Date Requested:January 09, 2014
Time Requested:02:09 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2014R1142 Introduced SB213
CBD Subject: REINTRO2013-551SOLAR ENERGY TAX CREDIT
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 apply the residential solar energy tax credit of up to $2,000 to each installation of a solar energy system. The bill extends the tax credit until July 1, 2021.
    
     According to our interpretation this bill would retroactively extend the Residential Solar Energy Tax Credit until July 1, 2021. The prior program expired as of July 1, 2013. The credit is offered to any West Virginia resident who installs a solar energy system on property located in this state and owned by the taxpayer that is used as a residence after July 1, 2009. The credit is for the lesser of 30% or $2,000 of the costs to purchase and install the system. With the extension of the Federal Residential Renewable Energy Tax Credit that offers a credit of up to 30% of the costs of a solar system in addition to the state tax credit the total cost of the State tax credit will likely increase in the future. Under existing law, the estimated cost of extending the Residential Solar Energy Tax Credit for FY2015 is $400,000. While current law provides that the tax credit can be up to a maximum of $2,000 for the installation of a solar energy system, the bill’s proposal to allow the credit for “systems” and to allow a tax credit up to a maximum of $2,000 “for each installation” may result in tax credit claims for a single residence well in excess of the current $2,000 limit. The pre-incentive cost of a solar energy system for a typical home is more than $40,000.
    
     Additional administrative costs to the State Tax Department would be $10,000 per year.

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 0 10,000
Personal Services 0 0 0
Current Expenses 0 0 10,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 -400,000
3. Explanation of above estimates (including long-range effect):
     The purpose of this bill is to apply the residential solar energy tax credit of up to $2,000 to each installation of a solar energy system. The bill extends the tax credit until July 1, 2021.
    
     According to our interpretation this bill would retroactively extend the Residential Solar Energy Tax Credit until July 1, 2021. The prior program expired as of July 1, 2013. The credit is offered to any West Virginia resident who installs a solar energy system on property located in this state and owned by the taxpayer that is used as a residence after July 1, 2009. The credit is for the lesser of 30% or $2,000 of the costs to purchase and install the system. With the extension of the Federal Residential Renewable Energy Tax Credit that offers a credit of up to 30% of the costs of a solar system in addition to the state tax credit the total cost of the State tax credit will likely increase in the future. Under existing law, the estimated cost of extending the Residential Solar Energy Tax Credit for FY2015 is $400,000. While current law provides that the tax credit can be up to a maximum of $2,000 for the installation of a solar energy system, the bill’s proposal to allow the credit for “systems” and to allow a tax credit up to a maximum of $2,000 “for each installation” may result in tax credit claims for a single residence well in excess of the current $2,000 limit. The pre-incentive cost of a solar energy system for a typical home is more than $40,000.
    
     Additional administrative costs to the State Tax Department would be $10,000 per year for the review of tax credit claims.


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to apply the residential solar energy tax credit of up to $2,000 to each installation of a solar energy system. The bill extends the tax credit until July 1, 2021.
    
     The proposed changes in the bill, as written, include the addition of the phrase “or systems” to current law references of “system” and the addition of the phrase “for each installation” to the current law reference of the maximum amount of tax credit (i.e., $2,000). However, the bill does not provide definitions for “systems” or for “each installation.” Absent definitions for these terms or phrases, the determination of what qualifies for the tax credit and the determination of the amount of qualifying tax credit could be subject to varying interpretations, thus increasing administrative costs and issues for both the State Tax Department and Taxpayers.