---
kind: "section"
citation: "7 U.S.C. § 518d"
title: "7"
title_heading: "Agriculture"
number: "518d"
heading: "Use of assessments as source of funds for payments"
release: "119-102"
url: "https://uscodex.org/usc/7/518d"
units:
  - "Chapter 21C — Tobacco Reform"
  - "Subchapter I — Transitional Payments to Tobacco Quota Holders and Producers of Tobacco"
---

# §518d. Use of assessments as source of funds for payments

- (a) **Definitions—** In this section:
  - (1) **Base period—** The term “base period’[^1] means the one-year period ending the June 30 before the beginning of a fiscal year.
  - (2) **Gross domestic volume—** The term “gross domestic volume” means the volume of [tobacco](/usc/7/518.md?p=8) products—
    - (A) removed (as defined by [section 5702 of title 26](/usc/26/5702.md)); and
    - (B) not exempt from tax under [chapter 52](/usc/26/chstE-ch52.md) of title 26 at the time of their removal under that chapter or the Harmonized Tariff Schedule of the [United States](/usc/7/6402.md?p=8).
  - (3) **Market share—** The term “market share” means the share of each manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) of a class of [tobacco](/usc/7/518.md?p=8) product (expressed as a decimal to the fourth place) of the total volume of domestic sales of the class of [tobacco](/usc/7/518.md?p=8) product during the [base period](#a-1) for a fiscal year for an assessment under this section.
- (b) **Quarterly assessments—**
  - (1) **Imposition of assessment—** The [Secretary](/usc/7/518.md?p=11), acting through the [Commodity](/usc/7/1a.md?p=9) Credit [Corporation](/usc/7/1502.md?p=b-5), shall impose quarterly assessments during each of fiscal years 2005 through 2014, calculated in accordance with this section, on each [tobacco](/usc/7/518.md?p=8) product manufacturer and [tobacco](/usc/7/518.md?p=8) product [importer](/usc/7/6802.md?p=4-A-iii-III-aa) that sells [tobacco](/usc/7/518.md?p=8) products in domestic commerce in the [United States](/usc/7/6402.md?p=8) during that fiscal year.
  - (2) **Amounts—** Beginning with the calendar quarter ending on December 31 of each of fiscal years 2005 through 2014, the assessment payments over each four-calendar quarter period shall be sufficient to cover—
    - (A) the [contract payments](/usc/7/518.md?p=5) made under sections [518a](/usc/7/518a.md) and [518b](/usc/7/518b.md) of this title during that period; and
    - (B) other expenditures from the [Tobacco Trust Fund](/usc/7/518.md?p=10) made during the base quarter periods corresponding to the four calendar quarters of that period.
  - (3) **Deposit—** Assessments collected under this section shall be deposited in the [Tobacco Trust Fund](/usc/7/518.md?p=10).
- (c) **Assessments for classes of tobacco products—**
  - (1) **Initial allocation—** The percentage of the total amount required by [subsection (b)](#b) to be assessed against, and paid by, the manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) of each class of [tobacco](/usc/7/518.md?p=8) product in fiscal year 2005 shall be as follows:
    - (A) For cigarette manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 96.331 percent.
    - (B) For cigar manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 2.783 percent.
    - (C) For snuff manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 0.539 percent.
    - (D) For roll-your-own [tobacco](/usc/7/518.md?p=8) manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 0.171 percent.
    - (E) For chewing [tobacco](/usc/7/518.md?p=8) manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 0.111 percent.
    - (F) For pipe [tobacco](/usc/7/518.md?p=8) manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa), 0.066 percent.
  - (2) **Subsequent allocations—** For subsequent fiscal years, the [Secretary](/usc/7/518.md?p=11) shall periodically adjust the percentage of the total amount required under [subsection (b)](#b) to be assessed against, and paid by, the manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) of each class of [tobacco](/usc/7/518.md?p=8) product specified in [paragraph (1)](#c-1) to reflect changes in the share of [gross domestic volume](#a-2) held by that class of [tobacco](/usc/7/518.md?p=8) product.
  - (3) **Effect of insufficient amounts—** If the [Secretary](/usc/7/518.md?p=11) determines that the assessment imposed under [subsection (b)](#b) will result in insufficient amounts to carry out this subchapter during a fiscal year, the [Secretary](/usc/7/518.md?p=11) shall assess such additional amounts as the [Secretary](/usc/7/518.md?p=11) determines to be necessary to carry out this subchapter during that fiscal year. The additional amount shall be allocated to manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) of each class of [tobacco](/usc/7/518.md?p=8) product specified in [paragraph (1)](#c-1) in the same manner and based on the same percentages applicable under paragraph [(1)](#c-1) or [(2)](#c-2) for that fiscal year.
- (d) **Notification and timing of assessments—**
  - (1) **Notification of assessments—** The [Secretary](/usc/7/518.md?p=11) shall provide each manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) subject to an assessment under [subsection (b)](#b) with written notice setting forth the amount to be assessed against the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) for each quarterly payment period. The notice for a quarterly period shall be provided not later than 30 days before the date payment is due under [paragraph (3)](#d-3).
  - (2) **Content—** The notice shall include the following information with respect to the quarterly period used by the [Secretary](/usc/7/518.md?p=11) in calculating the amount:
    - (A) The total combined assessment for all manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) of [tobacco](/usc/7/518.md?p=8) products.
    - (B) The total assessment with respect to the class of [tobacco](/usc/7/518.md?p=8) products manufactured or imported by the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa).
    - (C) Any adjustments to the percentage allocations among the classes of [tobacco](/usc/7/518.md?p=8) products made pursuant to paragraph [(2)](#c-2) or [(3)](#c-3) of subsection (c).
    - (D) The volume of gross sales of the applicable class of [tobacco](/usc/7/518.md?p=8) product treated as made by the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) for purposes of calculating the manufacturer’s or [importer](/usc/7/6802.md?p=4-A-iii-III-aa)’s [market share](#a-3) under [subsection (f)](#f).
    - (E) The total volume of gross sales of the applicable class of [tobacco](/usc/7/518.md?p=8) product that the [Secretary](/usc/7/518.md?p=11) treated as made by all manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) for purposes of calculating the manufacturer’s or [importer](/usc/7/6802.md?p=4-A-iii-III-aa)’s [market share](#a-3) under [subsection (f)](#f).
    - (F) The manufacturer’s or [importer](/usc/7/6802.md?p=4-A-iii-III-aa)’s [market share](#a-3) of the applicable class of [tobacco](/usc/7/518.md?p=8) product, as determined by the [Secretary](/usc/7/518.md?p=11) under [subsection (f)](#f).
    - (G) The [market share](#a-3), as determined by the [Secretary](/usc/7/518.md?p=11) under [subsection (f)](#f), of each other manufacturer and [importer](/usc/7/6802.md?p=4-A-iii-III-aa), for each applicable class of [tobacco](/usc/7/518.md?p=8) product.
  - (3) **Timing of assessment payments—**
    - (A) **Collection date—** Assessments shall be collected at the end of each calendar year quarter, except that the [Secretary](/usc/7/518.md?p=11) shall ensure that the final assessment due under this section is collected not later than September 30, 2014.
    - (B) **Base period quarter—** The assessment for a calendar year quarter shall correspond to the [base period](#a-1) quarter that ended at the end of the preceding calendar year quarter.
- (e) **Allocation of assessment within each class of tobacco product—**
  - (1) **Pro rata basis—** The assessment for each class of [tobacco](/usc/7/518.md?p=8) product specified in [subsection (c)(1)](#c-1) shall be allocated on a pro rata basis among manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) based on each manufacturer’s or [importer](/usc/7/6802.md?p=4-A-iii-III-aa)’s share of [gross domestic volume](#a-2).
  - (2) **Limitation—** No manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) shall be required to pay an assessment that is based on a share that is in excess of the manufacturer’s or [importer](/usc/7/6802.md?p=4-A-iii-III-aa)’s share of domestic volume.
- (f) **Allocation of total assessments by market share—** The amount of the assessment for each class of [tobacco](/usc/7/518.md?p=8) product specified in [subsection (c)(1)](#c-1) to be paid by each manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) of that class of [tobacco](/usc/7/518.md?p=8) product shall be determined for each quarterly payment period by multiplying—
  - (1) the [market share](#a-3) of the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa), as calculated with respect to that payment period, of the class of [tobacco](/usc/7/518.md?p=8) product; by
  - (2) the total amount of the assessment for that quarterly payment period under [subsection (c)](#c), for the class of [tobacco](/usc/7/518.md?p=8) product.
- (g) **Determination of volume of domestic sales—**
  - (1) **In general—** The calculation of the volume of domestic sales of a class of [tobacco](/usc/7/518.md?p=8) product by a manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa), and by all manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) as a group, shall be made by the [Secretary](/usc/7/518.md?p=11) based on information provided by the manufacturers and [importers](/usc/7/6802.md?p=4-A-iii-III-aa) pursuant to [subsection (h)](#h), as well as any other relevant information provided to or obtained by the [Secretary](/usc/7/518.md?p=11).
  - (2) **Gross domestic volume—** The volume of domestic sales shall be calculated based on [gross domestic volume](#a-2).
  - (3) **Measurement—** For purposes of the calculations under this subsection and the certifications under [subsection (h)](#h) by the [Secretary](/usc/7/518.md?p=11), the volumes of domestic sales shall be measured by—
    - (A) in the case of cigarettes and cigars, the number of cigarettes and cigars; and
    - (B) in the case of the other classes of [tobacco](/usc/7/518.md?p=8) products specified in [subsection (c)(1)](#c-1), in terms of number of pounds, or fraction thereof, of those products.
- (h) **Measurement of volume of domestic sales—**
  - (1) **Submission of information—** Each manufacturer and [importer](/usc/7/6802.md?p=4-A-iii-III-aa) of [tobacco](/usc/7/518.md?p=8) products shall submit to the [Secretary](/usc/7/518.md?p=11) a certified copy of each of the returns or forms described by [paragraph (2)](#h-2) that are required to be filed with a Federal agency on the same date that those returns or forms are filed, or required to be filed, with the agency.
  - (2) **Returns and forms—** The returns and forms described by this paragraph are those returns and forms that relate to—
    - (A) the removal of [tobacco](/usc/7/518.md?p=8) products into domestic commerce (as defined by [section 5702 of title 26](/usc/26/5702.md)); and
    - (B) the payment of the taxes imposed under charter[^2] [52](/usc/26/52.md) of title 26, including AFT Form 5000.24 and [United States](/usc/7/6402.md?p=8) Customs Form 7501 under currently applicable regulations.
  - (3) **Effect of failure to provide required information—** Any [person](/usc/7/1471g.md?p=b-1) that knowingly fails to provide information required under this subsection or that provides false information under this subsection shall be subject to the penalties described in [section 1003 of title 18](/usc/18/1003.md). The [Secretary](/usc/7/518.md?p=11) may also assess against the [person](/usc/7/1471g.md?p=b-1) a civil penalty in an amount not to exceed two percent of the value of the kind of [tobacco](/usc/7/518.md?p=8) products manufactured or imported by the [person](/usc/7/1471g.md?p=b-1) during the fiscal year in which the violation occurred, as determined by the [Secretary](/usc/7/518.md?p=11).
- (i) **Challenge to assessment—**
  - (1) **Appeal to Secretary—** A manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) subject to this section may contest an assessment imposed on the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) under this section by notifying the [Secretary](/usc/7/518.md?p=11), not later than 30 business days after receiving the assessment notification required by [subsection (d)](#d), that the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) intends to contest the assessment.
  - (2) **Information—** Not later than 180 days after October 22, 2004, the [Secretary](/usc/7/518.md?p=11) shall establish by regulation a procedure under which a manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) contesting an assessment under this subsection may present information to the [Secretary](/usc/7/518.md?p=11) to demonstrate that the assessment applicable to the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) is incorrect. In challenging the assessment, the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) may use any information that is available, including third party data on industry or individual company sales volumes.
  - (3) **Revision—** If a manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) establishes that the initial determination of the amount of an assessment is incorrect, the [Secretary](/usc/7/518.md?p=11) shall revise the amount of the assessment so that the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) is required to pay only the amount correctly determined.
  - (4) **Time for review—** Not later than 30 days after receiving notice from a manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) under [paragraph (1)](#i-1), the [Secretary](/usc/7/518.md?p=11) shall—
    - (A) decide whether the information provided to the [Secretary](/usc/7/518.md?p=11) under [paragraph (2)](#i-2), and any other information that the [Secretary](/usc/7/518.md?p=11) determines is appropriate, is sufficient to establish that the original assessment was incorrect; and
    - (B) make any revisions necessary to ensure that each manufacturer and [importer](/usc/7/6802.md?p=4-A-iii-III-aa) pays only its correct pro rata share of total [gross domestic volume](#a-2) from all sources.
  - (5) **Immediate payment of undisputed amounts—** The regulations promulgated by the [Secretary](/usc/7/518.md?p=11) under [paragraph (2)](#i-2) shall provide for the immediate payment by a manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) challenging an assessment of that portion of the assessment that is not in dispute. The manufacturer and [importer](/usc/7/6802.md?p=4-A-iii-III-aa) may place into escrow, in accordance with such regulations, only the portion of the assessment being challenged in good faith pending final determination of the claim.
- (j) **Judicial review—**
  - (1) **In general—** Any manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) aggrieved by a determination of the [Secretary](/usc/7/518.md?p=11) with respect to the amount of any assessment may seek review of the determination in the [United States](/usc/7/6402.md?p=8) District Court for the District of Columbia or for the district in which the manufacturer or [importer](/usc/7/6802.md?p=4-A-iii-III-aa) resides or has its principal place of business at any time following exhaustion of the administrative remedies available under [subsection (i)](#i).
  - (2) **Time limits—** Administrative remedies shall be deemed exhausted if no decision by the [Secretary](/usc/7/518.md?p=11) is made within the time limits established under [subsection (i)(4)](#i-4).
  - (3) **Excessive assessments—** The court shall restrain collection of the excessive portion of any assessment or [order](/usc/7/2902.md?p=10) a refund of excessive assessments already paid, along with interest calculated at the rate prescribed in [section 3717 of title 31](/usc/31/3717.md), if it finds that the [Secretary](/usc/7/518.md?p=11)’s determination is not supported by a preponderance of the information available to the [Secretary](/usc/7/518.md?p=11).
- (k) **Termination date—** The [authority](/usc/7/2009aa.md?p=1) provided by this section to impose assessments terminates on September 30, 2014.

## Footnotes

[^1]: So in original.
[^2]: So in original. Probably should be “chapter”.

## Source credit

(Pub. L. 108–357, title VI, § 625, Oct. 22, 2004, 118 Stat. 1529.)

## Notes

### Editorial Notes

### References in Text

The Harmonized Tariff Schedule of the United States, referred to in subsec. (a)(2)(B), is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of Title 19, Customs Duties.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable to the 2005 and subsequent crops of tobacco, see section 643 of Pub. L. 108–357, set out as a note under section 518 of this title.