FISCAL NOTE
Date Requested: January 23, 2020
Time Requested: 03:47 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2771 |
Introduced |
HB2156 |
|
|---|
| CBD Subject: |
Actions, Suits and Liens |
|---|
|
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 the bill is to create a tax credit for improving facades in historic districts. The bill provides that individuals and corporations are entitled to a 25 percent tax credit of the replacement cost of a historic façade.
According to our interpretation, passage of this bill would result in the creation of two separate tax preference provisions for the costs of improvement of a façade of a building with no historic value which is located within a historic district. For a Taxpayer subject to Personal Income Tax, the tax preference is a decreasing modification to income equal to 25 percent of the replacement cost of a façade of a building with no historic value. As a decreasing modification, a maximum tax benefit would be 6.5 percent of 25 percent of costs, or 1.625 percent of costs. For a Taxpayer subject to the Corporation Net Income Tax, the tax preference would equal 25 percent of the cost. The proposed bill fails to outline any standards or guidelines as to qualified facades or qualified costs other than a non-historic building location in a historic district. The local county commission or city council would decide what buildings qualify for State tax relief. By contract, qualified historic rehabilitation costs must be approved by the State Historic Preservation Office according to federal
rehabilitation guidelines. We are unable to accurately estimate the cost of this bill given the subjective standards for qualification for State tax benefits.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2022 and $10,000 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 |
0 |
10,000 |
| Personal Services |
0 |
0 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would result in the creation of two separate tax preference provisions for the costs of improvement of a façade of a building with no historic value which is located within a historic district. For a Taxpayer subject to Personal Income Tax, the tax preference is a decreasing modification to income equal to 25 percent of the replacement cost of a façade of a building with no historic value. As a decreasing modification, a maximum tax benefit would be 6.5 percent of 25 percent of costs, or 1.625 percent of costs. For a Taxpayer subject to the Corporation Net Income Tax, the tax preference would equal 25 percent of the cost. The proposed bill fails to outline any standards or guidelines as to qualified facades or qualified costs other than a non-historic building location in a historic district. The local county commission or city council would decide what buildings qualify for State tax relief. By contract, qualified historic rehabilitation costs must be approved by the State Historic Preservation Office according to federal
rehabilitation guidelines. We are unable to accurately estimate the cost of this bill given the subjective standards for qualification for State tax benefits.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2022 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of the bill is to create a tax credit for improving facades in historic districts. The bill provides that individuals and corporations are entitled to a 25 percent tax credit of the replacement cost of a historic façade.
There are concerns about the language of the bill, and a defect in the bill’s title.
A primary concern with this bill is that it relies on subjective standards and provides minimal guidance as to their application. This bill does not specify how county commissions or municipalities would determine whether a non-historic façade replacement would complement the facades of historic buildings within a State historic district. This bill shifts the historic district decision making authority from the WV Department of Arts, Culture and History to the counties and municipalities.
The title of the bill refers only to “creating a tax credit,” while the language of the bill creates a modification reducing the adjusted gross income for Personal Income Tax purposes, and a tax credit for purposes of the Corporation Net Income Tax.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov