FISCAL NOTE
Date Requested: January 27, 2023
Time Requested: 01:28 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3057 |
Introduced |
HB3094 |
|
|---|
| CBD Subject: |
Utilities |
|---|
|
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 establish the Remote Worker Home Development Act.
This bill would incentivize developers to create a subdivision that is “remote worker ready” by re-categorizing its property tax structure. The developed property would be kept at its original rate until each new home is sold for the first time. Upon the sale of the first home, the home and its tract of land would be taxed as the improved property for property tax purposes. Further, the developer would qualify for a personal income tax credit equal to the cost of the additional requirements for the remote office room and back up electrical power source in each new home. This bill would be effective on July 1, 2023.
As of December 2022, there have been 75 applicants accepted into the Ascend WV program, bringing 143 new residents to the state. According to the Division of Tourism, there is no knowledge of developers currently creating new subdivisions for Ascend WV participants so we cannot determine the revenue impact from this bill.
Administrative costs incurred by the Tax Department would be $25,000 in FY2024 and $5,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
25,000 |
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 |
20,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would incentivize developers to create a subdivision that is “remote worker ready” by re-categorizing its property tax structure. The developed property would be kept at its original rate until each new home is sold for the first time. Upon the sale of the first home, the home and its tract of land would be taxed as the improved property for property tax purposes. Further, the developer would qualify for a personal income tax credit equal to the cost of the additional requirements for the remote office room and back up electrical power source in each new home. This bill would be effective on July 1, 2023.
As of December 2022, there have been 75 applicants accepted into the Ascend WV program, bringing 143 new residents to the state. According to the Division of Tourism, there is no knowledge of developers currently creating new subdivisions for Ascend WV participants so we cannot determine the revenue impact from this bill.
Administrative costs incurred by the Tax Department would be $25,000 in FY2024 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish the Remote Worker Home Development Act.
This property tax benefit appears to potentially be at odds with the state constitution and property tax case law. It is a long-standing tenet of ad valorem taxation that all property must be taxed in proportion to its value. The West Virginia Supreme Court of Appeals has also held that all property must be taxed in a fair and uniform manner. There does not appear to be any requirement that the housing be purchased by someone working from home or moving into the state. There is no requirement that the new homeowner utilize the technology. The provisions could result in litigation because they may encroach on the express authority of local government.
The developer shall have an income tax credit equal to the cost of the additional requirements for the remote office room and back-up electrical power source in each home built. It is not clear what expenses qualify for this credit, whether this is a refundable credit, whether it applies against Corporation Net Income Tax and Personal Income Tax, how a pass-through entity would utilize the credit, whether there is carry forward or back, how the credit would be claimed, what documents would be required to claim the credit, which agency determines entitlement to the credit, and whether there are limits on this credit.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov