Date Requested:February 06, 2012
Time Requested:02:39 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2019 Introduced SB520
CBD Subject: TAX EXEMPTION COLLEGE GRADS
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 establish incentives to attract and retain young talent to the State of West Virginia. The bill establishes a modification reducing federal adjusted gross income for recent graduates of higher education institutions. The bill requires the Joint Committee on Government and Finance to review the effectiveness of the modification. The bill also provides for rule-making authority.
    
    As written, this bill would create a Personal Income Tax decreasing modification for taxpayers who have graduated from any accredited post-secondary institution with a two-year, four-year, or advanced degree and have obtained the qualifying degree not more than two years prior to the tax year in which the modification is to be claimed. Qualifying taxpayers would be permitted a decreasing modification in the amount of $25,000 to offset income received from any source after December 31, 2012. The bill also indicates that no person may claim the modification after December 31, 2019. The decreasing modification proposal requires the State Tax Commissioner to promulgate Legislative rules, as necessary, regarding the documentation necessary to claim the modification. Additionally, the bill requires the State Tax Commissioner to submit an annual report on the use of the modification to the Joint Committee on Government and Finance.
    
    According to our interpretation and based upon available information, passage of the proposed decreasing modification would reduce revenue by roughly $4 million to $6 million per year beginning in FY2014.
    
    If all Personal Income Tax returns claiming the proposed modification would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, the bill as written, requires the State Tax Commissioner to promulgate Legislative rules, as necessary, regarding the documentation necessary to claim the proposed modification. If the intent of the required rules is to ensure complete review of the use of the proposed modification, additional administrative costs to the State Tax Department would be substantial.
    

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 0 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would create a Personal Income Tax decreasing modification for taxpayers who have graduated from any accredited post-secondary institution with a two-year, four-year, or advanced degree and have obtained the qualifying degree not more than two years prior to the tax year in which the modification is to be claimed. Qualifying taxpayers would be permitted a decreasing modification in the amount of $25,000 to offset income received from any source after December 31, 2012. The bill also indicates that no person may claim the modification after December 31, 2019. The decreasing modification proposal requires the State Tax Commissioner to promulgate Legislative rules, as necessary, regarding the documentation necessary to claim the modification. Additionally, the bill requires the State Tax Commissioner to submit an annual report on the use of the modification to the Joint Committee on Government and Finance.
    
    According to our interpretation and based upon available information, passage of the proposed decreasing modification would reduce revenue by roughly $4 million to $6 million per year beginning in FY2014.
    
    If all Personal Income Tax returns claiming the proposed modification would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, the bill as written, requires the State Tax Commissioner to promulgate Legislative rules, as necessary, regarding the documentation necessary to claim the proposed modification. If the intent of the required rules is to ensure complete review of the use of the proposed modification, additional administrative costs to the State Tax Department would be substantial.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to establish incentives to attract and retain young talent to the State of West Virginia. The bill establishes a modification reducing federal adjusted gross income for recent graduates of higher education institutions. The bill requires the Joint Committee on Government and Finance to review the effectiveness of the modification. The bill also provides for rule-making authority.
    
    As written, the bill sub-title is “PART I. GENERAL,”while W. Va. Code §11-21-12 (the section being modified) is under “PART II. RESIDENTS.”