FISCAL NOTE
Date Requested: March 14, 2025
Time Requested: 03:00 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3462 |
Introduced |
HB2012 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses, Decreases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The stated purpose of this bill is to terminate accelerated payment requirements for consumer sales and use as well as withholding tax, while giving taxpayers sufficient notice.
According to our interpretation, the bill would eliminate the current requirement for accelerated payments by Taxpayers subject to the Consumer Sales and Service and Use Tax or the Withholding Tax. Current code requires taxpayers subject to the Consumer Sales and Service and Use Tax whose average monthly payments during the previous calendar year exceeded $100,000 to remit the tax attributable to the first fifteen days of June each year by June 20th. Taxpayers subject to the Withholding Tax whose average payment per calendar month for the preceding calendar year exceeded $100,000 are required to submit the tax attributable to the first 15 days of June each year by June 23rd. The bill effectuates the change by adding language to the relevant code section which, upon passage, removes the force or effect of the language requiring the accelerated payments.
Based on our interpretation, the proposed legislation, if passed, would cause a one-time shift in General Revenue Fund collections of roughly $50 million from FY2025. Revenue collections for FY2025 should be sufficient to accommodate the one-time shift of collections from June 2025 to July of FY2026. The estimated breakdown between the taxes would be $39 million in Consumer Sales and Service and Use Tax and $11 million in Withholding Tax.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025. There would be a savings of $5,000 per year 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 |
16,500 |
-5,000 |
-5,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
16,500 |
-5,000 |
-5,000 |
| 2. Estimated Total Revenues |
-50,000,000 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
According to our interpretation, the bill would eliminate the current requirement for accelerated payments by Taxpayers subject to the Consumer Sales and Service and Use Tax or the Withholding Tax. Current code requires taxpayers subject to the Consumer Sales and Service and Use Tax whose average monthly payments during the previous calendar year exceeded $100,000 to remit the tax attributable to the first fifteen days of June each year by June 20th. Taxpayers subject to the Withholding Tax whose average payment per calendar month for the preceding calendar year exceeded $100,000 are required to submit the tax attributable to the first 15 days of June each year by June 23rd. The bill effectuates the change by adding language to the relevant code section which, upon passage, removes the force or effect of the language requiring the accelerated payments.
Based on our interpretation, the proposed legislation, if passed, would cause a one-time loss in General Revenue Fund collections of roughly $50 million from FY2025. Revenue collections for FY2025 should be sufficient to accommodate the one-time shift of collections from June 2025 to July of FY2026. The estimated breakdown between the taxes would be a loss of $39 in Consumer Sales and Service and Use Tax and $11 million in Withholding Tax. Many of the taxpayers currently subject to the accelerated payment requirements use complex accounting systems.
Under current law, the acceleration of funds from July back to June tends to increase in magnitude from one year to the next. July revenues are depressed more over time with less funds available to pay July-related obligations, even after the State borrows funds from the Revenue Shortfall Reserve Fund for necessary early year cash flow needs.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025. There would be a savings of $5,000 per year in subsequent fiscal years.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov