FISCAL NOTE
Date Requested: March 02, 2021
Time Requested: 11:43 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2973 |
Introduced |
SB531 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
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 clarify that incomplete claims for refund are not filed and will not start interest accruing. Furthermore, to clarify that, if a taxpayer attempts to make one or more claims for refund or credit after the submission of a currently pending claim for refund or credit, they will be treated as incomplete and inaccurate claims, not properly filed if the subsequent claim, or claims, for refund or credit are for or from the same Taxpayer for the same tax period or part of the same tax period, or for the same transactions as those covered by the previously submitted claim.
According to our interpretation, this bill updates language related to overpayments and refunds and creates a new section which addresses overlapping, conflicting, and duplicate claims for refund. The bill provides that a lawful, mathematically correct, uncontested claim for refund shall include any interest due the taxpayer. A lawful, mathematically correct, uncontested claim for refund is one that is timely filed, signed by the appropriate taxpayer or taxpayers, mathematically correct, supported by all necessary documentation, and appears on its face to be correct.
In addition, the bill provides that if a taxpayer submits subsequent claim for refund or credit for the same tax period in which a claim is pending approval, the pending claim will be treated as incomplete and as an inaccurate claim not properly filed. The subsequently filed claim for refund or credit may also be treated as incomplete and as an inaccurate claim not properly filed where the previously submitted claim for refund or credit is still pending. The Tax Commissioner will issue a letter rejecting the claims. A taxpayer, who receives a rejection letter, may refile one comprehensive claim for refund covering the periods or transactions and resolving all overlapping, conflicting, incomplete, or duplicate claims. However, this does not toll the statute of limitations. If a claim for refund has been previously approved by the Tax Commissioner and a taxpayer subsequently files another claim for refund for the same period, the Tax Commissioner may require additional documentation to substantiate the claims. The 90-day determination period does not begin until the additional documentation has been submitted to the Tax Commissioner for review.
Per our interpretation, this bill clarifies and further defines the time period when a taxpayer who files a refund claim would be eligible to receive interest on an overpayment of tax. Over the calendar years 2017 through 2020, the amount paid by the Tax Department for refund interest varied from a low of $1.14 million to a high of $2.45 million. Over the same time frame, interest rates on overpayments, which are set annually, varied from 6.50 percent to 8.25 percent. Though it is not possible to estimate the impact for a given year, any reduction in the time period eligible for interest to be paid would reduce the amount of interest paid and thereby increase General Revenue Fund collections.
Additional administrative costs incurred by the Tax Department would be $15,000 in FY2022.
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 |
15,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill updates language related to overpayments and refunds and creates a new section which addresses overlapping, conflicting, and duplicate claims for refund. The bill provides that a lawful, mathematically correct, uncontested claim for refund shall include any interest due the taxpayer. A lawful, mathematically correct, uncontested claim for refund is one that is timely filed, signed by the appropriate taxpayer or taxpayers, mathematically correct, supported by all necessary documentation, and appears on its face to be correct.
In addition, the bill provides that if a taxpayer submits subsequent claim for refund or credit for the same tax period in which a claim is pending approval, the pending claim will be treated as incomplete and as an inaccurate claim not properly filed. The subsequently filed claim for refund or credit may also be treated as incomplete and as an inaccurate claim not properly filed where the previously submitted claim for refund or credit is still pending. The Tax Commissioner will issue a letter rejecting the claims. A taxpayer, who receives a rejection letter, may refile one comprehensive claim for refund covering the periods or transactions and resolving all overlapping, conflicting, incomplete, or duplicate claims. However, this does not toll the statute of limitations. If a claim for refund has been previously approved by the Tax Commissioner and a taxpayer subsequently files another claim for refund for the same period, the Tax Commissioner may require additional documentation to substantiate the claims. The 90-day determination period does not begin until the additional documentation has been submitted to the Tax Commissioner for review.
Per our interpretation, this bill clarifies and further defines the time period when a taxpayer who files a refund claim would be eligible to receive interest on an overpayment of tax. Over the calendar years 2017 through 2020, the amount paid by the Tax Department for refund interest varied from a low of $1.14 million to a high of $2.45 million. Over the same time frame, interest rates on overpayments, which are set annually, varied from 6.50 percent to 8.25 percent. Though it is not possible to estimate the impact for a given year, any reduction in the time period eligible for interest to be paid would reduce the amount of interest paid and thereby increase General Revenue Fund collections.
Additional administrative costs incurred by the Tax Department would be $15,000 in FY2022.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov