NOTICES

INDEPENDENT REGULATORY REVIEW COMMISSION

Notice of Comments Issued

[29 Pa.B. 5159]

   Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the designated standing committees may issue comments within 20 days of the close of the public comment period, and the Independent Regulatory Review Commission (Commission) may issue comments within 10 days of the close of the committee comment period. The Commission comments are based upon the criteria contained in section 5a(h) and (i) of the act (75 P. S. § 745.5a(h)(i)).

   The Commission has issued comments on the following proposed regulations. The agency must consider these comments in preparing the final-form regulation. The final-form regulations must be submitted by the dates indicated.

			Final-Form
			Submission
Reg No.	Agency/Title	Issued	Deadline
15-407	Department of Revenue    Sales and Use Tax;       Lawn Care Services	9/17/99	8/16/01
	(29 Pa.B. 3736 (July 17, 1999)
15-408	Department of Revenue    Sales and Use Tax;       Vending Machines	9/17/99	8/16/01
	(29 Pa.B. 3738 (July 17, 1999)

Department of Revenue Regulation No. 15-407

Sales and Use Tax; Lawn Care Services

September 17, 1999

   We have reviewed this proposed regulation from the Department of Revenue (Department) and submit for consideration the following objections and recommendations. Subsections 5.1(h) and 5.1(i) of the Regulatory Review Act (71 P. S. § 745.5a(h) and (i)) specify the criteria the Commission must employ to determine whether a regulation is in the public interest. In applying these criteria, our Comments address issues that relate to consistency with the statute and clarity. We recommend that these Comments be carefully considered as you prepare the final-form regulation.

1.  Subsection 55.6(a) Definitions.--Consistency with the statute and Clarity.

''Lawn''

   The regulation's definition of ''lawn'' states that ''the term does not include athletic fields, cemeteries, golf courses, fields, parks and public utility or highway right-of-ways.'' Mowing and other upkeep services performed on areas in the list of exclusions are not subject to tax as ''lawn care services.'' However, the difference between a ''lawn'' and a ''field'' is unclear. What distinguishes a ''lawn'' from a ''field''?

''Lawn care service''

   The definition of ''lawn care service'' is inconsistent with the statutory definition. The Department should delete the text of the definition and replace it with a reference to the statutory definition at section 201(jj) of the Tax Reform Code (TRC) (72 P. S. § 7201(jj)).

''Shrubbery'' and ''tree''

   ''Trimming or pruning shrubbery when performed in conjunction with other lawn care services'' is listed as a taxable service in subsection (c)(12). However, trimming or pruning trees is listed as a nontaxable service in subsection (d)(2). There is uncertainty over the difference between shrubbery and trees. The Department should define these terms to distinguish the difference between the two.

2.  Subsection 55.6(b) Scope.--Clarity.

   The last sentence of subsection (b) states services became taxable October 1, 1991. The purpose of this date reference is unclear. The Department should explain its purpose or delete this sentence from the regulation.

3.  Subsection 55.6(c) Examples of taxable services--Clarity.

   Subsection (c)(11) states that ''overseeding, sodding or grass plugging of lawns'' are taxable services. In contrast, subsection (d)(1) indicates that ''seeding, sodding or grass plugging to establish a new lawn'' are nontaxable services. The word ''existing'' should be inserted before the word ''lawn'' in subsection (c)(11) to clearly distinguish these services from the services to start a new lawn described in subsection (d)(1).

4.  Subsection 55.6(f) Exclusions.--Clarity.

   There are two concerns with subsection (f). First, it is entitled ''exclusions'' but its text uses the terms ''exemption'' and ''exclusion.'' It is our understanding that ''exclusions'' are those items or services that are not taxable by statute and the burden of proof to establish the contrary is on the Department. In contrast, ''exemptions'' are items or services that may be subject to tax under certain circumstances and the burden of proof is on the taxpayer claiming the exemption. If we are correct, clarity would be improved if there were a separate subsection for ''exemptions'' to distinguish them from ''exclusions.''

   The second concern is with the last sentence of subsection (f)(1). It states: ''[T]he manufacturing, mining, processing, public utility, farming, dairying, agriculture, horticulture or floriculture exclusions do not apply.'' It is unclear which ''exclusions'' are being referred to and how comprehensive they are. We understand these are statutory exclusions found in the TRC definitions of ''sale at retail'' and ''use'' (at 72 P. S. §§ 7201(k)(8) and 7201(o)(4), respectively). The last sentence of subsection (f)(1) should reference these statutory provisions and state that the exclusions do not apply to the tax on lawn care services.

Department of Revenue Regulation No. 15-408

Sales and Use Tax; Vending Machines

September 17, 1999

   We have reviewed this proposed regulation from the Department of Revenue (Department) and submit for consideration the following objections and recommendations. Subsections 5.1(h) and 5.1(i) of the Regulatory Review Act (71 P. S. § 745.5a(h) and (i)) specify the criteria the Commission must employ to determine whether a regulation is in the public interest. In applying these criteria, our Comments address issues that relate to reasonableness, economic and fiscal impact, and clarity. We recommend that these Comments be carefully considered as you prepare the final-form regulation.

1.  Section 31.28. Vending machines.--Reasonableness, Economic and fiscal impact, and Clarity.

Subsection (a) Soft Drink

   The definition of ''soft drink'' is not as complete as the definition in section 7201 of Act 45 of 1998 (Act). Statutory definitions should not be amended in regulations. The Department should include a citation to the statutory definition of ''soft drink'' in the final regulation.

Selected Food and Beverage Items

   The last phrase in this definition refers to other food items which are dispensed in cold form ''and normally heated in an oven or microwave provided by the operator.'' The Department should clarify whether the microwavable items sold are taxable if an operator does not provide a microwave.

Subsection (d)(2)

   The posting of signs or stickers indicating the purchase price and the amount of tax for each item in subsection (2) can be interpreted as optional in the rulemaking. The Department should clarify whether posting such information is mandatory.

   Also, subsection (2) relates to taxable property other than food and beverages. Subsection (3) relates to taxable food and beverage items. Although both of these sections address the requirements for taxing certain items, the structure of these subsections is inconsistent.

   In addition, subsection (3) contains an example of how to calculate the tax; subsection (2) does not. To clarify, the Department should consider adding examples to provide additional clarity and parallel structure for these two subsections.

Subsection (d)(4)(ii)(I)

   This subsection lists ''juice drinks'' as an item that is not taxable when sold from a vending machine. We believe the Department intended to list ''juice beverages,'' rather than ''juice drinks,'' in this subsection. The Department should correct this inconsistency in the final regulation.

Subsection (d)(4)(ii)(L)

   This subsection includes the term ''prepackaged frozen water-based products.'' For clarity, the Department should provide examples of these products.

Subsection (e)(1)

   Subsection (e)(1) states ''Sales of selected food and beverage items dispensed by means of a vending machine located on the premises of a school or church are exemptfrom tax, if the sales are made in the ordinary course of the activities of the school or church.'' The Department should clarify when sales would not be considered to be in the ordinary course of the church or school's activities.

JOHN R. MCGINLEY, Jr.,   
Chairperson

[Pa.B. Doc. No. 99-1689. Filed for public inspection October 1, 1999, 9:00 a.m.]

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