FISCAL NOTE
Date Requested: February 12, 2021
Time Requested: 04:22 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1982 |
Introduced |
HB2305 |
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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 provide a tax credit for an employer who hires a person who was convicted of a felony eligible for expungement.
According to our interpretation of this bill, an employer, who hires a convicted felon who has been released from confinement, and who has or is eligible to have his or her conviction expunged, is eligible for a tax credit against any Chapter 11 tax liability. The credit amount is equal to five percent of the salary of the person hired under the provisions of this proposed tax credit. It is important to note that if an eligible employer’s withholding tax were offset by tax credit under this bill, this tax liability would automatically shift to the hired employees, who are currently exempt from the employer’s withholding amounts under the current Chapter 11 provisions of the Personal Income Tax. Based on feedback from data on a federal tax credit program, we estimate roughly 400 individuals could be hired under this program in a year with a possible General Revenue Fund loss ranging from $0.5 million and $1.0 million per year depending on wages paid beginning in FY2023.
Additional administrative costs incurred by the State Tax Department are $15,000 in FY2022 and $10,000 in FY2023 and thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
15,000 |
10,000 |
| Personal Services |
0 |
0 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, an employer, who hires a convicted felon who has been released from confinement, and who has or is eligible to have his or her conviction expunged, is eligible for a tax credit against any Chapter 11 tax liability. The credit amount is equal to five percent of the salary of the person hired under the provisions of this proposed tax credit. It is important to note that if an eligible employer’s withholding tax were offset by tax credit under this bill, this tax liability would automatically shift to the hired employees, who are currently exempt from the employer’s withholding amounts under the current Chapter 11 provisions of the Personal Income Tax. Based on feedback from data on a federal tax credit program, we estimate roughly 400 individuals could be hired under this program in a year with a possible General Revenue Fund loss ranging from $0.5 million and $1.0 million per year depending on wages paid beginning in FY2023.
Additional administrative costs incurred by the State Tax Department are $15,000 in FY2022 and $10,000 in FY2023 and thereafter.
Memorandum
The stated purpose of this bill is to provide a tax credit for an employer who hires a person who was convicted of a felony eligible for expungement.
This bill would be difficult to administer. The proposed tax credit is under Chapter 61 of the West Virginia Code which deals with crimes and punishment. The Tax Commissioner is unable to administer provisions outside Chapter 11 of the code unless specified. Further, articles 9 and 10 in Chapter 11 of the W.Va. Code give authority for the Tax Commissioner to administer, collect, and enforce the State tax law. Without inclusion of these two Chapter 11 articles in the bill, the proposed section cannot be administered by the Tax Commissioner.
The proposed tax credit may not exceed the “employer’s unadjusted tax liability.” This language is not used in the W.Va. tax code and is therefore ambiguous.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov