Certified Final Objection No. 44 of the

Joint Legislative Committee on Administrative Rules

At its meeting on May 15, 1992, the Joint Legislative Committee on Administrative Rules (Committee) voted, pursuant to RSA 541-A:3-e, to enter a preliminary objection to Final Proposal 92-059 containing proposed rules of the Commissioner of Revenue Administration relative to the meals and rooms tax. The Commissioner responded to the preliminary objection by letter dated May 21, 1992.

At its meeting on September 18, 1992, the Committee voted, pursuant to RSA 541-A:3-e, V(c), to enter a final objection to Final Proposal 92-059. The final objection has been filed with the Director of the Office of Legislative Services for publication in the New Hampshire Rulemaking Register. The effect of a final objection is stated in RSA 541-A:3-e, VI:

After a committee objection is filed with the director under paragraph V(c), to the extent that the objection covers a rule or portion of a rule, the burden of proof thereafter shall be on the agency in any action for judicial review or for enforcement of the rule to establish that the part objected to is within the authority delegated to the agency, is consistent with the intent of the legislature, and is in the public interest. If the agency fails to meet its burden of proof, the court shall declare the whole or portion of the rule objected to invalid. The failure of the committee to object to a rule shall not be an implied legislative authorization of its substantive or procedural lawfulness.

1. Rev 702.08(g)

The Committee objected that Rev 702.08(g) is, pursuant to Committee Rule 402.02(a), contrary to legislative intent by conflicting with RSA 78-A:7, I.

The provision states that "advance deposits, which are not returned to the occupant shall be taxable rent." Deposits so collected are for the room rental, only, and do not include payment of the tax. The Committee objected to this provision because the Committee concluded that the meals and rooms tax is one that is properly paid for by the consumer, pursuant to RSA 78-A:7, I, but that this rule requires the operator to pay the tax.

2. Rev 702.17(c)(3)

The Committee objected that Rev 702.17(c)(3) is, pursuant to Committee Rules 401.01(c), 402.02(a), 403.01(d) and 403.02(c), beyond the authority of the Commissioner, contrary to legislative intent by conflicting with RSA 78-A:3, X, and contrary to the public interest by not being clear and understandable and capable of uniform application.

The rule states that "all single serving bakery products sold in a quantity of 6 or more, such as but not limited to donuts, cookies, brownies, or bagels" shall not be taxable. Thus, for example, one buying a quantity of 5 bakery products must pay the tax whereas one buying 6 of the same items is not required to pay the tax. Pursuant to 1986, 1:1, it is "the intent of the legislature to impose a tax upon the sale of meals and not upon the sale of groceries as those expressions are customarily understood." The Committee concluded that "groceries" is customarily understood to include small quantities of food. Additionally, it was unclear to the Committee whether fewer than 6 bakery products purchased along with other food items would be taxable. The Committee also concluded that the tax was not being levied uniformly as a result of differing interpretation. Finally, the Committee concluded that the Commissioner has no authority to propose a rule that is inconsistent with substantive statutory provisions.