FISCAL NOTE

Date Requested: February 24, 2016
Time Requested: 10:46 AM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2882 Introduced SB672
CBD Subject: Legal Gaming, Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to clarify that a lottery prize is a West Virginia source income for a nonresident. The bill provides that lottery winnings are not compensation for personal services performed within the state by nonresidents. Based on our interpretation, this bill would tax impose a withholding requirement on nonresidents for lottery winnings in excess of $5,000 as source income in West Virginia. Based on available information, it is estimated that the proposed bill would generate roughly $25,000 in Personal Income Tax revenue for the first year of implementation. However, revenue collection trends will be volatile over time due to the nature of the income source. Additional administrative costs incurred by the State Tax Department are expected to be $1,500 in FY2017. There are no additional administrative costs expected for the remainder of FY2016 or for any years following FY2017.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 1,500 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 1,500 0
2. Estimated Total Revenues 0 0 25,000


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


Based on our interpretation, this bill would tax impose a withholding requirement on nonresidents for lottery winnings in excess of $5,000 as source income in West Virginia. Based on available information, it is estimated that the proposed bill would generate roughly $25,000 in Personal Income Tax revenue for the first year of implementation. However, revenue collection trends will be volatile over time due to the nature of the income source. Additional administrative costs incurred by the State Tax Department are expected to be $1,500 in FY2017. There are no additional administrative costs expected for the remainder of FY2016 or for any years following FY2017.



Memorandum






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