reason to believe are engaging in the business of manufacturing or importing tobacco products without a TTB permit or are otherwise reporting activity to FDA/CTP that does not appear on the TTB-provided information.
5. Provide, upon TTB written request and to the extent practicable and authorized by law, data obtained by FDA/CTP concerning entities that TTB has identified for compliance review.
B. TTB will:
1. Provide, upon written request, annual Removal Data Reports and Tax Data Reports, and quarterly Permit Data Reports within the timeframes specified in Section V.
2. Provide, upon written request, any available permit and/or contact information relating to entities, identified by CTP from data sources other than TTB, that are potentially operating as manufacturers or importers of tobacco products within the meaning of the TTB regulations.
3. Provide, upon written request and to the extent practicable, clarification of any information included in Removal Data Reports, Tax Data Reports, and Permit Data Reports.
4. Provide responses to inquiries within a reasonable period, as determined on a case-by-case basis and agreed upon by both Parties, except where this MOU establishes specific timeframes for responses.
V. DATA.
A. Annual Reports and Required Data Fields. Annually, TTB will provide FDA/CTP with Removal Data Reports and Tax Data Reports, as described below, covering (1) the most recent complete fiscal year and (2) the fiscal year that closed three years prior to the closure of the most recent complete fiscal year. Excepting extraordinary circumstances, these reports will be provided no later than March 31st of each calendar year (e.g., TTB will provide, by March 31st, 2021, the Removal Data Reports and Tax Data Reports covering fiscal years 2020 and 2017). If circumstances require an extension to the established deadline, TTB will inform FDA/CTP of the need for additional time as soon as possible and establish a new, mutually agreed upon deadline. The data elements included in the reports may be changed by agreement of the Parties.
1. Removal Data Report. The purpose of the Removal Data Report is to identify, for each domestic manufacturer of tobacco products, the removals made subject to tax by month and by tax classification of tobacco product (i.e., large cigars, small cigars, large cigarettes, small cigarettes, pipe tobacco, roll-your-own tobacco, chewing tobacco, and snuff). The data included is sourced from monthly operational reports provided to TTB by manufacturers of tobacco products, specifically form TTB F 5210.5, “Report – Manufacturer of Tobacco Products or Cigarette Papers and Tubes,” or its electronic equivalent. The data elements in the Removal Data Report will include the following:
a) Operational Report Period – The “operational report period” specifies the monthly reporting period that is covered by the individual line of data in the Removal Data Report.
b) Business Name – The “business name” is the legal name of the tobacco products manufacturer, as listed on the TTB permit, whose removal information is conveyed in the individual line of data in the Removal Data Report. The “business name” does not include any “doing business as” names.
c) Permit ID – The “permit ID” is the TTB permit number of the tobacco products manufacturer whose removal information is conveyed by the individual line of data in the Removal Data Report.
d) EIN – The “EIN” is the Internal Revenue Service-issued employer identification number of the tobacco products manufacturer whose removal information is conveyed by the individual line of data in the Removal Data Report.
e) Product Type – The “product type” is the tax classification of tobacco product covered by the individual line of data in the Removal Data Report. The “product type” for each line will be large cigars, small cigars, large cigarettes, small cigarettes, pipe tobacco, roll-your-own tobacco, chewing tobacco, or snuff.
f) Quantity – The “quantity” is the amount of tobacco product removed by the manufacturer in the operational report period covered by the individual line of data in the Removal Data Report. For large cigars, small cigars, large cigarettes, and small cigarettes, the quantity represents sticks. For pipe tobacco, roll-your-own tobacco, chewing tobacco, and snuff, the quantity represents pounds.
2. Tax Data Report. The purpose of the Tax Data Report is to identify, for each domestic manufacturer of tobacco products, the tax liabilities reported, by product category, for each tax period within the fiscal year. The data is sourced from semimonthly tax returns provided to TTB by manufacturers of tobacco products, specifically form TTB F 5000.24, “Excise Tax Return,” or its electronic equivalent. The data elements in the Tax Data Report will include the following:
a) EIN – The “EIN” is the Internal Revenue Service-issued employer identification number of the tobacco products manufacturer whose tax information is conveyed by the individual line of data in the Tax Data Report.
b) Business Name – The “business name” is the legal name of the tobacco products manufacturer, as listed on the TTB permit, whose tax information is conveyed in the individual line of data in the Tax Data Report. The “business name” does not include any “doing business as” names.
c) Permit ID – The “permit ID” is the TTB permit number of the tobacco products manufacturer whose tax information is conveyed by the individual line of data in the Tax Data Report.
d) Tax Period End Date – The “tax period end date” is the ending date of the semimonthly tax period covered by the individual line of data in the Tax Data Report.
e) Cigars Tax Amount – The “cigars tax amount” is the amount of tax liability for removals of cigars reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report.
f) Cigarettes Tax Amount – The “cigarettes tax amount” is the amount of tax liability for removals of cigarettes reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report.
g) Chew/Snuff Tax Amount – The “chew/snuff tax amount” is the amount of tax liability for removals of chewing tobacco and snuff (combined) reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report.
h) Pipe/RYO Tax Amount – The “pipe/RYO tax amount” is the amount of tax liability for removals of pipe tobacco and roll-your-own tobacco (combined) reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report.
i) Increasing Adjustment Amount – The “increasing adjustment amount” is the total amount of any additional excise tax liabilities reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report. Generally, such adjustments account for tax shortfalls from prior tax reporting periods. An “increasing adjustment amount” may also include additional liabilities identified by TTB through the audit process.
j) Decreasing Adjustment Amount – The “decreasing adjustment amount” is the total amount of any decreasing adjustments reported by the manufacturer on the semimonthly tax return covered by the individual line of data in the Tax Data Report. Generally, such adjustments account for overpayments of tax from prior tax reporting periods. A “decreasing adjustment amount” may also include overpayments identified by TTB through the audit process.
B. Quarterly Reports and Required Data Fields. The Permit Data Report identified below is to be provided on a quarterly basis. Excepting extraordinary circumstances, TTB will provide FDA/CTP with Permit Data Reports, as described below, by the 15th calendar day of the first month of each fiscal quarter or the first Federal workday thereafter. If circumstances require an extension to the established deadline, TTB will inform FDA/CTP of the need for additional time as soon as possible and establish a new, mutually agreed upon deadline. The data elements included in the quarterly reports may be changed by agreement of the Parties.
1. Permit Data Report. The purpose of the Permit Data Report is to identify any TTB permits for domestic manufacturers or importers of tobacco products that were issued or closed during the most recent complete fiscal quarter. The data is sourced from permit applications, amended applications, permit surrender documentation, and TTB’s internal permit record management systems. Permit applications and amendments are made on the following forms or their electronic equivalents: TTB F 5200.3, “Application for Permit to Manufacture Tobacco Products or Processed Tobacco or to Operate an Export Warehouse;” TTB F 5200.16, “Application for Amended Permit to Manufacture Tobacco Products or Processed Tobacco or to Operate an Export Warehouse;” TTB F 5230.4, “Application for Permit to Import Tobacco Products and Processed Tobacco;” and TTB F 5230.5, “Application for Amended Permit to Import Tobacco Products and Processed Tobacco.” The data elements included in the Permit Data Report include the following:
a) EIN – The “EIN” is the Internal Revenue Service-issued employer identification number of the tobacco products manufacturer or importer whose permit information is conveyed by the individual line of data in the Permit Data Report.
b) Permit Type – The “permit type” is the type of permit covered by the individual line of data in the Permit Data Report. The permit type will be either manufacturer of tobacco products (“MTP”) or importer of tobacco products (“TIM”).
c) Business Name – The “business name” is the legal name of the tobacco products manufacturer or importer, as listed on the TTB permit, whose permit information is conveyed in the individual line of data in the Permit Data Report. Where applicable, self-reported “doing business as” names are also listed.
d) Permit ID - The “permit ID” is the TTB permit number of the tobacco products manufacturer or importer whose permit information is conveyed by the individual line of data in the Permit Data Report.
e) Permit Status – The “permit status” is the current Permits Online (PONL) permit status (e.g., “active,” “closed,” “expired,” etc.) of the permit covered by the individual line of data in the Permit Data Report, as of the time the Permit Data Report is generated.
f) Last Activity – The “last activity” is the date of the monthly operational report on which the permitted business covered by the individual line of data in the Permit Data Report most recently reported the manufacture or importation of tobacco products.
g) Issue Date – The “issue date” is the date on which the permit covered by the individual line of data in the Permit Data Report was approved and became operational.
h) Effective Closed Date – The “effective closed date” is the date on which the permitted business covered by the individual line of data in the Permit Data Report is understood to have ceased operations. This information is generally self-reported by the industry member.
i) Official Closed Date – The “official closed date” is the date on which the permit covered by the individual line of data in the Permit Data Report was closed by TTB personnel in TTB’s permit records management system.
j) Mailing Address – The “mailing address” is the address provided by the industry member at which the TTB-permitted business covered by the individual line of data in the Permit Data Report receives mail.
k) Premises Address – The “premises address” is the physical location of the TTB-permitted business covered by the individual line of data in the Permit Data Report.
l) Contact Information – The “contact information” is any contact information (i.e., name, state of residence, phone numbers, and/or e-mail addresses) for a representative of the permitted business covered by the individual line of data in the Permit Data Report.
VI. DATA SHARING GUIDELINES.
A. Both Parties recognize that information exchanged that contains any of the following types of information must be protected from unauthorized use and disclosure: (1) confidential commercial information, such as the information that would be protected from public disclosure pursuant to Exemption 4 of the Freedom of Information Act (FOIA); (2) personal privacy information, such as the information that would be protected from public disclosure pursuant to Exemption 6 or 7(C) of the FOIA; or (3) information that is otherwise protected from public disclosure by Federal statutes and their implementing regulations, e.g., The Internal Revenue Code of 1986, section 26 U.S.C. 6103 et. seq., the Trade Secrets Act (18 U.S.C. 1905), the Privacy Act (5 U.S.C. 552a), other Freedom of Information Act exemptions not mentioned above (5 U.S.C. 552(b)), the FDCA (21 U.S.C. 301 et seq.), and the Health Insurance Portability and Accountability Act (HIPAA), Pub. L. 104-191). Pursuant to FDCA section 301(j) (21 U.S.C. 331(j)), FDA/CTP will not reveal to TTB any method or process which is entitled to protection as a trade secret. FDA/CTP recognizes that presumptively all information provided by TTB under this MOU—but, not necessarily the same such information when provided by other entities—regarding tobacco industry members is return information as defined by Internal Revenue Code of 1986, section 26 U.S.C. 6103(b) and may not be further disclosed except pursuant to the particular requirements of section 6103.
B. The Parties will establish proper safeguards to ensure that information shared under this MOU shall be used and disclosed solely in accordance with applicable laws and regulations. Access to the information shared under this MOU shall be restricted to authorized FDA and TTB employees, agents, and officials who require access to perform their official duties in accordance with the uses of information as authorized by this MOU. Such personnel shall be advised of (1) the confidential nature of the information; (2) safeguards required to protect the information, and (3) the administrative, civil, and criminal penalties for noncompliance contained in applicable Federal laws. Contractors, their subcontractors, and agents requiring access to the information shared under this MOU will be required to sign a business associate/non-disclosure agreement by which they will commit to keep the information confidential.
C. As an express condition for the inspection and disclosure of Federal returns and return information provided by TTB under this MOU, FDA/CTP agrees to comply with the safeguards and requirements prescribed by section 6103(p)(4) of the Internal Revenue Code of 1986 and any implementation of such safeguards and requirements as may be provided by regulations and published procedures, including the requirements of Internal Revenue Service Publication (IRS P) 1075 (substituting TTB for the IRS as listed in these requirements).
1. FDA/CTP must furnish a Safeguard Procedures Report (SPR) to the TTB Director, Regulations and Rulings Division, describing how returns and return information provided by TTB under this MOU will be processed and how it will be protected from unauthorized disclosure. The SPR must be submitted in the form and manner specified by IRS P 1075. The SPR must be submitted to, and approved by, TTB prior to TTB entering into this MOU. FDA/CTP must submit a new SPR every 6 years from the date TTB approves the original SPR or whenever significant changes occur in FDA/CTP’s safeguard program.
2. FDA/CTP must furnish an annual Safeguard Activity Report (SAR) to the TTB Director, Regulations and Rulings Division, by September 30 of each year after this MOU goes into effect (see section VIII.A.) advising of: minor changes to the procedures or safeguards described in the SPR and future actions that will affect the FDA/CTP's safeguard procedures; summarizing the FDA/CTP's current efforts to ensure the confidentiality of returns and return information provided by TTB under this MOU; and certifying that FDA/CTP is in compliance with the requirements of section 6103(p)(4) of the IRC. The SAR must be submitted in the form and manner specified by IRS P 1075.
3. FDA/CTP must permit TTB to review the extent to which the FDA/CTP is complying with the requirements of section 6103(p) of the IRC; and
4. FDA/CTP must inform in writing all FDA/CTP employees and contractors and any other persons to or by whom disclosure or inspection of returns or return information provided by TTB under this MOU is authorized of the criminal penalties and civil liability provided by sections 7213 and 7431 of the IRC for an unauthorized disclosure of such returns and return information provided by TTB under this MOU.
VII. LIAISON OFFICERS.
Each Party will maintain a Liaison Officer responsible for coordination between the Parties under this MOU. The attached Liaison Officer Addendum lists contact information for each Party’s Liaison Officer. The Liaison Officer Addendum will be reviewed at the beginning of each fiscal year and updated as needed. Each Party may designate a new Liaison Officer at any time by providing to the other Party's Liaison Officer an updated Liaison Officer Addendum, signed by the Party’s MOU signatory. If, at any time, an individual designated as a Liaison Officer becomes unavailable to fulfill those functions, the relevant Party will provide an updated Liaison Officer Addendum within two weeks.
VIII. TERM, TERMINATION, AND MODIFICATION.
A. This MOU will be effective upon: (1) FDA/CTP submitting the SPR to TTB and receiving approval of such report; and then (2) the signature of both Parties’ representatives as listed below. This MOU may be modified or terminated by mutual written consent by FDA/CTP and TTB or may be terminated by either Party upon a 120-day advance written notice to the other.
B. This MOU may be terminated, suspended, or modified at the discretion of TTB or FDA/CTP due to changes in Federal law or regulations or whenever in the administration of Federal laws such termination is deemed appropriate, including substantial noncompliance with the terms of this MOU. Termination, suspension, or modification will be affected by written notice to the other Party of this MOU.
C. If this MOU is terminated or suspended, both Parties to the MOU must continue to secure and maintain any returns or return information provided under the MOU that remains in its possession in accordance with all applicable laws and regulations. See IRS P 1075.
APPROVED AND ACCEPTED FOR TTB
/s/
By: Mary G. Ryan
Title: Administrator, TTB
Date: 6/15/2022
APPROVED AND ACCEPTED FOR FDA/CTP
/s/
By: Janelle Barth
Title: Executive Officer, CTP, FDA
Date: 6/21/2022
TTB Liaison Officer Addendum
Pursuant to the MOU between TTB and FDA, CTP, Section VII, Liaison Officers, the following personnel are designated to act as Liaison Officers on behalf of TTB.
Primary:
Selina M. Ferguson
Selina.Ferguson@ttb.gov
202-453-2273
Alternate:
Jesse Longbrake
Jesse.Longbrake@ttb.gov
202-453-2066
/s/
Mary R. Ryan
Administrator
Date: 6/15/2022
FDA/CTP Liaison Officer Addendum
Pursuant to the MOU between TTB and FDA/CTP, Section VII, Liaison Officers, the following personnel
are designated to act as Liaison Officers on behalf of FDA/CTP.
Primary:
Krystal Monaco
krystal.monaco@fda.hhs.gov
240-402-4139
Alternates:
Kenneth McWhirter
kenneth.mcwhiter@fda.hhs.gov
301-348-1558
Bryan Walsh
bryan.walsh@fda.hhs.gov
301-796-6735
Patricia Squella
patricia.squella@fda.hhs.gov
240-402-1688
/s/
Janelle Barth
Executive Officer, CTP
Date: 6/21/2022