Section 1320-09-02-.01 - ESCROW DEPOSITS, CERTIFICATES AND DISPUTES(1) To promote compliance with Tenn. Code Ann. §§ 67-4-2601 et seq., including the requirement that NPMs comply with the Escrow Fund Act, all Non-Participating Manufacturers selling cigarettes in Tennessee must make escrow deposits required by Tenn. Code Ann. § 47-31-103(a)(2)(A) in quarterly installments, pursuant to these regulations, for a period of not less than (2) years from the effective date of these regulations or two years from the date the NPM is first certified in Tennessee, whichever is later. All Non-Participating Manufacturers selling cigarettes in Tennessee must certify their compliance with Tennessee's Escrow Fund Act on a quarterly basis during these two (2) years.(2) After complying with the quarterly escrow provisions of these regulations for a (2) year period, any Non-Participating Manufacturer may petition the Commissioner of Revenue to request that it be allowed to make its deposits on an annual basis. The Commissioner shall have discretion to decide whether such Non-Participating Manufacturer shall be allowed to make deposits on an annual basis, or shall remain on a quarterly basis. When making such determination, the Commissioner shall consider, among other factors the Commissioner deems relevant, the NPM's history of escrow payments and compliance; and the NPM's payment record in other states.(3) The Commissioner or the Attorney General may also require the production of any information or documents necessary to determine the adequacy of the amount of the installment deposit.(4) The Attorney General and/or the Commissioner of Revenue may provide or release to any Non-Participating Manufacturer such information necessary to calculate or determine that Non-Participating Manufacturer's quarterly deposit obligation. The Attorney General and Department of Revenue may develop a form to be used for any Non-Participating Manufacturer to request such information.(5) If a Tobacco Product Manufacturer disputes the amount that it is required to deposit into a Qualified Escrow Account on a quarterly or annual basis, it must submit a written notice at the time of making its deposit. After receiving the Attorney General or Department's adjustment or release determination, or a notice of failure to make a complete escrow deposit, the Tobacco Product Manufacturer may dispute the decision. The Tobacco Product Manufacturer must file any dispute with the General Counsel of the Department of Revenue and the Tobacco Enforcement Division of the Attorney General's Office, within twenty (20) business days of the date of the decision or notice. The dispute procedure shall be pursuant to Tenn. Code Ann. §§ 4-5-223 and 4-5-225. The official mailing address, overnight delivery address, telephone and facsimile numbers of the Department and the Attorney General are set forth on the applicable official websites.(6) To be a valid and ripe dispute, the Tobacco Product Manufacturer shall be required to first place the full escrow deposit amount identified by the Attorney General or Department of Revenue into a Qualified Escrow Account in its Tennessee sub-account and provide proof of that deposit to the Attorney General and Department. This deposit can be made under protest. The Tobacco Product Manufacturer's written notice of dispute must include a certification that the full escrow payment demanded by the Department or Attorney General has been deposited and must state with specificity all bases or reasons for the dispute. An escrow agent is required to comply with a final order issued in a dispute proceeding pursuant to Tenn. Code Ann. §§ 4-5-223 and 4-5-225 as described herein. Such compliance shall include, but not be limited to, releasing escrow funds pursuant to the court's final order.(7) In any dispute, the Licensed Distributor Reports, including all information contained therein, submitted to the State of Tennessee shall be presumed correct. The Non-Participating Manufacturer shall have the burden of proving that the Licensed Distributor Reports are incorrect, incomplete or inaccurate.Tenn. Comp. R. & Regs. 1320-09-02-.01
Original rule filed January 31, 2008; effective May 30, 2008.Authority: T.CA. § 4-4-103, § 47-31-102(10), § 67-1-102(a), § 67-4-2604(e) and § 2606(d).