Date Requested: January 23, 2015
Time Requested: 09:45 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1291 Introduced HB2176
CBD Subject: Tax


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 create a tax credit for certain businesses that locate within a twenty mile radius of a Hatfield-McCoy recreational trail head and in the same county as that trail head. The bill establishes variable amounts of the credit. The bill provides that the credit lasts for ten years. The bill defines a term. The bill provides rule-making authority.
    
    The bill creates a credit against Corporation Net Income Tax for certain businesses. According to the provisions of the bill, businesses that employ up to five new full-time employees are allowed a tax credit of $10,000. Businesses that employ between six and twelve new full-time employees are allowed a credit of $25,000. Businesses that employ between twenty-six and fifty new full-time employees are allowed a credit of $30,000. Finally, businesses that employ more than fifty new full- time employees are allowed a credit of $35,000. The loss to the General Revenue Fund between FY2016 and FY2026 cannot be determined. The bill does not clarify what constitutes new businesses or new employees.
    
    Additional administrative costs incurred by the State Tax Department would be $27,000 in FY2016 and $10,000 per fiscal year between FY2017 and FY2026.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 27,000 10,000
Personal Services 0 10,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 7,000 0
Other 0 10,000 0
2. Estimated Total Revenues 0 0 0


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


    The bill creates a credit against Corporation Net Income Tax for certain businesses. According to the provisions of the bill, businesses that employ up to five new full-time employees are allowed a tax credit of $10,000. Businesses that employ between six and twelve new full-time employees are allowed a credit of $25,000. Businesses that employ between twenty-six and fifty new full-time employees are allowed a credit of $30,000. Finally, businesses that employ more than fifty new full- time employees are allowed a credit of $35,000. The loss to the General Revenue Fund between FY2016 and FY2026 cannot be determined. The bill does not clarify what constitutes new businesses or new employees.
    
    Additional administrative costs incurred by the State Tax Department would be $27,000 in FY2016 and $10,000 per fiscal year between FY2017 and FY2026.
    
    
    



Memorandum


    The stated purpose of this bill is to create a tax credit for certain businesses that locate within a twenty mile radius of a Hatfield-McCoy recreation area trail head and in the same county as that trail head. The bill establishes variable amounts of the credit. The bill provides that the credit lasts for ten years. The bill defines a term. The bill provides rule-making authority.
    
    The bill’s provisions are not clearly defined which will result in difficulty in administration of the tax credit. A new business is undefined but the credit is available from the time the business is subject to Corporation Net Income Tax. The bill does not specify whether an established business that relocates or opens an additional business location within 20 miles of the trail head would be considered a “new business” for the purposes of the credit.
    
    There is no statement as to carryforward and carry back of unused credits. It would be useful to make the unavailability of carryforward or carry back provisions clear and to have provisions for enforcing the correct use of the credit.
    
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov