Date Requested:March 28, 2005
Time Requested:12:58 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R2011 Intro HB3236
CBD Subject: Special Reclamation Tax
FUND(S)
General Revenue Fund and Department of Environmental Protection Operating Fund
Sources of Revenue
General Fund,Other Fund DEP Operating 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 that the special reclamation tax and the special tax on coal production apply to coal subject to severance tax, which includes the reduced rate for thin-seam coal. Under current law, the special tax on coal, but not the special reclamation tax on coal production, is expressly made subject to the West Virginia Tax Crimes and Penalties Act and the West Virginia Tax Procedure and Administration Act. The bill, also, makes those Acts applicable to the Special Reclamation Tax.
    
    Some coal companies are currently seeking tax refunds for reclamation taxes and Department of Environmental Protection operating fund taxes paid on thin-seam coal for periods dating back as far as the 2001 tax year, under their interpretation that exempting thin-seam coal from the minimum severance tax also exempts thin-seam coal from the special reclamation taxes and the Department of Environmental Protection operating fund taxes. Absent this legislation and in the event of a court ruling in their favor, total refund claims associated with reclamation taxes and Department of Environmental Protection operating fund taxes paid on thin-seam coal could be up to $7.9 million and $1.1 million respectively. On a prospective basis, this would result in a $2.2 million annual reduction to the Special Reclamation Fund, and a $320,000 annual reduction to the Department of Environmental Protection Operating Fund.
    
    Additional administrative costs to the State Tax Department associated with this bill would 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 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 0 0
3. Explanation of above estimates (including long-range effect):
    The stated purpose of this bill is to provide that the special reclamation tax and the special tax on coal production apply to coal subject to severance tax, which includes the reduced rate for thin-seam coal. Under current law, the special tax on coal, but not the special reclamation tax on coal production, is expressly made subject to the West Virginia Tax Crimes and Penalties Act and the West Virginia Tax Procedure and Administration Act. The bill, also, makes those Acts applicable to the Special Reclamation Tax.
    
    Some coal companies are currently seeking tax refunds for reclamation taxes and Department of Environmental Protection operating fund taxes paid on thin-seam coal for periods dating back as far as the 2001 tax year, under their interpretation that exempting thin-seam coal from the minimum severance tax also exempts thin-seam coal from the special reclamation taxes and the Department of Environmental Protection operating fund taxes. Absent this legislation and in the event of a court ruling in their favor, total refund claims associated with reclamation taxes and Department of Environmental Protection operating fund taxes paid on thin-seam coal could be up to $7.9 million and $1.1 million respectively. On a prospective basis, this would result in a $2.2 million annual reduction to the Special Reclamation Fund, and a $320,000 annual reduction to the Department of Environmental Protection Operating Fund.
    
    Additional administrative costs to the State Tax Department associated with this bill would be due to the printing and promotional expense of notifying taxpayers.
    
    
    
    
    
    
    
    
    
    


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