Date Requested:February 16, 2011
Time Requested:03:20 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2692 Introduced SB519
CBD Subject: COAL MINE SAFETY EQUIPMENT PURCHASE
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 allow for a tax credit for coal companies that purchase innovative safety technology that is compiled by the Mine Safety Technology Task Force and approved by the Director of the West Virginia Office of Miners’ Health, Safety and Training. The bill makes legislative findings and purpose and defines terms. The bill sets forth requirements for a list of approved innovative mine safety technology. The bill specifies the amount of tax credit allowed. The bill establishes the criteria for qualified investments. The bill specifies forfeiture of unused tax credits. The bill specifies treatment for transfer of certified eligible safety property to successors. The bill also sets forth requirements for identification of investment credit property. The bill prescribes treatment for failure to keep records of certified eligible safety property. The bill further sets forth tax credit review and accountability requirements and specifies the requirements for disclosure of tax credits. The bill grants rulemaking authority. The bill also amends the duties of the Director of the West Virginia Office of Miners’ Health, Safety and Training and amends the duties of the Mine Safety Technology Task Force.
    
    As written, this bill would provide a tax credit equal to 50 percent of an eligible taxpayer’s investment in innovative safety technology. The innovative safety technology generally includes depreciable tangible personal property which is so new to the industry that the equipment has not yet been adopted by any state or federal agency as required equipment to be used in a coal mine or on a mine site or on any other industrial site. The total tax credit is to be applied over a five-year period at the rate of one-fifth per tax year. Tax liabilities under the Business Franchise Tax and Corporation Net Income Tax may be offset by the tax credit up to 50 percent of the pre-credit tax liability. Taxpayers seeking to claim the tax credit must file a written application for certification with the Office of Miners’ Health, Safety and Training, which may allocate no more than $5 million of tax credit during any fiscal year.
    
    According to our interpretation that the bill provides a cap on the total amount of credit that can be allocated in any fiscal year, passage of this bill would reduce General Revenue Fund collections initially by up to $1 million in the first full year and by up to $5 million per year upon full implementation.
    
    Assuming all tax returns claiming the proposed credit are accepted as filed, additional administrative costs to the State Tax Department associated with passage of this bill would be minimal. The Office of Miners’ Health, Safety and Training and the Mine Safety Technology Task Force may also incur additional administrative costs 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 -1,000,000 -5,000,000
3. Explanation of above estimates (including long-range effect):
    As written, this bill would provide a tax credit equal to 50 percent of an eligible taxpayer’s investment in innovative safety technology. The innovative safety technology generally includes depreciable tangible personal property which is so new to the industry that the equipment has not yet been adopted by any state or federal agency as required equipment to be used in a coal mine or on a mine site or on any other industrial site. The total tax credit is to be applied over a five-year period at the rate of one-fifth per tax year. Tax liabilities under the Business Franchise Tax and Corporation Net Income Tax may be offset by the tax credit up to 50 percent of the pre-credit tax liability. Taxpayers seeking to claim the tax credit must file a written application for certification with the Office of Miners’ Health, Safety and Training, which may allocate no more than $5 million of tax credit during any fiscal year.
    
    According to our interpretation that the bill provides a cap on the total amount of credit that can be allocated in any fiscal year, passage of this bill would reduce General Revenue Fund collections initially by up to $1 million in the first full year and by up to $5 million per year upon full implementation.
    
    Assuming all tax returns claiming the proposed credit are accepted as filed, additional administrative costs to the State Tax Department associated with passage of this bill would be minimal. The Office of Miners’ Health, Safety and Training and the Mine Safety Technology Task Force may also incur additional administrative costs associated with passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to allow for a tax credit for coal companies that purchase innovative safety technology that is compiled by the Mine Safety Technology Task Force and approved by the Director of the West Virginia Office of Miners’ Health, Safety and Training. The bill makes legislative findings and purpose and defines terms. The bill sets forth requirements for a list of approved innovative mine safety technology. The bill specifies the amount of tax credit allowed. The bill establishes the criteria for qualified investments. The bill specifies forfeiture of unused tax credits. The bill specifies treatment for transfer of certified eligible safety property to successors. The bill also sets forth requirements for identification of investment credit property. The bill prescribes treatment for failure to keep records of certified eligible safety property. The bill further sets forth tax credit review and accountability requirements and specifies the requirements for disclosure of tax credits. The bill grants rulemaking authority. The bill also amends the duties of the Director of the West Virginia Office of Miners’ Health, Safety and Training and amends the duties of the Mine Safety Technology Task Force.
    
    As written, the bill indicates that the proposed tax credit is to be applied over a 5-year. However, other provisions of the bill refer to a 10-year period. The inconsistencies may result in some unintended consequences. Also, the bill does not provide definitions for a number of terms, including “innovative mine safety technologies,” “fiscal year,” and “taxable year.” While the bill provides that the proposed tax credit may not reduce the Business Franchise Tax or Corporation Net Income Tax below 50 percent, there is no indication of how any unused credit is to be handled. Additionally, provisions in the severability section of the bill may be in conflict with the separation of powers doctrine.
    
    As written, the bill proposes to create a new article (i.e., §11-13BB), but also includes three references to §11-13AA. Since §11-13AA concerns an entirely different credit, the references may be in error.