FISCAL NOTE
Date Requested: February 21, 2025
Time Requested: 02:26 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1714 |
Introduced |
HB2766 |
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|---|
| CBD Subject: |
|
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FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to establish a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities.
Based on our interpretation, the bill would create a refundable tax credit for an individual who donates an eligible vehicle or a licensed automobile dealer who donates or sells an eligible vehicle through a qualified charitable organization that assists low-income workers with transportation needs. The maximum amount of credit is the higher of the fair market value of the vehicle, the difference between the fair market value and the reduced sales price or $6,000. A Qualified Charitable Organization is defined as a nonprofit under §501(c)(3) of the United State Code that is registered with the State of West Virginia and operates a program that assists low-income workers in this state with purchasing and financing affordable eligible vehicles.
The proposed bill creates a tax credit program which appears to closely approximate an existing tax credit program under W.Va. Code §11-13FF.
The legislation has no internal effective date. However, it does refer to credit caps beginning with Tax Year 2025.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue collection of up to $300,000 in FY2026, $300,000 in FY2027, and up to $1 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $27,500 in FY2026 and $11,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
27,500 |
11,000 |
| Personal Services |
0 |
11,000 |
11,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-300,000 |
-1,000,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the bill would create a refundable tax credit for an individual who donates an eligible vehicle or a licensed automobile dealer who donates or sells an eligible vehicle through a qualified charitable organization that assists low-income workers with transportation needs. The maximum amount of credit is the higher of the fair market value of the vehicle, the difference between the fair market value and the reduced sales price or $6,000. A Qualified Charitable Organization is defined as a nonprofit under §501(c)(3) of the United State Code that is registered with the State of West Virginia and operates a program that assists low-income workers in this state with purchasing and financing affordable eligible vehicles.
The legislation has no internal effective date. However, it does refer to credit caps beginning with Tax Year 2025.
There is currently a similar credit program under W.Va. Code §11-13FF. The current credit program limits the credit to the higher of 50 percent of the fair market value (or the difference between the fair market value and the sale price) or $2000. In addition, the current credit is non-refundable and must be used in the tax year in which the vehicle was donated. The proposed credit has a higher maximum credit, higher percentage of credit to fair market value, and it is refundable. These factors will likely encourage more potential vehicle donors to donate a vehicle instead of selling it and to donate the vehicle to a Charitable Organization which meets the criteria under this credit program. However, the proposed bill defines a “Low-Income Worker” as a person living in a household with total income at or below 150 percent of the federal poverty level. The current credit program under W.Va. Code §11-13FF defines a “Low-Income Worker as a person living in a household with total income at or below 200 percent of the federal poverty level. This change would likely reduce the number of low-income workers eligible for assistance under the proposed legislation verse those eligible under the current credit program.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue collection of up to $300,000 in FY2026, $300,000 in FY2027, and up to $1 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $27,500 in FY2026 and $11,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish a tax credit to facilitate the purchase of reliable and affordable vehicles to low-income working West Virginia men and women to expand access to employment opportunities.
This bill is very similar to the existing statute W.Va. Code §11-13FF.
The bill raises two major concerns: first, it states that “any person subject to the taxes imposed by the state of West Virginia…. Is entitled to a refundable credit….” But it fails to specify anywhere in the bill the specific tax against which the credit may be applied.
Second, whereas this bill purports to create a new article 11-14D in the code, there is an existing statute (and Legislative Rule) implementing just such a tax credit program as the one prescribed by this bill. See W.Va. Code §11-13FF and 110 C.S.R. 13FF (2020).
The bill also contains a title defect as the title states that “establishing the maximum amount of tax credits for tax years 2021 through 2022 at $300,000, but §11-14D-3(c) instead uses the years 2025 and 2026.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov