FISCAL NOTE
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 impose corporate net income tax on certain regulated investment companies and real estate investment trusts used as tax sheltering vehicles.
As written, this bill provides definitions for regulated investment companies and real estate investment trusts and provides that such entities are subject to the Corporation Net Income Tax on the part of their net income which is subject to federal income tax. The bill provides that the dividend paid deduction otherwise allowed in computing net income of the entities is to be added back for purposes of the West Virginia Corporation Net Income Tax unless the entity meets the definition of a qualified regulated investment company or a qualified real estate investment trust. According to our interpretation, passage of this bill would result in an increase in the General Revenue Fund of roughly $2.5 million in Fiscal Year 2009 and roughly $3.0 million in FY 2010.
Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
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 |
2,500,000 |
3,000,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would provide definitions for regulated investment companies and real estate investment trusts and provide that such entities would be subject to the Corporation Net Income Tax on the part of their net income which is subject to federal income tax. The bill provides that the dividend paid deduction otherwise allowed in computing net income of the entities is to be added back for purposes of the West Virginia Corporation Net Income Tax unless the entity meets the definition of a qualified regulated investment company or a qualified real estate investment trust. According to our interpretation, passage of this bill would result in an increase in the General Revenue Fund of roughly $2.5 million in Fiscal Year 2009 and roughly $3.0 million in FY 2010.
Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.
Memorandum
The stated purpose of this bill is to impose corporate net income tax on certain regulated investment companies and real estate investment trusts used as tax sheltering vehicles.
The bill, as written, uses the terms “invested” or “invest” when the term “investment” may be the intended usage. Additionally, the proposed definition of qualified real estate investment trust contains the phrase “value of the beneficial interest or shares of which are owned or controlled . . .” which is not entirely clear as to the intended meaning.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us