Date Requested:February 22, 2013
Time Requested:01:29 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1388 Introduced SB29
CBD Subject: 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 in the bill.
    
     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, 2013.”
    
     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 assuming the bill is amended to change the start date.
    
     Under the assumption that the State Tax Department would not be expected to evaluate the effectiveness of this proposed tax credit program, additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.
    

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 for the tax year beginning on January 1, 2013 there would be an annual $310,000 reduction in taxes collected and attributed to the General Revenue Fund.
    
     Under the assumption that the State Tax Department would not be expected to evaluate the effectiveness of this proposed tax credit program, additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.


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 in the bill.
    
     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. The modification may be carried forward over a period not to exceed five taxable years.
    
     Screenings and referrals of adult indigent patients to eligible taxpayers are to be done by free clinics licensed by the State or by the Donated Dental Program. There is no reference to use in determining whether a clinic is a “free clinic.” Additionally, there is no Code reference to Donated Dental Program. The referring medical providers should be defined to reduce the potential of abuse in the administration of this modification.
    
     The January 1, 2013 start date may cause problems of administration.