FISCAL NOTE
Date Requested: February 01, 2022
Time Requested: 08:37 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1181 |
Introduced |
HB4457 |
|
|---|
| 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 create an incentive for employers to hire people who are pursuing a formal program of recovery from substance abuse issues by allowing the employer to claim a tax credit for employing eligible individuals, with limits based upon the employer’s total number of employees overall.
According to our interpretation, the proposed bill provides Personal Income Tax and Corporation Net Income Tax credits for eligible taxpayers who hire qualified individuals participating in a program of substance abuse recovery. A certified employer may claim a credit each year for up to seven eligible employees, depending on the total number of employees in the business entity. The maximum credit allowed would be $2,000 per eligible individual hired and retained in employment. Absent an effective date in the bill, this credit would be available for tax years beginning on or after January 1, 2023. The Tax Department cannot accurately estimate the number of eligible businesses that would qualify for this tax credit nor the amount of tax credit claimed in any given year.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2022 and $10,000 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 |
15,000 |
10,000 |
10,000 |
| Personal Services |
0 |
10,000 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
15,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill provides Personal Income Tax and Corporation Net Income Tax credits for eligible taxpayers who hire qualified individuals participating in a program of substance abuse recovery. A certified employer may claim a credit each year for up to seven eligible employees, depending on the total number of employees in the business entity. The maximum credit allowed would be $2,000 per eligible individual hired and retained in employment. Absent an effective date in the bill, this credit would be available for tax years beginning on or after January 1, 2023. The Tax Department cannot accurately estimate the number of eligible businesses that would qualify for this tax credit nor the amount of tax credit claimed in any given year. The proposed bill is similar to a bill enacted by the State of New York for the tax year beginning January 1, 2020, which capped the size of its program at $2 million per year.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2022 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create an incentive for employers to hire people who are pursuing a formal program of recovery from substance abuse issues by allowing the employer to claim a tax credit for employing eligible individuals, with limits based upon the employer’s total number of employees overall.
The bill purports to create a credit against the personal or corporate income tax liability of eligible taxpayers who hire qualified individuals participating in a program of substance abuse recovery. However, the definition of “eligible taxpayer” incorrectly refers back to “this article” (i.e., proposed article 13MM) rather than article 21 (Personal Income Tax) or article 24 (Corporation Net Income Tax).
The bill fails to include in its definition of “eligible taxpayer” the various entities identifying a “taxpayer” (i.e., person, firm, partnership, corporation).
The bill gives the State Tax Commissioner authority in subsection (f) to prescribe the form required to claim the credit and access to information necessary to monitor compliance with program eligibility requirements, but it fails to specify what government entity administers the program.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov