FISCAL NOTE

Date Requested: January 19, 2018
Time Requested: 11:46 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1823 Introduced HB4210
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 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, 2018 through June 2027.
    
    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 Business Franchise Tax, Corporation Net Income Tax and Personal Income Tax liabilities. The Business Franchise Tax terminated on January 1, 2015. 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 $46,000 for FY2019 and $35,000 in subsequent fiscal 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 46,000 35,000
Personal Services 0 35,000 35,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,000 0
Other 0 10,000 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 Business Franchise Tax, Corporation Net Income Tax and Personal Income Tax liabilities. The Business Franchise Tax terminated on January 1, 2015. 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 $46,000 for FY2019 and $35,000 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, 2018 through June 2027.
    
    The bill would be difficult to enforce as written and could result in litigation due to a general lack of definitions for various terms necessary to determine scope of tax credit entitlement. This bill would allow the tax credits to terminate at the end of a fiscal year, but the credits are determined based upon the calendar year
    
    There is no language in the bill or in the bill title specifically stating that the bill is retroactive. The bill title does not mention that there is no carryforward and carryback of the unused credit.
    
    



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