FISCAL NOTE

Date Requested: February 12, 2019
Time Requested: 01:05 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2982 Introduced HB3081
CBD Subject:


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 expand the Good Samaritan Food Donation Act to include tax incentives for retail food distributors who make wholesome and fit grocery products available for nonprofit organizations who will distribute the food to individuals and families in need. According to our interpretation of this bill, retail food distributors that donate certain surplus food products to nonprofit organizations would be eligible for a tax credit offsetting Corporation Net Income Tax and Personal Income Tax liabilities. The proposed Good Samaritan Food Donation Tax credit is similar to the current State Farm to Food Bank tax credit, but it benefits retail food distributors rather than farmers with the maximum credit amount of $5,000 for each eligible taxpayer. The amount of the credit is 10 percent of the original retail sale value of the apparently fit grocery product or apparently wholesome food item. The cost of the current State Farm to Food Bank Credit is $10,000 per year. Passage of this bill would result in a loss to the General Revenue Fund of up to $1.0 million in FY2021 and in subsequent fiscal years if all eligible taxpayers choose to participate. Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2021 and in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 10,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 10,000
2. Estimated Total Revenues 0 0 -1,000,000


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


According to our interpretation of this bill, retail food distributors that donate certain surplus food products to nonprofit organizations would be eligible for a tax credit offsetting Corporation Net Income Tax and Personal Income Tax liabilities. The proposed Good Samaritan Food Donation Tax credit is like the current State Farm to Food Bank tax credit, but it benefits retail food distributors rather than farmers with the maximum credit amount of $5,000 for each eligible taxpayer. The amount of the credit is 10 percent of the original retail sale value of the apparently fit grocery product or apparently wholesome food item. The cost of the current State Farm to Food Bank Credit is $10,000 per year. Passage of this bill would result in a loss to the General Revenue Fund of up to $1.0 million in FY2021 and in subsequent fiscal years if all eligible taxpayers choose to participate. Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2021 and in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to expand the Good Samaritan Food Donation Act to include tax incentives for retail food distributors who make wholesome and fit grocery products available for nonprofit organizations who will distribute the food to individuals and families in need. There appears to be a title defect in that it states that “three new sections” are added, when, in fact, a new article is added which as three new sections. A receipt for the food product received is to be made and kept by both the retail food distributor and the nonprofit organization. These receipts will be retained to show proof of eligibility for the proposed tax credit. However, it not clear who creates this receipt. As there is no sales transaction, no corresponding receipt will be created. No documentation is required to establish a retail market value of any food donated. Neither is a third party appointed to determine the value of the food donated which in turn, determines the credit available. The process established in the West Virginia Farm to Food Bank Tax Credit may be useful in making these determinations. This bill as written creates a number of potential administrative issues for the Tax Department. Proposed W. Va. Code §11-13EE-1 refers to both “wholesale and retail food distributors” whereas W.Va. Code §55-7-3 only refers to retail food distributors.



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