Date Requested:January 24, 2012
Time Requested:02:31 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1719 Introduced SB410
CBD Subject: GAMBLING WINNINGS
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 West Virginia law consistent with federal law on withholding of personal income tax on gambling winnings.
    
    As written, this bill would update West Virginia’s Personal Income Tax Law to be consistent with the laws of the United States pertaining to backup withholding on gambling winnings. The bill would require a payer of a gambling prize subject to backup withholding (i.e., generally gambling winnings of $1,200 or more) to withhold from the payment an amount equal to 6.5 percent of the payment. The backup withholding provision in this bill would encourage compliance with existing law requiring gambling winnings to be included in federal adjusted gross income, the starting point for the West Virginia Personal Income Tax. Normal withholding requires proper identification of the winner. With the advent of the Privacy Act, it is rare that a person winning a gambling prize would have with them identification showing his or her Social Security Number.
    
    According to our interpretation, passage of this bill would increase General Revenue Fund collections between $7.2 million to $7.7 million per year. Due to the lack of an internal effective date, this proposed modification would first become effective for tax years beginning on or after January 1, 2013. Assuming that withholding would begin on or after January 1, 2013, FY2013 General Revenue Fund collections would increase by roughly $3 million.
    
    Additional administrative costs to the State Tax Department associated with this bill will be minimal.
    

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 3,000,000 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would update West Virginia’s Personal Income Tax Law to be consistent with the laws of the United States pertaining to backup withholding on gambling winnings. The bill would require a payer of a gambling prize subject to backup withholding (i.e., generally gambling winnings of $1,200 or more) to withhold from the payment an amount equal to 6.5 percent of the payment. The backup withholding provision in this bill would encourage compliance with existing law requiring gambling winnings to be included in federal adjusted gross income, the starting point for the West Virginia Personal Income Tax. Normal withholding requires proper identification of the winner. With the advent of the Privacy Act, it is rare that a person winning a gambling prize would have with them identification showing his or her Social Security Number.
    
    According to our interpretation, passage of this bill would increase General Revenue Fund collections between $7.2 million to $7.7 million per year. Due to the lack of an internal effective date, this proposed modification would first become effective for tax years beginning on or after January 1, 2013. Assuming that withholding would begin on or after January 1, 2013, FY2013 General Revenue Fund collections would increase by roughly $3 million.
    
    Additional administrative costs to the State Tax Department associated with this bill will be minimal.
    


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