FISCAL NOTE
Date Requested: January 26, 2023
Time Requested: 02:46 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2961 |
Introduced |
HB3093 |
|
|---|
| 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 establish a tax credit for a corporate entity which pays moving expenses to bring an employee to West Virginia.
According to our interpretation, the bill would create a Corporation Net Income Tax credit for employers who pay for or reimburse employees’ moving expenses to move to a “new residence” in West Virginia. The tax credit would be equal to the total amount of funds expended and it could be used to offset up to 50 percent of the Corporation Net Income Tax liability of the taxpayer for the taxable year. The bill has no internal effective date.
Though the purpose of the bill indicates that it seeks to establish a tax credit for moving expenses “to bring an employee to West Virginia”, the language of the bill only states that the employee move to a “new residence in West Virginia,” Therefore, eligible moving expenses would include out-of-state moves, in-state moves, and even cross-town moves.
Based on our interpretation, the legislation, if passed, would decrease General Revenue Fund collections by up to $4.0 million per year beginning in FY2024.
Additional administrative costs incurred by the State Tax Department would be $15,000 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 |
15,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-3,800,000 |
-3,800,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill would create a Corporation Net Income Tax credit for employers who pay for or reimburse employees’ moving expenses to move to a “new residence” in West Virginia. The tax credit would be equal to the total amount of funds expended and it could be used to offset up to 50 percent of the Corporation Net Income Tax liability of the taxpayer for the taxable year. The bill has no internal effective date.
Though the purpose of the bill indicates that it seeks to establish a tax credit for moving expenses “to bring an employee to West Virginia”, the language of the bill only states that the employee move to a “new residence in West Virginia,” Therefore, eligible moving expenses would include out-of-state moves, in-state moves, and even cross-town moves.
Based on our interpretation, the legislation, if passed, would decrease General Revenue Fund collections by up to $4.0 million per year beginning in FY2024.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2024.
Memorandum
The stated purpose of this bill is to establish a tax credit for a corporate entity which pays moving expenses to bring an employee to West Virginia.
This credit is not applicable to pass-through entities, but business structures can be complex, and a corporation could be a partner. Whether a subsidiary or parent could claim the credit is unclear. Although it appears that the credit was intended to apply to employees relocating to West Virginia, the language is unclear. As written, the credit could apply to any employee who moves to a “new residence” in West Virginia.
The terms “new residence” and “net liability” are not defined. The bill does not address whether the credit is subject to carry-back or forward treatment. Though it is strongly implied that the credit is not refundable, this could be stated more clearly. It is also not clear whether the employer needs to provide an actual workspace in West Virginia, how long the employee must remain in West Virginia, whether the employee must become a West Virginia resident, or how this credit is to be claimed.
The bill contains no internal effective date.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov