FISCAL NOTE
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 create a tax incentive program for development of alternative technologies for management and disposal of coal slurry.
As written, this bill would create a tax credit for investment in alternative technologies which eliminate or reduce the generation of coal slurry or which eliminate existing coal slurry disposal sites. The tax credit would be available to reduce the Taxpayer’s Corporation Net Income Tax by up to 50 percent. The bill also provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit. The tax credit would be allowed for tax years beginning on or after July 1, 2012.
The State Tax Department is unable to accurately determine the potential revenue impact of the tax credit proposed by this bill, however, the potential reduction in the General Revenue Fund could be significant given the lack of clarifying definitions related to eligible taxpayer, measure of activity subject to credit, and measure of credit.
Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify the amount of eligible credit, additional administrative costs to the State Tax Department could be significant.
Fiscal Note Detail
| 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 |
0 |
0 |
Explanation of above estimates (including long-range effect):
As written, this bill would create a tax credit for investment in alternative technologies which eliminate or reduce the generation of coal slurry or which eliminate existing coal slurry disposal sites. The tax credit would be available to reduce the Taxpayer’s Corporation Net Income Tax by up to 50 percent. The bill also provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit. The tax credit would be allowed for tax years beginning on or after July 1, 2012.
The State Tax Department is unable to accurately determine the potential revenue impact of the tax credit proposed by this bill, however, the potential reduction in the General Revenue Fund could be significant given the lack of clarifying definitions related to eligible taxpayer, measure of activity subject to credit, and measure of credit.
Assuming that all Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify the amount of eligible credit, additional administrative costs to the State Tax Department could be significant.
Memorandum
The stated purpose of this bill is to create a tax incentive program for development of alternative technologies for management and disposal of coal slurry.
Although the bill provides that the State Tax Commissioner would propose Legislative Rules regarding the applicability and method of claiming the credit, the lack of Legislative guidance in clarifying acceptable alternative technologies, qualifying investment, and other provisions may result in many differences in interpretation that would increase administrative and trial court activity.
The title of proposed W. Va. Code §11-13CC is “CORPORATE NET INCOME TAX CREDIT FOR COAL CLEANING AND PREPARATION FACILITIES” and the bill uses “corporate net income tax’ throughout. Since the actual title of the tax against which the proposed credit would be applied is the “Corporation Net Income Tax,”the title is defective and actual application of the tax credit against the Corporation Net Income Tax could be subject to question.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov