FISCAL NOTE
Date Requested: January 29, 2020
Time Requested: 02:58 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2231 |
Introduced |
HB4584 |
|
|---|
| 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 provide a tax exemption for income from a qualified retirement plan used to pay for long-term care.
The proposed bill would create a decreasing modification to federal adjusted gross income for any payment from a qualified retirement plan during the taxable year used to pay for long-term care at home or in a long-term care facility for either the taxpayer, the taxpayer’s spouse or a qualified dependent. The modification is only allowed to the extent the amount is not included as a deduction when arriving at the taxpayer’s federal adjusted gross income for the taxable year in which the payment is made. The modification is capped at $100,000 per taxpayer per year and would be effective for tax years beginning on and after January 1, 2020. Based on our interpretation, the passage of the proposed legislation would decrease General Revenue Fund collections by $400,000 in FY2021 and in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $20,000 in FY2021 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 |
20,000 |
10,000 |
| Personal Services |
0 |
10,000 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-400,000 |
-400,000 |
Explanation of above estimates (including long-range effect):
The proposed bill would create a decreasing modification to federal adjusted gross income for any payment from a qualified retirement plan during the taxable year used to pay for long-term care at home or in a long-term care facility for either the taxpayer, the taxpayer’s spouse or a qualified dependent. The modification is only allowed to the extent the amount is not included as a deduction when arriving at the taxpayer’s federal adjusted gross income for the taxable year in which the payment is made. The modification is capped at $100,000 per taxpayer per year and would be effective for tax years beginning on and after January 1, 2020. Based on our interpretation, the passage of the proposed legislation would decrease General Revenue Fund collections by $400,000 in FY2021 and in subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $20,000 in FY2021 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a tax exemption for income from a qualified retirement plan used to pay for long-term care.
The title of the bill and the title of the section use the term “exemption”, though the text of the section itself uses the correct language by providing a reducing modification.
The bill refers to a “401-K”. The correct designation should be 26 U.S.C. §401(k). The phrase “qualified retirement plan” should be defined so that it is clear whether an Individual Retirement Account (IRA) is included.
The bill purports to create a section 12j in article 21 of chapter 11. Section 12j already exists as relating to the ABLE Act. Sections up to 12l have been used.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov