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United States Food and Drug Administration
Tobacco Products, User Fees, Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products
OMB Control No. 0910-0749
SUPPORTING STATEMENT
Terms of Clearance: None.
Circumstances Making the Collection of Information Necessary
This information collection supports Food and Drug Administration (FDA, us or we) regulations. On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the Tobacco Control Act) (Pub. L. 111–31) was signed into law. The Tobacco Control Act amended the FD&C Act and granted FDA authority to regulate the manufacture, marketing, and distribution of tobacco products to protect public health generally and to reduce tobacco use by minors.
FDA issued a final rule (81 FR 28707) that requires domestic manufacturers and importers of cigars and pipe tobacco to submit information needed to calculate the amount of user fees assessed under the Federal Food, Drug, and Cosmetic Act (the FD&C Act). FDA expanded its authority by issuing a final rule (81 FR 28973), “Deeming Tobacco Products To Be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (Deeming rule), deeming all products that meet the statutory definition of “tobacco product,” except accessories of the newly deemed tobacco products, to be subject to the FD&C Act. The Deeming rule, among other things, subjected domestic manufacturers and importers of cigars and pipe tobacco to the FD&C Act’s user fee requirements. Consistent with the Deeming rule and the requirements of the FD&C Act, this final rule requires the submission of the information needed to calculate user fee assessments for each manufacturer and importer of cigars and pipe tobacco to FDA.
Previously the FDA issued a final rule (79 FR 39302) that requires domestic tobacco product manufacturers and importers to submit information needed to calculate the amount of user fees assessed under the Federal Food, Drug, and Cosmetic Act (FD&C Act). The United States Department of Agriculture (USDA) has been collecting this information and providing FDA with the data FDA needs to calculate the amount of user fees assessed to tobacco product manufacturers and importers. USDA ceased collecting this information in fiscal year 2015 (October 2014). USDA’s information collection did not require OMB approval, per an exemption by Pub. L. 108-357 section 642 (b)(3). Consistent with the requirements of the FD&C Act, FDA now requires the submission of this information to FDA instead of USDA. FDA is taking this action to ensure that FDA continues to have the information FDA needs to calculate, assess, and collect user fees from domestic manufacturers and importers of tobacco products.
Section 919(a) of the FD&C Act (21 U.S.C. 387s(a)) requires FDA to “assess user fees on, and collect such fees from, each manufacturer and importer of tobacco products” subject to the tobacco product provisions of the FD&C Act (chapter IX of the FD&C Act). The total amount of user fees to be collected for each fiscal year is specified in section 919(b)(1) of the FD&C Act, and under section 919(a) FDA is to assess and collect a proportionate amount each quarter of the fiscal year. The FD&C Act provides for the total assessment to be allocated among the classes of tobacco products. The class allocation is based on each tobacco product class’ volume of tobacco product removed1 into commerce. Within each class of tobacco products, an individual domestic manufacturer or importer is assessed a user fee based on its share of the market for that tobacco product class.
In specifying how to determine each of these two allocations — to a class of tobacco products and then to a domestic manufacturer or importer within a particular class of tobacco products — section 919 of the FD&C Act references the Fair and Equitable Tobacco Reform Act of 2004 (FETRA, Pub. L. 108-357 (7 U.S.C. 518 et seq.)). In determining the user fees to be assessed on each class of tobacco products, section 919(b)(2)(B)(ii) of the FD&C Act provides that the applicable percentage for each tobacco product class “shall be the percentage determined under section 625(c) of [FETRA] for each such class of product for such fiscal year.” In determining the user fee to be paid by each company, section 919(b)(4) of the FD&C Act directs that FDA use percentage share information “determined for purposes of allocations under subsections (e) through (h) of section 625 of [FETRA].”
FETRA provides for a Tobacco Transition Payment Program (TTPP) through which eligible former tobacco quota holders and tobacco producers receive payments in 10 equal installments in each fiscal year 2005 through 2014. FETRA provides for the establishment of quarterly assessments on each domestic manufacturer and importer of tobacco products to fund the 10-year TTPP. The last assessment under FETRA was in September 2014.
Under a Memorandum of Understanding (MOU) between FDA and USDA, USDA has been providing FDA with the information on percentage share by class of tobacco products and by individual company within each tobacco product class. In light of the sunset of the TTPP program, FDA is issuing this final rule consistent with section 919(b)(7) of the FD&C Act, which requires that no later than fiscal year 2015, FDA ensures that it will be able to make the determinations necessary for assessing tobacco product user fees.
The following sections of the final rule include collections of information.
§ 1150.5: Under paragraphs (a) and (b) of this section, domestic manufacturers and importers of FDA-regulated tobacco products are required to submit to FDA information that the Agency needs to calculate, assess, and collect user fees. The section provides continuity to domestic manufacturers and importers as it requires them to submit essentially the same information to FDA that they are currently submitting to USDA.
§ 1150.5(a): This paragraph describes when and in what manner domestic manufacturers and importers of FDA-regulated tobacco products are required to submit information to FDA. The cost and hourly burden for this section is covered under § 1150.5(b).
§ 1150.5(b)(1) and (b)(2): These paragraphs describe the information that domestic manufacturers and importers of FDA-regulated tobacco products are required to provide monthly. Under § 1150.5(b)(1), each domestic manufacturer and importer submits identifying information, including its name and address, contact name and telephone number, an email address and postal address for FDA notifications, Alcohol and Tobacco Tax and Trade Bureau (TTB) permit number, and Employer Identification Number. Under § 1150.5(b)(2), the manufacturer and importer submits information regarding the total amount of tobacco products, by class, removed into domestic commerce in the prior month and the Federal excise taxes paid, by class, for those removals. § 1150.5(b)(2) requires monthly reports from all domestic manufacturers and importers, and, as is currently required by USDA, entities that had no removals subject to tax during the reporting period are required to report that they had no removals. This type and frequency of reporting are almost identical to what USDA currently collects on its CCC-974 form. Moreover, FDA has available to domestic manufacturers and importers form FDA 3852, a form similar to the USDA CCC-974 form with minor changes reflecting that this information is to be submitted to FDA instead of USDA. The cost and hourly burden for this section contains burden from § 1150.5(a) and from Form FDA 3852.
Form FDA 3852: This form captures the monthly identification and removal information that domestic manufacturers and importers of FDA-regulated tobacco product are required to submit under § 1150.5(b)(1) and (b)(2). The form also directs manufacturers and importers to attach supporting documentation required by § 1150.5(b)(3) (described below). Thus, the burden for this form is covered under § 1150.5(b).
The information captured by § 1150.5(a), (b)(1), (b)(2), and Form FDA 3852 is necessary to provide FDA with the information needed to calculate the user fee to be assessed and collected from each domestic manufacturer and importer.
§ 1150.5(b)(3): This paragraph requires that domestic manufacturers and importers of FDA-regulated tobacco products provide monthly certified copies of the returns or forms related to the removal of tobacco products into domestic commerce and the payment of excise taxes. These reports and forms are referred to by the applicable Internal Revenue Code Authority. Because the specific names of external-to-FDA agency reports and forms may change over time, FDA does not name reports or forms in the final rule. FDA intends to specify the form names in FDA’s quarterly notification of assessments to domestic manufacturers and importers, on its Web site, and in Form FDA 3852. Currently the forms are: TTB Form 5220.6; TTB Form 5210.5; TTB 5000.24; and CBP Form 7501.
This information is necessary because collecting the required information enables FDA to determine allocations and verify monthly summary information on which the allocations are based so FDA can accurately assess and collect user fees from domestic manufacturers and importers of FDA-regulated tobacco products. As has been USDA’s approach, submission of the information in a summary form along with the supporting documents (i.e., copies of the relevant tax forms) helps ensure that FDA is able to efficiently and accurately identify the amount of tobacco product removed and subject to Federal excise tax. FDA believes that the required information provides the information the Agency needs to effectively implement section 919 of the FD&C Act. The burden on reporting entities should be relatively low because they will be submitting copies of forms they are currently required to submit under separate laws along with a summary of information from those forms.
§ 1150.13: This section requires that a domestic manufacturer and importer pay an assessment by the last day of the quarter involved. If FDA has not notified the domestic manufacturer or importer of the amount that is required to be remitted 30 calendar days before the end of a fiscal year quarter, the final rule provides that no interest is assessed until 30 calendar days after the date FDA sent notification of the amount owed. This section also requires that payments be submitted in U.S. dollars and in the manner specified in the notification (e.g., check or online payment).
This information is necessary for the FDA to collect assessments, to identify which domestic manufacturers and importers have paid their assessments, and to calculate interest on unpaid manufacturer and importer assessments.
§ 1150.15(a): This section requires that domestic manufacturers and importers submit any dispute in writing, within 45 days of the date of the assessment notification, that the dispute be legible and in English, and that the dispute be sent to the address identified on FDA’s tobacco products Web site. If FDA determines that an error occurs in the amount of the assessment, FDA will refund the amount. To ensure finality in FDA’s accounts and potential refund obligations, FDA believes it is necessary to have a time limit on disputes over user fee assessments. FDA believes the timeframe identified is adequate to detect a dispute and prepare a written submission to FDA.
This information is necessary to notify FDA of domestic manufacturer or importer disputes. FDA will provide a dated, written response and FDA’s response will provide information about how to submit a request for further Agency review.
§ 1150.15(d): This section provides that any request for further Agency review under 21 CFR 10.75 be submitted in writing within 30 days of the date of FDA’s response to the dispute (submitted under § 1150.15(a)). FDA believes this timeframe is adequate to detect a continued dispute and to prepare a written submission to FDA. Along with the timeframe in § 1150.15(a), this timeframe ensures finality in FDA’s accounts and potential refund obligations.
On August 9, 2023, the U.S. District Court for the District of Columbia issued an order vacating FDA’s rule deeming tobacco products to be subject to FDA’s tobacco product authorities “insofar as it applies to premium cigars”. FDA is working to develop a reporting mechanism that will allow for FDA to identify non-premium cigars.
2. Purpose and Use of the Information Collection
The purpose of the information collection is to require each tobacco product domestic manufacturer or importer to submit to FDA information needed to calculate and assess user fees under section 919 of the FD&C Act. FDA will collect this information to ensure that it has the information needed to calculate, assess, and collect tobacco product manufacturer and importer user fees. In addition, the collection of information allows the domestic manufacturer or importer the ability to request further review of their assessment if there is a dispute over the amount of the user fee assessed by FDA.
3. Use of Improved Information Technology and Burden Reduction
To make reporting requirements for this collection easier for respondents, FDA offers respondents the ability to provide their user fee submission information via an electronic form (Form FDA 3852) which can be completed and mailed via electronic mail or printed and mailed to FDA. Although the form can be submitted either electronically or in paper format, FDA estimates that based on its past experience with submittals, approximately 80 percent of all respondents will submit the information in electronic format.
4. Efforts to Identify Duplication and Use of Similar Information
As referenced in the previous terms of clearance, the data collected under this ICR overlaps with collections of excise tax and import information by Alcohol and Tobacco Tax and Trade Bureau (TTB) and Customs and Border Protection (CBP). However, the TTB and CBP data cannot currently be used by FDA for calculating user fees due to both logistical reasons and restrictions on the use of excise tax information that could be provided to FDA directly by TTB. FDA has had meetings with TTB about establishing a memorandum of understanding (MOU) with TTB to receive information directly from TTB regarding tobacco permit holders and excise tax payments and has fulfilled quarterly reporting requirements to notify OMB of outcomes of these interagency discussions. These meetings have led to the identification of certain legal restrictions that are outlined in the Internal Revenue Code law(s), specifically section 6103, that does not allow for the complete utilization of data received from the TTB and CBP to implement FDA’s Tobacco User Fee Program. FDA continues to communicate with the TTB and CBP to obtain certain information from each organization that allows the CTP to verify and validate our records received from industry to ensure accurate tobacco user fee assessments.
5. Impact on Small Businesses or Other Small Entities
All domestic manufacturers and importers of tobacco products subject to regulation under chapter IX of the FD&C Act are affected by this rule, including small businesses. It is likely that about 90 percent of the affected entities would be small (approximately 250 small entities)2. The actual user fees paid by small entities are likely smaller than those paid by larger businesses because user fees are assessed based on the percentage share by class of tobacco products and by individual company within each tobacco product class.
FDA continues to pursue means of reducing the reporting burden for both small and large respondents to this collection of information and continues to employ the latest technology for receiving user fee information, consistent with the intent of the legislation.
FDA aids small businesses in dealing with the information submission requirements of this collection of information by providing technical, nonfinancial assistance in submitting the information required for user fees.
6. Consequences of Collecting the Information Less Frequently
The collection of information submitted is used to meet the requirements of section 919 of the FD&C Act regarding user fees. Because the information collection is derived from information collected monthly by other agencies (i.e., TTB and CBP), we believe that collecting this information less frequently will not allow FDA to meet its statutory obligations for collecting equitable user fees from domestic manufacturers and importers of tobacco products.
7. Special Circumstances Relating to the Guidelines of 5 CFR 1320.5
This information collection fully complies with 5 CFR 1320.5(d) (2). There are no special circumstances associated with this information collection that would be inconsistent with the regulation.
8. Comments in Response to the Federal Register Notice and Efforts to Consult Outside the Agency
In accordance with 5 CFR 1320.8(d), FDA published a 60-day notice for public comment in the FEDERAL REGISTER of 11/19/2021 (86 FR 64948). No comments were received.
9. Explanation of Any Payment or Gift to Respondents
There is no payment or gift awarded to respondents of this collection of information.
10. Assurance of Privacy Provided to Respondents
Privacy is assured by enacting procedures to prevent unauthorized access to respondent data and by preventing the public disclosure of the responses of individual participants.
All electronic data is maintained in a manner that is consistent with the Department of Health and Human Services ADP Systems Security Policy as described in DHHS ADP Systems Manual, Part 6, chapters 6-30 and 6-35.
CTP consulted with FDA’s Privacy office, which conducted a Privacy Impact Assessment (PIA). CTP received HHS approval on the privacy impact assessment and was assigned PIA ID 2060831.
11. Justification for Sensitive Questions
FDA is not asking questions of a sensitive nature in this collection of information, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.
12. Estimates of Annualized Burden Hours and Costs
12a. Annualized Hour Burden Estimate
FDA estimates the burden of this collection of information as follows:
Table 1.--Estimated Annual Reporting Burden |
|||||
21 CFR Section/Activity |
No. of Respondents |
No. of Responses per Respondent |
Total Annual Responses |
Hours per Response |
Total Hours |
1150.5(a), (b)(1) and (2), and Form FDA 3852; General identifying information provided by manufacturers and importers of FDA regulated tobacco products and identification and removal information (monthly) |
700 |
12 |
8,400 |
3 |
25,200 |
Notification – “Monthly Reporting for Cigars”; Voluntary premium cigar data submission (monthly) |
100 |
12 |
1200 |
2.5 |
3,000 |
1150.5(b)(3); Certified copies (monthly) |
700 |
12 |
8,400 |
1 |
8,400 |
1150.13; Submission of user fee information (Identifying information, fee amount, etc. (quarterly) |
376 |
4 |
1,504 |
1 |
1,504 |
1150.15(a); Submission of user fee dispute (annually) |
5 |
1 |
5 |
10 |
50 |
1150.15(d); Submission of request for further review of dispute of user fee (annually) |
3 |
1 |
3 |
10 |
30 |
Total |
38,184, |
||||
FDA estimates that entities will submit tobacco product user fee reports for approximately 700 TTB permits in a given month. The permit count was derived from aggregate data of active permit holders provided by TTB and reflects that in FY21, there was an average of 234 total permitted manufacturers and 466 permitted importers reporting tobacco user fees over all tobacco product types for which TTB assesses excise taxes (including cigarettes, cigars, snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco).
FDA estimates it will take 3 hours for each of these submission types for a total of 25,200 hours annually. Under § 1150.5(b)(3), these respondents are also expected to provide monthly certified copies of the returns and forms that relate to the removal of tobacco products into domestic commerce and the payment of Federal excise taxes imposed under chapter 52 of the Internal Revenue Code of 1986 to FDA. We estimate that each monthly report will take 1 hour for a total of 8,400 hours annually.
For the additional information collected from domestic manufacturers and importers of premium cigars, we estimate an average of 2.5 hours per response for approximately 100 respondents for a total of 3,000 hours.
The estimate of 376 respondents required to submit payment of user fee information under § 1150.13 reflects an average across the four (4) quarters for FY21 assessments issued to entities. FDA estimates the quarterly submission will take approximately 1 hour for a total of 1,504 hours annually.
FDA estimates that five of those respondents assessed user fees will dispute the amounts under
§ 1150.15(a), for a total amount of 50 hours. FDA also estimates that three respondents who dispute their user fees will ask for further review by FDA under § 1150.15(d), for a total amount of 30 hours. FDA has received nine dispute submissions since fiscal year 2015. Based on this data, the Agency does not believe we will receive more than five disputes and three requests for further reviews in the next 3 years.
As previously stated, FDA is working to develop a reporting mechanism that will allow for FDA to identify non-premium cigars which may include an update to Form FDA 3852. In the meantime, domestic manufacturers and importers of cigars may voluntarily report data for “premium cigars”.
As part of the current monthly report, the regulations require submitting “[t]he units of product, by class, removed and not tax exempt for the prior month and the Federal excise tax it paid, by class, for such removal.” FDA uses this and other information to calculate tobacco product user fee assessments. Beginning with August 2023 removals (reports that were due September 20, 2023), FDA would explain that a domestic manufacturer or importer of cigars, in addition to the currently required information—may also submit the three data elements below for products that are “premium cigars” as defined in the court order:
The number of units removed and not tax exempt (block 10A for manufacturers and 10C for importers)
The Federal excise tax paid for those removals (block 10B for manufacturers and 10D for importers)
The supporting documentation identifying the removals and associated Federal excise taxes (attached to FDA 3852)
FDA suggests domestic manufacturers and importers of cigars use the existing FDA 3852 form, page 2, row 10 to report any additional information; they may enter both the non-premium and premium cigar volume and taxes in cells 10A through 10D as appropriate. Responders may use the current methods of submission for the monthly reports:
Email: TobaccoUserFees@fda.hhs.gov (preferred method)
Fax: 301-595-1429 or 301-595-1430
Mail: Food and Drug Administration
Center for Tobacco Products
Document Control Center
Attn: OM, Division of Financial Management, User Fee Team
Building 71, Room G335
10903 New Hampshire Avenue
Silver Spring, MD 20993-0002
12b. Annualized Cost Burden Estimate
Estimates of the cost of the annual burden are based on an hourly wage rate of $31.15, doubled to $62.30 per hour to account for benefits and overhead. This rate is derived from the Department of Labor’s Bureau of Labor Statistics for Tobacco Manufacturers (The Bureau of Labor Statistics (BLS) May 2021 average (mean) hourly wage for all occupations - NAICS 312200 - Tobacco Manufacturing (https://www.bls.gov/oes/current/naics4_312200.htm. We estimate the annualized cost for compliance with this collection to be $2,378,863.20.
Type of Respondent |
Total Burden Hours |
Hourly Wage Rate |
Total Respondent Costs |
Tobacco product manufacturers and importers |
38,184 |
$62.30 |
$2,378,863.20 |
13. Estimates of Other Total Annual Cost Burden to Respondents and Record Keepers
There is no capital, operating, or maintenance cost associated with this information collection.
14. Annualized Cost to Federal Government
FDA anticipates that the Federal Government will incur the following costs: Staff Costs
Full Time Equivalent (FTE) = 2
Annual Cost per FTE = $117,505
Total Annual Cost = $235,010
Our estimated cost to the Federal government reflects the allocation of 2 FTE employees who collect, process, and file responses received. Using as a basis salary and wage data for the Washington DC-Metropolitan area found at www.opm.gov for a GS-13/4 employee, we calculate a total cost of $235,010 ($117,505 x 2).
15. Explanation for Program Changes or Adjustments
This change request incorporates edits to allow for the collection of additional information related to premium cigars. On August 9, 2023, the U.S. District Court for the District of Columbia issued an order vacating FDA’s rule deeming tobacco products to be subject to FDA’s tobacco product authorities “insofar as it applies to premium cigars”. FDA is working to develop a permanent reporting mechanism that will allow for FDA to identify non-premium cigars. In the meantime, this update allows FDA to collect information on a voluntary basis. After OMB clearance, FDA plans on sending domestic manufacturers and importers of cigar tobacco products a letter (instrument in the ICR) with the additional information requested.
We estimate an average increase of 2.5 hours for approximately 100 respondents. The estimated burden for the information collection reflects an overall increase of 3,000 hours. We attribute this adjustment to the additional submission of monthly premium cigar data.
FDA estimates the total annual burden for this collection of information is 38,184 hours.
16. Plans for Tabulation and Publication and Project Time Schedule
The Agency has no plans for the tabulation and publication of this collection of information.
17. Reason(s) Display of OMB Expiration Date Is Inappropriate
The OMB approval and expiration date will be displayed on all materials associated with this collection of information.
18. Exceptions to Certification for Paperwork Reduction Act Submissions
No exceptions are requested.
1 Removal is defined at 26 U.S.C. 5702 as “the removal of tobacco products or cigarette papers or tubes, or any processed tobacco, from the factory or from internal revenue bond under section 5704, as the Secretary [of Treasury] shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States.”
2 This is based on the final regulatory impact analysis for the final rule: Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Cigars and Pipe Tobacco.
| File Type | application/vnd.openxmlformats-officedocument.wordprocessingml.document |
| Author | Daniel Gittleson |
| File Modified | 0000-00-00 |
| File Created | 2023-09-29 |