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 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. Assuming an internal effective date of July 1, 2012, General Revenue Fund collections would increase by roughly $6.5 million to $7.0 million in FY2013. For FY2014 and beyond, passage of this bill would increase General Revenue Fund collections between $7.2 million to $7.7 million per year. Additional administrative costs to the State Tax Department associated with this bill will be minimal.



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):


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. Assuming an internal effective date of July 1, 2012, General Revenue Fund collections would increase by roughly $6.5 million to $7.0 million in FY2013. For FY2014 and beyond, passage of this bill would increase General Revenue Fund collections between $7.2 million to $7.7 million per year. 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