FISCAL NOTE

Date Requested: March 08, 2021
Time Requested: 10:12 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2915 Introduced SB575
CBD Subject: Taxation


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 create a tax credit for individuals who purchase firearms safety equipment meant to prevent an unauthorized use or accidental discharge of a firearm. According to our interpretation, the proposed bill would create a non-refundable Personal Income Tax credit for individuals who purchase firearms safety equipment. The credit is effective for tax years beginning January 1, 2021, and the maximum amount of credit is $250 per person. The amount of credit is not based on costs incurred for the firearms safety equipment. Therefore, the amount of credit claimed up to the maximum amount would only be limited by the taxpayer’s tax liability. As written, a taxpayer and each person in their household could earn and claim the credit in successive years. Based on our interpretation, the passage of the proposed legislation would create a loss in General Revenue collections of $1.2 million in FY2022 and in subsequent fiscal years. Additional administrative cost incurred by the State Tax Department are expected to be $25,000 in FY2022 and $20,000 in FY 2023 and 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 25,000 20,000
Personal Services 0 20,000 20,000
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 -1,200,000 -1,200,000


Explanation of above estimates (including long-range effect):


According to our interpretation, the proposed bill would create a non-refundable Personal Income Tax credit for individuals who purchase firearms safety equipment. The credit is effective for tax years beginning January 1, 2021, and the maximum amount of credit is $250 per person. The amount of credit is not based on costs incurred for the firearms safety equipment. Therefore, the amount of credit claimed up to the maximum amount would only be limited by the taxpayer’s tax liability. As written, a taxpayer and each person in their household could earn and claim the credit in successive years. Based on our interpretation, the passage of the proposed legislation would create a loss in General Revenue collections of $1.2 million in FY2022 and in subsequent fiscal years. Additional administrative cost incurred by the State Tax Department are expected to be $25,000 in FY2022 and $20,000 in FY 2023 and subsequent fiscal years.



Memorandum


The stated purpose of this bill is to create a tax credit for individuals who purchase firearms safety equipment meant to prevent an unauthorized use or accidental discharge of a firearm. The bill allows a “tax credit” not to exceed $250 for the purchase of firearm safety equipment. Any remaining credit is forfeited. “Firearm safety equipment” means a safe or other storage device, trigger lock, chamber lock, cable lock, or other equipment to safeguard from the unauthorized use or accidental discharge of a firearm. The credit is allowed for tax years beginning on or after January 1, 2021. There is a reference to “annual credit allowance.” It is arguable that the credit may be taken annually. The credit is not limited to the amount spent on the equipment other than the $250 ceiling. Though the new section is in Article 21, “Personal income tax,” the bill does not say the credit is against the personal income tax liability of the person claiming the credit. As written, any person could claim this credit for multiple years.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov