FISCAL NOTE
Date Requested: March 03, 2025
Time Requested: 03:59 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3534 |
Introduced |
SB639 |
|
|---|
| 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 small business owners a tax credit for the time expended complying with state laws and regulations.
This bill would create a tax credit for businesses that have annual gross receipts of less than $2 million. The amount of the credit would be $2,000 for eligible businesses. If a business earns less than $50,000 per year, the credit would be reduced to $500 for that fiscal year. Though this bill defines a small business as that which earns less than $2 million of gross receipts, on an annual basis, the Small Business Administration (SBA) defines this as a business that employs fewer than 500 individuals. According to the SBA’s definition, there are 115,224 small businesses headquartered in West Virginia as of 2024. There was no data readily available to determine the number of businesses in West Virginia that have annual gross receipts of less than $2 million. This bill does not specify the tax type against which this credit shall be taken. Because of this lack of data, the ambiguity of the impacted tax type, and the disconnect between the definitions of a small business, we cannot reasonably estimate the revenue impact of the passage of this bill.
Additional administrative costs to the Tax Division would be $27,500 in FY 2026 and $11,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
27,500 |
11,000 |
| Personal Services |
0 |
11,000 |
11,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would create a tax credit for businesses that have annual gross receipts of less than $2 million. The amount of the credit would be $2,000 for eligible businesses. If a business earns less than $50,000 per year, the credit would be reduced to $500 for that fiscal year. Though this bill defines a small business as that which earns less than $2 million of gross receipts, on an annual basis, the Small Business Administration (SBA) defines this as a business that employs fewer than 500 individuals. According to the SBA’s definition, there are 115,224 small businesses headquartered in West Virginia as of 2024. There was no data readily available to determine the number of businesses in West Virginia that have annual gross receipts of less than $2 million. This bill does not specify the tax type against which this credit shall be taken. Because of this lack of data, the ambiguity of the impacted tax type, and the disconnect between the definitions of a small business, we cannot reasonably estimate the revenue impact of the passage of this bill.
Additional administrative costs to the Tax Division would be $27,500 in FY 2026 and $11,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide small business owners a tax credit for the time expended complying with state laws and regulations.
In §11-13NN-1(d), the bill does not specify for what years the credit may be taken while §11-13NN-1(e) provides that the credit is applicable to “that fiscal year.” A “fiscal year” usually refers to the state’s fiscal year, which runs from July 1, through June 30 of the following calendar year. A taxable year usually runs from January 1 of a calendar through December 31 of the same calendar year. The bill should specify which years to which the credits can be applied.
While the bill provides for an adjustment for inflation under §11-13NN-1(f), the language is too vague. The term “current rate of inflation” can mean many different things, and the bill fails to provide a clear definition.
The bill does not include an internal effective date.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov