H. B. 2020
(By Mr. Speaker, Mr. Kiss [By Request]
[Introduced February 12, 1997; referred to the
Committee on Finance.]
A BILL to amend and reenact section five, article thirteen-c,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, all relating to the
application of deferred credit amount.
Be it enacted by the Legislature of West Virginia:
That section five, article thirteen-c, chapter eleven of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended and reenacted to read as follows:
ARTICLE 13C. BUSINESS INVESTMENT AND JOBS EXPANSION CREDIT.
§11-13C-5. Application of annual credit allowance.
(a)
In general. -- The aggregate annual credit allowance for
the current taxable year is an amount equal to the sum of the
following as modified under subsections (o) and (p) of this section:
(1) The one-tenth part allowed under section four of this
article for qualified investment placed into service or use
during a prior taxable year; plus
(2) The one-tenth part allowed under section four of this
article for qualified investment placed into service or use
during the current taxable year; plus
(3) The one-tenth part allowed under section four-a of this
article for locating corporate headquarters in this state; or the
amount allowed under section seven-a of this article of the
taxable year.
(b)
Application of current year annual credit allowance. --
The amount determined under subsection (a) of this section shall
be allowed as a credit against that portion of the taxpayer's
state tax liability which is attributable to and the direct
result of the taxpayer's qualified investment, and shall be
applied as provided in subsections (c) through (k), both
inclusive, of this section, and in that order.
(c)
Business and occupation taxes. --
(1) That portion of the allowable credit attributable to
qualified investment in a business or other activity subject to
the taxes imposed by article thirteen of this chapter shall first
be applied to reduce up to eighty percent of the taxes imposed by
said article for the taxable year (determined before application of allowable credits against tax and the annual exemption).
(2) If the taxes due under article thirteen of this chapter
are not solely attributable to and the direct result of the
taxpayer's qualified investment in a business or other activity
taxable under said article, the amount of
such the taxes, which
are so attributable, shall be determined by multiplying the
amount of taxes due under said article, for the taxable year
(determined before application of any allowable credits against
tax and the annual exemption), by a fraction, the numerator of
which is all wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer employed in
this state, whose positions are directly attributable to the
qualified investment in a business or other activity taxable
under said article. The denominator of the fraction shall be the
wages, salaries and other compensation paid during the taxable
year to all employees of the taxpayer employed in this state,
whose positions are directly attributable to the business or
other activity of the taxpayer that is taxable under said
article.
(3) The annual exemption allowed by section three, article
thirteen of this chapter, plus any credits allowable under
articles thirteen-d and thirteen-e of this chapter, shall be
applied against and reduce only the portion of article thirteen taxes not apportioned to the qualified investment under this
article:
Provided, That any excess exemption or credits may be
applied against the amount of article thirteen taxes apportioned
to the qualified investment under this article, that is not
offset by the amount of annual credit against
such the taxes
allowed under this article for the taxable year, unless their
application is otherwise prohibited by this chapter.
(d)
Carrier income taxes. --
(1) That portion of the allowable credit attributable to
qualified investment in a business or other activity subject to
the taxes imposed by article twelve-a of this chapter shall first
be applied to reduce up to eighty percent of the taxes imposed by
said article for the taxable year.
(2) If the taxes due under article twelve-a of this chapter
are not solely attributable to and the direct result of the
taxpayer's qualified investment in a business or other activity
taxable under said article, the amount of such taxes, which are
so attributable, shall be determined by multiplying the amount of
taxes due under said article for the taxable year, by a fraction,
the numerator of which is all wages, salaries and other
compensation paid during the taxable year to all employees of the
taxpayer employed in this state, whose positions are directly
attributable to the qualified investment in a business or other activity taxable under said article. The denominator of the
fraction shall be the wages, salaries and other compensation paid
during the taxable year to all employees of the taxpayer,
employed in this state, whose positions are directly attributable
to the business or other activity of the taxpayer that is taxable
under said article.
(e)
Severance taxes. --
(1) On and after the first day of July, one thousand nine
hundred eighty-seven, that portion of the allowable credit
attributable to qualified investment in a business or other
activity subject to the tax imposed by article thirteen-a of this
chapter, and qualified investment in a business or activity that
was subject to the tax imposed by article thirteen of this
chapter prior to said first day of July, but on and after said
first day of July, is subject to the tax imposed by article
thirteen-a of this chapter, shall first be applied to reduce up
to eighty percent of the taxes imposed by said article for the
taxable year (determined before application of any allowable
credits against tax).
(2) If the taxes due under article thirteen-a of this
chapter are not solely attributable to and the direct result of
the taxpayer's qualified investment in a business or other
activity taxable under said article, the amount of
such the taxes which are so attributable, shall be determined by multiplying the
amount of taxes due under said article for the taxable year
(determined before application of any allowable credits against
tax), by a fraction, the numerator of which is all wages,
salaries and other compensation paid during the taxable year to
all employees of the taxpayer employed in this state, whose
positions are directly attributable to the qualified investment
in a business or other activity taxable under said article. The
denominator of the fraction shall be the wages, salaries and
other compensation paid during the taxable year to all employees
of the taxpayer employed in this state, whose positions are
directly attributable to the business or other activity of the
taxpayer that is taxable under said article.
(3) Any credits allowable under articles thirteen-d and
thirteen-e of this chapter shall be applied against and reduce
only the portion of article thirteen-a taxes not apportioned to
the qualified investment under this article:
Provided, That any
excess credits may be applied against the amount of article
thirteen taxes apportioned to the qualified investment under this
article, that is not offset by the amount of annual credit
against such taxes allowed under this article for the taxable
year, unless their application is otherwise prohibited by this
chapter.
(f)
Telecommunications taxes. --
(1) On and after the first day of July, one thousand nine
hundred eighty-seven, that portion of the allowable credit
attributable to qualified investment in a business or other
activity subject to the taxes imposed by article thirteen-b of
this chapter, shall first be applied to reduce up to eighty
percent of the taxes imposed by said article for the taxable year
(determined before application of allowable credits against tax)
and qualified investment in a business or activity that was
subject to the taxes imposed by article twelve-a of this chapter
prior to said first day of July, but on and after said first day
of July is subject to the tax imposed by article thirteen-b of
this chapter.
(2) If the taxes due under article thirteen-b of this
chapter are not solely attributable to and the direct result of
the taxpayer's qualified investment in a business or other
activity taxable under said article, the amount of
such the
taxes, which are so attributable, shall be determined by
multiplying the amount of taxes due under said article for the
taxable year (determined before application of any allowable
credits against tax), by a fraction, the numerator of which is
all wages, salaries and other compensation paid during the
taxable year to all employees of the taxpayer employed in this state whose positions are directly attributable to the qualified
investment in a business or other activity taxable under said
article. The denominator of the fraction shall be the wages,
salaries and other compensation paid during the taxable year to
all employees of the taxpayer employed in this state whose
positions are directly attributable to the business or other
activity of the taxpayer that is taxable under said article.
(g)
Business franchise tax. --
(1) On and after the first day of July, one thousand nine
hundred eighty-seven, that portion of the allowable credit
attributable to qualified investment in a business or activity
subject to the taxes imposed by article twenty-three of this
chapter, and qualified investment in a business or activity that
was subject to the taxes imposed by article thirteen of this
chapter prior to said first day of July, but on and after said
first day of July, is subject to the tax imposed by article
twenty-three of this chapter, shall first be applied to reduce up
to eighty percent of the taxes imposed by said article for the
taxable year (determined after application of the credits against
tax provided in section seventeen of said article, but before
application of any other allowable credits against tax).
(2) If the taxes due under article twenty-three of this
chapter are not solely attributable to and the direct result of the taxpayer's qualified investment in a business or other
activity taxable under said article for the taxable year
(determined after application of the credits against tax provided
in section seventeen of said article, but before application of
any other allowable credits), by a fraction, the numerator of
which is all wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer employed in
this state, whose positions are directly attributable to the
qualified investment in a business or other activity taxable
under said article. The denominator of the fraction shall be
wages, salaries and other compensation paid during the taxable
year to all employees of the taxpayer employed in this state,
whose positions are directly attributable to the business or
other activity of the taxpayer that is taxable under said
article.
(3) Any credits allowable under articles thirteen-d and
thirteen-e of this chapter shall be applied against and reduce
only the portion of article twenty-three taxes not apportioned to
the qualified investment under this article:
Provided, That any
excess exemption or credits may be applied against the amount of
article twenty-three taxes apportioned to the qualified
investment under this article that is not offset by the amount of
annual credit against such taxes allowed under this article for the taxable year, unless their application is otherwise
prohibited by this chapter.
(h)
Corporation net income taxes. --
(1) After application of subsections (c) through (g), both
inclusive of this section, any unused credit shall next be
applied to reduce up to eighty percent of the taxes imposed by
article twenty-four of this chapter for the taxable year
(determined before application of allowable credits against tax).
(2) If the taxes due under article twenty-four of this
chapter (determined before application of allowable credits
against tax) are not solely attributable to and the direct result
of the taxpayer's qualified investment, the amount of such taxes
which are so attributable, shall be determined by multiplying the
amount of taxes due under said article for the taxable year
(determined before application of allowable credits against tax),
by a fraction, the numerator of which is all wages, salaries and
other compensation paid during the taxable year to all employees
of the taxpayer employed in this state whose positions are
directly attributable to the qualified investment. The
denominator of the fraction shall be the wages, salaries and
other compensation paid during the taxable year to all employees
of the taxpayer employed in this state.
(3) Any credits allowable under article twenty-four of this chapter shall be applied against and reduce only the amount of
article twenty-four taxes not apportioned to the qualified
investment under this article:
Provided, That any excess credits
may be applied against the amount of article twenty-four taxes
apportioned to the qualified investment under this article that
is not offset by the amount of annual credit against
such the
taxes allowed under this article for the taxable year, unless
their application is otherwise prohibited by this chapter.
(i)
Personal income taxes. --
(1) If the person making the qualified investment is an
electing small business corporation (as defined in Section 1361
of the United States Internal Revenue Code of 1954, as amended),
a partnership or a sole proprietorship, then any unused credit
(after application of subsections (c), (d), (e), (f) and (g))
shall be allowed as a credit against up to eighty percent of the
taxes imposed by article twenty-one of this chapter on the income
from business or other activity subject to tax under article
twelve-a, thirteen, thirteen-a, thirteen-b or twenty-three of
this chapter.
(2) Electing small business corporations, partnerships and
other unincorporated organizations shall allocate the credit
allowed by this article among its members in the same manner as
profits and losses are allocated for the taxable year.
(3) If the amount of taxes due under article twenty-one of
this chapter (determined before application of allowable credits
against tax) that is attributable to business, is not solely
attributable to and the direct result of the qualified investment
of the electing small business corporation, partnership, other
unincorporated organization or sole proprietorship, the amount of
such taxes which are so attributable shall be determined by
multiplying the amount of taxes due under said article
(determined before application of allowable credits against tax),
that is attributable to business by a fraction, the numerator of
which is all wages, salaries and other compensation paid during
the taxable year to all employees of the electing small business
corporation, partnership, other unincorporated organization or
sole proprietorship employed in this state, whose positions are
directly attributable to the qualified investment. The
denominator of the fraction shall be the wages, salaries and
other compensation paid during the taxable year to all employees
of the taxpayer.
(4) No credit shall be allowed under this section against
any employer withholding taxes imposed by article twenty-one of
this chapter.
(j) For tax years beginning after the thirty-first day of
December, one thousand nine hundred ninety-two, and thereafter, if the formula provisions of subsections (c) through (i) of this
section, inclusive, do not fairly represent the taxes solely
attributable to and the direct result of the taxpayer's qualified
investment of the taxpayer and all other project participants in
the business or other activity subject to tax, the commissioner
may require, in respect to all or any part of the taxpayer's
businesses or activities, if reasonable:
(1) Separate accounting or identification; or
(2) Adjustment to the wages formula to reflect all
components of the tax liability; or
(3) The inclusion of one or more additional factors which
will fairly represent the taxes solely attributable to and the
direct result of the qualified investment of the taxpayer and all
other project participants in the businesses or other activities
subject to tax; or
(4) The employment of any other method to effectuate an
equitable attribution of the taxes.
In order to effectuate the purposes of this subsection, the
commissioner shall propose for promulgation legislative rules in
accordance with article three, chapter twenty-nine-a of this
code:
Provided, That the initial promulgation may be by
emergency rule. The rule shall set forth the standards by which
this subsection will be implemented and enforced:
Provided, however, That with regard to investment placed in service prior
to the passage of this provision, taxpayers having a specific
written determination from the tax commissioner that the taxpayer
is authorized or required to take credit against tax not
attributable to qualified investment shall not be subject to the
alternative allocation of credit provided for under this
subsection.
(k)
Sales and use taxes. --
On and after the first day of July, one thousand nine
hundred eighty-seven, for purchases of tangible personal property
and taxable services made on or after that date, that portion of
the allowable credit, which is attributable to qualified
investment in a business or activity subject to the taxes imposed
by articles fifteen and fifteen-a of this chapter on purchases
for use or consumption in the conduct of
such the business or
activity, shall be applied to reduce up to eighty percent of the
taxes imposed by said articles on purchases that are directly
used or consumed in the qualified investment activity. When
property and services purchased for use or consumption are not
solely used or consumed in the qualified investment activity, the
cost thereof shall be apportioned between such activities. Only
that amount apportioned to purchases directly used or consumed in
the qualified investment activity shall be included when applying the credit allowable under this subsection. On and after the
first day of July, one thousand nine hundred ninety-three, for
purchases of tangible personal property and taxable services made
on or after that date for use or consumption in the conduct of
business, no portion of the allowable credit may be applied
against the taxes imposed by said articles.
(l)
Ad valorem property taxes; unemployment taxes and
workers' compensation premiums. --
(1) After application of subsections (a) through (i), both
inclusive, of this section, any unused credit shall be applied as
a rebate for payment of the sum of the following amounts:
(A) Eighty percent of the ad valorem property taxes imposed
by levying bodies pursuant to article eight of this chapter, for
the taxable year (including payments in lieu of such taxes), on
property of the taxpayer that is directly attributable to the
qualified investment (including property having a useful life of
less than four years) of the taxpayer, in the new or expanded
business facility of the taxpayer resulting in new jobs; plus
(B) Eighty percent of the taxes imposed by article five,
chapter twenty-one-a of this code for the taxable year
attributable to the compensation of new employees filling the new
jobs that are directly attributable to the qualified investment;
plus
(C) Twenty percent of the workers' compensation premiums
imposed by article two, chapter twenty-three of this code, for
the taxable year attributable to the compensation paid new
employees filling the new jobs, that are directly attributable
to the qualified investment.
(2) A taxpayer eligible to claim this rebate shall apply
either the amount of the unused credit or the sum determined
under subdivision (1) of this subsection, whichever is less,
against the remaining twenty percent of the taxes imposed by
articles twelve-a, thirteen, thirteen-a, thirteen-b, twenty-one,
twenty-three and twenty-four of this chapter, attributable to the
qualified investment under this article. If any amount of rebate
remains after its application against the remaining twenty
percent of taxes as aforesaid, the amount remaining shall be
carried forward to each ensuing tax year until used or the
expiration of the twelfth subsequent tax year in which the
qualified investment was placed in service or use in this state
by the taxpayer.
(m)
Unused credit forfeited. -- If any credit remains after
application of subsection (b) of this section, the amount thereof
shall be forfeited. No carryover to a subsequent taxable year or
carryback to a prior taxable year shall be allowed for the amount
of any unused portion of any annual credit allowance, except as specifically provided in subsection (l), (o) or (p) of this
section.
(n) Notwithstanding any provision of this section to the
contrary and notwithstanding the reenactment of this section
later in time than the enactment or reenactment of section
fourteen of this article, the restrictions, limitations,
constraints and provisions of said section shall apply to and
supersede the provisions of this section.
(o)
Deferral of twenty percent of annual credit, eighty
percent current limitation. --
(1) Eighty percent of the amount of annual credit calculated
under subsections (a) through (n) of this section before
application of the minimum severance tax against coal and before
the adjustment set forth in subsection (p) of this section, shall
be applied against the taxes enumerated in subsections (c)
through (i), inclusive, of this section for the current tax year.
(2) The remaining twenty percent of
such the annual credit
so calculated in subsections (c) through (n) of this section
shall be applied against the taxes enumerated in subsections (c)
through (i), inclusive, of this section beginning in the tenth
tax year subsequent to the tax year in which qualified investment
was first placed in service or use in this state by the taxpayer,
and the amount thereof remaining shall be carried forward each ensuing tax year until used.
or until the expiration of the
twelfth tax year subsequent to the tax year in which qualified
investment was first placed in service or use in this state by
the taxpayer. No deferral of credit under this subsection shall
apply to this credit when applied in
such the tenth through
twelfth years.
(p)
Additional allowance. --
(1) After application of up to eighty percent of annual
credit against the taxes enumerated in subsections (c) through
(i), inclusive, of this section for the current tax year under
subsection (o) of this section, there shall be allowed an
additional amount of credit, as determined under subdivision (2)
of this subsection, which may offset up to one hundred percent of
the remaining taxes enumerated in subsections (g), (h) and (i),
in that order, of this section for the current tax year. Any
credit calculated and determined under this section which remains
after application against the taxes enumerated in subsections
(g), (h) and (i) under this section shall be forfeited and shall
not carryover to any other taxable year.
(2) The amount of credit allowable under this subsection
shall be the lesser of one third of the taxpayer's minimum
severance tax on coal payable, or the taxpayer's net minimum
severance tax on coal payable. For purposes of this subsection, the term "net minimum severance tax on coal payable" means the
amount of the excess of the minimum severance tax on coal over
the amount of the state severance tax on coal severed and
extracted by the taxpayer in this state not including the
additional severance tax on coal imposed by section six, article
thirteen-a of this chapter, calculated after application of the
credit allowed under this article, and before application of all
other credits, and after application of the five hundred dollar
exemption to the
said severance tax on coal.
(q)
Effective date. --
(1) This section, as amended in the year one thousand nine
hundred eighty-six, shall be effective upon passage. It shall be
retroactive, and shall be in lieu of the method provided by this
section for application of this credit prior to this amendment,
for qualified investment made on or after the first day of March,
one thousand nine hundred eighty-five.
(2) This section, as amended in the year one thousand nine
hundred eighty-seven, shall be effective for taxable years ending
after the thirtieth day of June, one thousand nine hundred
eighty-seven.
(3) This section, as amended in the year one thousand nine
hundred ninety-three, shall be effective for taxable years ending
after the thirty-first day of May, one thousand nine hundred ninety-three.
NOTE: The purpose of this bill is to allow the carry
forward of deferred credit until the total amount of credits are
utilized.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.