FISCAL NOTE

Date Requested: February 13, 2018
Time Requested: 01:15 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2558 Introduced HB4585
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue



Fiscal Note Summary


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


    The stated purpose of this bill is to allow the Farm to Food Bank Tax Credit to equal 100 percent of the value of the donated edible agricultural products when the value is $2,500 or less.
    
    According to our interpretation, the proposed bill would modify the recently enacted West Virginia Farm to Food Bank Tax Credit, which became effective for donations occurring after December 31, 2017. Current Law allows a credit of 10 percent of the value of donated agricultural products by farmers, not to exceed $2,500 during a taxable year or the Personal Income Tax or Corporation Net Income Tax liability of the taxpayer, whichever is less. Total cap of credit allowances per year is $200,000. The proposed bill would increase the credit amount to 100 percent of donations but would not alter credit limitations
    
    Based on our understanding, passage of this bill would result in an annual revenue decrease of less than $50,000 beginning in FY2020. This estimate is derived from actual experience in other states with a similar tax preference. As written, the State would effectively be paying the full cost of these donations. Farmers already receive a federal and state deduction for such donations on 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 farmers each year.
    
    There would be no additional administrative costs incurred by 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 -50,000


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


    According to our interpretation, the proposed bill would modify the recently enacted West Virginia Farm to Food Bank Tax Credit, which became effective for donations occurring after December 31, 2017. Current Law allows a credit of 10 percent of the value of donated agricultural products by farmers, not to exceed $2,500 during a taxable year or the Personal Income Tax or Corporation Net Income Tax liability of the taxpayer, whichever is less. Total cap of credit allowances per year is $200,000. The proposed bill would increase the credit amount to 100 percent of donations but would not alter credit limitations
    
    Based on our understanding, passage of this bill would result in an annual revenue decrease of less than $50,000 beginning in FY2020. This estimate is derived from actual experience in other states with a similar tax preference. As written, the State would effectively be paying the full cost of these donations. Farmers already receive a federal and state deduction for such donations on 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 farmers each year.
    
    There would be no additional administrative costs incurred by the State Tax Department.
    



Memorandum


    



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