FISCAL NOTE
Date Requested: March 09, 2021
Time Requested: 12:25 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2971 |
Introduced |
HB3012 |
|
|---|
| CBD Subject: |
Banking and Finance |
|---|
|
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 create the “First Time Home Buyer Savings Account.”
Per our interpretation, the proposed bill creates a decreasing Personal Income Tax modification for funds contributed by an account holder to a First-time Homebuyer Savings Account. The modification is limited to $5,000 for West Virginia residents who file an individual income tax return and $10,000 for West Virginia residents who file a joint income tax return. In addition, the modification is reduced for taxpayers with federal adjusted gross income of $150,000 or more for joint filers and $75,000 or more for other filers. The modification is phased out for joint filers with federal adjusted gross incomes of $200,000 or more and $100,000 or more for all other filers. The modification may be claimed for a period not to exceed 10 years with an aggregate total amount of account principal and earnings not to exceed $50,000. Withdrawals from the account which are not used to pay eligible costs related to the purchase of a single-family residence are subject to taxation and possible penalty. The proposed bill applies to tax years beginning on or after January 1, 2021, and before January 1, 2027. Funds contributed prior to January 1, 2026 continue to be exempt from taxation for the period and terms set forth in the bill. Based on our interpretation, passage of the proposed legislation would decrease General Revenue Fund collections by roughly $200,000 in FY2022 and subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $30,000 in FY2022 and $5,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
30,000 |
5,000 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
25,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-200,000 |
-200,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the proposed bill creates a decreasing Personal Income Tax modification for funds contributed by an account holder to a First-time Homebuyer Savings Account. The modification is limited to $5,000 for West Virginia residents who file an individual income tax return and $10,000 for West Virginia residents who file a joint income tax return. In addition, the modification is reduced for taxpayers with federal adjusted gross income of $150,000 or more for joint filers and $75,000 or more for other filers. The modification is phased out for joint filers with federal adjusted gross incomes of $200,000 or more and $100,000 or more for all other filers. The modification may be claimed for a period not to exceed 10 years with an aggregate total amount of account principal and earnings not to exceed $50,000. Withdrawals from the account which are not used to pay eligible costs related to the purchase of a single-family residence are subject to taxation and possible penalty. The proposed bill applies to tax years beginning on or after January 1, 2021, and before January 1, 2027. Funds contributed prior to January 1, 2026 continue to be exempt from taxation for the period and terms set forth in the bill. Based on our interpretation, passage of the proposed legislation would decrease General Revenue Fund collections by roughly $200,000 in FY2022 and subsequent fiscal years.
Additional administrative costs incurred by the Tax Department would be $30,000 in FY2022 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create the “First Time Home Buyer Savings Account.”
There are concerns with this bill. Misuse of terms otherwise used in the code may lead to confusion. This bill will be difficult to administer as written.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov