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 the bill is to add the taxable income or loss of any corporation that is a member of a unitary group and that is incorporated in certain jurisdictions considered to be tax havens to federal taxable income for purposes of determining state taxable income. As written, this bill would require the taxable income or loss of corporations that are members of a unitary group and that are incorporated in certain specified jurisdictions to be added to the “federal consolidated taxable income”of the unitary group for purposes of determining taxable income for the West Virginia Corporation Net Income Tax. The bill also requires the State Tax Commissioner to file (1) a one-time report on the use of out-of-state tax shelters, and (2) a recurring report of recommendations for legislation regarding the jurisdictions to be subject to the provisions of this bill relating to taxable income. The State Tax Department does not have sufficient information to determine the potential revenue impact of this proposal. Additional administrative costs to the State Tax Department associated with passage of the bill would be roughly $60,000 in FY2015 and roughly $50,000 each year thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2014
Increase/Decrease
(use"-")
2015
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 60,000 50,000
Personal Services 0 50,000 50,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 5,000 0
Other 0 5,000 0
2. Estimated Total Revenues 0 0 0


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


Passage of this bill would require the taxable income or loss of corporations that are members of a unitary group and that are incorporated in certain specified jurisdictions to be added to the “federal consolidated taxable income ”of the unitary group for purposes of determining taxable income for the West Virginia Corporation Net Income Tax. The bill also requires the State Tax Commissioner to file (1) a one-time report on the use of out-of-state tax shelters, and (2) a recurring report of recommendations for legislation regarding the jurisdictions to be subject to the provisions of this bill relating to taxable income. The State Tax Department does not have sufficient information to determine the potential revenue impact of this proposal. Additional administrative costs to the State Tax Department associated with passage of the bill would be roughly $60,000 in FY2015 and roughly $50,000 each year thereafter. The additional costs would include the hiring of one additional employee to perform the research and reporting required by this bill.



Memorandum


The stated purpose of the bill is to add the taxable income or loss of any corporation that is a member of a unitary group and that is incorporated in certain jurisdictions considered to be tax havens to federal taxable income for purposes of determining state taxable income. As written, the bill references “federal consolidated taxable income” and the stated purpose references “federal taxable income.” The different terminology may lead to different interpretations of the income to use. Existing Corporation Net Income Tax law may already require the consideration of taxable income for unitary groups as proposed by this bill.



    Person submitting Fiscal Note: Mark B. Muchow
    Email Address: Roger.D.Cox@wv.gov