Date Requested: January 29, 2015
Time Requested: 02:18 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2515 Introduced HB2490
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 establishing a tax credit for new businesses that locate in the state. The bill sets forth how the credit is determined. The bill establishes the conditions that must be set to qualify for the credit. The bill defines terms.
    
    According to our interpretation, the provisions of this bill would add an additional alternative Economic Opportunity Tax Credit option to current law tax credit options for general investment and job expansion (Section 11-13Q-4), for job expansion by qualified small businesses (Section 11-13Q-10), for job expansion by corporate headquarter relocations (Section 11-13Q-5), for job expansion for specified high technology manufacturers (Section 11-13Q-10a) and for small jobs expansions by businesses not otherwise satisfying the general new jobs threshold requirements (Section 11-13Q-22). The new addition adds additional complexity to the current Law. The additional option would only apply to new businesses that locate in the State and create at least 15 jobs (existing businesses that expand would not qualify) and would count jobs created within a two year period occurring from one year prior to investment up through one year following investment. The additional option also allows tax credits for business sectors previously excluded from participation, including among others, the mining sector, retail trade sector, public utility sector and certain service sectors (e.g., medical, legal and accounting firms). We would anticipate additional tax credit costs related to new businesses among those sectors that normally expand in the current economy. Prime examples would be tax credits for natural gas industry expansion associated with technological advancements in horizontal drilling and medical service industry expansion associated with an aging State population. The net future cost to the State General Revenue Fund cannot be determined.
    
    Additional administrative costs to the Tax Department would be at least $10,000 per year due to anticipation of greater volume of tax credit applications requiring responding correspondence and related rulings.
    
    
    



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 10,000 10,000
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 0


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


    According to our interpretation, the provisions of this bill would add an additional alternative Economic Opportunity Tax Credit option to current law tax credit options for general investment and job expansion (Section 11-13Q-4), for job expansion by qualified small businesses (Section 11-13Q-10), for job expansion by corporate headquarter relocations (Section 11-13Q-5), for job expansion for specified high technology manufacturers (Section 11-13Q-10a) and for small jobs expansions by businesses not otherwise satisfying the general new jobs threshold requirements (Section 11-13Q-22). The new addition adds additional complexity to the current Law. The additional option would only apply to new businesses that locate in the State and create at least 15 jobs (existing businesses that expand would not qualify) and would count jobs created within a two year period occurring from one year prior to investment up through one year following investment. The additional option also allows tax credits for business sectors previously excluded from participation, including among others, the mining sector, retail trade sector, public utility sector and certain service sectors (e.g., medical, legal and accounting firms). We would anticipate additional tax credit costs related to new businesses among those sectors that normally expand in the current economy. Prime examples would be tax credits for natural gas industry expansion associated with technological advancements in horizontal drilling and medical service industry expansion associated with an aging State population. The net future cost to the State General Revenue Fund cannot be determined.
    
    Additional administrative costs to the Tax Department would be at least $10,000 per year due to anticipation of greater volume of tax credit applications requiring responding correspondence and related rulings.
    
    



Memorandum


    The stated purpose of this bill is establishing a tax credit for new businesses that locate in the state. The bill sets forth how the credit is determined. The bill establishes the conditions that must be set to qualify for the credit. The bill defines terms.
    
    The bill title fails to fully reflect changes provided in the text of the bill.
    
    



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