RULES AND REGULATIONS
Title 61--REVENUE
DEPARTMENT OF REVENUE
[61 PA. CODE CH. 2]
Employment Incentive Payment
[27 Pa.B. 4322] The Secretary of Revenue, under the authority contained in section 491 of the Public Welfare Code (62 P. S. § 491) and section 6 of the Fiscal Code (72 P. S. § 6), by this notice of final rulemaking, for which proposed rulemaking has been omitted, adopts amendments to §§ 2.1 and 2.3 (relating to general explanation; and issuance of certificate (Form REV-1601)) to read as set forth in Annex A.
The Department of Revenue (Department), under section 204 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204) (CDL) and the regulation thereunder, 1 Pa. Code § 7.4, finds that notice of proposed rulemaking is, under the circumstances, unnecessary and contrary to the public interest and, therefore, may be omitted.
Publication of the regulatory changes as proposed rulemaking is unnecessary because there are no parties who would be disadvantaged by the changes.
Extending the deadline for submission of the Employment Incentive Program (Program) certification request to 21 days benefits those businesses that wish to participate in the Program but had difficulty complying with the existing ''same day as the person began work'' standard. Welfare recipients seeking jobs will benefit because additional employers will be able to participate, and more potential jobs will be available for recipients.
Expanding the methods permitted for submitting the Program certification request to include facsimile or other electronic means will facilitate the certification process. This will benefit employers, and ultimately, the employable welfare recipients.
Publication of the regulatory changes as proposed rulemaking rather than final rulemaking would also be contrary to the public interest.
The Commonwealth, through the Department of Public Welfare, began implementation of Statewide Federal and State welfare reforms on March 3, 1997. As a result, both the Commonwealth and employable welfare recipients face more stringent programmatic employment requirements.
Decreased employment opportunities increase the risk of adverse consequences for both the State and employable recipients. If the Department of Public Welfare fails to meet Federally-mandated participation rates, Federal financial penalties may result. Program participants must meet time-limited eligibility standards for work. The additional time required to give notice of proposed rulemaking would delay implementation of the regulatory provisions, and would therefore cause:
(1) Employers to miss opportunities to participate in the Program.
(2) Employers to delay (or put off altogether) decisions to hire welfare recipients.
(3) The Commonwealth and taxpayers to continue to bear the expense of maintaining unhired persons on public assistance.
Purpose of Regulation
In 1988, the Department adopted numerous amendments to Chapter 2 (relating to employment incentive payment). Since that time, there have been changes to various Federal programs that have prompted the amendment of § 2.3. This amendment conforms the regulation to be consistent with those Federal programs.
Explanation of Regulatory Requirements
Section 2.3(b) is amended to extend the time period in which an employer may request a Program certificate from the Department of Public Welfare from the date the employed welfare recipient begins work to no later than 21 days following the actual date the employed welfare recipient began work. This time period is consistent with the time period under the Federal Work Opportunities Tax Credit Program.
Requests shall be considered timely in compliance with subsection (b) if either:
(1) Received on and date-stamped by a Department of Public Welfare-approved facsimile machine, computer or other electronic device no later than 21 days following the actual date the person began work.
(2) Postmarked by the United States Postal Service no later than 21 days following the actual date the person began work.
The following summarizes the issues prompting the amendments to § 2.3:
One of the amendments adopted in 1988 related to co-promotion of EIP with the similar Federal Targeted Jobs Tax Credit (TJTC) Program. The TJTC Program lapsed more than a year ago, and the Federal Aid to Families with Dependent Children (AFDC) Program terminated March 3, 1997. AFDC has been replaced by the Temporary Assistance for Needy Families Program.
Experience has shown that the existing timeliness criteria deters small employers from participating in the Program, for they are unable to get forms completed and mailed by midnight of the first day a welfare recipient begins to work. The 21-day extension will enable a much larger population of smaller employers to participate in the Program.
The growth of electronic communications offers the potential for more efficient and useful options of requesting Program certification, rather than depending solely upon the United States mail.
Fiscal Impact
The Department has determined that the final-form regulations will have an unknown fiscal impact on the Commonwealth. In FY 1995-96, credits claimed totaled less than $700,000. Over the next 3 years, it is improbable that the additional small businesses claiming this credit will cause the total amounts of credits claimed to approach the $25 million annual cap. The extended filing period for EIP certificates is intended to enable increased numbers of small businesses to utilize the credit. The increase in certificates issued to these businesses will induce an increase in the total amount of credits claimed. In theory, the total costs associated with the EIP credit are more than offset by the savings of the projected future welfare payments if the new hires were to remain unemployed and continue to draw benefits.
Paperwork
The final-form regulations may generate additional paperwork for the public or the Commonwealth to the extent that there is an increase in the number of businesses utilizing the credit.
Effectiveness/Sunset Date
The final-form regulations will become effective upon publication in the Pennsylvania Bulletin. The regulations are scheduled for review within 5 years of final publication. No sunset date has been assigned.
Contact Person
The contact person for an explanation of the regulations is Anita M. Doucette, Office of Chief Counsel, PA Department of Revenue, Dept. 281061, Harrisburg, PA 17128-1061.
Regulatory Review
Under section 5(f) of the Regulatory Review Act (71 P. S. § 745.5(f)), on July 9, 1997, the Department submitted a copy of the regulations with proposed rulemaking omitted to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Finance and the Senate Committee on Finance. On the same date, the rulemaking was submitted to the Office of Attorney General for review and approval under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506). In accordance with section 5(c) of the Regulatory Review Act, the rulemaking was deemed approved by the Senate and House Committees on July 29, 1997. IRRC met on August 7, 1997, and approved the regulations.
Findings
The Department finds that the regulations are necessary and appropriate for the administration and enforcement of the authorizing statute. Under section 204 of the CDL, the Department also finds that the proposed rulemaking procedures in sections 201 and 202 of the CDL (45 P. S. §§ 1201 and 1202) are unnecessary and contrary to public interest and, therefore, may be omitted.
Order
Acting under the authorizing statute, the Department orders that:
(a) The regulations of the Department, 61 Pa. Code Chapter 2, are amended by amending §§ 2.1 and 2.3 to read as set forth in Annex A.
(b) The Secretary of the Department shall submit this order and Annex A to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(c) The Secretary of the Department shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
ROBERT A. JUDGE, Sr.
SecretaryFiscal Note: 15-384. No fiscal impact; (8) recommends adoption.
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 27 Pa.B. 4400 (August 23, 1997).)
Annex A
TITLE 61. REVENUE
PART I. DEPARTMENT OF REVENUE
Subpart A. GENERAL PROVISIONS
CHAPTER 2. EMPLOYMENT INCENTIVE PAYMENT CREDIT § 2.1. General explanation.
Under the act of April 8, 1982 (P. L. 231, No. 75) (62 P. S. §§ 201, 403, 404.1, 405.1, 405.2, 408, 408.1, 422, 423, 432, 432.2--432.7A, 432.9, 432.11, 432.12, 432.15, 432.16, 432.19--432.21, 442.1, 443.6, 475, 481, 487 and 489) a tax credit is available for persons who employ certain welfare recipients, with additional tax credit for those who provide day care services for the welfare recipient's child or children. This chapter explains the scope and effect of the employment incentive payment tax credit (the ''EIP credit''), the manner in which it is validated, procedures established by the Department for verification and application of tax credits, and the manner in which they may be used by employers.
§ 2.3. Issuance of certificate (Form REV-1601).
(a) The issuance of EIP certificates and verification of entitlement thereto is the responsibility of the Department of Public Welfare. The criteria for issuance of EIP certificates is established by the act of December 19, 1985 (P. L. 356, No. 102) (72 P. S. § 8701-A) and by 55 Pa. Code (relating to Public Welfare).
(b) An EIP Program Certificate shall be issued upon request to an employer who hires a person who is receiving Temporary Assistance to Needy Families or any form of General Assistance at the time of employment. The employer shall request the certificate from the Department of Public Welfare in writing no later than 21 days following the actual date upon which the newly-employed welfare recipient began work. Requests shall be considered to be timely in compliance with this subsection if either:
(1) Received on and date-stamped by a Department of Public Welfare-approved facsimile machine, computer or other electronic device no later than 21 days following the actual date the person began work.
(2) Postmarked by the United States Postal Service no later than 21 days following the actual date the person began work.
(c) An employer may not request an EIP certificate for the employment of the following persons:
(1) A person who displaces another individual, unless the individual was discharged for cause as certified by the Office of Employment Security.
(2) A closely related person to the employer.
(3) A domestic or other household employe in the home of the employer.
(4) Subject to the provisions of subsection (d), a person for whom the employer is simultaneously receiving Federal or State funded job training payments.
(5) An individual who is the employer, such as self-employed.
(6) A shareholder who owns more than 50% of the value of the outstanding stock of the employing corporation, bank, savings institution, company, insurance company or mutual thrift institution.
(7) A member of an employing partnership.
(8) An employe of an estate or trust if the employe is a grantor, beneficiary or fiduciary of the estate or trust.
(d) If for a period an employer receives State or Federally funded payments for on-the-job training for an employe, none of the wages paid to that employe for the training qualify for EIP credit. Wages paid to the employe after completion of the State or Federally funded job training may qualify for EIP credit. In such cases, the EIP certificate shall be requested in writing under subsection (b) no later than the date upon which the employe begins training.
(e) Within 30 days of the date of issuance of the EIP certificate by the Department of Public Welfare, the employer shall forward a copy of the completed certificate to the Department.
[Pa.B. Doc. No. 97-1347. Filed for public inspection August 22, 1997, 9:00 a.m.]
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