FISCAL NOTE

Date Requested: February 08, 2016
Time Requested: 02:14 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2467 Introduced HB4437
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to create tax credits for new small businesses in order to assist and encourage the growth of small business owners in the State of West Virginia, as well as promoting job growth from within this state by hiring residents of the state, for those tax years beginning on or after January 1, 2016, through June 2024.
    
    The bill allows a credit of up to $2,500 for each new full-time employee to any taxpayer who is based in and operates entirely within West Virginia and has less than 100 employees. The amount of credit may not exceed 50 percent of the wages paid or $2,500, whichever is less. The tax credit would be allowed against the Corporation Net Income Tax and Personal Income Tax liabilities. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
    
    Additional administrative costs incurred by the State Tax Department would be $83,950 for FY2017 and $70,250 in subsequent fiscal years.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 83,950 70,250
Personal Services 0 63,700 70,250
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 11,000 0
Other 0 9,250 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    The bill allows a credit of up to $2,500 for each new full-time employee to any taxpayer who is based in and operates entirely within West Virginia and has less than 100 employees. The amount of credit may not exceed 50 percent of the wages paid or $2,500, whichever is less. The tax credit would be allowed against the Corporation Net Income Tax and Personal Income Tax liabilities. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
    
    Additional administrative costs incurred by the State Tax Department would be $83,950 for FY2017 and $70,250 in subsequent fiscal years.
    
    



Memorandum


    The stated purpose of this bill is to create tax credits for new small businesses in order to assist and encourage the growth of small business owners in the State of West Virginia, as well as promoting job growth from within this state by hiring residents of the state, for those tax years beginning on or after January 1, 2016, through June 2024.
    
    The bill would be difficult to enforce as written and would likely result in litigation. Although some of these aspects are addressed, this bill would benefit from being divided into different sections, such as legislative intent, severability, definitions, effective date, eligibility requirements for the credit, refunds, administration of this section, carry back and carry forward and forms and record keeping requirements.
    
    One area of ambiguity within this proposed bill is that the credit begins on a calendar year, but ends on a fiscal year.
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov