Date Requested:February 27, 2013
Time Requested:01:18 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1941 Introduced HB2745
CBD Subject: STUDENT AND COLLEGE GRADUATE TAX EXEMPTION
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 give current undergraduate students relief from paying state income taxes and graduates of undergraduate programs relief from state income taxes for a period of two years.
    
     As written, this bill proposes an exemption for any full-time student attending a state public institution of higher learning in an accredited undergraduate program and for the first two tax years following successful completion of an undergraduate program. A qualified taxpayer must present proof to claim this exemption showing that he or she has paid a minimum sum equal to or greater than seventy five percent of the tax liability that would have otherwise existed under Article 21; of the West Virginia Code, for the subject tax year to the higher education institution or other qualified lending entity to which the taxpayer has incurred a debt in the form of student loans. The tax exemption proposal authorizes the State Tax Commissioner to promulgate rules, as necessary, to carry out the purposes of the tax exemption law.
    
     According to our interpretation and based upon available information, passage of the proposed tax exemption would result in a reduction in the General Revenue Fund of roughly $12 million to $17 million per year. Due to the lack of an internal effective date, this proposed exemption would first become effective for tax years beginning on or after January 1, 2014.
    
     The State Tax Department will incur additional administrative costs associated with passage of this bill of roughly $200,000 in FY2015 and roughly $50,000 per year thereafter. The additional costs would be for form development and revision, programming changes and additional personnel to review documents the Taxpayer must present as proof of eligibility for the exemption.
    

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 0 200,000
Personal Services 0 0 50,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 150,000
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     The stated purpose of this bill is to give current undergraduate students relief from paying state income taxes and graduates of undergraduate programs relief from state income taxes for a period of two years.
    
     As written, this bill proposes an exemption for any full-time student attending a state public institution of higher learning in an accredited undergraduate program and for the first two tax years following successful completion of an undergraduate program. A qualified taxpayer must present proof to claim this exemption showing that he or she has paid a minimum sum equal to or greater than seventy five percent of the tax liability that would have otherwise existed under Article 21; of the West Virginia Code, for the subject tax year to the higher education institution or other qualified lending entity to which the taxpayer has incurred a debt in the form of student loans. The tax exemption proposal authorizes the State Tax Commissioner to promulgate rules, as necessary, to carry out the purposes of the tax exemption law.
    
     According to our interpretation and based upon available information, passage of the proposed tax exemption would result in a reduction in the General Revenue Fund of roughly $12 million to $17 million per year. Due to the lack of an internal effective date, this proposed exemption would first become effective for tax years beginning on or after January 1, 2014.
    
     The State Tax Department will incur additional administrative costs associated with passage of this bill of roughly $200,000 in FY2015 and roughly $50,000 per year thereafter. The additional costs would be for form development and revision, programming changes and additional personnel to review documents the Taxpayer must present as proof of eligibility for the exemption.


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to give current undergraduate students relief from paying state income taxes and graduates of undergraduate programs relief from state income taxes for a period of two years.
    
     The bill specifies only “a state public institution of higher learning,” but it does not specify which state. Presumably, it was intended to only apply to the State of West Virginia, but this is not clarified making it possible to include institutions in other states.