Date Requested:February 08, 2011
Time Requested:12:12 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2485 Introduced HB3060
CBD Subject: CORPORATION NET INCOME 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 provide a different procedure for determining the credit for utility taxpayers with net operating loss carryovers relating to the corporation net income tax.
    
    As written, the credit against Corporation Net Income Tax available to taxpayers subject to the Business and Occupation Tax on electric power generation and/or distribution that was originally computed as an amount equal to one-quarter percent (0.25%) of the taxpayer’s West Virginia net operating loss carryovers that existed on December 31, 2006 would be decreased by the net operating loss used or applied in each tax year beginning on or after January 1, 2007. Additionally, the computation of the credit is to be adjusted from 0.25 percent (i.e., the difference between the Corporation Net Income Tax rate of 9 percent for tax years beginning before January 1, 2007 and the 8.75 percent for tax years beginning on or after January 1, 2007) to the difference between current rates and 9 percent. Similar to the original Legislation creating the credit and according to our interpretation, passage of this bill will offset unintended results of the currently scheduled tax rate reductions. While the application of used or applied net operating loss amounts will reduce the amount of credit available, the re-computation involving the difference in the previous and current tax rates may increase the amount of credit. Thus, the revenue impact resulting from passage of this bill cannot be readily determined.
    
    There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
    

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):
    As written, the credit against Corporation Net Income Tax available to taxpayers subject to the Business and Occupation Tax on electric power generation and/or distribution that was originally computed as an amount equal to one-quarter percent (0.25%) of the taxpayer’s West Virginia net operating loss carryovers that existed on December 31, 2006 would be decreased by the net operating loss used or applied in each tax year beginning on or after January 1, 2007. Additionally, the computation of the credit is to be adjusted from 0.25 percent (i.e., the difference between the Corporation Net Income Tax rate of 9 percent for tax years beginning before January 1, 2007 and the 8.75 percent for tax years beginning on or after January 1, 2007) to the difference between current rates and 9 percent. Similar to the original Legislation creating the credit and according to our interpretation, passage of this bill will offset unintended results of the currently scheduled tax rate reductions. While the application of used or applied net operating loss amounts will reduce the amount of credit available, the re-computation involving the difference in the previous and current tax rates may increase the amount of credit. Thus, the revenue impact resulting from passage of this bill cannot be readily determined.
    
    There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
    


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