Date Requested:February 16, 2013
Time Requested:09:21 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1327 Introduced HB2072
CBD Subject: TAX EXEMPTION FOR SCHOOL SUPPLIES AND CLOTHES
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

     The stated purpose of this bill is to create an annual exemption for clothing, footwear and school supplies.
    
     According to our interpretation, passage of this bill would create a three-day annual sales tax holiday and would reduce General Revenue Fund Tax collections by approximately $1.8 million per year. As written, the bill would apply to clothing items under $100, not just back-to-school clothing items under $100. Additionally, computers or computer accessories, where the cost after credit for any manufacturer’s rebate is less than $750, would be exempt.
    
     Additional administrative costs to the State Tax Department would be $48,500 during the current fiscal year due to notifying taxpayers and vendors of the annual holiday. Thereafter, there would be no additional costs.
    

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 48,500 0 0
Personal Services 0 0 0
Current Expenses 48,500 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 -1,800,000
3. Explanation of above estimates (including long-range effect):
     The stated purpose of this bill is to create an annual exemption for clothing, footwear and school supplies.
    
     According to our interpretation, passage of this bill would create a three-day annual sales tax holiday and would reduce General Revenue Fund Tax collections by approximately $1.8 million per year. As written, the bill would apply to clothing items under $100, not just back-to-school clothing items under $100. Additionally, computers or computer accessories, where the cost after credit for any manufacturer’s rebate is less than $750, would be exempt.
    
     Additional administrative costs to the State Tax Department would be $48,500 during the current fiscal year due to notifying taxpayers and vendors of the annual holiday. Thereafter, there would be no additional costs.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to create an annual exemption for clothing, footwear and school supplies.
    
     This bill may be in violation of the Streamlined Sales and Use Tax Agreement (SSUTA). Under the Agreement, items exempted must be defined in Part II or Part III(B) of the Library of Definitions. Footwear is not defined in either of these two parts. Also, SSUTA requires that sales tax holidays be preceded by notice of at least 60 days in advance of the holiday. Since there is no effective date in the bill, the notice time line may be difficult fulfill by the first weekend in August 2013.