|
A tobacco quota buyout was included in the American Jobs Creation
Act of 2004, which was signed and enacted on October 22, 2004 (PL
108-357) (link
to the buyout legislation). The tobacco quota buyout terminates
the federal tobacco price support and supply control programs (beginning
with the 2005 crop), makes compensation payments to tobacco quota
owners and active tobacco growers for the elimination of the tobacco
quota asset, and provides for the orderly disposal of existing tobacco
pool stocks. Payments to tobacco quota owners and growers are expected
to total $9.6 billion, with annual payments spread evenly over 10
years. Additional funding for handling pool stocks and administration
bring the cost of the total buyout package to $10.14 billion. The
buyout is funded entirely by assessments on tobacco product manufacturers
and importers. This website contains additional details about the
tobacco quota buyout and related issues.
Buyout
Website Archive
www.tobaccobuyoutinfo.com
is a new website devoted exclusively to providing the most comprehensive
and up-to-date buyout information. New information will be added
to the site as it becomes available.
Phase
II Decision Overturned
August 19, 2005
The North Carolina Supreme court issued an opinion on August 19,
2005, that reverses an earlier North Carolina Business Court ruling
(December 23, 2005) and requires more than $400 million in Phase
II payment for the 2004 calendar year to be paid. The earlier ruling
declared that passage of the tobacco quota buyout legislation triggered
an offset provision in the 1999 Phase II agreement that released
participating cigarette manufacturers from any Phase II payment
obligations for calendar year 2004 and beyond. The 14 participating
states appealed the ruling, and the final decision reversed the
earlier court ruling. This decision is final, meaning that the appeals
process is exhausted and 2004 Phase II payments will be issued,
according to each state's approved distribution plan.
Link
to the North Carolina Supreme Court Phase II Opinion
Link
to a Press Release from the Tennessee department of Agriculture
U.S.
Department of the Treasury Notice 2005-57
July 19, 2005
This is a revised notice issued by the Department of Treasury and
IRS that answers frequently asked questions regarding the tax treatment
of payments made to tobacco quota holders (owners) under the Tobacco
Transition Payment Program (TTPP). Note that this release only provides
guidance for payments to tobacco quota owners; a separate guidance
regarding treatment of TTPP payments for tobacco producers (growers)
will be issued later. This notice modifies and supersedes the information
in Notice 2005-51, issued June 21, 2005.
Buyout
Administrative Regulations
On April 4, 2005, USDA's FSA and CCC issued the Tobacco Transition
Payment Program Final Rule (link
to the TTPP final rule). This rule provides administrative regulations
for the TTPP.
On
February 10, 2005, USDA's FSA issued the final regulations dealing
with assessments on tobacco product manufacturers and importers
to fund the tobacco transition payment program in the tobacco quota
buyout (link
to the buyout assessment final rule).
Forms
for Lump Sum Payments Now Available
The first of 10 annual buyout payments to tobacco quota owners and
growers with a TTPP contract have been issued to most contract holders
(distribution of the first annual payment should be completed by
September 30, 2005). Contract holders may choose to arrange with
a third party financial institution to receive the remaining 9 buyout
payments as a discounted lump sum payment instead of receiving 9
annual installments from CCC. New forms are available from USDA’s
Farm Service Agency to transfer your contract to a third party for
a lump sum exchange. FSA
Form 962, TTPP Successor In Interest Contract, must be submitted
to FSA by November 1, 2005 to participate in a lump sum exchange.
Alternatively,
contract holders may assign future payments to a third party (for
purposes such as securing a loan), in which case the contract holder
still “owns” the contract and will continue to bear
annual tax obligations for future annual payments, even though the
annual contract payments will go to the party to which they are
assigned. Additional information and forms are available from USDA’s
FSA: http://www.fsa.usda.gov/tobacco/.
Summary
of Buyout Provisions
Buyout
Questions and Answers
Buyout
Payments by State
Buyout
Payments by Kind
Economic
Impacts of Buyout
Buyout
Legislation Language
•
Download the Buyout Legislation
•
Download the Assessment Final Rule
•
Download
the Tobacco Transition Payment Program Final Rule
Buyout
Presentations and Other Resources
Historical
Buyout Information
|
