FISCAL NOTE
Date Requested: March 12, 2021
Time Requested: 11:28 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1309 |
Introduced |
HB3117 |
|
|---|
| CBD Subject: |
Economic Development |
|---|
|
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 deduction from the adjusted gross income for purposes of determining personal income tax for certain remote workers and telecommuters.
According to our interpretation, the bill provides for a decreasing modification against federal adjusted gross income for individuals who perform at least 25 percent of their work from home using electronic network tools and remote working technology and whose West Virginia adjusted gross income is less than $91,000. To determine if 25 percent of an individual’s work is done from home, the amount of work from home is calculated as a proportion of total hours worked. The amount of the decreasing modification is $2,500. The legislation does not limit eligibility to West Virginia residents, full-time workers, or to individuals working remotely for a business located in West Virginia. If passed, this legislation would be effective beginning in Tax Year 2022.
Per our interpretation, if passed, this legislation would reduce General Revenue Fund collections by between $7 million and $15 million in FY2023. The loss would gradually increase in subsequent fiscal years if the current growth trends in remote working continue.
Additional costs to the State Tax Department would be $20,000 in FY2022 and $15,000 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 |
20,000 |
15,000 |
| Personal Services |
0 |
15,000 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill provides for a decreasing modification against federal adjusted gross income for individuals who perform at least 25 percent of their work from home using electronic network tools and remote working technology and whose West Virginia adjusted gross income is less than $91,000. To determine if 25 percent of an individual’s work is done from home, the amount of work from home is calculated as a proportion of total hours worked. The amount of the decreasing modification is $2,500. The legislation does not limit eligibility to West Virginia residents, full-time workers, or to individuals working remotely for a business located in West Virginia. If passed, this legislation would be effective beginning in Tax Year 2022.
Per our interpretation, if passed, this legislation would reduce General Revenue Fund collections by between $7 million and $15 million in FY2023. The loss would gradually increase in subsequent fiscal years if the current growth trends in remote working continue.
Additional costs to the State Tax Department would be $20,000 in FY2022 and $15,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a deduction from the adjusted gross income for purposes of determining personal income tax for certain remote workers and telecommuters.
The bill is vague. It does not clearly define the $91,000 threshold and it does not define “electronic network tools” or “remote working technology.” The hours worked appear to be for all wage or earned income sources. It may be difficult to verify how much time was spent working from home in order to determine whether the 25 percent work from home requirement was met.
The proposed bill may violate the equal protection clause of the West Virginia Constitution.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov