FISCAL NOTE
Date Requested: February 22, 2021
Time Requested: 01:35 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2164 |
Introduced |
HB2637 |
|
|---|
| CBD Subject: |
|
|---|
|
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 purposed of this bill is to provide a tax credit for persons who graduate with an associate’s, bachelor’s, or graduate degree in the area of science, technology, engineering, mathematics, nursing, or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college and who thereafter continue to reside in this state.
According to our interpretation, the proposed bill would allow a tax credit for college graduates who complete a two-year, four-year, or post-graduate degree program in the specific areas mentioned above. The amount of the credit is equal to the amount of taxes paid for the year in which the taxpayer graduates and the next subsequent year, not to exceed $1,500 per year, and no more than $3,000 for the two years. In the third year, the taxpayer may apply a refund for the allowable credit not used in the first two years. The tax credit begins with tax years beginning after December 31, 2020 and ends on December 31, 2026. The State Tax Department does not have sufficient information to accurately estimate the revenue loss from this proposal, but the loss would be substantial.
Additional administrative costs incurred by the State Tax Department would be $75,000 in FY2022 and $45,000 in subsequent fiscal years through FY2027.
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 |
75,000 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
30,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would allow a tax credit for college graduates who complete a two-year, four-year, or post-graduate degree program in the specific areas mentioned above. The amount of the credit is equal to the amount of taxes paid for the year in which the taxpayer graduates and the next subsequent year, not to exceed $1,500 per year, and no more than $3,000 for the two years. In the third year, the taxpayer may apply a refund for the allowable credit not used in the first two years. The tax credit begins with tax years beginning after December 31, 2020 and ends on December 31, 2026. The State Tax Department does not have sufficient information to accurately estimate the revenue loss from this proposal, but the loss would be substantial.
Additional administrative costs incurred by the State Tax Department would be $75,000 in FY2022 and $45,000 in subsequent fiscal years through FY2027.
Memorandum
The stated purposed of this bill is to provide a tax credit for persons who graduate with an associate’s, bachelor’s, or graduate degree in the area of science, technology, engineering, mathematics, nursing, or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college and who thereafter continue to reside in this state.
An “eligible taxpayer” is defined in the bill as “a person who graduates with an associate’s degree, a bachelor’s degree, or a graduate degree in the area of science, technology, engineering, mathematics, nursing, or teaching from any regionally accredited in-state or higher education institution or any regionally accredited in-state community and technical college on or after January 1, 2021, and before January 1, 2026, and who thereafter continuously resides in this state from the date of graduation through the next subsequent year.” This definition does not include the “out-of-state higher education institution” mentioned in the bill’s purpose note.
The amount of the credit is determined by the person’s personal income tax “paid and otherwise unrefundable … for the taxable year in which the eligible taxpayer graduated and the next subsequent year, not to exceed $1,500 per year.” However, the credit cannot be applied against the eligible taxpayer’s personal income tax liability until year three (i.e., after the year of graduation and the subsequent year).
In the third year (the second year after graduation), the eligible taxpayer must apply for “a refund of the allowable tax credits” by April 30. In the title of subsection (c), the credit is identified as “refundable,” which usually means that the amount of the credit can exceed the amount of tax owed so that a taxpayer’s liability can be reduced to zero and they can get a “refund” on top of that. However, nothing in the rest of the bill indicates that this credit is refundable to that extent. If the eligible taxpayer fails to apply for the credit before April 30 of year three, then the credit is forfeited. It is unclear why April 30 is the date set for forfeiture, when personal income taxes are normally due by April 15 following the end of the tax year. No credit may be refunded for any personal income tax imposed after December 31, 2026.
Beginning on August 1, 2021, and August 1 of every year thereafter (not limited by the bill’s language to the life of the credit), the Tax Commissioner shall submit a report to the Governor, the President of the Senate and the Speaker of the House. The Tax Commissioner is authorized to propose legislative rules.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov