FISCAL NOTE
Date Requested: January 11, 2023
Time Requested: 10:19 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1060 |
Introduced |
HB2483 |
|
|---|
| 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 the bill is to create a tax credit for improving facades in historic districts. The bill provides that individuals and corporations are entitled to a 25 percent tax credit of the replacement cost of a historic façade.
According to our interpretation, passage of this bill would result in the creation of two separate tax preference provisions for the costs of improvement of a façade of a building with no historic value which is located within a historic district. For a Taxpayer subject to Personal Income Tax, the tax preference is a decreasing modification to income equal to 25 percent of the replacement cost of a façade of a building with no historic value. As a decreasing modification, a maximum tax benefit would be 6.5 percent of 25 percent of costs, or 1.625 percent of costs. For a Taxpayer subject to the Corporation Net Income Tax, the tax preference would equal 25 percent of the cost. The proposed bill fails to outline any standards or guidelines as to qualified facades or qualified costs other than a non-historic building location in a historic district. The local county commission or city council would decide what buildings qualify for State tax relief. By contrast, qualified historic rehabilitation costs must be approved by the State Historic Preservation Office according to federal
rehabilitation guidelines. We are unable to accurately estimate the cost of this bill given the subjective standards for qualification for State tax benefits.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would result in the creation of two separate tax preference provisions for the costs of improvement of a façade of a building with no historic value which is located within a historic district. For a Taxpayer subject to Personal Income Tax, the tax preference is a decreasing modification to income equal to 25 percent of the replacement cost of a façade of a building with no historic value. As a decreasing modification, a maximum tax benefit would be 6.5 percent of 25 percent of costs, or 1.625 percent of costs. For a Taxpayer subject to the Corporation Net Income Tax, the tax preference would equal 25 percent of the cost. The proposed bill fails to outline any standards or guidelines as to qualified facades or qualified costs other than a non-historic building location in a historic district. The local county commission or city council would decide what buildings qualify for State tax relief. By contrast, qualified historic rehabilitation costs must be approved by the State Historic Preservation Office according to federal rehabilitation guidelines. We are unable to accurately estimate the cost of this bill given the subjective standards for qualification for State tax benefits.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Memorandum
The stated purpose of this bill is to create a tax credit for improving facades in historic districts. The bill provides that individuals and corporations are entitled to a 25 percent tax credit of the replacement cost of a historic façade.
The title of this bill is defective. It incorrectly characterizes a tax preference for individuals as a tax credit, rather than as a Schedule M decreasing modification of federal adjusted gross income for West Virginia Personal Income Tax. This bill also does not address which individual or entity is charged with the responsibility of approving the completed historic façade replacement.
Based upon the definition of “certified historic structure” in the current Historic Rehabilitated Building Tax credits per W.Va. Code §11-21-8g, a taxpayer could be considered eligible for both the Personal Income Tax modification in the bill and the existing credits.
This bill does not address whether the proposed decreasing modification or credit is subject to carryforward or carryback. It is also not known whether the proposed credit is transferable. Further, effective date of the proposed credit, sunset date, the procedure to claim the decreasing modification or credit, record keeping requirements, existence of any cap on the proposed credit, oversight by other agencies other than the Tax Commissioner, or whether the Tax Commissioner has any rulemaking authority are all silent in this bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov