To:All non-participating tobacco product manufacturers
From:Michael Plumley, Assistant Attorney General
Date:June 25, 2004
Re:Passage and implementation of HB 97 regarding non-participating tobacco product manufacturers
Please be advised that the Kentucky General Assembly passed HB 97 April 13, 2004, and the bill was signed by the Governor on April 22, 2004. This provision amends KRS 131.602 by changing the calculation used to determine whether an NPM has deposited an excess amount into escrow in a given year. Under this statute, the escrow deposits are the property of the NPM, which earns interest on the accounts as it accrues, and the deposits are returned after 25 years if they have not been released prior to that time.
We have received questions from the industry regarding when this provision will be applied to sales of NPMs and how the release provision will be implemented in April 2005. In order to effectively and fairly implement this provision, our office has determined that the new calculation for releases should be applied to sales beginning August 1, 2004, the first full month after the statutory change is technically effective. Therefore, our office will consider properly supported requests for a release from escrow based upon the old provision for sales between January 1, 2004 and July 31, 2004. The burden is on the NPM to provide calculations and proof of sales.
HB 97 also includes a provision allowing the Office of the Attorney General to promulgate regulations requiring quarterly payments into escrow. We are in the process of drafting such regulations to be proposed and filed. Further information on quarterly installment deposits will be provided when it becomes available. It is unlikely that quarterly deposits would be required prior to January 1, 2005.