Date Requested:January 28, 2011
Time Requested:01:11 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2322 Introduced HB2918
CBD Subject: PERMANENT BUSINESS REGISTRATION
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 change the procedure for suspending, revoking or canceling a business registration certificate. The bill permits a registrant to appeal an order to suspend, revoke or cancel a business registration certificate. The bill permits a business registration certificate to be revoked, canceled or suspended for nonpayment of property taxes. The bill also changes the sparkler and novelty registration fee from annual one to an initial one. The bill updates permanent registration language.
    
    As written, this bill proposes changes to the Business Registration Tax including establishment of the tax for business registration certificates granted after cessation of a business, or after suspension, revocation, cancellation or lapse of a prior business registration certificate; restatement of Taxpayer rights regarding appeal of cancellation, revocation or suspension of business registration certificates; and, providing for the revocation, cancellation or suspension of permanent business registration certificates in lieu of authority to refuse to renew business registration certificates (Legislative changes in prior years eliminated the biennial renewal of business registration certificates). According to our interpretation, the authority to revoke, cancel, or suspend permanent business registration certificates provides the State Tax Department with similar tax compliance tools as provided by the refusal to renew a business registration certificate, when biennial renewal was required. Without the authority to revoke permanent business registration certificates for nonpayment of taxes, voluntary compliance with State and local tax laws will decline. In the most recent available period, Department notification to Taxpayers of pending action regarding their business registration certificate resulted in the remittance of roughly $11 million, within 90 days of the notification, to address tax nonpayment delinquencies. Without the changes proposed in this bill, it is estimated that between $2 million and $3 million in tax obligations may go unpaid resulting in a like reduction in the General Revenue Fund.
    
    Passage of the bill would prevent administrative costs associated with the revocation of licenses from increasing significantly when the alternative failure to renew program disappears as of July 1, 2011. Otherwise, staffing at the Office of Tax Appeals and Tax Department, and associated administrative costs, would have to grow significantly to handle the volume of possible show-cause hearings related to license revocation.

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 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
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would make changes to the Business Registration Tax including establishment of the tax for business registration certificates granted after cessation of a business, or after suspension, revocation, cancellation or lapse of a prior business registration certificate; restatement of Taxpayer rights regarding appeal of cancellation, revocation or suspension of business registration certificates; and, providing for the revocation, cancellation or suspension of permanent business registration certificates in lieu of authority to refuse to renew business registration certificates (Legislative changes in prior years eliminated the biennial renewal of business registration certificates). According to our interpretation, the authority to revoke, cancel, or suspend permanent business registration certificates provides the State Tax Department with similar tax compliance tools as provided by the refusal to renew a business registration certificate, when biennial renewal was required. Without the authority to revoke permanent business registration certificates for nonpayment of taxes, voluntary compliance with State and local tax laws will decline. In the most recent available period, Department notification to Taxpayers of pending action regarding their business registration certificate resulted in the remittance of roughly $11 million, within 90 days of the notification, to address tax nonpayment delinquencies. Without the changes proposed in this bill, it is estimated that between $2 million and $3 million in tax obligations may go unpaid resulting in a like reduction in the General Revenue Fund.
    
    Passage of the bill would prevent administrative costs associated with the revocation of licenses from increasing significantly when the alternative failure to renew program disappears as of July 1, 2011. Otherwise, staffing at the Office of Tax Appeals and Tax Department, and associated administrative costs, would have to grow significantly to handle the volume of possible show-cause hearings related to license revocation.
    


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