Date Requested:February 15, 2012
Time Requested:03:16 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2187 Introduced HB4547
CBD Subject: INNOVATION FREE TRADE ACT
FUND(S)
General Revenue Fund, local governments
Sources of Revenue
General Fund,Other Fund local property tax
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 enact the West Virginia Innovation Free-Trade Act of 2012 consisting of West Virginia Innovation Free-Trade Business Technology Property Valuation Act and the West Virginia Innovation Free-Trade Tax Credit Act, the purpose of which is to encourage the development and use in this state of emerging technologies to create good jobs and grow West Virginia’s economy. The bill defines terms. The bill specifies the method for valuation of certain property. The bill provides for application to county assessors by specified date. The bill provides a procedure for protest and appeal of determination by county assessor. The bill requires the West Virginia Development Office to report to the Joint Committee on Government and Finance on the economic impact. The bill makes legislative findings. The bill allows credit and exemption from certain taxes. The bill provides for computation of credit, application of credit and period for which credit is allowed. The bill requires an application to claim the credit. The bill requires that new jobs be good-paying jobs with health benefits. The bill requires identification of investment credit property and recomputation of credit in event of premature disposition of investment property. The bill provides for forfeiture of unused tax credits and redetermination of credit allowed. The bill imposes recapture tax under specified circumstances to recover state taxes and property taxes. The bill allows transfer of qualified investment to successors. The bill provides rules for failure to keep records of investment credit property. The bill provides rules for interpretation and construction of act. The bill provides for tax credit review and accountability. The bill specifies effective dates and termination dates. The bill provides rule-making authority. The bill provides a severability clause.
    
    As written, this bill would create a tax credit for capital investment and development of the use in West Virginia of “innovative business technologies,” would set the valuation, for Property Tax purposes, of “innovative business technologies” at 5 percent of the original cost, and would provide an exemption for eligible businesses from sales and use taxes on tangible personal property (excluding motor fuels and motor vehicles, unless the vehicle is an alternative fuel vehicle) and services purchased for use or consumption by the eligible taxpayer in the emerging technology business activity. The bill indicates “innovative business technologies” includes, but is not limited to, emerging technologies and other business technologies that primarily use state-of-the-art methodologies, practices or techniques to manufacture, produce or provide its primary goods or services. The tax credit would be available to new businesses or a new segment of a business primarily engaged in an emerging technology industry or is primarily utilizing new innovative business technologies. The amount of credit is based upon the amount of qualified investment and number of jobs created. Additionally, the bill provides criteria for the eligible new jobs, including the median compensation and benefits. Also, reports on the tax credit and Property Tax valuation are required.
    
    The State Tax Department does not have sufficient data to estimate the potential revenue impact of this proposed credit or the proposed Property Tax valuation.
    
    As written, the bill requires the State Tax Department to develop application forms, to review and approve applications for the credit and to prepare a periodic report on the credit. Additional administrative costs to the State Tax Department associated with passage of this bill would be at least $50,000 per year. Also, county assessors and the Development Office may incur additional administrative costs attributable to passage of this bill.
    

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):
    As written, this bill would create a tax credit for capital investment and development of the use in West Virginia of “innovative business technologies,” would set the valuation, for Property Tax purposes, of “innovative business technologies” at 5 percent of the original cost, and would provide an exemption for eligible businesses from sales and use taxes on tangible personal property (excluding motor fuels and motor vehicles, unless the vehicle is an alternative fuel vehicle) and services purchased for use or consumption by the eligible taxpayer in the emerging technology business activity. The bill indicates “innovative business technologies” includes, but is not limited to, emerging technologies and other business technologies that primarily use state-of-the-art methodologies, practices or techniques to manufacture, produce or provide its primary goods or services. The tax credit would be available to new businesses or a new segment of a business primarily engaged in an emerging technology industry or is primarily utilizing new innovative business technologies. The amount of credit is based upon the amount of qualified investment and number of jobs created. Additionally, the bill provides criteria for the eligible new jobs, including the median compensation and benefits. Also, reports on the tax credit and Property Tax valuation are required.
    
    The State Tax Department does not have sufficient data to estimate the potential revenue impact of this proposed credit or the proposed Property Tax valuation.
    
    As written, the bill requires the State Tax Department to develop application forms, to review and approve applications for the credit (including determining as to whether or not potential innovative business technologies were in commercial use anywhere in the United States prior to July 1, 2012) and to prepare a periodic report on the credit. Additional administrative costs to the State Tax Department associated with passage of this bill would be at least $50,000 per year. Also, county assessors and the Development Office may incur additional administrative costs attributable to passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to enact the West Virginia Innovation Free-Trade Act of 2012 consisting of West Virginia Innovation Free-Trade Business Technology Property Valuation Act and the West Virginia Innovation Free-Trade Tax Credit Act, the purpose of which is to encourage the development and use in this state of emerging technologies to create good jobs and grow West Virginia’s economy. The bill defines terms. The bill specifies the method for valuation of certain property. The bill provides for application to county assessors by specified date. The bill provides a procedure for protest and appeal of determination by county assessor. The bill requires the West Virginia Development Office to report to the Joint Committee on Government and Finance on the economic impact. The bill makes legislative findings. The bill allows credit and exemption from certain taxes. The bill provides for computation of credit, application of credit and period for which credit is allowed. The bill requires an application to claim the credit. The bill requires that new jobs be good-paying jobs with health benefits. The bill requires identification of investment credit property and recomputation of credit in event of premature disposition of investment property. The bill provides for forfeiture of unused tax credits and redetermination of credit allowed. The bill imposes recapture tax under specified circumstances to recover state taxes and property taxes. The bill allows transfer of qualified investment to successors. The bill provides rules for failure to keep records of investment credit property. The bill provides rules for interpretation and construction of act. The bill provides for tax credit review and accountability. The bill specifies effective dates and termination dates. The bill provides rule-making authority. The bill provides a severability clause.
    
    As written, the definition of innovative business technologies does “not include any technology that was in commercial use anywhere in the United States prior to July 1, 2012.” However, the bill does not provide a definition of “commercial use.” The bill indicates that qualification for the special valuation and tax credit includes a requirement that the “new jobs created be good paying jobs . . .” However, the lack of a clear definition of “good paying” may lead to widely different interpretations.
    
    The language in proposed W. Va. Code §11-13CC-11(c) includes a reference to “section nine of article 13CC,” when the reference should probably be to “section seven.”