FISCAL NOTE

Date Requested: January 17, 2018
Time Requested: 10:56 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2022 Introduced HB2039
CBD Subject: Corporations, 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 establishing 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 met 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 $15,000 per year beginning in FY2020.
    



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 15,000
Personal Services 0 0 5,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 10,000
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 $15,000 per year beginning in FY2020.
    



Memorandum


    The stated purpose of this bill is to establishing 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 met to qualify for the credit. The bill defines terms.
    
    This bill sets forth two major departures from article 13Q, particularly section 10, credit for small business: (1) the bill allows the credit to the extractive industries, timber and synthetic fuel manufacturing, and (2) it increases the amount of credit.
    
    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 this state plus the amount apportioned to the qualified investment using the payroll factor. However, the reference in proposed W.Va. Code §11-13Q-5a(d) to W.Va. Code §11-13Q-7(h)(1) is incorrect. Subsection (h) sets forth the carryforward provision for unused credit. There is no subdivision (1) of subsection (h).
    
    



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