FISCAL NOTE
Date Requested: January 21, 2022
Time Requested: 04:05 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1281 |
Introduced |
HB4317 |
|
|---|
| 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 foster the donation of body organs through creation of tax credit for living and deceased organ donors, providing a tax credit to employees providing paid leave to an employee for organ donation, prohibiting termination of an employee for taking time away from employment to donate an organ, and prohibiting the denial, cancellation, or other discrimination in policies of life insurance, sickness, disability, or long-term care insurance due to the status of the insured as a living organ donor.
According to our interpretation, this bill would allow a Personal Income Tax credit to any living or deceased individual that donates an organ for the year that they donate and a Business Tax credit to employers who offer paid time off to donors. The tax credit for a living donor would be $5,000 and the tax credit for the estate of a deceased donor would be $10,000. There would be an additional tax credit equal to 50% of total net wages paid to an employee during the paid leave period used for purposes of donating a body organ for human organ transplantation. If the credit exceeds the tax liability, then it may be carried over to the next taxable year. Passage of this bill could result in available tax credits of roughly $1 million per year beginning in FY2024. However, the net amount of tax credits claimed against tax liability will likely be significantly less than $1 million. Most estates will not incur sufficient liabilities to fully use the tax credits.
Additional administrative costs incurred by the State Tax Department would be $35,000 for FY2024 and $5,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
5,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,000,000 |
-1,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would allow a Personal Income Tax credit to any living or deceased individual that donates an organ for the year that they donate and a Business Tax credit to employers who offer paid time off to donors. The tax credit for a living donor would be $5,000 and the tax credit for the estate of a deceased donor would be $10,000. There would be an additional tax credit equal to 50% of total net wages paid to an employee during the paid leave period used for purposes of donating a body organ for human organ transplantation. If the credit exceeds the tax liability, then it may be carried over to the next taxable year. Passage of this bill could result in available tax credits of roughly $1 million per year beginning in FY2024. However, the net amount of tax credits claimed against tax liability will likely be significantly less than $1 million. Most estates will not incur sufficient liabilities to fully use the tax credits.
Additional administrative costs incurred by the State Tax Department would be $35,000 for FY2024 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to foster the donation of body organs through creation of tax credit for living and deceased organ donors, providing a tax credit to employees providing paid leave to an employee for organ donation, prohibiting termination of an employee for taking time away from employment to donate an organ, and prohibiting the denial, cancellation, or other discrimination in policies of life insurance, sickness, disability, or long-term care insurance due to the status of the insured as a living organ donor.
The bill is silent as to the meaning of “next taxable year” in the case of a deceased donor. The carryover is available for just the one year, but there is no provision that any excess remaining after the carryover year is forfeited.
Given that an excess can be carried over, the language describing the amounts as “up to” $5,000 and “up to” $10,000 is confusing. Unless the credit in the first year is in a certain amount, rather than an uncertain “up to” number, there can arguably be no “excess” to be carried over.
The organ donation tax credit established under subsections (b) and (c) of the bill may not be claimed by a part-year resident or a nonresident of this state. The proposed bill may arguably violate Section 10 of Article III of the West Virginia Constitution, which is the state’s equal protection clause. The proposed bill does not provide a basis for allowing a tax benefit only to “full-time residents.”
Providing a tax credit for the “donation” of a human organ for transplant purposes may violate the federal National Organ Transplant Act, which prohibits the sale of human organs. The tax credit could be interpreted as payment for an organ.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov