FISCAL NOTE

Date Requested: February 13, 2018
Time Requested: 01:13 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2639 Introduced HB4575
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:





Fiscal Note Summary


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


The stated purpose of this bill is to provide an exemption from use tax for sales of tangible personal property, custom software, or services generated through affiliate marketing by a retailer who has no other nexus to the state. The bill clarifies that affiliate marketing does not create nexus for the purposes of the imposition and collection of use tax. The bill defines the term, “affiliate marketing”. The passage of this bill would create an exemption from use tax for the gross receipts or gross proceeds from sale of tangible personal property, custom software, or services which are generated through affiliate marketing by a retailer who has no other nexus to the State of West Virginia. Further, the bill creates an exemption to the Consumer Sales and Service tax for retailer sales through affiliated marketing by clarifying that affiliated marketing does not create the nexus required for collecting and remitting of the tax under this article or under W.Va. Code §11-15-1. The bill appears to clarify a nexus standard with a tax exemption. According to our interpretation, passage of this bill would have a minimal impact on General Revenue Fund collections. There would be no additional administrative costs to the State Tax Department.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


The passage of this bill would create an exemption from use tax for the gross receipts or gross proceeds from sale of tangible personal property, custom software, or services which are generated through affiliate marketing by a retailer who has no other nexus to the State of West Virginia. Further, the bill creates an exemption to the Consumer Sales and Service tax for retailer sales through affiliated marketing by clarifying that affiliated marketing does not create the nexus required for collecting and remitting of the tax under this article or under W.Va. Code §11-15-1. The bill appears to clarify a nexus standard with a tax exemption. According to our interpretation, passage of this bill would have a minimal impact on General Revenue Fund collections. There would be no additional administrative costs to the State Tax Department.



Memorandum


The stated purpose of this bill is to provide an exemption from use tax for sales of tangible personal property, custom software, or services generated through affiliate marketing by a retailer who has no other nexus to the state. The bill clarifies that affiliate marketing does not create nexus for the purposes of the imposition and collection of use tax. The bill defines the term, “affiliate marketing”. The bill does not fit well into the statutory scheme of the definitions of “retailer” and “retailer engaging in business in this state,” and the requirements of those certain retailers to collect and remit use tax. The bill appears contrary to the direction of most states, which are seeking means to require affiliate marketers and other e-commerce sellers to collect and remit use tax. If the United States Supreme Court would rule that remote sales are taxable, this exemption will preclude the State for being able to collect sales tax on these sales.



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