Date Requested:February 17, 2012
Time Requested:03:00 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2242 Introduced SB624
CBD Subject: ALTERNATIVE FUEL
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 permit tax credits taken for the purchase of alternative fuel vehicles or conversion to alternative fuel vehicles or the construction of alternative fuel vehicle infrastructure to be transferred.
    
     As written, this bill would permit any entity, including a governmental entity, to transfer the right to the tax credit available for the purchase or conversion of alternative fuel vehicles or for the construction of alternative fuel vehicle refueling infrastructures, if the entity meets the definition of a taxpayer as defined in the tax credit statute. The bill provides that transferors or sellers must apply to the State Tax Department for approval of any transfer, sale or assignment of the tax credit. Additionally, the bill provides that the proceeds from the sale or transfer of the credit are exempt from the Consumers Sales and Service Tax, the Corporation Net Income Tax, and the Personal Income Tax.
    
     The Alternative-Fuel Motor Vehicles Tax Credit via W. Va. Code §11-6D-2(g) defines “taxpayer” as “any natural person, corporation, limited liability company or partnership subject to the tax imposed under article twenty-one, article twenty-three, or article twenty-four . . .” (i.e., Personal Income Tax, Business Franchise Tax, and Corporation net Income Tax). According to our interpretation, the proposed change would not include governmental entities because governmental entities are not taxpayers. The potential cost of this proposal would be minimal since the tax credit for non-governmental entities would likely have been used with or without a transfer, although the transfer would accelerate the use of the tax credit. However, if the proposal were to include governmental entities, the potential cost of this proposal could be significant since governments normally do not earn tax credits and the transfer of newly “earned credits” would represent additional costs to the State Treasury in excess of a normal tax credit program.
    
     Under existing law, taxpayers may receive tax credits equal to 35 percent of the purchase price of an alternative-fuel motor vehicle up to $7,500 for vehicles weighing less than 26,000 pounds and $25,000 for vehicles weighing more than 26,000 pounds. In addition, a taxpayer may receive a tax credit equal to 50 percent of the cost of installation of alternative fuel vehicle refueling infrastructure up to $250,000 per installation if not accessible to the public or $312,500 if accessible to the public. Allowing governments to sell credits for just a few buses, cars and refueling facilities could easily result in a the creation of a few million dollars worth of State tax credits.
    
     Current law may actually discourage purchases of compressed natural gas vehicles because tax credits of similar size are available for flex fuel vehicles which would comprise much than more than 99 percent of all sales.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 per year.
    

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 permit any entity, including a governmental entity, to transfer the right to the tax credit available for the purchase or conversion of alternative fuel vehicles or for the construction of alternative fuel vehicle refueling infrastructures, if the entity meets the definition of a taxpayer as defined in the tax credit statute. The bill provides that transferors or sellers must apply to the State Tax Department for approval of any transfer, sale or assignment of the tax credit. Additionally, the bill provides that the proceeds from the sale or transfer of the credit are exempt from the Consumers Sales and Service Tax, the Corporation Net Income Tax, and the Personal Income Tax.
    
     The Alternative-Fuel Motor Vehicles Tax Credit via W. Va. Code §11-6D-2(g) defines “taxpayer” as “any natural person, corporation, limited liability company or partnership subject to the tax imposed under article twenty-one, article twenty-three, or article twenty-four . . .” (i.e., Personal Income Tax, Business Franchise Tax, and Corporation net Income Tax). According to our interpretation, the proposed change would not include governmental entities because governmental entities are not taxpayers. The potential cost of this proposal would be minimal since the tax credit for non-governmental entities would likely have been used with or without a transfer, although the transfer would accelerate the use of the tax credit. However, if the proposal were to include governmental entities, the potential cost of this proposal could be significant since governments normally do not earn tax credits and the transfer of newly “earned credits” would represent additional costs to the State Treasury in excess of a normal tax credit program.
    
     Under existing law, taxpayers may receive tax credits equal to 35 percent of the purchase price of an alternative-fuel motor vehicle up to $7,500 for vehicles weighing less than 26,000 pounds and $25,000 for vehicles weighing more than 26,000 pounds. In addition, a taxpayer may receive a tax credit equal to 50 percent of the cost of installation of alternative fuel vehicle refueling infrastructure up to $250,000 per installation if not accessible to the public or $312,500 if accessible to the public. Allowing governments to sell credits for just a few buses, cars and refueling facilities could easily result in a the creation of a few million dollars worth of State tax credits.
    
     Current law may actually discourage purchases of compressed natural gas vehicles because tax credits of similar size are available for flex fuel vehicles which would comprise much than more than 99 percent of all sales.
    
     Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $50,000 per year due to the requirement to review and approve transfers of the tax credit.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
     The stated purpose of this bill is to permit tax credits taken for the purchase of alternative fuel vehicles or conversion to alternative fuel vehicles or the construction of alternative fuel vehicle infrastructure to be transferred.
    
     As written, the bill in proposed W. Va. Code §11-6D-10 refers only to the “transfer” of the tax credit while in the Section heading and in other places refers to “transfer or sale.” Additionally, the bill refers to “Corporate Net Income Tax” when the correct reference should be “Corporation Net Income Tax.”