Date Requested:March 25, 2005
Time Requested:02:24 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R2064 Intro HB3335
CBD Subject: Expenditures by Individuals for Educatio
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 provide a tax credit for expenditures made toward educational purposes for school children.
    
    According to our interpretation, passage of this bill would result in a significant decrease in General Revenue Fund collections beginning in Fiscal Year 2006-2007. Due to the lack of an internal effective date, the proposed tax credit would not become effective until the 2006 tax year.
    
    Under the assumption that all returns would be accepted as filed, 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):
    This bill provides a personal income tax credit of fifty percent of the total amount expended up to $1,000 for households who incur educational expenses associated with a dependent child in grade school, high school, technical school or college. Qualified expenses may include contributions to the child’s school, funds for tutoring, funds for the purchase or lease of a home computer, funds for the purchase of school uniforms, funds for the purchase of school textbooks and “other expenses allowed by the tax department”. According to our interpretation, passage of this bill would result in a significant decrease in General Revenue Fund collections beginning in Fiscal Year 2006-2007. Due to the lack of an internal effective date, the proposed tax credit would not become effective until the 2006 tax year.
    
    Under the assumption that all returns would be accepted as filed, 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
    The stated purpose of this bill is to provide a tax credit for expenditures made toward educational purposes for school children.
    
    The bill lacks any clause setting forth its effective date. In addition, It is also unclear whether “school age” means eighteen years of age or under or whether it includes dependents until the age of twenty-four. Direct monetary contributions to the child’s school may be included when calculating the amount of credit, however, there are no guidelines as to just what may be considered to be a contribution. Finally, the bill provides for a $1,000 limit, but it unclear whether the $1,000 limit applies to the amount of the credit or the amount of expenditures.