FISCAL NOTE
Date Requested: January 11, 2024
Time Requested: 03:37 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1549 |
Introduced |
HB4181 |
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| CBD Subject: |
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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 a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities.
According to our interpretation of this bill, any individual or licensed automobile dealer subject to taxes imposed by the State would be eligible for a refundable tax credit of 100 percent of the qualified value of the vehicle up to $6,000 per vehicle donated. West Virginia currently has a tax credit for individual taxpayers who donate vehicles to qualified charitable organizations and for new or used car dealers that sell a motor vehicle to low-income workers through a program administered by a qualified charitable organization which offset both Personal Income Tax and Corporation Net Income Tax. The current donated vehicle credit is the minimum of 50 percent of the value of the vehicle or $2,000. The proposed bill would double the value of the existing tax credit, triple the maximum amount of credit per vehicle and make the tax credit refundable. These changes would likely enhance participation in the donated vehicle program by a significant margin. However, the provisions of the bill add this new tax credit without amending the existing tax credit. Taxpayers would potentially qualify for two separate tax credits with slightly different rules related to the donation of a car. The current vehicle credit has a maximum total of $300,000 per fiscal year while the proposed credit keeps the maximum total of $300,000 only in tax years 2025 and 2026 and increases it to $1.0 million for subsequent fiscal years.
Passage of this bill would reduce General Revenue Fund collections by up to $300,000 in FY2025 and by up to $1.0 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $5,000 per year in FY2025 and subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
5,000 |
5,000 |
5,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
5,000 |
5,000 |
5,000 |
| 2. Estimated Total Revenues |
0 |
-300,000 |
-1,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, any individual or licensed automobile dealer subject to taxes imposed by the State would be eligible for a refundable tax credit of 100 percent of the qualified value of the vehicle up to $6,000 per vehicle donated. West Virginia currently has a tax credit for individual taxpayers who donate vehicles to qualified charitable organizations and for new or used car dealers that sell a motor vehicle to low-income workers through a program administered by a qualified charitable organization which offset both Personal Income Tax and Corporation Net Income Tax. The current donated vehicle credit is the minimum of 50 percent of the value of the vehicle or $2,000. The proposed bill would double the value of the existing tax credit, triple the maximum amount of credit per vehicle and make the tax credit refundable. These changes would likely enhance participation in the donated vehicle program by a significant margin. However, the provisions of the bill add this new tax credit without amending the existing tax credit. Taxpayers would potentially qualify for two separate tax credits with slightly different rules related to the donation of a car. The current vehicle credit has a maximum total of $300,000 per fiscal year while the proposed credit keeps the maximum total of $300,000 only in tax years 2025 and 2026 and increases it to $1.0 million for subsequent fiscal years.
Passage of this bill would reduce General Revenue Fund collections by up to $300,000 in FY2025 and by up to $1.0 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $5,000 per year in FY2025 and subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities.
This bill raises two major concerns. First, the bill mentions that a taxpayer is eligible for a State refundable credit but fails to mention the specific State tax that the credit may be applied against.
Second, while the bill purports to create a new article 11-14D in the W.Va. Code, there is an existing statute and Legislative Rule implementing such a tax credit program as the one prescribed by this bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov