[27 Pa.B. 630]
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Regulation Being Considered Proposed Date Need and Legal Basis for Action Agency for Promulgation Contact General Assistance restructure--Act 1994-49 May 1997, as final omitted. This final regulation codifies Act 1994-49 provisions that affect the medical benefits of General Assistance recipients over the age of 21 when these services are solely state funded. These recipients are no longer eligible for dental services unless their medical condition or handicap requires services to be provided in an ambulatory surgical center, short procedures unit or inpatient hospital; medical supplies and equipment except as prescribed for family planning or with home health agency service; and prescription drugs except legend birth control drugs. This regulation will be reviewed by the MAAC, as noted above. Tom Vracarich
(717) 783-2209Prior authorization May 1997, as final omitted. This final regulation adds a prior authorization requirement for home health services, psychiatric partial hospitalization and multisource brand name drugs identified by the department as having equivalent generic drug products available for substitution. This regulation will be reviewed by the MAAC, as noted above.. Tom Vracarich
(717) 783-2209Discontinue coverage--infertility May 1997, as final omitted. This final regulation codifies Act 1994-49 provisions that discontinues payment for all drugs, devices, products, services and procedures that are used or related to treating infertility, including surrogacy services, effective September 1, 1994. This regulation will be reviewed by the MAAC, as noted above. Tom Vracarich
(717) 783-2209Residential treatment facilities (RTF) for mental health services May 1997, as final omitted. This regulation codifies coverage for mental health services to children under 21 years of age that are provided in a residential treatment facility. This regulation will be reviewed by the MAAC, as noted above. Tom Vracarich
(717) 783-2209Chapter 1187 Nursing Facilities Intergovernmental Transfer June 1997, as final omitted. This final regulation codifies the current inter-governmental transfer agreement for nursing facilities reimbursed under case mix regulations. The provisions include transition rates for general nursing facilities and enhanced transition rates for county nursing facilities. Provisions contained in the regulation are a result of negotiations with the County Commissioners Association and have been reviewed with the long term care subcommittee of the MAAC. Tom Vracarich
(717) 783-2209Pharmaceutical services drug coverage May 1997, as final omitted. This regulation provides that the medical assistance program provides drug coverage to medically needy only recipients receiving nursing facility services. This includes medically needy only recipients who reside in nursing facilities and intermediate care facilities/mental retardation (ICF/MR). This regulation will be reviewed by the MAAC, as noted above. Tom Vracarich
(717) 783-2209$150 deductible for General Assistance recipients May 1997, as final omitted. This regulation implements Act 1996-35 provisions imposing a $150 deductible on inpatient and outpatient hospital services and ambulatory surgical center services, except laboratory and x-ray services for General Assistance and General Assistance-related Medical Assistance recipients. This regulation will be reviewed by the MAAC, as noted above. Tom Vracarich
(717) 783-2209Medical assistance transportation program Regulations pending IRRC Order. This regulation amends Chapter 2070, eligibility for services funded through the public assistance transportation block grant, to reflect current practices and to rename it as Chapter 2070, eligibility for services funded through the medical assistance transportation program. This regulation will be reviewed by the MAAC. Tom Vracarich
(717) 783-2209REVENUE Books, Publications and Advertising Materials
61 Pa. Code § 31.29May 1997, as proposed. The Department is amending § 31.29 (relating to books, printed matter and advertising materials) in response to statutory changes and inquiries from the public. Douglas A. Berguson 717-787-1382 Building Maintenance or Building Cleaning Services
61 Pa. Code §§ 55.7 and 60.1May 1997, as proposed. This regulation sets forth the Department s interpretation of 72 P. S. §§ 7201(k)(14), (o)(12) and (aa) and 7204(51) relating to the taxation of building maintenance or building cleaning services. Currently the Department s interpretation is set forth as a pronouncement and codified at § 60.1 (relating to building maintenance or building cleaning services). The Department has concluded that its policy relating to this service should be set forth as a regulation. Therefore, in addition to proposing to add § 55.7 (relating to building maintenance or building cleaning services), the Department is also proposing to delete the pronouncement set forth at § 60.1. Douglas A. Berguson 717-787-1382 Cigarette Tax
61 Pa. Code, Article IIIJune 1997, as proposed. This regulation is a comprehensive amendment to the cigarette tax regulations set forth in Title 61, Article III. Cigarette and Beverage Taxes. Douglas A. Berguson 717-787-1382 Compensation; Allowable Deductions From Gross Compensation and Deferred Compensation Arrangements
61 Pa. Code §§ 101.6, 101.6a and 101.6bMay 1997, as proposed. The Department is amending §§ 101.6 and adding 101.6a and 101.6b to set forth its interpretation of current case law and current policy in the areas of compensation; commonly recognized old age or retirement benefits; reimbursements of business expenses; and guaranteed payments. Douglas A. Berguson 717-787-1382 Computer Services June 1997, as proposed. This regulation sets forth the Department s interpretation of 72 P. S. §§ 7201(k)(16), (o)(14), (dd)--(ii) and 7204(52) relating to the taxation of computer services. Currently the Department s interpretation is set forth as a pronouncement and codified at 61 Pa. Code § 60.13 (relating to computer services). The Department has concluded that its policy relating to this service should be set forth as a regulation. Therefore, in addition to proposing to add a regulatory section relating to computer services, the Department is also proposing to delete the pronouncement set forth at § 60.13. Douglas A. Berguson 717-787-1382 Credits Against Tax; Estimated Tax
61 Pa. Code §§ 111.2--111.5, 115.1--115.5, 115.8, 115.9 and 115.11--115.12May 1997, as proposed. This regulation sets forth the Department s policy relating to taxes for which credit is not allowed; other conditions for allowance of the credit for taxes paid to other states; limitations on the amount of the credit for taxes paid to other states; proof requirements; jointly paid estimated tax; and application of overpayments of estimated tax. This regulation is necessary to delete obsolete text; add language consistent with statutory changes; and provide additional guidance in areas that have been subject to questions from the public. Douglas A. Berguson 717-787-1382 Definitions; Net Profits and Regulated Investment Companies
61 Pa. Code §§ 101.1, 103.12 and 155.30March 1997, as proposed. Section 101.1 (relating to definitions) is being amended by replacing the existing definitions of ''employe'' and ''employer'' with new definitions consistent with the requirements of 72 P. S. § 7301(g) and (h). The definition of ''income'' is being expanded to implement the provisions of 72 P. S. § 7602(f)(2)(A) and reflect recent holdings in Morgan v. Commonwealth, 42 Pa. Commonwealth Ct. 557, 400 A.2d 1384 (1979) and Wettach v. Commonwealth, 153 Pa. Commonwealth Ct. 293, 620 A.2d 730 (1993). Section 103.12 (relating to net profits) is also being amended to reflect Morgan and Wettach. The definition of ''personal income tax income'' set forth in § 155.30(b)(4) (relating to regulated investment companies) is being amended to provide that the term means income computed in the same manner and on the same basis as the income of an individual under Article V. Personal Income Tax. Douglas A. Berguson 717-787-1382 Disclaimers of Nonprobate Taxable Assets
61 Pa. Code § 93.81May 1997, as proposed. The regulation sets forth specific conditions that must be met in order for a disclaimer executed in regard to nonprobate taxable assets and nontrust assets of resident decedents to be valid for Pennsylvania inheritance tax purposes. Based on the decision and order received from the Commonwealth Court In Re Estate of Bernecker, 654 A.2d 246 (Pa. Commonwealth 1995), the Department is revising its policy on the effectiveness of disclaimers of nonprobate taxable assets for Pennsylvania inheritance tax purposes. Douglas A. Berguson 717-787-1382 Duplicating
61 Pa. Code § 31.22February 1997, as proposed. The regulation adds language addressing duplication of documents provided by the customer; details the treatment of duplication of documents not provided by the customer; and explains that when the document being duplicated is provided by the vendor In the ordinary course of business, the charge for copies is taxable unless the document is an official document. In addition, the regulation also explains that vendors may claim the resale exemption on purchases of tangible personal property, such as toner or paper, that is transferred to the customer In connection with the sale of a duplicated document. Douglas A. Berguson, 717-787-1382 Further Examination of Books and Records
61 Pa. Code §§ 6.22, 8a.1 and 35.1July 1997, as final. This regulation interprets section 2915-A of the act of June 30, 1995 (P. L. 139, No. 21) (Act 21) by adding § 8a.1 (relating to further examination of books and records). It also deletes § 6.22 (relating to further examination of books and records) because the section will not be necessary upon final publication of § 8a.1. To avoid confusion, § 35.1 (relating to tax examinations and assessments) is being amended to delete language that is similar In nature to § 8a.1. Section 2910-A of Act 21 required the Department to develop regulations to implement the provisions of Article XXIX-A. Tax Amnesty Program, of which section 2915-A, further examination of books and records, is a part. Douglas A. Berguson, 717-787-1382 Lawn Care Services
61 Pa. Code §§ 55.6 and 60.2May 1997, as final. This regulation sets forth the Department s interpretation of 72 P. S. §§ 7201(k)(17), (o)(15) and (jj) relating to the taxation of lawn care services. Currently the Department s interpretation is set forth as a pronouncement and codified at 61 Pa. Code § 60.2 (relating to lawn care services). Department has concluded that its policy relating to this service should be set forth as a regulation. Therefore, In addition to proposing to add § 55.6 (relating to lawn care services), the Department is also proposing to delete the pronouncement set forth at § 60.2. Douglas A. Berguson, 717-787-1382 Local Tax
61 Pa. Code §§ 60.16, and 95.1--96.303May 1997, as proposed. This regulation sets forth the Department s interpretation of sections 501-509 of the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class (53 P. S. §§ 12720.501--12720.509), sections 3150-B--3157-B of the Second Class County Code (16 P. S. §§ 6150-B--6157-B) and section 201-A of the Tax Reform Code of 1971 (72 P. S. § 7201-A). Currently the Department s interpretation is set forth as a pronouncement and codified at 61 Pa. Code § 60.16 (relating to local sales, use and hotel occupancy tax). The Department has concluded that its policy relating to local sales, use and hotel occupancy tax should be set forth as a regulation. Therefore, in addition to proposing to add Chapter 95. Local Tax, the Department is also proposing to delete the pronouncement set forth at § 60.16. Douglas A. Berguson, 717-787-1382 Maintaining a Place of Business Within this Commonwealth
61 Pa. Code § 56.1May 1997, as proposed. Section 56.1 is amended to make it more consistent with the statutory definition of ''maintaining a place of business in this Commonwealth'' set forth at 72 P. S. § 7201(b) including the amendment set forth in Act 1995-21 (72 P. S. § 7201(b)(4)) regarding what the term does not include. Douglas A. Berguson, 717-787-1382 Passenger Car Rental Tax
61 Pa. Code §§ 9.14 and 47.20July 1997, as final. This regulation sets forth the Department s interpretation of Article XVI-A Passenger Car Rental Tax (72 P. S. §§ 8601-A--8604-A). Currently the Department s interpretation is set forth as a pronouncement and codified at § 9.14 (relating to passenger car rental tax). The Department has concluded that its policy relating to Article XVI-A should be set forth as a regulation. Therefore, in addition to proposing to add § 47.20 (relating to passenger car rental tax), the Department is also proposing to delete the pronouncement set forth at § 9.14. Douglas A. Berguson, 717-787-1382 Public Transportation Assistance Fund Taxes and Fees
61 Pa. Code §§ 9.4 and 47.19July 1997, as final. This regulation sets forth the Department s interpretation of 72 P. S. § 9301 relating to public transportation assistance fund taxes and fees. Currently the Department s interpretation is set forth as a pronouncement and codified at § 9.4 (relating to public transportation assistance fund taxes and fees). The Department has concluded that its policy relating to public transportation assistance fund taxes and fees should be set forth as a regulation. Therefore, in addition to proposing to add § 47.19 (relating to public transportation assistance fund taxes and fees), the Department is also proposing to delete the pronouncement set forth at § 9.4. Douglas A. Berguson, 717-787-1382 Return of Information as to Payment In Excess of $10
61 Pa. Code § 117.18March 1997, as proposed. This regulation amends § 117.18 (relating to return of information as to payment in excess of $10) to clarify how a Pennsylvania information return may be made by a regulated investment company. In March, 1996, the Department adopted a final-form regulation that amended § 117.18 in addition to other personal income tax regulatory sections. During the final stages of the adoption process, a comment was made regarding the information return made by a regulated investment company. To avoid delay in adoption of the entire regulatory package, the Department agreed to amend the section In a separate regulation. Douglas A. Berguson, 717-787-1382 Telecommunications Service
61 Pa. Code §§ 31.1, 31.24, 48.1 and 55.8July 1997, as proposed. This regulation sets forth the Department s interpretation of the 1991 statutory changes set forth in section 201(m), 202(c) and 204(5) of the Tax Reform Code of 1971 (72 P. S. §§ 7201(m), 7202(c) and 7204(5)) regarding telephone, telegraph and telecommunications services. Douglas A. Berguson, 717-787-1382 Sales and Use Tax Amendments
61 Pa. Code §§ 7.3, 7.6, 31.4, 31.5, 31.7, 31.26, 32.1--32.5, 32.21, 32.22, 32.31--32.37, 33.1, 33.2, 33.4, 42.1, 42.3, 44.2, 45.1, 46.9, 47.18 and 58.13June 1997, as proposed. The Department is proposing numerous amendments to the Pennsylvania Code, Title 61. This regulatory package is the result, In part, of a comprehensive review of sales and use tax regulations in light of legislative changes from 1991 to the present. Douglas A. Berguson, 717-787-1382 SECURITIES COMMISSION
Institutional Investor
64 Pa. Code § 102.111March 1997, as proposed. This regulation would be amended to include Qualified Institutional Buyer (QIB) under SEC Rule 144A as an institutional investor under the 1972 Act. Under Rule 144A, a QIB is an organization or regulated person who, acting for its own account or the accounts of other qualified institutional buyers, owns and invests on a discretionary basis in the aggregate at least $100 million in securities of issuers that are not affiliated with such person. Not being uniform with the SEC definition requires issuers selling only to institutional buyers to incur the cost of a Blue Sky legal memo for Pennsylvania to determine where PA differs from the SEC definition. Other states have included Rule 144A QIBs in their definition of institutional investor. G. Philip Rutledge
(717) 783-5130Securities issued by broker-dealers
64 Pa. Code § 202.080March 1997, as proposed. This regulation would repeal the requirement to file Form 202-H with the Commission for offers and sales of securities of a registered broker-dealer to officers, partners or employees. In FY95-96, the Commission received 12 filings under this section. Staff performs only a cursory review of the form and does not believe that the filing requirement is necessary or appropriate for the protection of investors. As there is no filing fee for Form 202-H, there is no impact on fee revenues. G. Philip Rutledge
(717) 783-5130Isolated Transaction Exemption
64 Pa. Code § 203.189March 1997, as proposed. This regulation would be amended to (1) delete the requirement that the issuer must be organized under PA law or have its principal place of business in PA and (2) expand the number of sales to be made to Accredited Investors. The Commission has received numerous inquiries concerning the availability of this exemption from issuers that anticipate only one or two sales in PA, generally to Accredited Investors. In most cases, however, the exemption was not available because the issuer was not a PA Issuer. For a three month period in 1996, the Commission received 42 inquiries from non-PA Issuers, 33 of which indicated that sales would be made to only one or two Accredited Investors in PA. On an annualized basis, this would mean that approximately 132 issuers would not have to make a filing with the Commission. Because no filing would need be made, it is estimated that there would be an annual General Fund fee revenue loss of approximately $20,000. G. Philip Rutledge
(717) 783-5130Offers on the Internet
64 Pa. Code § 203.189.1March 1997, as proposed. This regulation will codify the Commission's existing Internet order granting an exemption for offers of securities which are made on the Internet but are not intended to be sold to PA residents. This order has served as a nationwide model for dealing with jurisdictional issues concerning Internet offerings at the state level and has been advocated by SEC Commissioner Wallman for adoption at the federal level. G. Philip Rutledge
(717) 783-5130Waivers for Accredited Investors
64 Pa. Code § 204.012March 1997, as proposed. T This regulation would waive the offer and sale numerical limitations in Sections 203(d) and (e) of the 1972 Act and the general solicitation prohibition in Section 203(d) of the 1972 Act for Accredited Investors. This regulation is being proposed in light of new systems being developed and receiving certain regulatory approvals from the SEC that facilitate the communication of securities offerings on the Internet to Accredited Investors (e.g. ACE-Net) and to provide regulatory guidance for those issuers relying upon the Commission's Internet Order (wherein the Commission took the position that Internet offers constituted general solicitation under the 1972 Act) that subsequently may wish to make sales in PA to Accredited Investors. G. Philip Rutledge
(717) 783-5130Trust Indenture Requirements
64 Pa. Code § 207.081March 1997, as proposed. This amendment would repeal the requirement that all debt securities to be registered by qualification under Section 206 of the 1972 Act be required to comply with the Federal Trust Indenture Act of 1939. G. Philip Rutledge
(717) 783-5130Subscription Agreements
64 Pa. Code § 207.091March 1997, as proposed. This amendment would repeal that the portion of the regulation requiring intrastate offerings under Section 206 to use a specific subscription form. The Commission has not enforced this provision and believes that issuers should have the ability to fashion their own subscription agreements within the appropriate constraints of the anti-fraud provisions of the 1972 Act. G. Philip Rutledge
(717) 783-5130Quarterly Reports of the Progress of a Registered Offering
64 Pa. Code § 207.110March 1997, as proposed. This amendment would repeal the requirement to file Form 207-K. The Commission received 108 207-K reports during FY95-96 from approximately 27 issuers filing under Section 206, of which 20 were non-profit organizations selling debt securities. These organizations generally renew their registration each year and information concerning sales during the prior year are captured by Item 5 of Form 206. Information filed on Form 207-K has not been material to the Commission's enforcement efforts and it believes that this requirement is a regulatory burden which does not fulfill a sufficient corresponding investor protection objective. G. Philip Rutledge
(717) 783-5130Notice to Purchasers under Section 207(m)
64 Pa. Code § 207.130March 1997, as proposed. This amendment would implement provisions of Act 126 of 1994. Act 126 of 1994 amended Section 207(m) and deleted its application to transactions under Sections 203(e) and (r) of the 1972 Act while also making the furnishing of a notice reciting the withdrawal rights under Section 207(m) a condition of the exemption in Section 203(d). Act 126 also gave the Commission explicit authority to adopt a regulation specifying the form and manner in which a 207(m) notice has to be given. G. Philip Rutledge
(717) 783-5130Required Records; Report on Sales of Securities and Use of Proceeds
64 Pa. Code § 209.010March 1997, as proposed. This amendment would repeal reporting requirements on Form 209 for non-investment companies. Last year, the Commission received 1,244 Form 209 reports from non-investment companies. The Commission expends an enormous amount of time, computer resources and postage to insure timely filing of Form 209. Aggregate offerings of $100,000 or less under Section 203(d) have been exempt from filing Form 209 for a number of years without any adverse effect. The information supplied by Form 209 does not contribute materially to the Commission's enforcement efforts and often is submitted in such form where it cannot be compared meaningfully to the original offering document. The few instances where oversales have been detected can be addressed through an adjustment to the fee schedule. The Commission believes the Form 209 filing requirement for non-investment companies is a regulatory burden which does not fulfill a sufficient corresponding investor protection objective. G. Philip Rutledge
(717) 783-5130Financial Reports to Security Holders
64 Pa. Code § 606.011March 1997, as proposed. This amendment would delete the regulation's application to transactions effected under Sections 203(o)(ii), (q) and (r) and exclude from the regulation's requirements companies that are subject to the reporting requirements of the Securities Exchange Act of 1934 under Sections 13 of 15(d) thereof that actually have made a filing under that act. Deleting application of the provisions of this section to Sections 203(o)(ii), (q) and (r) would parallel changes to the 1972 Act which removed the application of the Two Business Day Right of Withdrawal to transactions effected under those sections. The transactions affected by this amendment are not those that require heightened regulatory oversight. A further amendment would address a problem that has arisen in using the definition of ''reporting company'' in the 1972 Act. This section of the regulation always has stood for the proposition that a company filing Forms 10-Q and 10-K with the SEC would not have to provide additional financial information to PA shareholders. The Division would retain the concept but change the wording. G. Philip Rutledge
(717) 783-5130Amendment Form
64 Pa. Code § 609.011March 1997, as proposed. This amendment would delete the requirement to use a specific form for amending filings made with the Commission. The form should be deleted because many issuers do not use it and the Commission has not enforced its use. The amendment would recast the regulation as a general requirement to file material changes with respect to previously filed offering documents and would obligate issuers to identify the form or filing being amended and provide a copy which is marked to show changes. Also, the Commission would propose including a sunset date that no amendments need be filed with respect to offerings for which the last sale in the Commonwealth was made more than five years ago, which time period equals the criminal statute of limitations in Section 511. G. Philip Rutledge
(717) 783-5130
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