FISCAL NOTE
Date Requested: January 31, 2023
Time Requested: 04:29 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3306 |
Introduced |
SB524 |
|
|---|
| CBD Subject: |
Health |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources, 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 improve family planning services. The bill requires insurance coverage for specified sterilization procedures. The bill provides for a one-time tax credit for adoption expenses. The bill provides for early intervention services for newly adopted newborn children. The bill eliminates barriers to contraceptives. The bill requires the state health officer to prescribe self-administered hormonal contraceptive on statewide basis. The bill provides civil immunity to the state health officer. The bill requires local boards of health provide hormonal and nonhormonal contraceptives free of charge. The bill establishes a special revenue account. The bill sets out the purpose of the account. The bill provides for rulemaking. Finally, the bill makes technical corrections.
This fiscal note only addresses the personal income tax provisions within the bill.
Based on our interpretation, the legislation, if passed, would establish a one-time personal income tax credit of up to $8000 based on qualified expenses paid by the taxpayer in the process of an adoption. The tax credit is limited to $8000 per adoption proceeding and it is non-refundable. Though the credit is noted as being a “one-time tax credit’, wording in the legislation indicates that the credit could potentially be used in more than one tax year. The bill defines qualified adoption expenses as reasonable and necessary adoption fees, court costs, attorney fees and other expenses which are directly related to the legal adoption of an eligible child by the taxpayer. Adoptions of a child who is not a citizen or resident of the United States are not eligible for the tax credit. There is no internal effective date; therefore, per §11-10-5p, the amendment would be effective as of January 1, 2024.
According to our interpretation, the legislation, if passed, would result in an increase in General Revenue Fund collections of roughly $200,000 in FY2024 and in subsequent fiscal years. The wording of the proposed legislation restricts the ability of taxpayers to fully utilize the credit because the amount of credit is limited to qualified adoption expenses paid by the taxpayer up to $8000. The ability to utilize the credit is further constrained by the amount of tax liability of the taxpayer because the credit would no longer be refundable.
Additional administrative costs incurred by the State Tax Department would be $56,500 in FY2024 and $45,000 in subsequent fiscal years.
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 |
56,500 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,500 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
200,000 |
200,000 |
Explanation of above estimates (including long-range effect):
This fiscal note only addresses the personal income tax provisions within the bill.
Based on our interpretation, the legislation, if passed, would establish a one-time personal income tax credit of up to $8000 based on qualified expenses paid by the taxpayer in the process of an adoption. The tax credit is limited to $8000 per adoption proceeding and it is non-refundable. Though the credit is noted as being a “one-time tax credit’, wording in the legislation indicates that the credit could potentially be used in more than one tax year. The bill defines qualified adoption expenses as reasonable and necessary adoption fees, court costs, attorney fees and other expenses which are directly related to the legal adoption of an eligible child by the taxpayer. Adoptions of a child who is not a citizen or resident of the United States are not eligible for the tax credit. There is no internal effective date; therefore, per §11-10-5p, the amendment would be effective as of January 1, 2024.
According to our interpretation, the legislation, if passed, would result in an increase in General Revenue Fund collections of roughly $200,000 in FY2024 and in subsequent fiscal years. The wording of the proposed legislation restricts the ability of taxpayers to fully utilize the credit because the amount of credit is limited to qualified adoption expenses paid by the taxpayer up to $8000. The ability to utilize the credit is further constrained by the amount of tax liability of the taxpayer because the credit would no longer be refundable.
Additional administrative costs incurred by the State Tax Department would be $56,500 in FY2024 and $45,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to improve family planning services. The bill requires insurance coverage for specified sterilization procedures. The bill provides for a one-time tax credit for adoption expenses. The bill provides for early intervention services for newly adopted newborn children. The bill eliminates barriers to contraceptives. The bill requires the state health officer to prescribe self-administered hormonal contraceptive on statewide basis. The bill provides civil immunity to the state health officer. The bill requires local boards of health provide hormonal and nonhormonal contraceptives free of charge. The bill establishes a special revenue account. The bill sets out the purpose of the account. The bill provides for rulemaking. Finally, the bill makes technical corrections.
This summary is limited to the personal income tax implications of the bill.
The proposed legislation limits the tax credit to the higher of $8000 or the amount of “qualified adoption expenses”. The credit does not apply to adoptions of children who are not residents or citizens of the United States; children of spouses; adoptions in violation of state or federal law; surrogate parenting arrangements; adoption of one’s spouse’s child, or adoptions for which expenses are reimbursed by an employer or otherwise.
Subsection (b)(1) may be subject to multiple interpretations. It appears to mean that if one incurs expenses prior to the year of adoption, the credit can be claimed in the year the adoption was final. If expenses are incurred in the year of adoption or after, then on can claim the credit in the year the expense was incurred or paid. Subject to the $8,000 cap, this would mean that there could be multiple years in which a credit may be claimed: the year of the adoption and any other later year in which expenses were incurred.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov