Date Requested:February 18, 2005
Time Requested:09:56 AM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R514 Intro SB122
CBD Subject: State Chartered Banks
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 allow state-chartered banks to organize as limited liability companies provided that the federal deposit insurance corporation (FDIC) determines that they are eligible for deposit insurance.
    
    The passage of this bill would have a minimal revenue impact on the General Revenue Fund. This bill would allow state-chartered banks to organize as limited liability companies, if they choose to do so. Presently, state-chartered banks are taxed under the Corporation Net Income Tax and Business Franchise Tax. As an LLC (limited liability company), these banks would still be subject to the Business Franchise Tax on net worth. Any income tax liabilities would flow through to the shareholders and be taxed under the 9 percent Corporation Net Income Tax if the shareholder was a corporation or under the Personal Income Tax at a top marginal rate of 6.5 percent. This bill would allow state-chartered banks the same right to organize as LLC’s, as other businesses in the State.
    
    There would be no additional administrative costs to the Tax Department.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
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
3. Explanation of above estimates (including long-range effect):
    The passage of this bill would have a minimal revenue impact on the General Revenue Fund. This bill would allow state-chartered banks to organize as limited liability companies, if they choose to do so. Presently, state-chartered banks are taxed under the Corporation Net Income Tax and Business Franchise Tax. As an LLC (limited liability company), these banks would still be subject to the Business Franchise Tax on net worth. Any income tax liabilities would flow through to the shareholders and be taxed under the 9 percent Corporation Net Income Tax if the shareholder was a corporation or under the Personal Income Tax at a top marginal rate of 6.5 percent. This bill would allow state-chartered banks the same right to organize as LLC’s, as other businesses in the State.
    
    
    There would be no additional administrative costs to the Tax Department.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us