FISCAL NOTE

Date Requested: January 12, 2022
Time Requested: 03:39 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1332 Introduced HB4056
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 increase the amount of personal exemption for personal income tax from $2,000 to $4,000. Per our interpretation, the bill would increase the Personal Exemption from the Personal Income Tax from $2,000 to $4,000 for individuals and their dependents, for each married partner filing separately, and for the additional exemption allowed a surviving spouse. The bill would not affect the $500 reduction allowed for taxpayers who are claimed as dependents on another return. The bill states that the increased exemption would apply “with respect to any taxable year beginning on or after January 1, 1987”. Potentially, any return within the three-year statutory window could be amended to include the increased exemption. It is not possible to estimate the number of taxpayers who would file amended returns in response to the retroactive aspect of the bill. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections attributable to current year returns by a minimal amount in FY2022 and $125.0 million in FY2023 and subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2023 and $5,000 in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2022
Increase/Decrease
(use"-")
2023
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 25,000 5,000
Personal Services 0 5,000 5,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 20,000 0
2. Estimated Total Revenues 0 -125,000,000 -125,000,000


Explanation of above estimates (including long-range effect):


Per our interpretation, the bill would increase the Personal Exemption from the Personal Income Tax from $2,000 to $4,000 for individuals and their dependents, for each married partner filing separately, and for the additional exemption allowed a surviving spouse. The bill would not affect the $500 reduction allowed for taxpayers who are claimed as dependents on another return. The bill states that the increased exemption would apply “with respect to any taxable year beginning on or after January 1, 1987”. Potentially, any return within the three-year statutory window could be amended to include the increased exemption. It is not possible to estimate the number of taxpayers who would file amended returns in response to the retroactive aspect of the bill. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections attributable to current year returns by a minimal amount in FY2022 and $125.0 million in FY2023 and subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2023 and $5,000 in subsequent fiscal years.



Memorandum


The stated purpose of this bill is to increase the amount of the personal exemption for person income tax from $2,000 to $4,000. The title of the bill states that the bill amends §8-12-14 of the West Virginia Code. The actual code section addressed by the bill is §11-21-16. The bill states that the increased exemption would apply “with respect to any taxable year beginning on or after January 1, 1987,” which effectively makes the change in personal exemption amount retroactive and would result in an unknown number of amended returns.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov