FISCAL NOTE
Date Requested: January 10, 2018
Time Requested: 02:44 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1196 |
Introduced |
SB78 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee.
Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in Tax Year 2018 and terminating after the end of Tax Year 2020. Passage of the proposed legislation would result in a potential loss from Tax Year 2018 returns of approximately $400,000 occurring in FY2019. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination.
Additional administrative costs to the State Tax Department would be $10,000 in FY2019 and $5,000 in subsequent years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
5,000 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-400,000 |
-400,000 |
Explanation of above estimates (including long-range effect):
Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in Tax Year 2018 and terminating after the end of Tax Year 2020. Passage of the proposed legislation would result in a potential loss from Tax Year 2018 returns of approximately $400,000 occurring in FY2019. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination.
Additional administrative costs to the State Tax Department would be $10,000 in FY2019 and $5,000 in subsequent years.
Memorandum
The stated purpose of this bill is to continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee.
The title of the proposed bill fails to state that there is an internal effective date or that there is a provision terminating the modification after December 31, 2020. Further, the title also states that this is an “adjustment to gross income’ rather than a modification reducing federal adjusted gross income. The use of the word “continue” in the bill’s stated purpose and title is not entirely accurate because the modification had been terminated.
The bill contains a technical change to the language of this Code section, which mischaracterizes what the code currently provides. The current law states that the tax adjustment was terminated “for the tax years on and after January 1, 2015.” This bill changes that language to state the tax adjustment was terminated “for taxable year beginning on January 1, 2015.” This language is ambiguous and could cause confusion regarding applicable tax years. The taxpayer may attempt to argue that the Legislature is attempting to retroactively grant the modification for Tax Years 2016 and 2017.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov