FISCAL NOTE
Date Requested: January 10, 2024
Time Requested: 09:45 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2283 |
Introduced |
HB4487 |
|
|---|
| CBD Subject: |
Finance and Administration |
|---|
|
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 provide a onetime fee and tax free day for a new for profit business or domestic corporation to obtain a license in this state.
According to our interpretation, the Tax Department in coordination with the Secretary of State shall designate three days per year when new for-profit businesses can register their business without paying the Business Registration Fee. This tax relief is only for one year. Businesses must be new and a resident of West Virginia. A corporate taxpayer must be a domestic corporation. The provisions of this bill attempt to grant a new business fee holiday for certain fees that were repealed many years ago, including the Corporation License Tax and Business Registration renewal fees. Under current law, the Tax Division collects a one-time only permanent license fee of $30. The Secretary of State collects an annual report fee from domestic and foreign corporations and limited liability companies.
Roughly 84 percent of new businesses registered in the State are domiciled in West Virginia. On average, nearly 5,200 new businesses domiciled in West Virginia are registered in the State annually. Passage of this bill would have no impact unless the one-time Business Registration Fee was removed permanently as opposed to delayed. Permanent removal would reduce General Revenue Fund collections by up to $160,000 in FY2025 and subsequent fiscal years. The bill also attempts to temporarily remove the Corporation License Tax, a tax that was repealed as of July 1, 2008.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
10,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
10,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-160,000 |
-160,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the Tax Department in coordination with the Secretary of State shall designate three days per year when new for-profit businesses can register their business without paying the Business Registration Fee. This tax relief is only for one year. Businesses must be new and a resident of West Virginia. A corporate taxpayer must be a domestic corporation. The provisions of this bill attempt to grant a new business fee holiday for certain fees that were repealed many years ago, including the Corporation License Tax and Business Registration renewal fees. Under current law, the Tax Division collects a one-time only permanent license fee of $30. The Secretary of State collects an annual report fee from domestic and foreign corporations and limited liability companies.
Roughly 84 percent of new businesses registered in the State are domiciled in West Virginia. On average, nearly 5,200 new businesses domiciled in West Virginia are registered in the State annually. Passage of this bill would have no impact unless the one-time Business Registration Fee was removed permanently as opposed to delayed. Permanent removal would reduce General Revenue Fund collections by up to $160,000 in FY2025 and subsequent fiscal years. The bill also attempts to temporarily remove the Corporation License Tax, a tax that was repealed as of July 1, 2008.
Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2024.
Memorandum
The stated purpose of this bill is to provide a onetime fee and tax free day for a new for profit business or domestic corporation to obtain a license in this state.
This bill does not accomplish its purpose as there are several issues with this bill. First the changes to W.Va. Code §11-12C-2 related to the Corporate License Tax are not applicable as this tax was terminated on July 1, 2008.
The proposed business registration fee waiver is only for the first year of paying the Business Registration Tax. However, pursuant to W.Va. Code §11-12-5, permanent registrations are available. Additionally, under W.Va. Code §11-12-5, there is a tax related to permanent business registration certificates granted on or after July 1, 2010. Since the proposed fee waiver only applies to the original business registration fee under W.Va. Code §11-12-3, but not the permanent business registration fee under W.Va. Code §11-12-5, the proposed bill does not appear to accomplish anything.
It is also unclear whether the proposed fee waivers would occur three separate days per year, or a one-time three-day period in which taxpayers enjoy the relief. Further it is not certain whether the business registration waiver will be repeated annually. It is also unclear whether the proposed fee waiver would apply to each location of the business.
This bill appears to violate the interstate commerce clause, as the proposed business registration fee waiver only provides relief to businesses that are domiciled in West Virginia.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov