Date Requested:January 27, 2014
Time Requested:02:50 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2014R1197 Introduced SB433
CBD Subject: SALES TAX EXEMPTION FOR PRECIOUS METAL SALES
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 exempt sales of precious metals from the sales tax if the purchase is $5,000 or more and is an investment. The bill also defines the term “precious metal.”
    
     As written, the bill does not define “investment purposes.” Also, the bill defines “precious metal” to mean “gold, silver, platinum or other valuable metal.” Without certain definitions and clarifications including the forms in which precious metal can be purchased (e.g., bullion, coin, jewelry, etc.), the items that may be exempt upon passage of this bill may be very broad.
    
     Absent clear and unambiguous definitions as to what passage of this bill would exempt from the Consumers Sales and Service Tax (or complementary Use Tax), we are unable to accurately estimate the loss to the General Revenue Fund, but given the potential for broad application of the exemption the reduction in revenue could be substantial.
    
     Additional administrative costs to the State Tax Department resulting from passage of this bill could be significant due to lack of clear and unambiguous definitions as to what may be exempt.
    

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 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 0
3. Explanation of above estimates (including long-range effect):
     The stated purpose of this bill is to exempt sales of precious metals from the sales tax if the purchase is $5,000 or more and is an investment.
    
     As written, the bill does not define “investment purposes.” Also, the bill defines “precious metal” to mean “gold, silver, platinum or other valuable metal.” Without certain definitions and clarifications including the forms in which precious metal can be purchased (e.g., bullion, coin, jewelry, etc.), the items that may be exempt upon passage of this bill may be very broad.
    
     Absent clear and unambiguous definitions as to what passage of this bill would exempt from the Consumers Sales and Service Tax (or complementary Use Tax), we are unable to accurately estimate the loss to the General Revenue Fund, but given the potential for broad application of the exemption the reduction in revenue could be substantial.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to exempt sales of precious metals from the sales tax if the purchase is $5,000 or more and is an investment.
    
     While the stated intent of this bill is to exempt sales of precious metals when purchased for investment purposes from West Virginia sales tax, for lack of certain definitions and clarification, the bill may lead to administrative difficulty in enforcement. The bill does not define "investment purposes" or "other valuable metal," and defines "precious metals" very broadly. The inclusion of "other valuable metal" might allow for the inclusion and exclusion of metals such as copper, depending on its market value. By including "investment purposes" in the bill, proof of said purpose may pose enforcement difficulties.
    
     The bill does not address the form the "precious metals" may take, for example: bullion, coin, jewelry, etc. In some cases, "collectable" coins may contain "precious metal," but derive some or most of their value as an investment from their rarity.