Date Requested:February 15, 2013
Time Requested:10:55 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1088 Introduced HB2276
CBD Subject: DENTIST'S DEDUCTION FOR INDIGENT DENTAL CARE
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 purpose of the bill is to provide a tax incentive to dental practitioners to perform dental services at no cost to indigent patients as defined.
    
     This bill creates a decreasing modification to federal adjusted gross income for Personal Income Tax filers (or to federal taxable income for Corporation Net Income Tax filers) of up to $15,000 of the defined dollar value of any dental services provided to indigent patients at no cost. As written, this bill defines indigent patient “as a West Virginia resident whose income is one hundred fifty percent or more below the federal poverty level, and who has no insurance coverage for dental care.” It is our interpretation that in order to qualify as indigent, as specified in the bill, a person would only qualify if they had negative income in excess of $6,000 (i.e., poverty level income less 150 percent of poverty level income). Additionally, the bill specifies that the proposed modification is for tax years beginning “after January 1, 2012.”
    
     Assuming that the bill would be amended to define an indigent patient as “a West Virginia resident whose income is no greater than one hundred fifty percent of the federal poverty guideline for the number of individuals in the family unit” and to apply the modification to tax years beginning “on or after January 1, 2013", passage of this bill would reduce General Revenue Fund collections by approximately $310,000 per year beginning in Fiscal Year 2014.
    
     If all returns with the proposed modification are accepted as filed additional administrative costs to the State Tax Department associated with this bill will be minimal. However, if the State Tax department would be required to verify the validity of the modification, additional administrative costs could be significant.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
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 -310,000
3. Explanation of above estimates (including long-range effect):
     This bill creates a decreasing modification to federal adjusted gross income for Personal Income Tax filers (or to federal taxable income for Corporation Net Income Tax filers), of up to $15,000 of the defined dollar value of any dental services provided to indigent patients at no cost.
    
     There are 908 active licensed West Virginia dentists and approximately 35% or 318 participate in free clinic programs. The estimated average federal adjusted gross income for West Virginia dentists is $180,000. If 318 dentists claim the full $15,000 modification on their Personal Income Tax or Corporation Net Income Tax there would be an annual $310,000 reduction in taxes collected and attributed to the General Revenue Fund.
     If all returns with the proposed modification are accepted as filed additional administrative costs to the State Tax Department associated with this bill will be minimal. However, if the State Tax department would be required to verify the validity of the modification, additional administrative costs could be significant.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The purpose of the bill is to provide a tax incentive to dental practitioners to perform dental services at no cost to indigent patients as defined.
    
     As written, this bill defines indigent patient “as West Virginia resident whose income is one hundred fifty percent or more below the federal poverty level, and who has no insurance coverage for dental care.” Since this would appear to only apply to person with negative income, the proposed bill may not have intended impact. Additionally, the bill specifies that the proposed modification is for tax year beginning “after January 1, 2012.” The phrase “on and after” is generally preferred for clarity.
    
     Screening and referrals to eligible taxpayers are to be done by free clinics recognized by the State or the Donated Dental Program. There is no reference to use of determining wether a clinic is a “free clinic.” Additionally, there is no Code reference to Donated Dental Program so it is possible there could be abuse in the administration of this modification.
    
     W. Va. Code §11-24-25 (CNIT) retains the same language, “taxable income of dentist,” while attempting to address corporation. Corporations cannot be licensed to practice dentistry, only individuals as per W. Va. Code §§30-4-3 (11) and (19).
    
     The January 1, 2012 start date may cause problems of administration.