H. B. 4625
(By Delegate Michael)
[Introduced February 27, 1998; referred to the
Committee on Finance.]
A BILL to amend and reenact sections two and nine, article
fifteen, chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, all relating
to consumers sales and service tax by adding a definition
for electronic data processing, repealing certain
definitional language within the exemption for data
processing services, and making technical corrections.
Be it enacted by the Legislature of West Virginia:
That sections two and nine, article fifteen, chapter eleven
of the code of West Virginia, one thousand nine hundred thirty- one, as amended, be amended to read as follows:
ARTICLE 15. CONSUMERS SALES TAX.
§11-15-2. Definitions.
For the purpose of this article:
(a) "Business" includes all activities engaged in or caused
to be engaged in with the object of gain or economic benefit,
direct or indirect, and all activities of the state and its
political subdivisions which involve sales of tangible personal
property or the rendering of services when those service
activities compete with or may compete with the activities of
other persons.
(b) "Communication" means all telephone, radio, light, light
wave, radio telephone, telegraph and other communication or means
of communication, whether used for voice communication, computer
data transmission or other encoded symbolic information transfers
and shall include commercial broadcast radio, commercial
broadcast television and cable television.
(c) "Contracting":
(1)
In general. -- "Contracting" means and includes the
furnishing of work, or both materials and work, for another (by
a sole contractor, general contractor, prime contractor or
subcontractor) in fulfillment of a contract for the construction,
alteration, repair, decoration or improvement of a new or
existing building or structure, or any part thereof, or for
removal or demolition of a building or structure, or any part
thereof, or for the alteration, improvement or development of
real property.
(2)
Form of contract not controlling. -- An activity that
falls within the scope of the definition of contracting shall
constitute contracting regardless of whether such contract
governing the activity is written or verbal and regardless of
whether it is in substance or form a lump sum contract, a cost- plus contract, a time and materials contract, whether or not
open-ended, or any other kind of construction contract.
(3)
Special rules. -- For purposes of this definition:
(A) The term "structure" includes, but is not limited to,
everything built up or composed of parts joined together in some
definite manner and attached or affixed to real property, or
which adds utility to real property or any part thereof, or which
adds utility to a particular parcel of property and is intended
to remain there for an indefinite period of time.
(B) The term "alteration" means, and is limited to,
alterations which are capital improvements to a building or
structure or to real property.
(C) The term "repair" means, and is limited to, repairs
which are capital improvements to a building or structure or to
real property.
(D) The term "decoration" means, and is limited to,
decorations which are capital improvements to a building or
structure or to real property.
(E) The term "improvement" means, and is limited to,
improvements which are capital improvements to a building or
structure or to real property.
(F) The term "capital improvement" means improvements that
are affixed to or attached to and become a part of a building or
structure or the real property or which add utility to real
property or any part thereof and that last, or are intended to
be relatively permanent. As used herein, "relatively permanent"
means lasting at least a year or longer in duration without the
necessity for regularly scheduled recurring service to maintain
such capital improvement. "Regular recurring service" means
regularly scheduled service intervals of less than one year.
(G) Contracting does not include the furnishing of work, or
both materials and work in the nature of hookup, connection,
installation or other services if such service is incidental to
the retail sale of tangible personal property from the service
provider's inventory:
Provided, That such hookup, connection or
installation of the foregoing is incidental to the sale of the
same and performed by the seller thereof or performed in
accordance with arrangements made by the seller thereof.
Examples of transactions that are excluded from the definition of
contracting pursuant hereto include, but are not limited to, the
sale of wall-to-wall carpeting and the installation of wall-to-wall carpeting, the sale, hookup and connection of mobile homes,
window air conditioning units, dishwashers, clothing washing
machines or dryers, other household appliances, drapery rods,
window shades, venetian blinds, canvas awnings, free standing
industrial or commercial equipment and other similar items of
tangible personal property. Repairs made to the foregoing are
within the definition of contracting if such repairs involve
permanently affixing to or improving real property or something
attached thereto which extends the life of the real property or
something affixed thereto or allows or is intended to allow such
real property or thing permanently attached thereto to remain in
service for a year or longer.
(d) (1) "Directly used or consumed" in the activities of
manufacturing, transportation, transmission, communication or the
production of natural resources means used or consumed in those
activities or operations which constitute an integral and
essential part of such activities, as contrasted with and
distinguished from those activities or operations which are
simply incidental, convenient or remote to such activities.
(2) Uses of property or consumption of services which
constitute direct use or consumption in the activities of
manufacturing, transportation, transmission, communication or the
production of natural resources includes only:
(A) In the case of tangible personal property, physical
incorporation of property into a finished product resulting from
manufacturing production or the production of natural resources;
(B) Causing a direct physical, chemical or other change upon
property undergoing manufacturing production or production of
natural resources;
(C) Transporting or storing property undergoing
transportation, communication, transmission, manufacturing
production or production of natural resources;
(D) Measuring or verifying a change in property directly
used in transportation, communication, transmission,
manufacturing production or production of natural resources;
(E) Physically controlling or directing the physical
movement or operation of property directly used in
transportation, communication, transmission, manufacturing
production or production of natural resources;
(F) Directly and physically recording the flow of property
undergoing transportation, communication, transmission,
manufacturing production or production of natural resources;
(G) Producing energy for property directly used in
transportation, communication, transmission, manufacturing
production or production of natural resources;
(H) Facilitating the transmission of gas, water, steam or electricity from the point of their diversion to property
directly used in transportation, communication, transmission,
manufacturing production or production of natural resources;
(I) Controlling or otherwise regulating atmospheric
conditions required for transportation, communication,
transmission, manufacturing production or production of natural
resources;
(J) Serving as an operating supply for property undergoing
transmission, manufacturing production or production of natural
resources, or for property directly used in transportation,
communication, transmission, manufacturing production or
production of natural resources;
(K) Maintenance or repair of property, including maintenance
equipment, directly used in transportation, communication,
transmission, manufacturing production or production of natural
resources;
(L) Storage, removal or transportation of economic waste
resulting from the activities of manufacturing, transportation,
communication, transmission or the production of natural
resources;
(M) Pollution control or environmental quality or protection
activity directly relating to the activities of manufacturing,
transportation, communication, transmission or the production of natural resources and personnel, plant, product or community
safety or security activity directly relating to the activities
of manufacturing, transportation, communication, transmission or
the production of natural resources; or
(N) Otherwise be used as an integral and essential part of
transportation, communication, transmission, manufacturing
production or production of natural resources.
(3) Uses of property or services which would not constitute
direct use or consumption in the activities of manufacturing,
transportation, transmission, communication or the production of
natural resources include, but are not limited to:
(A) Heating and illumination of office buildings;
(B) Janitorial or general cleaning activities;
(C) Personal comfort of personnel;
(D) Production planning, scheduling of work or inventory
control;
(E) Marketing, general management, supervision, finance,
training, accounting and administration; or
(F) An activity or function incidental or convenient to
transportation, communication, transmission, manufacturing
production or production of natural resources, rather than an
integral and essential part of such activities.
(e) (1) "Directly used or consumed" in the activities of gas storage, the generation or production or sale of electric power,
the provision of a public utility service or the operation of a
utility business, means used or consumed in those activities or
operations which constitute an integral and essential part of
such activities or operation, as contrasted with and
distinguished from activities or operations which are simply
incidental, convenient or remote to such activities.
(2) Uses of property or consumption of services which
constitute direct use or consumption in the activities of gas
storage, the generation or production or sale of electric power,
the provision of a public utility service, or the operation of a
utility business include only:
(A) Tangible personal property or services, including
equipment, machinery, apparatus, supplies, fuel and power and
appliances, which are used immediately in production or
generation activities and equipment, machinery, supplies, tools
and repair parts used to keep in operation exempt production or
generation devices. For purposes of this subsection, production
or generation activities shall commence from the intake, receipt
or storage of raw materials at the production plant site;
(B) Tangible personal property or services, including
equipment, machinery, apparatus, supplies, fuel and power,
appliances, pipes, wires and mains which are used immediately in the transmission or distribution of gas, water and electricity
to the public, and equipment, machinery, tools, repair parts and
supplies used to keep in operation exempt transmission or
distribution devices, and such vehicles and their equipment as
are specifically designed and equipped for such purposes are
exempt from the tax when used to keep a transmission or
distribution system in operation or repair. For purposes of this
subsection, transmission or distribution activities shall
commence from the close of production at a production plant or
wellhead when a product is ready for transmission or distribution
to the public and shall conclude at the point where the product
is received by the public;
(C) Tangible personal property or services, including
equipment, machinery, apparatus, supplies, fuel and power,
appliance, pipes, wires and mains, which are used immediately in
the storage of gas or water, and equipment, machinery, tools,
supplies and repair parts used to keep in operation exempt
storage devices;
(D) Tangible personal property or services used immediately
in the storage, removal or transportation of economic waste
resulting from the activities of gas storage, the generation or
production or sale of electric power, the provision of a public
utility service, or the operation of a utility business;
(E) Tangible personal property or services used immediately
in pollution control or environmental quality or protection
activity or community safety or security directly relating to the
activities of gas storage, generation or production or sale of
electric power, the provision of a public utility service or the
operation of a utility business.
(3) Uses of property or services which would not constitute
direct use or consumption in the activities of gas storage,
generation or production or sale of electric power, the provision
of a public utility service or the operation of a utility
business include, but are not limited to:
(A) Heating and illumination of office buildings;
(B) Janitorial or general cleaning activities;
(C) Personal comfort of personnel;
(D) Production planning, scheduling of work or inventory
control;
(E) Marketing, general management, supervision, finance,
training, accounting and administration; or
(F) An activity or function incidental or convenient to the
activities of gas storage, generation or production or sale of
electric power, the provision of public utility service or the
operation of a utility business.
(f) "Drugs" includes all sales of drugs or appliances to a purchaser, upon prescription of a physician or dentist and any
other professional person licensed to prescribe.
(g) "Electronic data processing services" means:
(1) The processing of another's data through the use of a
computer, including all processes incident to processing of data
such as keypunching, keystroke verification, rearranging or
sorting of previously documented data for the purpose of data
entry or automatic processing, and changing the medium on which
data is sorted, whether these processes are done by the same
person or several persons;
(2) Providing access to, but not the sale or lease of,
computer equipment for the purpose of processing data or
examining or acquiring data stored in or accessible to such
computer equipment;
(3) "Electronic data processing services" does not include:
(A) Accounting services such as advice on tax matters, tax
preparation, asset management, budgetary matters, quality
control, information security, auditing and any other situation
where the accounting service provider receives data or
information and studies, analyzes or interprets such data;
(B) Payroll preparation services other than the electronic
data processing necessary to prepare the payroll, such as direct
deposit services, preparation and issuance of checks, management of pensions or other benefit programs, preparation of management
reports, preparation of payroll journals, or preparation of W-2
forms for the Internal Revenue Service;
(C) Analyzing business policies and procedures;
(D) Feasibility studies including economic and technical
analysis of existing or potential computer hardware or software
needs and alternatives;
(E) Designing policies, procedures, and custom software for
collecting business information and determining how data should
be summarized, sequenced, formatted, processed, controlled and
reported so that it will be meaningful to management;
(F) Developing policies and procedures that document how
business events and transactions are to be authorized, executed
and controlled;
(G) Testing of business procedures;
(H) Training personnel in business procedure applications;
(I) Providing credit information to users of such
information by a consumer reporting agency;
(J) Providing debt collection services;
(K) Providing research services; and/or
(L) Providing secretarial or other clerical services.
(g) (h) "Gas storage" means the injection of gas into a
storage reservoir, or the storage of gas for any period of time in a storage reservoir, or the withdrawal of gas from a storage
reservoir, engaged in by businesses subject to the business and
occupation tax imposed by sections two and two-e, article
thirteen of this chapter.
(h) (i) "Generating or producing or selling of electric
power" means the generation, production or sale of electric power
engaged in by businesses subject to the business and occupation
tax imposed by section two, two-d, two-m or two-n, article
thirteen of this chapter.
(i) (j) "Gross proceeds" means the amount received in money,
credits, property or other consideration from sales and services
within this state, without deduction on account of the cost of
property sold, amounts paid for interest or discounts or other
expenses whatsoever. Losses shall not be deducted, but any
credit or refund made for goods returned may be deducted.
(j) "Management information services" means, and is limited
to, data processing, data storage, data recovery and backup,
programming recovery and backup, telecommunications, computation
and computer processing, computer programming, electronic
information and data management activities, or any combination of
such activities, when such activity, or activities, is not
subject to regulation by the West Virginia public service
commission and such activity, or activities, is for the purpose of managing, planning for, organizing or operating, any
industrial or commercial business, or any enterprise, facility or
facilities of an industrial or commercial business, whether such
industrial or commercial business or enterprise, facility or
facilities of an industrial or commercial business is located
within or without this state and without regard to whether such
industrial or commercial business, or enterprise, facility or
facilities of an industrial or commercial business is owned by
the provider of the management information services or by a
"related person", as defined in Section 267(b) of the Internal
Revenue Code of 1986, as amended.
(k) "Management information services facility" means a
building, or any part thereof, or a complex of buildings, or any
part thereof, including the machinery and equipment located
therein, that is exclusively dedicated to providing management
information services to the owner or operator thereof or to
another person.
(l) (k) "Manufacturing" means a systematic operation or
integrated series of systematic operations engaged in as a
business or segment of a business which transforms or converts
tangible personal property by physical, chemical or other means
into a different form, composition or character from that in
which it originally existed.
(m) (l) "Personal service" includes those:
(1) Compensated by the payment of wages in the ordinary
course of employment; and
(2) Rendered to the person of an individual without, at the
same time, selling tangible personal property, such as nursing,
barbering, shoe shining, manicuring and similar services.
(n) (m) "Persons" means any individual, partnership,
association, corporation, state or its political subdivisions or
agency of either, guardian, trustee, committee, executor or
administrator.
(o) (n) "Production of natural resources" means, except for
oil and gas, the performance, by either the owner of the natural
resources or another, of the act or process of exploring,
developing, severing, extracting, reducing to possession and
loading for shipment and shipment for sale, profit or commercial
use of any natural resource products and any reclamation, waste
disposal or environmental activities associated therewith. For
the natural resources oil and gas, "production of natural
resources" means the performance, by either the owner of the
natural resources, a contractor, or a subcontractor, of the act
or process of exploring, developing, drilling, well stimulation
activities such as logging, perforating or fracturing, well
completion activities such as the installation of the casing, tubing and other machinery and equipment, and any reclamation,
waste disposal or environmental activities associated therewith,
including the installation of the gathering system or other
pipeline to transport the oil and gas produced or environmental
activities associated therewith and any service work performed on
the well or well site after production of the well has initially
commenced. All work performed to install or maintain facilities
up to the point of sale for severance tax purposes would be
included in the "production of natural resources" and subject to
the direct use concept. "Production of natural resources" does
not include the performance or furnishing of work, or materials
or work, in fulfillment of a contract for the construction,
alteration, repair, decoration or improvement of a new or
existing building or structure, or any part thereof, or for the
alteration, improvement or development of real property, by
persons other than those otherwise directly engaged in the
activities specifically set forth in this subsection as
"production of natural resources."
(p) (o) "Providing a public service or the operating of a
utility business" means the providing of a public service or the
operating of a utility by businesses subject to the business and
occupation tax imposed by sections two and two-d, article
thirteen of this chapter.
(q) (p) "Purchaser" means a person who purchases tangible
personal property or a service taxed by this article.
(r) (q) "Sale," "sales" or "selling" includes any transfer
of the possession or ownership of tangible personal property for
a consideration, including a lease or rental, when the transfer
or delivery is made in the ordinary course of the transferor's
business and is made to the transferee or his
or her agent for
consumption or use or any other purpose.
(s) (r) "Service" or "selected service" includes all
nonprofessional activities engaged in for other persons for a
consideration, which involve the rendering of a service as
distinguished from the sale of tangible personal property, but
shall not include contracting, personal services or the services
rendered by an employee to his
or her employer or any service
rendered for resale.
(t) (s) "Tax" includes all taxes, interest and penalties
levied hereunder.
(u) (t) "Tax commissioner" means the state tax commissioner.
(v) (u) "Taxpayer" means any person liable for the tax
imposed by this article.
(w) (v) "Transmission" means the act or process of causing
liquid, natural gas or electricity to pass or be conveyed from
one place or geographical location to another place or geographical location through a pipeline or other medium for
commercial purposes.
(x) (w) "Transportation" means the act or process of
conveying, as a commercial enterprise, passengers or goods from
one place or geographical location to another place or
geographical location.
(y) (x) "Ultimate consumer" or "consumer" means a person who
uses or consumes services or personal property.
(z) (y) "Vendor" means any person engaged in this state in
furnishing services taxed by this article or making sales of
tangible personal property.
§11-15-9. Exemptions.
(a)
Exemptions for which exemption certificate may be
issued. -- A person having a right or claim to any exemption set
forth in this subsection may, in lieu of paying the tax imposed
by this article and filing a claim for refund, execute a
certificate of exemption, in the form required by the tax
commissioner, and deliver it to the vendor of the property or
service, in the manner required by the tax commissioner.
However, the tax commissioner may, by rule, specify those
exemptions authorized in this subsection for which exemptions
certificates are not required. The following sales of tangible
personal property and/or services are exempt as provided in this subsection:
(1) Sales of gas, steam and water delivered to consumers
through mains or pipes and sales of electricity;
(2) Sales of textbooks required to be used in any of the
schools of this state or in any institution in this state which
qualifies as a nonprofit or educational institution subject to
the West Virginia department of education and the arts, the board
of trustees of the university system of West Virginia or the
board of directors for colleges located in this state;
(3) Sales of property or services to this state, its
institutions or subdivisions, governmental units, institutions or
subdivisions of other states:
Provided, That the law of the
other state provides the same exemption to governmental units or
subdivisions of this state and to the United States, including
agencies of federal, state or local governments for distribution
in public welfare or relief work;
(4) Sales of vehicles which are titled by the division of
motor vehicles and which are subject to the tax imposed by
section four, article three, chapter seventeen-a of this code, or
like tax;
(5) Sales of property or services to churches which make no
charge whatsoever for the services they render:
Provided, That
the exemption granted in this subdivision applies only to services, equipment, supplies, food for meals and materials
directly used or consumed by these organizations, and does not
apply to purchases of gasoline or special fuel;
(6) Sales of tangible personal property or services to a
corporation or organization which has a current registration
certificate issued under article twelve of this chapter, which is
exempt from federal income taxes under Section 501(c)(3) or
(c)(4) of the Internal Revenue Code of 1986, as amended, and
which is:
(A) A church or a convention or association of churches as
defined in Section 170 of the Internal Revenue Code of 1986, as
amended;
(B) An elementary or secondary school which maintains a
regular faculty and curriculum and has a regularly enrolled body
of pupils or students in attendance at the place in this state
where its educational activities are regularly carried on;
(C) A corporation or organization which annually receives
more than one half of its support from any combination of gifts,
grants, direct or indirect charitable contributions or membership
fees;
(D) An organization which has no paid employees and its
gross income from fund raisers, less reasonable and necessary
expenses incurred to raise the gross income (or the tangible personal property or services purchased with the net income), is
donated to an organization which is exempt from income taxes
under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of
1986, as amended;
(E) A youth organization, such as the girl scouts of the
United States of America, the boy scouts of America or the YMCA
Indian guide/princess program and the local affiliates thereof,
which is organized and operated exclusively for charitable
purposes and has as its primary purpose the nonsectarian
character development and citizenship training of its members;
(F) For purposes of this subsection:
(i) The term "support" includes, but is not limited to:
(I) Gifts, grants, contributions or membership fees;
(II) Gross receipts from fund raisers which include receipts
from admissions, sales of merchandise, performance of services or
furnishing of facilities in any activity which is not an
unrelated trade or business within the meaning of Section 513 of
the Internal Revenue Code of 1986, as amended;
(III) Net income from unrelated business activities, whether
or not the activities are carried on regularly as a trade or
business;
(IV) Gross investment income as defined in Section 509(e) of
the Internal Revenue Code of 1986, as amended;
(V) Tax revenues levied for the benefit of a corporation or
organization either paid to or expended on behalf of the
organization; and
(VI) The value of services or facilities (exclusive of
services or facilities generally furnished to the public without
charge) furnished by a governmental unit referred to in Section
170(c)(1) of the Internal Revenue Code of 1986, as amended, to an
organization without charge. This term does not include any gain
from the sale or other disposition of property which would be
considered as gain from the sale or exchange of a capital asset,
or the value of an exemption from any federal, state or local tax
or any similar benefit;
(ii) The term "charitable contribution" means a contribution
or gift to or for the use of a corporation or organization,
described in Section 170(c)(2) of the Internal Revenue Code of
1986, as amended; and
(iii) The term "membership fee" does not include any amounts
paid for tangible personal property or specific services rendered
to members by the corporation or organization;
(G) The exemption allowed by this subdivision does not apply
to sales of gasoline or special fuel or to sales of tangible
personal property or services to be used or consumed in the
generation of unrelated business income as defined in Section 513 of the Internal Revenue Code of 1986, as amended. The provisions
of this subdivision apply to sales made after the thirtieth day
of June, one thousand nine hundred eighty-nine:
Provided, That
the exemption granted in this subdivision applies only to
services, equipment, supplies and materials used or consumed in
the activities for which the organizations qualify as tax exempt
organizations under the Internal Revenue Code and does not apply
to purchases of gasoline or special fuel;
(7) An isolated transaction in which any taxable service or
any tangible personal property is sold, transferred, offered for
sale or delivered by the owner of the property or by his or her
representative for the owner's account, the sale, transfer, offer
for sale or delivery not being made in the ordinary course of
repeated and successive transactions of like character by the
owner or on his or her account by the representative:
Provided,
That nothing contained in this subdivision may be construed to
prevent an owner who sells, transfers or offers for sale tangible
personal property in an isolated transaction through an
auctioneer from availing himself or herself of the exemption
provided in this subdivision, regardless of where the isolated
sale takes place. The tax commissioner may propose a legislative
rule for promulgation pursuant to article three, chapter twenty- nine-a of this code which he or she considers necessary for the efficient administration of this exemption;
(8) Sales of tangible personal property or of any taxable
services rendered for use or consumption in connection with the
commercial production of an agricultural product the ultimate
sale of which is subject to the tax imposed by this article or
which would have been subject to tax under this article:
Provided, That sales of tangible personal property and services
to be used or consumed in the construction of or permanent
improvement to real property and sales of gasoline and special
fuel are not exempt:
Provided, however, That nails and fencing
shall not be considered as improvements to real property;
(9) Sales of tangible personal property to a person for the
purpose of resale in the form of tangible personal property:
Provided, That sales of gasoline and special fuel by distributors
and importers is taxable except when the sale is to another
distributor for resale:
Provided, however, That sales of
building materials or building supplies or other property to any
person engaging in the activity of contracting, as defined in
this article, which is to be installed in, affixed to or
incorporated by that person or his or her agent into any real
property, building or structure is not exempt under this
subdivision;
(10) Sales of newspapers when delivered to consumers by route carriers;
(11) Sales of drugs dispensed upon prescription and sales of
insulin to consumers for medical purposes;
(12) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(13) Sales and services performed by day-care centers;
(14) Casual and occasional sales of property or services not
conducted in a repeated manner or in the ordinary course of
repetitive and successive transactions of like character by a
corporation or organization which is exempt from tax under
subdivision (6) of this subsection on its purchases of tangible
personal property or services:
(A) For purposes of this subdivision, the term "casual and
occasional sales not conducted in a repeated manner or in the
ordinary course of repetitive and successive transactions of like
character" means sales of tangible personal property or services
at fund raisers sponsored by a corporation or organization which
is exempt, under subdivision (6) of this subsection, from payment
of the tax imposed by this article on its purchases, when the
fund raisers are of limited duration and are held no more than
six times during any twelve-month period and "limited duration"
means no more than eighty-four consecutive hours; and
(B) The provisions of this subdivision apply to sales made
after the thirtieth day of June, one thousand nine hundred
eighty-nine;
(15) Sales of property or services to a school which has
approval from the board of trustees of the university system of
West Virginia or the board of directors of the state college
system to award degrees, which has its principal campus in this
state, and which is exempt from federal and state income taxes
under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended:
Provided, That sales of gasoline and special fuel are
taxable;
(16) Sales of mobile homes to be utilized by purchasers as
their principal year-round residence and dwelling:
Provided,
That these mobile homes are subject to tax at the three-percent
rate;
(17) Sales of lottery tickets and materials by licensed
lottery sales agents and lottery retailers authorized by the
state lottery commission, under the provisions of article twenty- two, chapter twenty-nine of this code;
(18) Leases of motor vehicles titled pursuant to the
provisions of article three, chapter seventeen-a of this code to
lessees for a period of thirty or more consecutive days. This
exemption applies to leases executed on or after the first day of July, one thousand nine hundred eighty-seven, and to payments
under long-term leases executed before that date, for months of
the lease beginning on or after that date;
(19) Notwithstanding the provisions of section eighteen of
this article or any other provision of this article to the
contrary, sales of propane to consumers for poultry house heating
purposes, with any seller to the consumer who may have prior paid
the tax in his or her price, to not pass on the same to the
consumer, but to make application and receive refund of the tax
from the tax commissioner, pursuant to rules which are
promulgated after being proposed for legislative approval in
accordance with chapter twenty-nine-a of this code by the tax
commissioner;
(20) Any sales of tangible personal property or services
purchased after the thirtieth day of September, one thousand nine
hundred eighty-seven, and lawfully paid for with food stamps
pursuant to the federal food stamp program codified in 7 U.S.C.
§2011 et seq., as amended, or with drafts issued through the West
Virginia special supplement food program for women, infants and
children codified in 42 U.S.C. §1786;
(21) Sales of tickets for activities sponsored by elementary
and secondary schools located within this state;
(22) Sales of electronic data processing services;
and related software: Provided, That for the purposes of this
subdivision "electronic data processing services" means: (A) The
processing of another's data, including all processes incident to
processing of data such as keypunching, keystroke verification,
rearranging or sorting of previously documented data for the
purpose of data entry or automatic processing and changing the
medium on which data is sorted, whether these processes are done
by the same person or several persons; and (B) providing access
to computer equipment for the purpose of processing data or
examining or acquiring data stored in or accessible to the
computer equipment
(23) Tuition charged for attending educational summer camps;
(24) Dispensing of services performed by one corporation,
partnership or limited liability company for another corporation,
partnership or limited liability company when the entities are
members of the same controlled group or are related taxpayers as
defined in Section 267 of the Internal Revenue Code. "Control"
means ownership, directly or indirectly, of stock, equity
interests or membership interests possessing fifty percent or
more of the total combined voting power of all classes of the
stock of a corporation, equity interests of a partnership or
membership interests of a limited liability company entitled to
vote or ownership, directly or indirectly, of stock, equity interests or membership interests possessing fifty percent or
more of the value of the corporation, partnership or limited
liability company;
(25) Food for the following are exempt:
(A) Food purchased or sold by public or private schools,
school sponsored student organizations or school sponsored
parent-teacher associations to students enrolled in such school
or to employees of such school during normal school hours; but
not those sales of food made to the general public;
(B) Food purchased or sold by a public or private college or
university or by a student organization officially recognized by
the college or university to students enrolled at the college or
university when the sales are made on a contract basis so that a
fixed price is paid for consumption of food products for a
specific period of time without respect to the amount of food
product actually consumed by the particular individual
contracting for the sale and no money is paid at the time the
food product is served or consumed;
(C) Food purchased or sold by a charitable or private
nonprofit organization, a nonprofit organization or a
governmental agency under a program to provide food to low-income
persons at or below cost;
(D) Food sold in an occasional sale by a charitable or nonprofit organization including volunteer fire departments and
rescue squads, if the purpose of the sale is to obtain revenue
for the functions and activities of the organization and the
revenue obtained is actually expended for that purpose;
(E) Food sold by any religious organization at a social or
other gathering conducted by it or under its auspices, if the
purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenue
obtained from selling the food is actually used in carrying on
those functions and activities:
Provided, That purchases made by
the organizations are not exempt as a purchase for resale;
(26) Sales of food by little leagues, midget football
leagues, youth football or soccer leagues and similar types of
organizations, including scouting groups and church youth groups,
if the purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenues
obtained from selling the food is actually used in supporting or
carrying on functions and activities of the groups:
Provided,
That the purchases made by the organizations are not exempt as a
purchase for resale;
(27) Charges for room and meals by fraternities and
sororities to their members:
Provided, That the purchases made
by a fraternity or sorority are not exempt as a purchase for resale;
(28) Sales of or charges for the transportation of
passengers in interstate commerce;
(29) Sales of tangible personal property or services to any
person which this state is prohibited from taxing under the laws
of the United States or under the constitution of this state;
(30) Sales of tangible personal property or services to any
person who claims exemption from the tax imposed by this article
or article fifteen-a of this chapter pursuant to the provision of
any other chapter of this code;
(31) Charges for the services of opening and closing a
burial lot;
(32) Sales of livestock, poultry or other farm products in
their original state by the producer of the livestock, poultry or
other farm products or a member of the producer's immediate
family who is not otherwise engaged in making retail sales of
tangible personal property; and sales of livestock sold at public
sales sponsored by breeders or registry associations or livestock
auction markets:
Provided, That the exemptions allowed by this
subdivision apply to sales made on or after the first day of
July, one thousand nine hundred ninety, and may be claimed
without presenting or obtaining exemption certificates:
Provided, however, That the farmer shall maintain adequate records;
(33) Sales of motion picture films to motion picture
exhibitors for exhibition if the sale of tickets or the charge
for admission to the exhibition of the film is subject to the tax
imposed by this article and sales of coin-operated video arcade
machines or video arcade games to a person engaged in the
business of providing the machines to the public for a charge
upon which the tax imposed by this article is remitted to the tax
commissioner:
Provided, That the exemption provided in this
subdivision applies to sales made on or after the first day of
July, one thousand nine hundred ninety, and may be claimed by
presenting to the seller a properly executed exemption
certificate;
(34) Sales of aircraft repair, remodeling and maintenance
services when the services are to an aircraft operated by a
certified or licensed carrier of persons or property, or by a
governmental entity, or to an engine or other component part of
an aircraft operated by a certificated or licensed carrier of
persons or property, or by a governmental entity and sales of
tangible personal property that is permanently affixed or
permanently attached as a component part of an aircraft owned or
operated by a certificated or licensed carrier of persons or
property, or by a governmental entity, as part of the repair, remodeling or maintenance service and sales of machinery, tools
or equipment, directly used or consumed exclusively in the
repair, remodeling or maintenance of aircraft, aircraft engines
or aircraft component parts, for a certificated or licensed
carrier of persons or property, or for a governmental entity;
(35) Charges for memberships or services provided by health
and fitness organizations relating to personalized fitness
programs;
(36) Sales of services by individuals who baby-sit for a
profit:
Provided, That the gross receipts of the individual from
the performance of baby-sitting services do not exceed five
thousand dollars in a taxable year;
(37) Sales of services after the thirtieth day of June, one
thousand nine hundred ninety-seven, by public libraries or by
libraries at academic institutions or by libraries at
institutions of higher learning;
(38) Commissions received after the thirtieth day of June,
one thousand nine hundred ninety-seven, by a manufacturer's
representative;
(39) Sales of primary opinion research services after the
thirtieth day of June, one thousand nine hundred ninety-seven,
when:
(A) The services are provided to an out-of-state client;
(B) The results of the service activities, including, but
not limited to, reports, lists of focus group recruits and
compilation of data are transferred to the client across state
lines by mail, wire or other means of interstate commerce, for
use by the client outside the state of West Virginia; and
(C) The transfer of the results of the service activities is
an indispensable part of the overall service.
For the purpose of this subdivision the term "primary
opinion research" means original research in the form of
telephone surveys, mall intercept surveys, focus group research,
direct mail surveys, personal interviews and other data
collection methods commonly utilized for quantitative and
qualitative opinion research studies;
(40) Sales of property or services after the thirtieth day
of June, one thousand nine hundred ninety-seven, to persons
within the state when those sales are for the purposes of the
production of value-added products:
Provided, That the exemption
granted in this subdivision applies only to services, equipment,
supplies and materials directly used or consumed by those persons
engaged solely in the production of value-added products:
Provided, however, That this exemption may not be claimed by any
one purchaser for more than five consecutive years, except as
otherwise permitted in this section.
For the purpose of this subdivision, the term "value-added
product" means the following products derived from processing a
raw agricultural product, whether for human consumption or for
other use: For purposes of this subdivision, the following
enterprises qualify as processing raw agricultural products into
value-added products: Those engaged in the conversion of:
(A) Lumber into furniture, toys, collectibles and home
furnishings;
(B) Fruits into wine;
(C) Honey into wine;
(D) Wool into fabric;
(E) Raw hides into semi-finished or finished leather
products;
(F) Milk into cheese;
(G) Fruits or vegetables into a dried, canned or frozen
product;
(H) Feeder cattle into commonly accepted slaughter weights;
(I) Aquatic animals into a dried, canned, cooked or frozen
product; and
(J) Poultry into a dried, canned, cooked or frozen product;
(41) After the thirtieth day of June, one thousand nine
hundred ninety-seven, sales of music instructional services by a
music teacher; and artistic services or artistic performances of an entertainer or performing artist pursuant to a contract with
the owner or operator of a retail establishment, restaurant, inn,
bar, tavern, sports or other entertainment facility or any other
business location in this state in which the public or a limited
portion of the public may assemble to hear or see musical works
or other artistic works be performed for the enjoyment of the
members of the public there assembled when the amount paid by the
owner or operator for the artistic service or artistic
performance does not exceed three thousand dollars:
Provided,
That nothing contained herein may be construed to deprive private
social gatherings, weddings or other private parties from
asserting the exemption set forth in this subdivision. For the
purposes of this exemption, artistic performance or artistic
service means and is limited to the conscious use of creative
power, imagination and skill in the creation of aesthetic
experience for an audience present and in attendance, and
includes, and is limited to, stage plays, musical performances,
poetry recitations and other readings, dance presentation,
circuses and similar presentations, and does not include the
showing of any film or moving picture, gallery presentations of
sculptural or pictorial art, nude or strip show presentations,
video games, video arcades, carnival rides, radio or television
shows or any video or audio taped presentations or the sale or leasing of video or audio tapes, airshows, or any other public
meeting, display or show other than those specified herein:
Provided, however, That nothing contained herein may be construed
to exempt the sales of tickets from the tax imposed in this
article. The state tax commissioner shall propose a legislative
rule pursuant to article three, chapter twenty-nine-a of this
code establishing definitions and eligibility criteria for
asserting this exemption which is not inconsistent with the
provisions set forth herein:
Provided further, That nude dancers
or strippers shall not be considered as entertainers for the
purposes of this exemption;
(42) After the thirtieth day of June, one thousand nine
hundred ninety-seven, charges to a member by a membership
association or organization which is exempt from paying federal
income taxes under Section 501(c)(3) or (c)(6) of the Internal
Revenue Code of 1986, as amended, for membership in the
association or organization, including charges to members for
newsletters prepared by the association or organization for
distribution primarily to its members, charges to members for
continuing education seminars, workshops, conventions, lectures
or courses put on or sponsored by the association or
organization, including charges for related course materials
prepared by the association or organization or by the speaker or speakers for use during the continuing education seminar,
workshop, convention, lecture or course, but not including any
separate charge or separately stated charge for meals, lodging,
entertainment or transportation taxable under this article:
Provided, That the association or organization pays the tax
imposed by this article on its purchases of meals, lodging,
entertainment or transportation taxable under this article for
which a separate or separately stated charge is not made. A
membership association or organization which is exempt from
paying federal income taxes under Section 501(c)(3) or (c)(6) of
the Internal Revenue Code of 1986, as amended, may elect to pay
the tax imposed under this article on the purchases for which a
separate charge or separately stated charge could apply and not
charge its members the tax imposed by this article or, the
association or organization may avail itself of the exemption set
forth in subdivision (9) of this subsection relating to purchases
of tangible personal property for resale and then collect the tax
imposed by this article on those items from its member;
(43) Sales of governmental services or governmental
materials after the thirtieth day of June, one thousand nine
hundred ninety-seven, by county assessors, county sheriffs,
county clerks or circuit clerks in the normal course of local
government operations; and
(44) Direct or subscription sales by the division of natural
resources of the magazine currently entitled "Wonderful West
Virginia".
(b)
Refundable exemptions. -- Any person having a right or
claim to any exemption set forth in this subsection shall first
pay to the vendor the tax imposed by this article and then apply
to the tax commissioner for a refund or credit, or as provided in
section nine-d of this article, give to the vendor his or her
West Virginia direct pay permit number. The following sales of
tangible personal property and/or services are exempt from tax as
provided in this subsection:
(1) Sales of property or services to bona fide charitable
organizations who make no charge whatsoever for the services they
render:
Provided, That the exemption granted in this subdivision
applies only to services, equipment, supplies, food, meals and
materials directly used or consumed by these organizations, and
shall not apply to purchases of gasoline or special fuel;
(2) Sales of services, machinery, supplies and materials
directly used or consumed in the activities of manufacturing,
transportation, transmission, communication, production of
natural resources, gas storage, generation or production or
selling electric power, provision of a public utility service or
the operation of a utility service or the operation of a utility business, in the businesses or organizations named in this
subdivision and shall not apply to purchases of gasoline or
special fuel;
(3) Sales of property or services to nationally chartered
fraternal or social organizations for the sole purpose of free
distribution in public welfare or relief work:
Provided, That
sales of gasoline and special fuel are taxable;
(4) Sales and services, fire fighting or station house
equipment, including construction and automotive, made to any
volunteer fire department organized and incorporated under the
laws of the state of West Virginia:
Provided, That sales of
gasoline and special fuel are taxable; and
(5) Sales of building materials or building supplies or
other property to an organization qualified under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as
amended, which are to be installed in, affixed to or incorporated
by the organization or its agent into real property, or into a
building or structure which is or will be used as permanent
low-income housing, transitional housing, an emergency homeless
shelter, a domestic violence shelter or an emergency children and
youth shelter if the shelter is owned, managed, developed or
operated by an organization qualified under Section 501(c)(3) or
(c)(4) of the Internal Revenue Code of 1986, as amended.
NOTE: The purpose of this bill is to define electronic data
processing for Sales Tax purposes, and to make certain technical
corrections.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.