Date Requested:March 15, 2005
Time Requested:02:52 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1593 Intro SB526
CBD Subject: Tax Liability for Contribution to Commun
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

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

    The stated purpose of this bill is to allow a credit against the West Virginia personal income tax and corporation net income tax liability for taxpayers who contribute to community foundations.
    
    According to our interpretation, passage of this bill would potentially result in a significant decrease in General Revenue Fund collections beginning in Fiscal Year 2005-2006. Due to the lack of an internal effective date, the provisions of this bill would not become effective until the 2006 tax year. The bill provides for a new tax credit against personal income tax and corporation net income tax for contributions to an endowment fund of a community foundation. The credit is equal to 50 percent of a taxpayer’s contributions. For personal income taxpayers, other than resident estates or trusts, the credit may not exceed $100 ($200 for joint return filers). The credit for resident estates or trusts may not exceed 10 percent of tax liability, or $5,000, whichever is less. For taxpayers subject to the corporation net income tax, the credit may not exceed 5 percent of tax liability, or $5,000, whichever is less.
    
    Additional administrative costs to the Tax Department would be approximately $5,000.

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 5,000 0 0
Personal Services 0 0 0
Current Expenses 5,000 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):
    This bill provides for a new tax credit against personal income tax and corporation net income tax for contributions to an endowment fund of a community foundation. The credit is equal to 50 percent of a taxpayer’s contributions. For personal income taxpayers, other than resident estates or trusts, the credit may not exceed $100 ($200 for joint return filers). The credit for resident estates or trusts may not exceed 10 percent of tax liability, or $5,000, whichever is less. For taxpayers subject to the corporation net income tax, the credit may not exceed 5 percent of tax liability, or $5,000, whichever is less. The new credit would provide a strong incentive for taxpayers to divert their contributions to community foundations. Therefore, passage of this bill would potentially result in a significant decrease in General Revenue Fund collections.
    
    Additional administrative costs to the Tax Department would be for printing of forms and promotional materials.


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