Date Requested:February 21, 2013
Time Requested:05:19 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1679 Introduced HB2204
CBD Subject: TAX CREDIT FOR WOOD & PELLET STOVES
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 allow a credit against state personal income tax for the purchase of a new wood or pellet stove used in a home within the state. The bill also creates a credit for the purchase of wood pellets purchased in the state.
    
     According to our interpretation, this bill provides for two separate credits against Personal Income Tax. The first is a one-time credit of $300 for the purchase and installation of a new wood or pellet stove purchased on or after July 1, 2012. Based upon available data, this credit would result in a decrease of less than $100,000 per year to the General Revenue Fund.
    
     The second credit is a one-time $300 credit for the purchase of wood pellets within the state of West Virginia. We are unable to estimate the loss to the General Revenue Fund from this credit. The bill does not provide any limitations on either the amount of pellets purchased or the use for such pellets (i.e., no requirement the pellets are to be used in the pellet stove); therefore this credit is very broad in nature.
    
     Additionally, taxpayers may claim a federal energy efficiency tax credit under The American Taxpayer Relief Act of 2012, signed into law on January 1, 2013, which extended the credit for biomass stoves through December 31, 2013. Under this Act, taxpayers may take a $300 credit for the purchase of a biomass stove with a thermal efficiency rating of at least 75%. Biomass-burning stoves include wood and pellet burning stoves.
    
     There would be a one-time administrative cost of $30,600 to the State Tax Department for programming changes related to the new credit. Thereafter, there would be no additional administrative costs from the passage of this bill.
    

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 30,600 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 30,600 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     According to our interpretation, this bill provides for two separate credits against Personal Income Tax. The first is a one-time credit of $300 for the purchase and installation of a new wood or pellet stove purchased on or after July 1, 2012. Based upon available data, this credit would result in a decrease of less than $100,000 per year to the General Revenue Fund.
    
     The second credit is a one-time $300 credit for the purchase of wood pellets within the state of West Virginia. We are unable to estimate the loss to the General Revenue Fund from this credit. The bill does not provide any limitations on either the amount of pellets purchased or the use for such pellets (i.e., no requirement the pellets are to be used in the pellet stove); therefore this credit is very broad in nature.
    
     Additionally, taxpayers may claim a federal energy efficiency tax credit under The American Taxpayer Relief Act of 2012, signed into law on January 1, 2013, which extended the credit for biomass stoves through December 31, 2013. Under this Act, taxpayers may take a $300 credit for the purchase of a biomass stove with a thermal efficiency rating of at least 75%. Biomass-burning stoves include wood and pellet burning stoves.
    
     There would be a one-time administrative cost of $30,600 to the State Tax Department for programming changes related to the new credit. Thereafter, there would be no additional administrative costs from the passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to allow a credit against state personal income tax for the purchase of a new wood or pellet stove used in a home within the state. The bill also creates a credit for the purchase of wood pellets purchased in the state.
    
     The proposed bill provides for two credits against Personal Income Tax, one for the purchase of a new wood or pellet stove and another credit for the purchase of wood pellets within the State of West Virginia. However, the second credit provides no direction as to the quantity of wood pellets a taxpayer must purchase to claim the one-time $300 credit. As a result, the credit could exceed the price paid for the wood pellet fuel.
    
     The proposed bill does not define the term “residential dwelling” which could encompass numerous buildings.
    
     The bill may violate the Interstate Commerce Clause of the United States Constitution in that it discriminates against out-of-state produce retailers of wood pellets.
    
     Also, the bill allows for the credit for purchases made on or after July 1, 2012. Since this date is retroactive, taxpayers could take the credit against previous years by filing an amended return.