Date Requested:February 17, 2011
Time Requested:05:37 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2244 Introduced SB541
CBD Subject: WATER'S EDGE GROUP
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 make a technical correction clarifying which entities are to be included in a water’s edge group for purposes of the corporation net income tax.
    
    As written, this bill makes a technical correction in one of the seven statements that identify the income or members to be included in the combined group on a water’s edge unitary combined reporting basis. Currently, the statute indicates that the income of any member that earns more than 20 percent of its income, directly or indirectly, from intangible property of service-related activities that are deductible against the business income of other members of the water’s edge group is to be included in the group. The bill proposes to exclude income from receipts from transactions that produce or induce intangible or interest expense of other members that must be added back in the determining net income.
    
    According to our interpretation, this bill makes a technical change to identify the income to be included on a water’s edge unitary combined reporting basis. Passage of this bill should have minimal impact on State revenue and should affect a small number of Taxpayers.
    
    There will be no additional administrative costs for 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, this bill makes a technical correction in one of the seven statements that identify the income or members to be included in the combined group on a water’s edge unitary combined reporting basis. Currently, the statute indicates that the income of any member that earns more than 20 percent of its income, directly or indirectly, from intangible property of service-related activities that are deductible against the business income of other members of the water’s edge group is to be included in the group. The bill proposes to exclude income from receipts from transactions that produce or induce intangible or interest expense of other members that must be added back in the determining net income.
    
    According to our interpretation, this bill makes a technical change to identify the income to be included on a water’s edge unitary combined reporting basis. Passage of this bill should have minimal impact on State revenue and should affect a small number of Taxpayers.
    
    There will be no additional administrative costs for the State Tax Department associated with passage of this bill.
    


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