Date Requested:March 22, 2005
Time Requested:05:00 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1877 Intro SB614
CBD Subject: Corporate Net Income Updated
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 update the meaning of “federal taxable income” and certain other terms used but not defined in the West Virginia Corporation Net Income Tax Act by bringing them into conformity with their meaning for federal income tax purposes, and to require a new increasing modification for the IRC § 199 deduction that was enacted by Congress in 2004 and is first allowable for federal income tax purposes for tax years beginning after December 31, 2004.
    
    The American Jobs Creation Act, which was signed into law on October 22, 2004, includes a federal tax benefit for certain domestic production activities. The purpose of new section 11-24-6a is to disallow this deduction when determining West Virginia corporation net income tax liability for taxable years beginning after December 31, 2004. This new section also provides the Tax Commissioner with additional remedies for noncompliance and for errors in computing federal taxable income.
    
    According to our interpretation, passage of this bill will result in conformity with the Governor’s official revenue estimates for FY2006.
    
    Additional administrative costs to the State Tax Department associated with this bill will be minimal.

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):
    Passage of this bill will update the meaning of “federal taxable income” for Corporation Net Income Tax purposes to be the “federal taxable income” as defined by the laws of the United States as of December 31, 2004. However, the bill disallows the deduction for certain domestic production activities as provided in the American Jobs Creation Act of 2004.
    
    According to our interpretation, passage of this bill will result in conformity with the Governor’s official revenue estimates for FY2006.
    
    Additional administrative costs to the State Tax Department associated with this bill will be minimal.


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