FISCAL NOTE

Date Requested: February 20, 2017
Time Requested: 01:02 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2202 Introduced HB2553
CBD Subject: Taxation


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 specify an exemption from the consumer sales and service tax and use tax for sales of services and tangible personal property rendered for use in connection with raising and training livestock; set forth legislative intent; provide a method to resolve conflicts in law; provide an effective date; provide definitions; and describe those sales of services and tangible personal property that are exempt and provide method of claiming exemption. The proposed bill creates Consumer Sales and Service Tax and Use Tax exemptions for various sales or services and tangible personal property rendered for use in connection with raising and training livestock. Businesses and individuals who are in the farming business already have a direct use exemption for all their farm-related purchases. The proposed bill would expand the sales tax exemption to individuals who raise or train livestock but are not in the farming business. We are unable to estimate the revenue impact of this proposal. Additional administrative costs incurred by the State Tax Department are expected to be minimal in FY2017 and FY2018.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 1,000 500 0
Personal Services 500 500 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 500 0 0
2. Estimated Total Revenues 0 0 0


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


The proposed bill creates Consumer Sales and Service Tax and Use Tax exemptions for various sales or services and tangible personal property rendered for use in connection with raising and training livestock. Businesses and individuals who are in the farming business already have a direct use exemption for all their farm-related purchases. The proposed bill would expand the sales tax exemption to individuals who raise or train livestock but are not in the farming business. We are unable to estimate the revenue impact of this proposal. This exemption would be per se and no exemption certificate would be required. Additional administrative costs incurred by the State Tax Department are expected to be minimal in FY2017 and FY2018.



Memorandum


The stated purpose of this bill is to specify an exemption from the consumer sales and service tax and use tax for sales of services and tangible personal property rendered for use in connection with raising and training livestock; set forth legislative intent; provide a method to resolve conflicts in law; provide an effective date; provide definitions; and describe those sales of services and tangible personal property that are exempt and provide method of claiming exemption. The lack of record keeping and the lack of definition or broad definitions may lead to over use of the exemptions. The fees are broad in scope and some are undefined. This could lead to overclaimed exemptions and unintended expenses/fees being exempted. The lack of record keeping for exemptions will also inhibit the ability of the Tax Commissioner to determine when or if an exemption was claimed and whether the exemption was authorized. The specification that the exemptions are per se and that no exemption certificate or direct pay permit is needed conflicts with the Streamlined Sales and Use Tax Agreement. The effective date is problematic. The effective date is for sales “made after” July 1, 2017. Historically, changes have been made on the first days of a quarter or the first day of the fiscal year. This change is on July 2, 2017.



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