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PA Bulletin, Doc. No. 00-742



[61 PA. CODE CH. 101]

Personal Income Tax

[30 Pa.B. 2236]

   The Department of Revenue (Department), under authority contained in section 354 of the Tax Reform Code of 1971 (TRC) (72 P. S. § 7354), proposes to amend §§ 101.1 and 101.6 (relating to definitions; and compensation) to read as set forth in Annex A.

Purpose of Regulation

   This regulatory amendment will provide an explanation of the meaning and scope of the exclusion from compensation in section 301(d)(vi) of the TRC, Personal Income Tax (72 P. S. § 7301(d)(vi)) for employer or labor union payments for supplemental unemployment programs. The proposed changes will address the tax treatment of programs offered to provide supplemental benefits to employes terminated from service as a result of layoff, workforce reduction, plant closings or other involuntary terminations.

Explanation of Regulatory Requirements

   Section 101.1 is amended by adding the definition of ''supplemental unemployment benefit plan.'' Section 101.6 is amended by adding a new paragraph (9) relating to benefits payable under a supplemental unemployment benefit plan, under subsection (c) which enumerates what compensation does not mean or include. The numbering of this new paragraph will change upon the Department's adoption of Regulation 15-402 (see 28 Pa.B. 1946 (April 25, 1998)), relating to payments for employe welfare benefit plans and cafeteria plans.

Affected Parties

   Persons receiving employer or labor union payments for supplemental unemployment programs may be affected by this proposed rulemaking.

Fiscal Impact

   The Department has determined that the proposed rulemaking will have no fiscal impact on this Commonwealth.


   The proposed rulemaking will not require additional paperwork for the public or the Commonwealth.

Effectiveness/Sunset Date

   The proposed rulemaking will become effective upon final publication in the Pennsylvania Bulletin. The proposed rulemaking is scheduled for review within 5 years of final publication. No sunset date has been assigned.

Contact Person

   Interested persons are invited to submit in writing any comments, suggestions or objections regarding the proposed rulemaking to Anita M. Doucette, Office of Chief Counsel, PA Department of Revenue, Dept. 281061, Harrisburg, PA 17128-1061, within 30 days after the date of the publication of this notice in the Pennsylvania Bulletin.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 26, 2000, the Department submitted a copy of these proposed amendments to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House and Senate Committees on Finance. In addition to submitting the proposed amendments, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, ''Regulatory Review and Promulgation.'' A copy of this material is available to the public upon request.

   Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed rulemaking, it will notify the Department within 10 days of the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by the portion of the proposed amendments to which an objection is made. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the amendments, by the Department, the General Assembly and the Governor of objections raised.


   Fiscal Note: 15-414. No fiscal impact; (8)  recommends adoption.

Annex A






§ 101.1.  Definitions.

   The following words and terms, when used in this article, have the following meanings, unless the context clearly indicates otherwise:

*      *      *      *      *

   Supplemental unemployment benefit plan--A plan established or maintained by an employer or by an employe organization, or by both, that has both of the following attributes:

   (i)  Under the plan, no benefit is payable to, or subject in any manner to anticipation, assignment or pledge by, any plan participant except upon lay-off or involuntary separation from the employment of the employer (whether or not the separation is temporary) resulting directly from:

   (A)  A permanent reduction in force.

   (B)  Plant closing.

   (C)  Change in organizational structure.

   (D)  Discontinuance of an operation.

   (E)  The participant's failure to meet or maintain standards of performance for the position due to inability to carry out the responsibilities of the position, health, obsolescence, failure to meet the changed responsibilities of the position or similar circumstance beyond the control of the participant.

   (ii)  Under the plan, no benefit is payable to, or subject in any manner to anticipation, assignment or pledge by, any plan participant who either:

   (A)  Voluntarily separates from service.

   (B)  Is separated or discharged from service for any of the following reasons:

   (I)  Refusal to accept another position with reasonably comparable compensation.

   (II)  The commission of illegal acts.

   (III)  Insubordination, failure or refusal to comply with rules or regulations or similar acts within the control of the participant.

*      *      *      *      *

§ 101.6.  Compensation.

*      *      *      *      *

   (c)  Compensation does not mean or include any of the following:

*      *      *      *      *

   (9)  Benefits payable under a supplemental unemployment benefit plan, whether payable on a periodic basis or in the form of cash, services or property.

*      *      *      *      *

[Pa.B. Doc. No. 00-742. Filed for public inspection May 5, 2000, 9:00 a.m.]

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