Date Requested:January 09, 2014
Time Requested:11:05 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2014R1009 Introduced SB2
CBD Subject: TAX INCENTIVE TO DENTAL PRACTITIONERS
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 this bill is to provide a tax incentive to dental practitioners to perform dental services at no cost to indigent patients as defined in this 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 on or after January 1, 2014.
    
     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,” passage of this bill would reduce General Revenue Fund collections by approximately $310,000 per year beginning in Fiscal Year 2015.
    
     Additional administrative costs to the State Tax Department associated with this bill would be roughly $40,000 in FY2015.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2014
Increase/Decrease
(use"-")
2015
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 40,000 0
Personal Services 0 0 0
Current Expenses 0 40,000 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -310,000 -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 approximately 908 active licensed West Virginia dentists and approximately 35 percent 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 or after January 1, 2014 there would be an annual $310,000 reduction in taxes collected and attributed to the General Revenue Fund.
    
     Additional administrative costs to the State Tax Department associated with this bill would be roughly $40,000 in FY2015 for forms development, testing and printing.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated 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 this bill.
    
     The definition of indigent patient, as written in the bill, would include only those West Virginia residents with income of -$6,000 or less (i.e., negative income).
    
     The bill states that the screening 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.