FISCAL NOTE
Date Requested: January 17, 2020
Time Requested: 12:12 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2014 |
Introduced |
SB530 |
|
|---|
| 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 modify requirements related to the taxation of aircraft, exempt aircraft sold in this state and removed within 60 days from sales tax; provide for conditions for exemption; provide an exemption from the consumer sales and service tax for purchases of certain services and tangible personal property sold for the repair, remodeling and maintenance of aircraft; specify a method for claiming exemption; and establish the effective date for the changes to the section.
According to our interpretation, the proposed legislation would add an exemption from Consumer Sales Tax for aircraft sold in this state which are registered outside of the state as long as the aircraft is removed from this state within 60 days of purchase. In addition, the proposed legislation would expand the current Consumer Sales Tax exemption for purchases of services and tangible person property sold for the repair, remodeling, and maintenance of aircraft to include all aircraft instead of only aircraft operated under a fractional ownership program. The changes would apply to all sales made on or after July 1, 2020. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections by $1.7 million in FY2021 and $1.8 million in FY2022.
Additional administrative costs incurred by the Tax Department would be $5,000 in FY2021 and $1,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
5,000 |
1,000 |
| Personal Services |
0 |
5,000 |
1,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,700,000 |
-1,800,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed legislation would add an exemption from Consumer Sales Tax for aircraft sold in this state which are registered outside of the state as long as the aircraft is removed from this state within 60 days of purchase. In addition, the proposed legislation would expand the current Consumer Sales Tax exemption for purchases of services and tangible person property sold for the repair, remodeling, and maintenance of aircraft to include all aircraft instead of only aircraft operated under a fractional ownership program. The changes would apply to all sales made on or after July 1, 2020. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections by $1.7 million in FY2021 and $1.8 million in FY2022.
Additional administrative costs incurred by the Tax Department would be $5,000 in FY2021 and $1,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to modify requirements related to the taxation of aircraft, exempt aircraft sold in this state and removed within 60 days from sales tax; provide for conditions for exemption; provide an exemption from the consumer sales and service tax for purchases of certain services and tangible personal property sold for the repair, remodeling and maintenance of aircraft; specify a method for claiming exemption; and establish the effective date for the changes to the section.
The bill creates a provision under which sales and use taxes are not imposed on the sale of an aircraft provided the buyer flies the plane out of the state within 60 days. The bill does not include language which limits the amount of time the purchaser’s aircraft can be in the state for the first year after purchase. The current language would allow the purchaser to fly out of the state, return immediately and avoid the sales tax.
The bill added language in subdivision (a)(19) of W.Va. Code §11-15-9, but the added language is incorrect. The proposed added language, “of this code”, would be correct if the statutory citation was to state law; but the statute cited is federal, so “of this code” becomes a misnomer and it should not be added.
A title defect may be found in the fact that the title fails to mention the elimination of the “fractional ownership program” contained in W.Va. Code §11-15-9p. The bill’s title is misleading in that it purports to “provide an exemption from the consumer sales and service tax for purchases of certain services and tangible personal property sold for the repair, remodeling and maintenance of aircraft” when the exemption already exists.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov