Date Requested:January 31, 2008
Time Requested:06:25 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2008R1953 Introduced SB545
CBD Subject: TAX ADMINISTRATION EFFICIENCY
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 require electronic filing of tax returns for taxpayers that satisfy the threshold requirements; to authorize the combining of tax assessments resulting from one audit; to authorize the Tax Commissioner to promulgate rules to determine the application of partial tax payments; to apply the statute of limitations separately to all taxes in a combined assessment; to authorize the recordation of one lien for all taxes in a combined assessment, to authorize health care providers to assert the exemption from consumers sales and service tax for purchases of drugs, durable medical goods, mobility enhancing equipment, prosthetic devices and insulin for use in providing professional or personal services through direct pay permits; to eliminate the periodic biennial renewal requirement for business registration certificates granted on or after the first day of July, two thousand ten; to impose a penalty for the involuntary cancellation, revocation or suspension of such certificates for any cause specified by statute, payable upon reinstatement, or issuance of a business registration certificate after the involuntary cancellation; revocation or suspension of a prior business registration certificate; to require the Tax Commissioner to design a new tax return form that combines the reporting of both Consumers Sales and Service Tax and Use Tax, and to require taxpayers to use the form required by the Tax Commissioner, and to simplify the annual West Virginia Withholding Tax imposed under the code by adopting the federal schedule and procedures.
    
    As written, this bill proposes a number of changes. In addition to proposed changes included in the stated purpose, the bill proposes the following: taxpayers whose total annual remittance for any single tax administered by the State Tax Department was greater than or equal to $100,000 would be required to file all returns for all taxes electronically; effective July 1, 2010, the requirement for a biennial renewal of the business registration certificate would be eliminated and the business registration certificate as initially issued would be permanent subject to revocation, cancellation, or suspension; the State Tax Commissioner would be required to design a return that combines the Consumers Sales and Service Tax (W. Va. Code §11-15 et al) and Use Tax (W. Va. Code §11-15A et al) by June 15, 2008; taxpayers subject to the Consumers Sales and Service Tax and Use Tax would be required to file the combined return designed by the State Tax Commissioner effective July 1, 2008. According to our interpretation, the proposal to eliminate the biennial renewal of the business registration certificate would increase General Revenue Fund collections by $1.7 million in Fiscal Year 2009 and $1.8 million in Fiscal Year 2010. This provision results in a revenue increase since the Governor’s Executive Budget provides for the elimination of the biennial renewal requirement in 2008. The electronic filing requirement specified in this bill would result in an undetermined increase in State interest income since some tax payments would be deposited sooner than check payments. The cumulative revenue impact of the remaining provisions of this bill would be minimal.
    
    Administrative costs for the State Tax Department associated with passage of this bill may be lower over the long-term due to reduced printing and mailing costs associated with the elimination of the biennial business registration requirement and the combined Consumers Sales and Service Tax and Use Tax. However, costs associated with notifying taxpayers of the electronic filing requirement, the combined Consumers Sales and Service Tax and Use Tax return, and the revised Withholding Tax filing requirements would increase Fiscal Year 2009 administrative costs by roughly $200,000.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 200,000 0
Personal Services 0 0 0
Current Expenses 0 200,000 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 require electronic filing of tax returns for taxpayers that satisfy the threshold requirements; to authorize the combining of tax assessments resulting from one audit; to authorize the Tax Commissioner to promulgate rules to determine the application of partial tax payments; to apply the statute of limitations separately to all taxes in a combined assessment; to authorize the recordation of one lien for all taxes in a combined assessment, to authorize health care providers to assert the exemption from consumers sales and service tax for purchases of drugs, durable medical goods, mobility enhancing equipment, prosthetic devices and insulin for use in providing professional or personal services through direct pay permits; to eliminate the periodic biennial renewal requirement for business registration certificates granted on or after the first day of July, two thousand ten; to impose a penalty for the involuntary cancellation, revocation or suspension of such certificates for any cause specified by statute, payable upon reinstatement, or issuance of a business registration certificate after the involuntary cancellation; revocation or suspension of a prior business registration certificate; to require the Tax Commissioner to design a new tax return form that combines the reporting of both Consumers Sales and Service Tax and Use Tax, and to require taxpayers to use the form required by the Tax Commissioner, and to simplify the annual West Virginia Withholding Tax imposed under the code by adopting the federal schedule and procedures.
    
    As written, this bill proposes a number of changes. In addition to proposed changes included in the stated purpose, the bill proposes the following: taxpayers whose total annual remittance for any single tax administered by the State Tax Department was greater than or equal to $100,000 would be required to file all returns for all taxes electronically; effective July 1, 2010, the requirement for a biennial renewal of the business registration certificate would be eliminated and the business registration certificate as initially issued would be permanent subject to revocation, cancellation, or suspension; the State Tax Commissioner would be required to design a return that combines the Consumers Sales and Service Tax (W. Va. Code §11-15 et al) and Use Tax (W. Va. Code §11-15A et al) by June 15, 2008; taxpayers subject to the Consumers Sales and Service Tax and Use Tax would be required to file the combined return designed by the State Tax Commissioner effective July 1, 2008. According to our interpretation, the proposal to eliminate the biennial renewal of the business registration certificate would increase General Revenue Fund collections by $1.7 million in Fiscal Year 2009 and $1.8 million in Fiscal Year 2010. This provision results in a revenue increase since the Governor’s Executive Budget provides for the elimination of the biennial renewal requirement in 2008. The electronic filing requirement specified in this bill would result in an undetermined increase in State interest income since some tax payments would be deposited sooner than check payments. The cumulative revenue impact of the remaining provisions of this bill would be minimal.
    
    Administrative costs for the State Tax Department associated with passage of this bill may be lower over the long-term due to reduced printing and mailing costs associated with the elimination of the biennial business registration requirement and the combined Consumers Sales and Service Tax and Use Tax. However, costs associated with notifying taxpayers of the electronic filing requirement, the combined Consumers Sales and Service Tax and Use Tax return, and the revised Withholding Tax filing requirements would increase Fiscal Year 2009 administrative costs by roughly $200,000.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to require electronic filing of tax returns for taxpayers that satisfy the threshold requirements; to authorize the combining of tax assessments resulting from one audit; to authorize the Tax Commissioner to promulgate rules to determine the application of partial tax payments; to apply the statute of limitations separately to all taxes in a combined assessment; to authorize the recordation of one lien for all taxes in a combined assessment, to authorize health care providers to assert the exemption from consumers sales and service tax for purchases of drugs, durable medical goods, mobility enhancing equipment, prosthetic devices and insulin for use in providing professional or personal services through direct pay permits; to eliminate the periodic biennial renewal requirement for business registration certificates granted on or after the first day of July, two thousand ten; to impose a penalty for the involuntary cancellation, revocation or suspension of such certificates for any cause specified by statute, payable upon reinstatement, or issuance of a business registration certificate after the involuntary cancellation; revocation or suspension of a prior business registration certificate; to require the Tax Commissioner to design a new tax return form that combines the reporting of both Consumers Sales and Service Tax and Use Tax, and to require taxpayers to use the form required by the Tax Commissioner, and to simplify the annual West Virginia Withholding Tax imposed under the code by adopting the federal schedule and procedures.
    
    The proposed amendment to W. Va. Code §11-21-74 includes multiple occurrences of the following proposed revision:
    
    Notwithstanding the provisions of this subsection, on or after the first day of January, two thousand nine, every employer required to deduct and withhold tax under this article shall file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes so required to be deducted and withheld due dates for annual returns and payments shall be established by the Tax Commissioner to match, as closely as practicable the due dates in effect for FIT purposes in accordance with the procedures established by the Internal Revenue Service pursuant to section 3402 of the Internal Revenue Code.
    
    However, the segment may be missing punctuation that would make the statement clearer. Also, the proposed change uses the acronym, FIT, without providing an explanation of its meaning.