Date Requested:February 10, 2005
Time Requested:01:11 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005r382 Intro HB2119
CBD Subject: Veterans 5-year Income Tax Exemption
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to exempt from state income tax, for five years, veterans and their spouses who locate in the state following separation from military service.
    
    According to our interpretation, passage of this bill would result in a decrease in State General Revenue Fund collections of at least $26 million per year beginning in FY2006-2007. Due to the lack of an internal effective date, this bill would not become effective until the 2006 tax year.
    
    The bill provides for a blanket income tax exemption to honorably discharged veterans and their immediate families for a period of five years following separation from military service. The bill also expands the five-year exemption qualification to any veteran, who was honorably discharged within a ten year period of the bills’s effective date.
    
    Additional administrative costs to the Tax Department, attributable to the collection and processing of information necessary for this five-year tax exemption program, would total $35,000.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 27,000
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 -26,000,000
3. Explanation of above estimates (including long-range effect):
    This bill provides a five-year blanket income tax exemption from the resident personal income tax to all honorably discharged veterans of the past ten years. Passage of this bill will reduce General Revenue Fund collections by at least $26 million per year beginning in FY2006-2007. The provisions of the bill would apply to all honorably discharged members of the military, who received their discharge over the past ten years.
    
    Additional administrative costs to the Tax Department, attributable to the collection and processing of information necessary for this five-year tax exemption program, would total $35,000 in FY2006-2007, and $27,000 in each year thereafter. The additional administrative costs include the hiring of one employee to review the application and supporting documentation required for the exemption.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us