ersc bod Increase in rent under a lease executed before Aug. 15, 1971, effective after Jan. 1, 1972. -151 Aggregate pricing system. -152 Item pricing system-department store. 153 Item pricing system-grocery store. 154 Processing of exception applications from landlords charging excess rents. [Superseded by Price Commission Ruling 1972-222, 37 F.R. 16986, Aug. 23, 1972] -155 Conflict determination 2-156 Rents-notice. rent. 2-157 Rent of base allowable cost-tangible personal property taxes. 2-158 Rent-average transaction-same building or complex. 12-159 Rental increase for increase in allowable costs. 12-160 Prior approval for an increase in rent in excess of 10 percent for capital improvement. 12-161 Increase in rent for capital improvement. 72-162 Formula-determined rent leases executed prior to August 15, 1971. 972-163 Notice-rental increase under & formula. 1972-164 Base rent-special arrangements. 1972-165 Prices stated as a percentage in contracts entered into during the freeze base period. 1972-166 Exception procedures for hospitals whose proposed price increase will not increase their aggregate annual revenues by more than 6 percent. 1972-167 Institutional providers of health, allowable costs. 1972-168 Separate base prices for different classes of purchases. 1972-169 Price-control-posting. 1972-170 Custom products. 1972-171 Charges of a nonprofit educational institution. 1972-172 New property. 1972-173 Retailers' inventory repricing. 1972-174 Determining base price "Large Size" item not previously sold. 1972-175 Service organization—tavern. 1972-176 Rent increase less than $1 based on capital improvement. 1972-177 Maintenance of customary percentage markups in retail meat pricing. 1972-178 Prices stated as a percentage in contracts entered into during the freeze base period. 1972-179 Price Category I firm-prenotification. 1972-180 Disclosure by a state advisory board. 1972-181 Furnishing of information by the Internal Revenue Service to a state advisory board. 1972-182 Application of regulations governing institutional providers of health services to individual hospitals. 1972-183 Profit margin determinations. 1972-184 Retroactive payments. 1972-185 Effective date of regulations. 1972-186 Custom contract prenotification. 1972-187 Restaurant pricing—allowable cost increases. 1972-188 Base rent determination. 1972-189 State property taxes effect of discount. 1972-190 New charge for par checking. 1972-191 "Transactions" of statutory tenants. 1972-192 Decrease in services-rent increase. 1972-193 Additional motel units. 1972-194 Rehabilitated swelling as a structure. 1972-195 Increase in services-rent decrease. 1972-196 Commodity futures transactions. 1972-197 Index pricing. 1972-198 Rental increase where property is devoted to mixed use. 1972-199 Small business exemption for public utilities. 1972-200 Elimination of rent subsidieswages and salaries. 1972-201 First installment; allocation of increased costs. 1972-202 Date lease is executed. 1972-203 Finance charges. 1972-204 Retaliatory eviction-enforcement consequences. 1972-205 Retaliatory eviction-tenant's rights against landlord. 1972-206 Determination of profit margin violation. 1972-207 Consolidated groups-intercompany sales. 1972-208 Volatile ment. prices required state 1972-209 Varying rent in accordance with the number of occupants. 1972-210 Base price of long-term lease. 1972-211 Determining profit margin when a firm has changed from a calendar year to a fiscal year. 1972-212 Rent-new security guards. 1972-213 Effective date of price increase ap proval. 1972-214 New partnership-base price. 1972-215 Determination of base price, 1972-216 Joint venture. 1972-217 Arm's-length transaction. 1972-218 Swimming pool fee. 1972-219 Average transaction rent-decrease in services. 1972-220 Redetermination of base rent. 1972-221 Rebates-increased cost. 1972-222 Processing of exceptional applications from landlords charging excess rents. 1972-223 May 25, 1970, limiting price. 1972-224 Taxes in escrow accounts not "Paid". 1972-225 Price rounding to nearest cent. 1972-226 Hospitals increased revenues derived from new services. 1972-227 Effect when small business exemption is lost. 1972-228 Rental of boat slips. 1972-229 Definition-institutional of health. 1972-230 Trust services. 1972-231 Price provider increase with respect to early payment discount. 1972-232 Definition-price increase. 1972-233 Health maintenance organization. 1972-234 Increase allowed when tax paid. 1972-235 Notice requirements and retroactivity relating to vacancy decontrolled units. 1972-236 Reducation in service as a price increase. 1972-237 Discontinuance of trading stamps as a price increase. 1972-238 Excise and sales taxes. 1972-239 Price Commission rulings update as of June 30, 1972. 1972-240 Hedging gains and losses. 1972-241 New property-brand name and private brand alcoholic beverages. 1972-242 Medical fees charged by a medical doctor. 1972-243 Actual sales price of new automobiles. 1972-244 Publishing companies. [Price Commission Ruling 1971-1] WATER SERVICE CHARGES Facts. City A is composed of several departments under the supervision of a city council and mayor. Some of the departments are financed by property tax revenues (e.g. police and fire departments), while others are financed by service charges (e.g. garbage collection and water departments). The garbage collection department has incurred cost increases after November 14, 1971, without any gain in productivity. The water department has incurred no such cost increases. Issues. May the city increase its service charge for water service to cover the increased costs of the garbage collection department? Ruling. No. The city may not inc the water service rates to cover the creased costs of the garbage collect department. Even though State and cal income, sales, and real estate ta are not subject to the provisions of Economic Stabilization Act of 19702 cause they are not prices (Economic S bilization Regulations § 101.1(c) (1 service charges imposed by State or lo governments are not exempt. Any per who carries on the trade or business s selling or making available services service organization, as defined in Ere nomic Stabilization Regulations § 300.1 (b) (3), and this definition includes ge ernment instrumentalities. Theref each city department which rend services financed by service charges posed on the recipients of that servic a service organization, and may charg price in excess of the base price only reflect allowable costs in effect on vember 14, 1971, and cost increases curred after November 14, 1971, redu to reflect productivity gains. On the fa given above, only the garbage collect department has incurred such increa costs and therefore only the ser charges imposed for the garbage coll tion service could be increased. This ruling has been approved the General Counsel of the Pr Commission. [36 F.R. 23109, Dec. 3, 1971] [Price Commission Ruling 1971-2] SEWER AND WATER SERVICE CHARGES Facts. City A is limited by State law t a real property tax rate below that neces sary to pay for its general governmenta functions. It generates the additiona revenues necessary to perform thos functions by charging more for sewe and water services than is necessary t pay for those services. It has incurred additional costs in performing its general governmental functions. Issue. May the city raise the service charges on its sewer and water service to pay the increased costs incurred in performing its general governmental functions? Ruling. The city may not increase its sewer and water service charges to pay the increased costs incurred in performing its general governmental functions. A city which operates a sewer and water 1.0 partment is to that extent a "service ganization" within the definition proled by Economic Stabilization Regulans § 300.101(b) (3). Therefore, it can Icrease its charges only to reflect its lowable costs in effect on November 1971, and cost increases it incurred ter November 14, 1971, reduced to reect productivity gains. On these facts, e city itself, and not the sewer and ater department, incurred the addional costs, and thus the sewer and ater department cannot increase its ates to reflect such additional costs. This ruling has been approved by che General Counsel of the Price Commission. 36 F.R. 23108, Dec. 3, 1971] [Price Commission Ruling 1971-8] WAGE INCREASES Facts. On November 18, 1971, Company A agreed to pay a wage increase to its employees of approximately 16 percent per year. Company A wants to raise its prices to reflect in full this wage increase on the grounds that the increase is an "allowable cost" within the meaning of Price Commission regulations, § 300.101 (c) (2). Issue. Is the wage increase which exOceeds the general guidelines of 5.5 perocent per year granted by Company A an allowable cost within the meaning of Price Commission regulations, § 300.101 (c) (2)? Ruling. For a company which agreed to a general wage increase after the guideline of 5.5 percent per year for wage increases had been announced on November 8, 1971, increased "allowable costs" for the purpose of justifying a price increase shall not generally include increased wage payments, including fringe benefits, in excess of 5.5 percent per year. Payments to replenish major deficiencies in a welfare fund which are necessary to protect the pensions of men already retired constitute an exception. This interpretation does not apply to wage increases for workers making less than minimum wage standards of general applicability. Nor does it preclude a company from obtaining an "exception by ruling" as provided by Price Commission regulations, § 300.612, if the company can demonstrate that not counting the increased wage costs in excess of 5.5 percent with respect to its particular situation constitutes a gross inequity. This ruling has been approved by the General Counsel of the Price Commission. [36 F.R. 23661, Dec. 11, 1971] [Price Commission Ruling 1971-4] PRENOTIFICATION Facts. Company A had sales in its last fiscal year of $150 million. It has prenotified the Price Commission of every price increase it has put into effect. Issue. Must Company A also report to the Price Commission at the end of its next fiscal quarter? Ruling. Yes, all prenotification firms are required to submit quarterly reports to the Price Commission on Form PC-1 in addition to prenotifying the Commission of proposed price increases, pursuant to § 300.051(d). This ruling has been approved by the General Counsel of the Price Commission. [36 F.R. 24077, Dec. 18, 1971] [Price Commission Ruling 1971-5] Facts. For the purposes of filing income tax returns, preparing financial statements, and its general business operations, Corporation X maintains its books and records according to a fiscal year ended December 31st. On November 14, 1971, Phase II of the economic stabilization program, established pursuant to the Economic Stabilization Act of 1970, became operative. Issue. Whether or not Corporation X must change from a fiscal year ended December 31st to a fiscal year ended November 13th. Ruling. Corporation X may continue to maintain its books and records on the basis of a fiscal year ended December 31st. Although November 14, 1971 is a reference date or starting point which may be determinative of whether certain requirements may be operative with respect to the granting and implementation of certain price adjustments, there is no mandate in the Act or the regulations that the fiscal year of Corporation X be changed to end on November 13th. Moreover, this same rule would apply regardless of what date the fiscal year of Corporation X ended upon. Further, it is to be noted that the "fiscal year" referred to in this ruling is intended to mean a period of 12 months. 84-025 0-72 -18 This ruling has been approved by the General Counsel of the Price Commission. [36 F.R. 24232, Dec. 22, 1971] [Price Commission Ruling 1972–1] BUS OPERATORS Facts. An operator of school buses holds contracts for the transportation of school children with several school districts. The contracts are negotiated each year during June and July. All the contracts for the school year 1971-72 were signed in June, 1971 except one with School District A which was signed July 20, 1971. Wages of his drivers were increased by 5 percent in contracts signed July 27, 1971. Issue. May the operator increase his service charges for transportation for the school year 1972-73 to be negotiated next summer? Ruling. The bus operator may increase his charges to all school districts with which he will contract to furnish transportation services for 1972-73. However, in accordance with the conditions in § 300.14 of the Economic Stabilization Regulations, increases in charges are authorized only to reflect allowable costs in effect on November 14, 1971, and cost increases incurred after November 14, 1971, reduced to reflect productivity gains, and only if the increased prices do not increase the firm's total profits, as a percentage of sales, before income taxes, over those which prevailed during the base period. corporation has been actively engaged to in the business since 1967. It computes its net income on the basis of a calendar year. In the year 1968 the corporation had net income, before income taxes and extraordinary items, equal to 5 percent of its sales. In the years 1969 and 1970 the respective figures for net income, before income taxes, and extraordinary items, were 6 percent and 7 percent. Be ginning December 31, 1971, the corporation proposes to increase the prices of each of its three products by 3 percent because the cost of certain raw materials used in the products has increased by 4 percent and many of its employees have received a 2 percent wage increase. Annual sales of the corporation do not and have never exceeded $1 million. Issue. May the corporation increase its prices by more than 2.5 percent after November 13, 1971, and, if so, what factors would determine the amount of the increase? Ruling. It is possible that the corporation may increase its prices more than 2.5 percent. Prices after November 13.1 1971, are to be established in accordance with Price Commission guidelines. The 2.5 percent figure represents a goal for average price increases across the entire economy, but individual price changes may be above or below that figure, depending upon allowable cost increases and net profit margins. Under Economic Stabilization Regulation § 300.12, manufacturers may charge prices for products in excess of the base prices to reflect increases in allowable costs in effect on November 14, 1971, and cost increases incurred after November 14, 1971 reduced to reflect productivity gains. However, the effect of all of a manufacturer's price changes cannot be to increase its profit margin as a percentage of dollar sales, before income taxes, over that which prevailed during the base period. The "base period", as defined in Economic Stabilization Regulations § 300.5 means the average of any two of a person's last three fiscal years ended prior to August 15, 1971. The selection of such two fiscal years is to be made by the person. Therefore, increases in the manufacturer's prices of the three products would be determined by reference to the profit margin determinations for any two of the years 1968, 1969 and 1970. It would also be determined by reference to increases in allowable costs and by productivity gains. However, the profit margin determinations are to be made by The base price from which the allowable increase is to be computed is the price of the contract with School District A which was entered into during the freeze base period-July 16 to August 14, 1971. Accordingly, the bus operator may charge in excess of the price in this contract so much as is necessary to absorb increases in allowable costs, such as wages (subject generally to a limitation of 5.5 percent on increases made after November 8, 1971), maintenance, replacements, licenses, etc. This ruling has been approved by the General Counsel of the Price Commission. [37 F.R. 247, Jan. 7, 1972] [Price Commission Ruling 1972-2] CRITERIA FOR CORPORATE PRICE INCREASES Facts. A manufacturer, a corporation, manufactures three separate items. The Facts. A U.S. corporation, A, buys raw eather from a foreign dealer who deivers the leather to corporation A in he United States. Upon receipt of the eather, corporation A manufactures eather jackets that it sells to clothing wholesalers in the United States. The Jackets are not custom made to order. Issue. How are these two transactions covered by the regulations? Ruling. The first sale of an import into the customs territory of the United States is exempt. Economic Stabilization Regulations § 101.32 (d) (2). The price may be whatever is agreed upon between the foreign exporter and U.S. importer. Therefore, in the example above, the sale of the leather goods by the foreign dealer to corporation A is exempt. When the importer sells the article (whether changed or not, or incorporated into another product) to a U.S. purchaser, that sale is subject to control and the rules of the Price Commission apply. Thus, the sale by corporation A to the U.S. retailers is subject to the rules of the Price Commission. The price charged by corporation A to the U.S. wholesalers may exceed corporation A's base price (as defined in Subpart F of the regulations) only if it reflects cost increases, subject to adjustmen';s for productivity gains and subject to the rule that its profit margin as a percentage of sales may not be greater than the average of the best two of the last 3 fiscal years ended prior to August 15, 1971. Economic Stabilization Regulation, § 300.12. This ruling has been approved by the General Counsel of the Cost of Living Council. [87 F.R. 247, Jan. 7, 1972] [Price Commission Ruling 1972-4] SALE OF PERSONAL PROPERTY BY INDIVIDUALS Facts. Citizen A wishes to sell a television set he purchased from a retailer 2 weeks ago and used in his home but which he no longer needs because he just received a better model as a gift. Issue. Is citizen A's sale of this television set exempt from the controls of the economic stabilization program? Ruling. Yes. Sales of used products are exempt from controls. Economic Stabilization Regulations § 101.32(e). To qualify as a used product, the product must have been acquired and used by an end user, such as citizen A. Temporary holding for purposes of resale, however, does not make a product a used product, unless it is used for demonstration purposes, such as a demonstration or floor sample. This ruling has been approved by the General Counsel of the Price Commission. [37 F.R. 248, Jan. 7, 1972] [Price Commission Ruling 1972-5] CRITERIA FOR INCREASES IN PROFESSIONAL SERVICE FEES Facts. A, B, and C are certified public accountants practicing their profession as a partnership, A, B, C & Co. They bi clients for services rendered, taking into account such factors as their costs in performing accounting work and results achieved in the event they represent clients in business negotiations. Issue. May the partnership of A, B, C & Co. increase the fees which it charges its clients after November 13, 1971? Ruling. The partnership A, B, C & Co. may increase its fees depending on the circumstances. The fees charged by the firm of certified public accountants are prices which are governed by the regulations of the Price Commission dealing with services. See Economic Stabilization Regulations, §§ 300.5 and 300.14. Even though the fees charged for services rendered after November 13, 1971, may take into account costs in effect on that date and cost increases after that date, reduced to reflect productivity gains, such increased fees shall not result in an increase in the partnership's profit margin as a percentage of sales, before income taxes, over that which prevailed during the base period. To the extent that charges are based on results achieved in business negotiations (e.g., on a percentage basis), without regard to cost, such charges cannot exceed the higher of (1) charges made for the same or similar services during the period beginning August 15, 1971, and ending |