West Virginia Senate Bill SB441

West Virginia 2023 Regular Session

• Introduced: 1/23/23
• Refer: 1/23/23
• Report Pass: 2/8/23

Caption

Removing additional one and one-half percent interest rate for tax underpayments

Impact

If enacted, SB441 could significantly affect state revenue by altering the financial penalties associated with tax underpayments. The reduction in interest rates may encourage timely tax payments, potentially increasing compliance among taxpayers who previously faced larger penalties. However, it might also result in decreased revenue for the state if taxpayers respond to lower penalties by delaying payments, expecting lesser financial implications. As the tax structure stands to be revised, the implications of this bill may warrant further evaluation regarding its long-term effects on state taxation and revenue stability.

Summary

Senate Bill 441 proposes to amend the West Virginia tax code by removing an additional one-and-one-half percent interest rate charged on tax underpayments. This change aims to simplify the provisions surrounding tax payments and reduce the financial burden on taxpayers by lowering the cost of underpayments. The bill specifically targets the interest penalties that have been in place since July 1, 2002, thereby standardizing the interest rate for tax underpayments to the basic rate of eight percent per annum instead of the increased rate previously enforced. The effective date for this amendment is set for after December 31, 2023.

Sentiment

The general sentiment around SB441 appears to be mixed, with proponents arguing that it offers relief to taxpayers by easing the financial stresses associated with tax underpayments. Supporters include those who believe that less punitive measures may foster a more cooperative relationship between taxpayers and the state. On the other hand, some critics may view the removal of this added interest as potentially jeopardizing state financial interests, worrying that it could lead to further delays in payment among non-compliant taxpayers, thus harming revenue streams essential for funding state services.

Contention

Notable points of contention regarding SB441 primarily center on the balance between encouraging compliance through reasonable penalty structures and maintaining sufficient state revenue. Advocates and opponents typically debate the extent to which repealing such interest rates could either foster a more cordial taxpayer relationship or inadvertently promote lax payment behavior. Legislators may also analyze contrary viewpoints on how tax policy adjustments could ultimately affect economic conditions, particularly for marginalized groups who may benefit more from punitive measures designed to ensure compliance.