FISCAL NOTE
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 provide a modification in the state personal income tax by reducing the federal adjusted gross income for motor fuel expenses incurred in commuting to and from one’s occupation at the mileage rate allowed at the federal income tax level by the federal Internal Revenue Service.
The passage of this bill would result in a loss to the General Revenue Fund of approximately $176-188 million for FY2010 due to the effective date being January 1, 2009. The loss to the General Revenue Fund would be approximately $88-94 million in subsequent fiscal years.
If all returns are accepted as filed, there would be no additional administrative costs to the State Tax Department.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
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 |
-90,800,000 |
Explanation of above estimates (including long-range effect):
The passage of this bill would result in a loss to the General Revenue Fund of approximately $176-188 million for FY2010 due to the effective date being January 1, 2009. The loss to the General Revenue Fund would be approximately $88-94 million in subsequent fiscal years. Over 92 percent of all workers in the state commute to work in private transportation. Any person who commutes to work would be entitled to reduce their adjusted gross income by some amount, making this modification very broad based.
If all returns are accepted as filed, there would be no additional administrative costs to the State Tax Department.
Memorandum
The stated purpose of this bill is to provide a modification in the state personal income tax by reducing the federal adjusted gross income for motor fuel expenses incurred in commuting to and from one’s occupation at the mileage rate allowed at the federal income tax level by the federal Internal Revenue Service.
There are a number of administration and compliance related concerns. It would not be possible to verify the correctness of the reducing modification on the respective personal income tax returns, and thereby prevent abuse. For example, will employees driving vehicles provided by employers still be able to use the reducing modification? There is nothing in the bill that prevents that from occurring.
Additionally, the current federal milage allowance effective January 1, 2009 is 55 cents per mile; that amount may increase or decrease during the year. There could very well be problems assuring that the correct allowance is used within the appropriate time frames.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us