FISCAL NOTE

Date Requested: January 27, 2016
Time Requested: 02:55 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1788 Introduced SB399
CBD Subject: Agriculture, Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to establish a credit against personal and corporate income taxes for farmers who donate edible agricultural products to food banks and other nonprofit food programs serving needy persons. According to our interpretation, passage of this bill would result in an annual revenue decrease of less than $10,000. This estimate is derived from actual experience in other states with a similar tax preference. The amount of this proposed tax credit is equal to ten percent of the value of the donated edible agricultural products by farmers, but does not exceed $2,500 during a taxable year or the total Personal Income Tax or Corporation Net Income Tax liability, whichever is less, in the year the donation is made. If the amount of the credit exceeds the taxpayer’s Personal or Corporation Net Income Tax liability for the taxable year, the amount which exceeds the tax liability may be carried over up to four taxable years and applied as a credit against the tax liability of the taxpayer. Farmers already receive a federal and state deduction for such donations on their federal Schedule F. However, farmers tend to generate little or no net income from Schedule F. The proposed tax credit would generally offset income taxes generated by farmers attributable to activities outside of farming. Only 1.9 percent of all income tax returns filed in West Virginia are filed by famers each year. Additional administrative costs incurred by the State Tax Department would be $19,250 in FY2018 and thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 19,250
Personal Services 0 0 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 9,250
2. Estimated Total Revenues 0 0 0


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


According to our interpretation, passage of this bill would result in an annual revenue decrease of less than $10,000. This estimate is derived from actual experience in other states with a similar tax preference. The amount of this proposed tax credit is equal to ten percent of the value of the donated edible agricultural products by farmers, but does not exceed $2,500 during a taxable year or the total Personal Income Tax or Corporation Net Income Tax liability, whichever is less, in the year the donation is made. If the amount of the credit exceeds the taxpayer’s Personal or Corporation Net Income Tax liability for the taxable year, the amount which exceeds the tax liability may be carried over up to four taxable years and applied as a credit against the tax liability of the taxpayer. Farmers already receive a federal and state deduction for such donations on their federal Schedule F. However, farmers tend to generate little or no net income from Schedule F. The proposed tax credit would generally offset income taxes generated by farmers attributable to activities outside of farming. Only 1.9 percent of all income tax returns filed in West Virginia are filed by famers each year. Additional administrative costs incurred by the State Tax Department would be $19,250 in FY2018 and thereafter.



Memorandum






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