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 regulate illegal immigration in West Virginia. As written, this bill proposes a number of regulatory and administrative requirements relating to illegal immigrants. The provisions include identification of prohibited acts and the associated penalties; specification of the entities that may issue identification documentation; requirements for determining the citizenship status of persons charged with a criminal act; requirements for employers to register with and use a status verification system to verify the federal employment status of all new employees; requirements that agencies of the State, or its political subdivisions, verify the lawful presence of any person who applies for State or local benefits or selected federal benefits administered by agencies of the State, or its political subdivisions; requirements for additional Withholding Tax when independent contractors fail to provide to the contracting entity with documentation to verify the independent contractor’s employment authorization; limitations on post-secondary education benefits to individuals not lawfully present in the United States; establishment of a Fraudulent Documents Identification Unit within the Department of Public Safety. Among the bill’s many provisions, it appears that only the additional Withholding Tax requirement has the potential to affect the taxes and fees administered by the State Tax Department. The Withholding Tax provision requires contractors to withhold West Virginia Personal Income Tax at the top marginal rate on compensation paid to the employees of an independent contractor who fails to provide the contracting entity with an employee’s employment authorization. According to our interpretation, this provision would result in some non-quantifiable increase in State revenue. The revenue gain would be attributable to compliance gains associated with the possible capture of tax collections from a few non-filers. The bill may contain other provisions that may potentially affect revenue sources administered by agencies other than the State Tax Department. Additional administrative costs for the State Tax Department associated with this bill would be roughly $120,000 in Fiscal Year and roughly $45,000 in each succeeding year. Other government agencies would also incur additional administrative costs due to this bill. In some cases, the additional administrative costs could be significant.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2008 Increase/Decrease (use"-")	2009 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	120,000	45,000
Personal Services	0	45,000	45,000
Current Expenses	0	75,000	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

Passage of this bill would implement a number of regulatory and administrative requirements relating to illegal immigrants. The provisions include identification of prohibited acts and the associated penalties; specification of the entities that may issue identification documentation; requirements for determining the citizenship status of persons charged with a criminal act; requirements for employers to register with and use a status verification system to verify the federal employment status of all new employees; requirements that agencies of the State, or its political subdivisions, verify the lawful presence of any person who applies for State or local benefits or selected federal benefits administered by agencies of the State, or its political subdivisions; requirements for additional Withholding Tax when independent contractors fail to provide to the contracting entity with documentation to verify the independent contractor’s employment authorization; limitations on post-secondary education benefits to individuals not lawfully present in the United States; establishment of a Fraudulent Documents Identification Unit within the Department of Public Safety. Among the bill’s many provisions, it appears that only the additional Withholding Tax requirement has the potential to affect the taxes and fees administered by the State Tax Department. The Withholding Tax provision requires contractors to withhold West Virginia Personal Income Tax at the top marginal rate on compensation paid to the employees of an independent contractor who fails to provide the contracting entity with an employee’s employment authorization. According to our interpretation, this provision would result in some non-quantifiable increase in State revenue. The revenue gain would be attributable to compliance gains associated with the possible capture of tax collections from a few non-filers. The bill may contain other provisions that may potentially affect revenue sources administered by agencies other than the State Tax Department. Additional administrative costs for the State Tax Department associated with this bill would be roughly $120,000 in Fiscal Year and roughly $45,000 in each succeeding year. The additional costs include one-time costs for the printing and distribution of revised Withholding Tax tables to all employers in the State and recurring costs for the hiring of a new State Tax Department employee to monitor and track the Department’s compliance with the bill’s administrative requirements. Other government agencies would also incur additional administrative costs due to this bill. In some cases, the additional administrative costs could be significant.

Memorandum

The stated purpose of this bill is to regulate illegal immigration in West Virginia. In proposed W. Va. Code §15-14-6, the bill requires contracting entities to withhold state income tax at the top marginal income tax as provided in W. Va. Code §11-21-4(a). However, the correct citation is W. Va. Code §11-21-4(e).

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