FISCAL NOTE
Date Requested: February 19, 2021
Time Requested: 11:26 AM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2124 |
Introduced |
HB2618 |
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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 expand the Good Samaritan Food Donation Act to include tax incentives for retail food distributors who make wholesome and fit grocery products available for nonprofit organizations who will distribute the food to individuals and families in need.
According to our interpretation of this bill, retail food distributors that donate certain surplus food products to nonprofit organizations would be eligible for a tax credit offsetting Corporation Net Income Tax and Personal Income Tax liabilities. The proposed Good Samaritan Food Donation Tax credit is similar to the current State Farm to Food Bank tax credit, but it benefits retail food distributors rather than farmers with the maximum credit amount of $5,000 for each eligible taxpayer. The amount of the credit is 10 percent of the original retail sale value of the apparently fit grocery product or apparently wholesome food item. The cost of the current State Farm to Food Bank Credit is $10,000 per year. Passage of this bill would result in a loss to the General Revenue Fund of up to $1.0 million in FY2023 and in subsequent fiscal years if all eligible taxpayers choose to participate.
Additional administrative costs incurred by the State Tax Department would be $71,500 in FY2023 and $45,000 in subsequent fiscal years.
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 |
0 |
45,000 |
| Personal Services |
0 |
0 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-1,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, retail food distributors that donate certain surplus food products to nonprofit organizations would be eligible for a tax credit offsetting Corporation Net Income Tax and Personal Income Tax liabilities. The proposed Good Samaritan Food Donation Tax credit is similar to the current State Farm to Food Bank tax credit, but it benefits retail food distributors rather than farmers with the maximum credit amount of $5,000 for each eligible taxpayer. The amount of the credit is 10 percent of the original retail sale value of the apparently fit grocery product or apparently wholesome food item. The cost of the current State Farm to Food Bank Credit is $10,000 per year. Passage of this bill would result in a loss to the General Revenue Fund of up to $1.0 million in FY2023 and in subsequent fiscal years if all eligible taxpayers choose to participate.
Additional administrative costs incurred by the State Tax Department would be $71,500 in FY2023 and $45,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to expand the Good Samaritan Food Donation Act to include tax incentives for retail food distributors who make wholesome and fit grocery products available for nonprofit organizations who will distribute the food to individuals and families in need.
The title of the bill does not include personal income tax as a tax against which the tax credit is established, although it does include it as a tax against which the credit can be applied. There is also no maximum allowance on the total dollar amount of tax credits that may be issued in a given tax year for all eligible taxpayers seeking to claim this proposed credit.
A receipt for the appraised amount of food product received is to be made and kept by both the retail food distributor and the nonprofit organization. These receipts will be retained to show proof of eligibility for this proposed tax credit. However, it is not clear who created this “receipt.: As there is no “sales” transaction, no corresponding receipt will be created. No documentation is required to establish a retail market value of any food donated. Neither is a third party appointed to determine the value of the food donated which in turn determines the credit available.
As drafted, the bill creates several potential administrative issues for the Tax Department. For example, sometimes this bill refers only to retail distributors as potential eligible tax credit recipients whereas in other sections of this bill there is reference to both wholesale distributors and retail distributors. The last sentence of subsection (c) incorrectly refers to. W.Va. Code 11-13EE-1, which is the Coal Severance Tax rebate, as the proposed authority allowing non-profit organizations to claim a portion of the value of the food donated.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov