FISCAL NOTE
Date Requested: October 04, 2024
Time Requested: 09:17 AM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 5012 |
Introduced |
HB226 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By; Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense
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 credit against the personal income tax in the amount of 50% of the allowable federal child and dependent care credit, effective for tax years beginning on or after January 1, 2024.
Per our interpretation, the bill would establish a nonrefundable personal income tax credit for persons who are allowed a federal tax credit for child and dependent care pursuant to 26 U.S.C. §21. The amount of credit allowed is 50 percent of the federal child and dependent care tax credit. The legislation would be effective for taxable years beginning on and after January 1, 2024.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue Fund collections of $4.2 million beginning in FY2025.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025, $26,500 in FY2026 and $10,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
45,000 |
10,000 |
| Personal Services |
0 |
45,000 |
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 |
-4,200,000 |
-4,200,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would establish a nonrefundable personal income tax credit for persons who are allowed a federal tax credit for child and dependent care pursuant to 26 U.S.C. §21. The amount of credit allowed is 50 percent of the federal child and dependent care tax credit. The legislation would be effective for taxable years beginning on and after January 1, 2024.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue Fund collections of $4.2 million beginning in FY2025.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025, $26,500 in FY2026 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a credit against the personal income tax in the amount of 50% of the allowable federal child and dependent care credit, effective for tax years beginning on or after January 1, 2024.
The bill seeks to establish a child and dependent care tax credit like the federal child and dependent care tax credit. The credit is nonrefundable.
The bill will require significant programming changes to the Tax Division’s computer system and tax forms. Generally, development of current tax year forms, instructions, schedules, and programming begins in July and August. This bill would require new forms, instructions, schedules, and programming which will be needed by January. All new forms and programming require testing prior to finalization. This could result in delays to availability of the forms to taxpayers and potentially delays in processing returns and the refunds attributable to those returns.
The Tax Division’s Gentax system will have to be reprogrammed to complete two distinct tasks. First, Gentax must be programmed to scan and incorporate paper returns with the associated changes and new schedules into the system. Second, Gentax must be programmed to download and incorporate electronically filed returns with the associated changes and new schedules.
Additionally, all programming changes would need to be shared with vendors providing “Free File” options as well as those selling tax preparation software so they can make their own programming changes. Testing of those programs (and forms) must be done with the Tax Division and approved.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov