FISCAL NOTE
Date Requested: January 23, 2023
Time Requested: 04:24 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3142 |
Introduced |
SB441 |
|
|---|
| 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 repeal the additional one and one-half percent interest rate for underpayments after December 31, 2023.
According to our interpretation, beginning in calendar year 2024, the additional one and one-half percent interest rate for tax underpayments would be eliminated. The current interest rate for tax underpayments is 11.5%. Removing the additional one and one-half percent interest rate for tax underpayments would reduce General Revenue Fund collections by nearly $0.8 million in FY2024 and $1.6 million per year in FY2025 and thereafter in comparison to current law.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2024.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
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 |
-800,000 |
-1,600,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, beginning in calendar year 2024, the additional one and one-half percent interest rate for tax underpayments would be eliminated. The current interest rate for tax underpayments is 11.5%. Removing the additional one and one-half percent interest rate for tax underpayments would reduce General Revenue Fund collections by nearly $0.8 million in FY2024 and $1.6 million per year in FY2025 and thereafter in comparison to current law.
Due to changes in interest rate policy by the Federal Reserve, the total interest rate on tax underpayments is up by 375 basis points this year. The change in interest rates should increase yield to the State Treasury by roughly $4.0 million per year of effect. The proposed change contemplated in this bill would reduce the impact of these higher interest rates by a factor of 40 percent.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2024.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov