Date Requested:March 28, 2005
Time Requested:12:54 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R2010 Intro HB3237
CBD Subject: Exemption from Consumer Sales Tax
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 amend the code in order to neutralize the holding in Syncor International Corporation v. Palmer, 208 W. Va. 658 (2001). That case held, contrary to long standing administrative policy embodied in legislative rule 110 C.S.R. 15, ยง92, that radiopharmaceuticals purchased by medical service providers are exempt from sales tax when they are purchased for use and consumption in providing a professional service and are specially formulated by the pharmaceutical company for a specific, identified patient. The reasoning of the court might be used, however, and extended in a different case to exempt all purchases of drugs, durable medical goods, mobility enhancing equipment, prosthetic devices and insulin for use in providing a professional or personal service. This bill would codify long standing administrative policy embodied in legislative rule that was modified by the Syncor decision. It would reverse the loss of revenue resulting from that decision and would avoid future revenue loss should a court apply the Syncor reasoning to other purchases by health care providers for use in providing professional and personal services.
    
    According to our interpretation, passage of this bill would increase General Revenue collections by approximately $2.5 million per year and protect against the loss of approximately $18 to $23 million per year if a court would apply the Syncor reasoning to other purchases of drugs.
    
    The Tax Department would incur additional administrative costs of roughly $4,000 for printing and promotion.

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 4,000 0 0
Personal Services 0 0 0
Current Expenses 4,000 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 2,500,000 2,500,000
3. Explanation of above estimates (including long-range effect):
    This bill would codify long standing administrative policy embodied in legislative rule that was modified by the Syncor International Corporation v. Palmer, 208 W. Va. 658 (2001) decision. According to our interpretation, passage of this bill would increase General Revenue collections by approximately $2.5 million per year and protect against the loss of approximately $18 to $23 million per year if a court would apply the Syncor reasoning to other purchases of drugs.
    
    The Tax Department would incur additional administrative costs of roughly $4,000 for printing and promotion.
    


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