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 create a tax credit for hiring veterans of the United States Military. As written, the bill would provide a tax credit to employers who hire veterans after January 1, 2010. The tax credit would be equal to $1,000 for every veteran hired and be available for the first three years of the veteran’s employment and could be used to reduce the employer’s Personal Income Tax or Corporation Net Income Tax liability, whichever is applicable. The bill also provides that the State Tax Commissioner shall provide by rule or regulation for the reporting, filing, and application of the claims for the tax credit. The State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to passage of this bill. If all Personal Income Tax or Corporation Net Income Tax returns claiming the proposed tax credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, the bill as written, requires the State Tax Commissioner to provide rules or regulations regarding the documentation necessary to claim the proposed tax credit. If the intent of the required rules is to ensure complete review of the use of the proposed tax credit, additional administrative costs to the State Tax Department would be more significant.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
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


Explanation of above estimates (including long-range effect):


Passage of this bill would provide a tax credit to employers who hire veterans after January 1, 2010. The tax credit would be equal to $1,000 for every veteran hired and be available for the first three years of the veteran’s employment and could be used to reduce the employer’s Personal Income Tax or Corporation Net Income Tax liability, whichever is applicable. The bill also provides that the State Tax Commissioner shall provide by rule or regulation for the reporting, filing, and application of the claims for the tax credit. The State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to passage of this bill. Nationwide, veterans comprise nearly 10 percent of the population of persons 18 years of age and over. The West Virginia veteran percentage may be greater than 10 percent. If all Personal Income Tax or Corporation Net Income Tax returns claiming the proposed tax credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, the bill as written, requires the State Tax Commissioner to provide rules or regulations regarding the documentation necessary to claim the proposed tax credit. If the intent of the required rules is to ensure complete review of the use of the proposed tax credit, additional administrative costs to the State Tax Department would be more significant.



Memorandum


The stated purpose of this bill is to create a tax credit for hiring veterans of the United States Military. As written, the bill provides that the tax credit is available for the first three years of the veteran’s employment. However, the bill does not provide guidance as to whether the qualifying employment is full-time or part-time, nor does the bill provide guidance as to the duration a veteran must be employed in order for the employer to gain entitlement to the tax credit. While the proposed tax credit could be used to reduce the employer’s Personal Income Tax or Corporation Net Income Tax liability, whichever is applicable, the bill does specify that only one credit is to be taken per employee (e.g., there does not appear to be a provision to prohibit every member of a pass-through entity from claiming the full credit). Additionally, the bill provides that the State Tax Commissioner shall provide by rule or regulation for the reporting, filing, and application of the claims for the tax credit “in a manner in conformity with the legislative purpose” of the proposed section. However, the bill does not clearly specify the intended legislative purpose.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov