FISCAL NOTE
Date Requested: February 10, 2017
Time Requested: 09:08 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1331 |
Introduced |
HB2039 |
|
|---|
| CBD Subject: |
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 tax credit for new businesses that locate in the state. The bill sets forth how the credit is determined. The bill establishes the conditions that must be set to qualify for the credit. The bill defines terms.
According to our interpretation of this bill, any corporation that establishes a new business in this state and employs at least fifteen people who are domiciled in West Virginia would be allowed a credit against their Corporation Net Income Tax liabilities. The amount of the credit is ten percent of the adjusted qualified investment. According to the provisions of this bill, the adjusted qualified investment is the qualified investment of the new business. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
Additional administrative costs incurred by the State Tax Department would be $14,000 per year beginning in FY2019.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
14,000 |
| Personal Services |
0 |
0 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
9,000 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, any corporation that establishes a new business in this state and employs at least fifteen people who are domiciled in West Virginia would be allowed a credit against their Corporation Net Income Tax liabilities. The amount of the credit is ten percent of the adjusted qualified investment. According to the provisions of this bill, the adjusted qualified investment is the qualified investment of the new business. We cannot estimate the revenue impact of this bill because we do not know how many small businesses would qualify for this credit.
Additional administrative costs incurred by the State Tax Department would be $14,000 per year beginning in FY2019.
Memorandum
The stated purpose of this bill is to establish a tax credit for new businesses that locate in the state. The bill sets forth how the credit is determined. The bill establishes the conditions that must be set to qualify for the credit. The bill defines terms.
The major deviation from the current State Economic Opportunity Tax Credit, WV Code §11-13Q, is that this bill expands the credit to the extractive industries and synthetic fuel manufacturing and increases the amount of Corporation Net Income Tax the credit may be applied against.
The amount of Corporation Net Income Tax against which the credit is allowed is the tax due on the adjusted federal taxable income allocated to the State plus the amount apportioned to the qualified investment using the payroll factor. The bill incorrectly references WV Code §11-13Q-7(h) to the payroll factor, when in fact it is a carryforward provision for unused credit. Further, this specific section of the WV Code does not contain a subdivision (1). The correct reference to the payroll factor is WV Code §11-13Q-5a (d).
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov