FISCAL NOTE

Date Requested: January 29, 2020
Time Requested: 11:44 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2790 Introduced SB655
CBD Subject: Taxation


FUND(S):

General Revenue Fund, local governments

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 clarify, for purposes of this article, the types of operating expenses that must be used for purposes of valuing producing oil and natural gas wells, the methodology that shall be used by the Tax Commissioner in calculating operating expenses, the confidentiality of information submitted by natural resource producers to the Tax Commissioner, reports that must be submitted by the Tax Commissioner to the Joint Committee on Government and Finance, and to provide for alternate appeal of proposed valuation of natural resources property for ad valorem property tax purposes. The revenue impact of this proposal cannot be readily determined. The bill deals with developing different methodologies and cap rates for determining oil and gas values in the future. Additional administrative costs would be minimal.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
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 revenue impact of this proposal cannot be readily determined. The bill deals with developing different methodologies and cap rates for determining oil and gas values in the future. Additional administrative costs would be minimal.  



Memorandum


The stated purpose of this bill is to clarify, for purposes of this article, the types of operating expenses that must be used for purposes of valuing producing oil and natural gas wells, the methodology that shall be used by the Tax Commissioner in calculating operating expenses, the confidentiality of information submitted by natural resource producers to the Tax Commissioner, reports that must be submitted by the Tax Commissioner to the Joint Committee on Government and Finance, and to provide for alternate appeal of proposed valuation of natural resources property for ad valorem property tax purposes. The bill would allow appeals of natural resources valuation to be heard by the West Virginia Office of Tax Appeals at the taxpayer’s election. However, unlike appeals to the Board of Equalization and Review, the amended statute would set no time constraints on such appeals, either for filing appeals, or for issuing a ruling. This lack of administrative structure for the appeal process to the Office of Tax Appeals would create issues and confusion. Furthermore, unlike appeals to the Boards of Assessment Appeals, appeals under this proposed statute would not require the taxpayer to prepay the amount of tax in controversy. This, too, could create problems. Rulings by the Office of Tax Appeals could be appealed to the Circuit Court, in the same manner as appeals from rulings by a Board of Equalization and Review or a Board of Assessment Appeals.



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