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SB441 SUB1 Senate Bill 441 History

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Key: Green = existing Code. Red = new code to be enacted
COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 441

(By Senators Helmick, McCabe, Green, Unger, Plymale, Foster, Kessler and Wells)

____________

[Originating in the Committee on Finance;

reported February 19, 2010.]

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A BILL to amend and reenact §11-13Z-1, §11-13Z-2 and §11-13Z-3 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto eight new sections, designated §11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8, §11-13Z-9, §11-13Z-10 and §11-13Z-11, all relating to the tax credit for residential solar energy systems; identifying legislative purpose; creating certain definitions; defining "solar energy system"; limiting amount of credit to a maximum of $2,000; specifying application of credit and carryforward periods; establishing burden of proof on taxpayer; requiring that written application for credit be filed with the Tax Commissioner not later than specified date; allowing a penalty of fifty percent of credit for failure to make timely application; establishing eligibility requirements for credit; disqualifying from credit taxpayer that purchases solar energy systems from related persons; providing for credit recapture and imposition of recapture tax if property disposed of in the first or succeeding tax year the system put into service; authorizing promulgation of rules; specifying credit exclusion when other credits are applied, or where federal grant or federal deduction applies, indicating nontransferability of credit; requiring Tax Commissioner to undertake a solar energy tax credit review beginning in 2013 and report results to the Governor, the President of the Senate and the Speaker of the House of Delegates; requiring taxpayers to submit confidential data for inclusion in said review and report; and terminating the solar energy tax credit in 2013.

Be it enacted by the Legislature of West Virginia:
That §11-13Z-1, §11-13Z-2 and §11-13Z-3 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding thereto eight new sections, designated §11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8, §11-13Z-9, §11-13Z-10 and §11-13Z-11, all to read as follows:
ARTICLE 13Z. RESIDENTIAL SOLAR ENERGY TAX CREDIT.
§11-13Z-1. Legislative purpose.
The purpose of this article is to provide a tax credit against West Virginia state personal income tax for qualified purchases and installation of solar energy systems by qualified taxpayers.
§11-13Z-2. Definitions.
(a) When used in this article, words defined in subsection (b) of this section shall have the meanings ascribed to them in this section, except in those instances where a different meaning is provided in this article or the context in which the word is used clearly indicates that a different meaning is intended by the Legislature.
(b) Definitions. --
(1) "Cost to purchase and install" means amounts actually invested and expended by a taxpayer to acquire and place into service equipment and components of a solar energy system in a residence.
(A) "Cost to purchase and install" includes: Architectural and engineering services and costs of designs and plans directly related to the construction or installation of the solar energy system; labor costs properly allocable to on-site preparation, assembly and original installation; material costs and delivery fees.
(B) "Cost to purchase and install" does not include: Any amount not includable under federal income tax law in the Taxpayer's federal income tax basis in the residential property into which the solar energy system is installed, any amount that has been or will be deducted, or which is allowable as a deduction, from federal adjusted gross income in determining the taxpayer's federal income tax liability, costs attributable to extended warranties, guarantees and optional insurance on the solar energy system, discounts; rebates; refunds or any cost paid with a federal grant or state grant or other grants, fees for use permits or variances; interest or other finance charges; land costs; legal fees and costs and court costs, deed preparation costs, operating and maintenance costs, patent search fees; repair costs; service contracts, costs for supplemental heating equipment used with, or in addition to, solar collectors; any amount that is not an actual cost or monetary outlay, including but not limited to, unpaid costs of equipment or materials, and unpaid labor, including the taxpayer's labor. For purposes of this credit, there shall be deducted from the cost to purchase and install a solar energy system any amount of federal tax credit that has offset, or will offset, the taxpayer's federal income tax liability or a portion thereof, that is based upon, or calculated from, the cost to purchase or the cost to install the solar energy system, or both the cost to purchase and the cost to install the solar energy system.
(2) "Placed in service" means that condition and circumstance in which a solar energy system is ready and available to produce useable energy, with all solar energy equipment, apparatus, components, connections and installations having been fully completed.
(3) "Residence" means the dwelling place of a natural person, owned or rented by that person, used as that person's primary abode, and not held out for rent or other income generating activity by that person.
(4) "Solar energy system" means:
(A) A solar thermal system or solar photovoltaic system which uses solar energy to generate electricity; heat or cool a structure or provide hot water for use in the structure or to provide solar process heat, including controls, tanks, pumps, heat exchangers, and other equipment used directly and exclusively for the solar energy system.
(B) The term "solar energy system" does not include land or structural elements of the building, such as walls, roofs, or other equipment or structures ordinarily contained in the structure, or a swimming pool, hot tub or any other energy storage medium that has a function other than energy storage; or a system which derives less than fifty percent of its energy to heat or cool from the sun.
(5) "Taxpayer" means a natural person who is subject to the West Virginia personal income tax imposed in article twenty-one of this chapter.
§11-13Z-3. Amount of credit.
Any taxpayer who purchases and installs, or who purchases and causes to be installed through a contractor, a solar energy system on property located in this state within or on property owned and used by the taxpayer as the taxpayer's personal residence, on or after July 1, 2009, shall be allowed a credit against the taxes imposed in article twenty-one of this chapter in an amount equal to thirty percent of the cost to purchase and install a solar energy system up to a maximum amount of $2,000.
§11-13Z-4. Application of credit.
(a) The credit provided in this article shall be applied against the tax imposed by article twenty-one of this chapter and shall be credited against the taxpayer's tax liability as follows:
(1) The tax credit authorized in this article shall be applied against the taxpayer's tax liability imposed by article twenty-one of this chapter, for the first tax year during which the solar energy system is first place in service and;
(2) Remaining credit, if any, may be carried forward, until used up, or until the end of the four year carry forward period, whichever comes first. Credit carried forward after the first tax year during which the solar energy system is first placed in service shall be applied against the taxpayer's tax liability imposed by article twenty-one of this chapter, for a carry forward period not exceeding the four consecutive tax years immediately succeeding the end of the first tax year when the solar energy system is first place in service, for a total maximum credit application period of five consecutive years. The credit may not be carried forward beyond those five tax years, and may not be carried back to prior taxable years;
(3) Any tax credit remaining after the fifth tax year is forfeited.
(b) Application of the credit authorized by this article, by itself, or in combination with all other applicable tax credits, exemptions and deductions shall in no event reduce the tax liability of the taxpayer below zero, and shall in no circumstances be applied as a refundable tax credit, or result in a refundable tax credit.
§11-13Z-5. Burden of proof; application required; failure to make timely application.

(a) The burden of proof is on the taxpayer to establish by clear and convincing evidence that the taxpayer is entitled to the benefits allowed by this article.
(b) Application for credit required:
(1) Application required. -- Notwithstanding any provision of this article to the contrary, no credit is allowed or may be applied under this article for any cost to purchase and install a solar energy system until the person asserting a claim for the allowance of credit under this article makes written application to the Tax Commissioner for allowance of credit as provided in this article. An application for credit shall be filed, in the form prescribed by the Tax Commissioner, no later than the last day for filing the tax returns, determined by including any authorized extension of time for filing the return, required under article twenty-one of this chapter for the taxable year in which the solar energy system to which the credit relates is placed in service, and all information required by the form shall be provided.
(2) Failure to make timely application. -- The failure to timely apply for the credit results in the forfeiture of fifty percent of the total credit otherwise allowable under this article.
§11-13Z-6. Eligibility for credit.
(a) The credit authorized by this section is available to any taxpayer, as defined in this article, who installs or causes to be installed a solar energy system as defined in this article, on property located in this state and owned by the taxpayer and used and occupied as a residence by the taxpayer for at least one hundred eighty-three days during a taxable year beginning on or after January 1, 2009.
(b) The credit authorized by this section is available for qualified taxpayers and qualified solar energy systems notwithstanding the availability and application of any federal tax credits for solar energy systems: Provided, That the credit authorized by this article shall not be available for any portion of the purchase cost or installation cost of the solar energy system that is funded by a federal grant or a state grant or any other grant source.
(c) The credit authorized by this article shall not be available to a taxpayer who purchases the solar energy system from a person whose relationship to the taxpayer would result in the disallowance of deductions under 26 U.S.C. §267 or §707 or §707(b) of the United States Internal Revenue Code of 1986, as amended.
§11-13Z-7. Recapture Of credit; recapture tax imposed, rules.
(a) When recapture tax applies. -- A qualified taxpayer who purchases and installs a solar energy system for use in a residential property who has applied for and received the tax credit provided in this article, and who disposes of such residential property in either the first tax year during which the solar energy system is first placed in service or the next immediately succeeding tax year, shall be subject to the recapture tax imposed by subsection (b) of this section.
(b) Recapture tax imposed. --
(1) Full recapture. -- If the qualified taxpayer disposes of the residential property for which the solar energy system was installed in either the first tax year during which the solar energy system is first place in service or the next immediately succeeding tax year, and has applied for and received the credit provided in this article, the taxpayer shall be subject to full recapture of the credit. The amount of tax due under this subdivision shall be an amount equal to the full amount of credit received by the taxpayer for the purchase and installation of the solar energy system.
(2) Payment of recapture tax. -- The amount of tax recaptured under this section is due and payable on the day the taxpayer's annual return, under article twenty-one of this chapter, is due for the taxable year in which this section applies.
(c) Rules. -- The Tax Commissioner may promulgate such rules as may be useful or necessary to carry out the purposes of this article and to implement the intent of the Legislature. Rules shall be promulgated in accordance with the provisions of article three, chapter twenty-nine-a of this code.
§11-13Z-8. Credit exclusion.
Any taxpayer that has taken the credits authorized by section eight-a or eight-g, article twenty-one of this chapter based on installation or purchase of a solar energy system is not eligible for application of the credit authorized by this article for installation or purchase of the same solar energy system or any part thereof.
§11-13Z-9. Credit is nontransferable.
Taxpayers eligible for the credit provided in this article may not sell, assign or otherwise transfer their credit to another taxpayer. No tax credit shall be allowed under this article to grantees, lessees, transferees, or successor owners of residential property in which a solar energy system has been installed or placed in service by any grantor, lessor, transferor or predecessor owner of such property, or for which tax credit has been authorized pursuant to this article for any grantor, lessor, transferor or predecessor owner of such property. No credit may be authorized under this article for a speculative builder of residential property in which a solar energy system has been installed or placed in service, or for any person who purchases from a speculative builder, residential property in which a solar energy system has been installed or placed in service by the speculative builder.
§11-13z-10. Tax credit review and accountability.
(a) Beginning on February 1, 2013, and every third year thereafter, the Tax Commissioner shall submit to the Governor, the President of the Senate and the Speaker of the House of Delegates a tax credit review and accountability report evaluating the cost of the credit set forth in this article, during the most recent three-year period for which information is available. The criteria to be evaluated shall include, but not be limited to, for each year of the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The cost of the credit;
(b) Taxpayers claiming the credit shall provide any information the Tax Commissioner may require to prepare the report. The information provided shall not be subject to the confidentiality and disclosure provisions of sections five-d and five-s, article ten of this chapter because the information relates to individual taxpayers for whom personal tax information confidentiality would be compromised by disclosure of personal tax credit information.
§11-13Z-11. Credit termination.
No taxpayer shall be entitled to take any credit pursuant to this article for a solar energy system placed in service on or after July 1, 2013.

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