FISCAL NOTE

Date Requested: February 01, 2022
Time Requested: 08:38 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2391 Introduced HB4465
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 eliminate the requirement that the apprenticeship training tax credit based be limited to wages paid to apprentices in the construction trades for tax years beginning on and after January 1, 2023. According to our interpretation, this bill would modify the current West Virginia Apprenticeship Training Tax Credit by expanding the credit beyond wages paid to apprentices in the construction trades and allowing any apprentice in the State to qualify. The amount of credit per apprentice would still be a maximum of $2,000 and the tax credit would be calculated by multiplying $2 per hour by the total number of hours worked during the tax year by an apprentice working for the participating taxpayer. Effective for tax years on or after January 1, 2023, for the employer to qualify for the proposed modified credit, the apprentice would need to be registered with the U.S Department of Labor, Office of Apprenticeship, and West Virginia State Office in the tax year that the apprentice and employer who participate in a qualified apprenticeship training program. According to the U.S. Department of Labor’s Office of Apprenticeship, in FY2020, the top five occupations for active apprentices were electrician, carpenter, construction craft laborer, plumber, and heavy truck driver. This modified tax credit would generate a greater loss to the General Revenue Fund compared to the existing Apprenticeship Training Credit, which costs roughly $300,000 per year. We cannot readily quantify the number of additional apprentices who would qualify for the modified credit and cannot determine the loss to the General Revenue Fund in FY2024 and subsequent fiscal years. However, based on available information, most tax credit claims will likely continue to be related to the construction industry. Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2024.



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 0
Personal Services 0 0 0
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 0


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


According to our interpretation, this bill would modify the current West Virginia Apprenticeship Training Tax Credit by expanding the credit beyond wages paid to apprentices in the construction trades and allowing any apprentice in the State to qualify. The amount of credit per apprentice would still be a maximum of $2,000 and the tax credit would be calculated by multiplying $2 per hour by the total number of hours worked during the tax year by an apprentice working for the participating taxpayer. Effective for tax years on or after January 1, 2023, for the employer to qualify for the proposed modified credit, the apprentice would need to be registered with the U.S Department of Labor, Office of Apprenticeship, and West Virginia State Office in the tax year that the apprentice and employer who participate in a qualified apprenticeship training program. According to the U.S. Department of Labor’s Office of Apprenticeship, in FY2020, the top five occupations for active apprentices were electrician, carpenter, construction craft laborer, plumber, and heavy truck driver. This modified tax credit would generate a greater loss to the General Revenue Fund compared to the existing Apprenticeship Training Credit, which costs roughly $300,000 per year. We cannot readily quantify the number of additional apprentices who would qualify for the modified credit and cannot determine the loss to the General Revenue Fund in FY2024 and subsequent fiscal years. However, based on available information, most tax credit claims will likely continue to be related to the construction industry. Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2024.



Memorandum


The stated purpose of this bill is to eliminate the requirement that the apprenticeship training tax credit based be limited to wages paid to apprentices in the construction trades for tax years beginning on and after January 1, 2023. There is some confusion in how this bill proposes to expand the existing Apprenticeship Training Tax Credit. The language in this bill leaves intact the section that explains the qualification of the credit, without deleting the limiting reference to apprentices employed in the construction trades. It might be easier to provide some reference in this bill to trades in addition to the construction industry, i.e., carpentry, plumbing, etc.



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