Date Requested:January 20, 2011
Time Requested:03:23 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1055 Introduced HB2655
CBD Subject: ABOLISH BUSINESS & FRANCHISE 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 abolish the business franchise tax effective July 1, 2011.
    
     Under current law, the Business Franchise Tax rate is being phased down to zero through a series of annual reductions in the tax rate. As written, this bill would accelerate the elimination of the tax from tax years beginning on or after January 1, 2015 to tax years beginning on or after July 1, 2011. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows:
    
    Fiscal Year Change in Revenue
    2012 -$19,400,000
    2013 -$46,400,000
    2014 -$27,700,000
    2015 -$ 6,100,000
    2016 -$ 800,000
    
    Due to the proposed change effective for tax years beginning on or after July 1, 2011, additional administrative costs to the State Tax Department associated with this bill would be roughly $30,000 in both FY2011 and FY2012.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 30,000 30,000 0
Personal Services 0 0 0
Current Expenses 30,000 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 30,000 0
2. Estimated Total Revenues 0 -19,400,000 -19,400,000
3. Explanation of above estimates (including long-range effect):
    Under current law, the Business Franchise Tax rate is being phased down to zero through a series of annual reductions in the tax rate. As written, this bill would accelerate the elimination of the tax from tax years beginning on or after January 1, 2015 to tax years beginning on or after July 1, 2011. According to our interpretation, passage of this bill would result in reductions in the General Revenue Fund as follows:
    
    Fiscal Year Change in Revenue
    2012 -$19,400,000
    2013 -$46,400,000
    2014 -$27,700,000
    2015 -$ 6,100,000
    2016 -$ 800,000
    
    Due to the proposed change effective for tax years beginning on or after July 1, 2011, additional administrative costs to the State Tax Department associated with this bill would be roughly $30,000 in both FY2011 and FY2012. The additional costs would include mailing a notification to taxpayers of the tax rate change and the update of computer audit programs.
    


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