General information

(a) A nonparticipating manufacturer whose cigarettes or roll-your-own tobacco are sold to consumers within Arkansas after April 6, 1999, must either:

(1) Become a participating manufacturer and perform its financial obligations as required under the Master Settlement Agreement; or

(2) Deposit into a qualified escrow fund as defined in Arkansas Code § 26-57-260(6) on or before April 15 of the year following the year for which the deposit is being made the following amounts:
1999, 0.94241 cents for each unit sold after April 6, 1999
2000, 1.04712 cents for each unit sold
2001 and 2002, 1.36125 cents for each unit sold
2003 through 2006, 1.67539 cents for each unit sold
2007 and each year thereafter, 1.88482 cents for each unit sold
(b)(1) Beginning March 15, 2000, and on or before March 15 of each subsequent year, the Department of Finance and Administration will provide each ascertainable nonparticipating manufacturer and the Attorney General with the units sold in Arkansas during the preceding calendar year.

(2) The department will obtain this information from:

(A) The monthly tobacco excise tax reports filed with the department by tobacco distributors;

(B) Information obtained during audits of tobacco distributors; and

(C) Other sources that reflect the units sold in this state.

(3) This figure should be used by the nonparticipating manufacturer in calculating the proper amount of its escrow payment to Arkansas.

(4) Any nonparticipating manufacturer that disagrees with the units sold as determined by the department should notify both the department and the Attorney General of that disagreement by April 1 of that year.

(5) Notice to the department and the Attorney General should be sent to the address shown in subsection (g) of this section.
(c)(1) Nonparticipating manufacturers are ultimately responsible for the calculation of their escrow payments due to the State of Arkansas.

(2) The calculation should be performed as follows:
UNITS SOLD x
APPLICABLE ESCROW PAYMENT RATE
=
TOTAL ESCROW PAYMENT DUE ON OR BEFORE APRIL 15 OF EACH YEAR FOR THE PRECEDING CALENDAR YEAR
(as defined in 26 CAR § 163-102(5), above)
(as set forth in subdivision (a)(2) of this section, above)
(d)(1) The department is authorized to adjust the amount of a nonparticipating manufacturer's total escrow payment liability based upon information acquired through subsequent audits conducted by the department of tobacco distributors that sell the nonparticipating manufacturer’s products within Arkansas.

(2) The affected nonparticipating manufacturer and the Attorney General will be notified of any such adjustment from the department.

(3) Adjustments may be challenged administratively through the department’s administrative hearing and review process in accordance with the Arkansas Tax Procedure Act, Arkansas Code § 26-18-101 et seq.
(e)(1) Each nonparticipating manufacturer required to deposit funds into a qualified escrow fund must file with the Office of the Attorney General a written document on or before April 30 of each year verifying:

(A) The number of individual cigarettes, including roll-your-own tobacco, sold in Arkansas during the prior year; and

(B) That the appropriate amount of money has been deposited into the escrow fund.

(2) Verification of the deposit must be documented by a statement from the financial institution with whom the escrow account has been established.

(3) Written verification should be sent to:
Office of the Attorney General
Public Protection Department, Tobacco Division
323 Center Street, Suite 1100
Little Rock, AR 72201
(f)(1) Cigarette manufacturers, wholesalers, distributors, and retailers doing business in Arkansas shall cooperate with the department and the Office of the Attorney General in providing information required for the proper enforcement of Acts 1999, No. 1165.

(2) If deemed necessary, such manufacturers, wholesalers, distributors, and retailers may be audited as authorized under Arkansas Code §§ 26-18-305 and 26-57-212.

(g) Questions or requests for additional information should be directed to:
Office of the Attorney General
Public Protection Department, Tobacco Division
323 Center Street, Suite 1100
Little Rock, AR 72201
Telephone: (501) 682-2007
Fax: (501) 682-2591
Department of Finance and Administration, Revenue Division
Miscellaneous Tax Section
P.O. Box 8054, Room 2420
Little Rock, AR 72203-8054
Telephone: (501) 682-7187
Fax: (501) 682-7900