Date Requested:January 14, 2012
Time Requested:01:22 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2912 Carry Over HB3267
CBD Subject: MILITARY AND SPOUSES EXEMPTION
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 an additional decreasing modification reducing federal adjusted gross income for income earned by military personnel and their spouses during a period of service in an area of armed conflict.
    
    The bill, as written, exempts all income earned by military personnel and their spouses from Personal Income Tax during a period of service in an area of armed conflict. The changes in the bill are effective for tax years beginning on or after January 1, 2011. The provisions of this bill would reduce General Revenue Fund collections by roughly $1.1 million in FY2013. The change in the modification for Tax Year 2011 returns will result in amended returns. The revenue loss for FY2013 includes the loss for those amended 2011 returns as well as the loss for Tax Year 2012 returns. For FY2014 and beyond, the revenue impact could fluctuate greatly depending on the number of military personnel stationed overseas in conflict areas.
    
    Since passage of this bill would result in the processing of additional refunds in Fiscal Year 2013 due to amended returns, additional costs to the State Tax Department would be significant.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
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 -1,100,000 0
3. Explanation of above estimates (including long-range effect):
    The bill, as written, exempts all income earned by military personnel and their spouses from Personal Income Tax during a period of service in an area of armed conflict. The changes in the bill are effective for tax years beginning on or after January 1, 2011. The provisions of this bill would reduce General Revenue Fund collections by roughly $1.1 million in FY2013. The change in the modification for Tax Year 2011 returns will result in amended returns. The revenue loss for FY2013 includes the loss for those amended 2011 returns as well as the loss for Tax Year 2012 returns. For FY2014 and beyond, the revenue impact could fluctuate greatly depending on the number of military personnel stationed overseas in conflict areas. The revenue impact for Tax Year 2012 is much less than that for Tax Year 2011 due to the reductions in forces in combat zones.
    
    Since passage of this bill would result in the processing of additional refunds in Fiscal Year 2013 due to amended returns, additional costs to the State Tax Department would be significant.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to provide an additional decreasing modification reducing federal adjusted gross income for income earned by military personnel and their spouses during a period of service in an area of armed conflict.
    
    The amount of the decreasing modification is $100,000 per year for single filers and taxpayers filing separately and $200,000 per year for joint filers. It is possible that the $200,000 decreasing modification may be available even if the spouse is a non-working spouse.