Senate Bill No. 646
(By Senators Unger and Minard)
[Originating in the Committee on Finance;
reported March 29, 2005.]
A BILL to amend and reenact §11-13-1 and §11-13-3 of the Code of
West Virginia, 1931, as amended, all relating generally to
business and occupation tax; exempting from tax gross income
received by nonprofit homeowners associations for community
services to members; deleting obsolete language; and making
Be it enacted by the Legislature of West Virginia:
That §11-13-1 and §11-13-3 of the Code of West Virginia, 1931,
as amended, be amended and reenacted, all to read as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
. -- When used in this article, or in the
administration of this article, the terms defined in subsection (b)
shall have the meanings ascribed to them by this section, unless a
different meaning is clearly required by either the context in which the term is used or by specific definition.
(b) Terms defined
(1) "Person", or the term "company",
used in this
interchangeably, includes any individual, firm,
copartnership, joint adventure, association, corporation, trust or
any other group or combination acting as a unit, and the plural as
well as the singular number, unless the intention to give a more
limited meaning is disclosed by the context.
(2) "Sale", "sales" or "selling" includes any transfer of or
title to property or electricity, whether for money or in exchange
for other property.
(3) "Taxpayer" means any person liable for any tax hereunder.
(4) "Gross income" means the gross receipts of the taxpayer,
received as compensation for personal services and the gross
receipts of the taxpayer derived from trade, business, commerce or
sales and the value proceeding or accruing from the sale of
tangible property (real or personal) or service, or both, and all
receipts by reason of the investment of the capital of the business
engaged in, including rentals, royalties, fees, reimbursed costs or
expenses or other emoluments however designated and including all
interest, carrying charges, fees or other like income, however
denominated, derived by the taxpayer from repetitive carrying of
accounts, in the regular course and conduct of his or her
and extension of credit in connection with the sale of any tangible personal property or service and without any deductions on account
of the cost of property sold, the cost of materials used, labor
costs, taxes, royalties paid in cash or in kind or otherwise,
interest or discount paid or any other expenses whatsoever.
(5) "Gross proceeds of sales" means the value, whether in
money or other property, actually proceeding from the sale of
tangible property without any deduction on account of the cost of
property sold or expenses of any kind.
(6) "Business" shall include all activities engaged in or
caused to be engaged in with the object of gain or economic
benefit, either direct or indirect. "Business" shall include the
rendering of gas storage service by any person for the gain or
economic benefit of any person, including, but not limited to, the
storage operator, whether or not incident to any other business
(7) "Gas" means either natural gas unmixed or any mixture of
natural and artificial gas or any other gas.
(8) "Storage reservoir" means that portion of any subterranean
sand or rock stratum or strata into which gas has been injected for
the purpose of storage prior to the first day of March, one
thousand nine hundred eighty-nine.
(9) "Gas storage service" means the injection of gas into a
storage reservoir, the storage of gas for any period of time in a
storage reservoir or the withdrawal of gas from a storage reservoir.
gas may be owned by the storage operator or
any other person.
(10) "Net number of dekatherms of gas injected" means the sum
of the daily injection of dekatherms of gas in excess of the sum of
the daily withdrawals of dekatherms of gas during a tax month.
(11) "Net number of dekatherms of gas withdrawn" means the sum
of the daily withdrawal of dekatherms of gas in excess of the sum
of the daily injection of dekatherms of gas during a tax month.
(12) "Gas storage operator" means any person who operates a
storage reservoir or provides a storage service as defined
in this subsection
either as owner or lessee.
(13) "Month" or "tax month" means the calendar month.
(14) "Dekatherm" means the thermal energy unit equal to one
million British thermal units (BTU's) or the equivalent of one
thousand cubic feet of gas having a heating content of one thousand
BTU's per cubic foot.
(15) "Taxable year" means the calendar year, or the fiscal
year ending during
calendar year, upon the basis of which
tax liability is computed under this article. "Taxable year"
means, in case of a return made for a fractional part of a year
under the provisions of this article, or under regulations
promulgated by the Tax Commissioner, the period for which
return is made.
(16) "Homeowners' association" means a homeowners' association as defined in Section 528 of the Internal Revenue Code of 1986, as
amended. The term "homeowners' association" also includes any unit
owners' association organized under section one hundred one,
article three, chapter thirty-six-b of this code.
(17) "Member", for purposes of the exemption provided in
subdivision (7), subsection (b), section three of this article,
means a person having membership rights in a homeowners'
association, in accordance with the provisions of its articles of
incorporation, bylaws or other instruments creating its form and
organization; and having bona fide rights and privileges in the
organization ordinarily conferred on members of the homeowners
association, such as the right to vote, the right to elect officers
and directors and the right to hold office within the organization.
The term "member" also includes a "unit owner" as that term is
defined in section one hundred three, article one, chapter thirty-
six-b of this code.
§11-13-3. Exemptions; annual exemption and periods thereof.
(a) Monthly exemption. --
For any tax imposed under the
provisions of this article with respect to any period
prior to the
first day of July, one thousand nine hundred eighty-three, there
shall be an exemption in every case of fifty dollars in amount of
tax computed under the provisions of this article. A person
exercising a privilege taxable hereunder for a fractional part of
a tax year shall be entitled to an exemption of the sum bearing the proportion to fifty dollars that the period of time the privilege
is exercised bears to a whole year. Only one exemption shall be
allowed to any one person, whether he exercises one or more
privileges taxable hereunder.
For any tax imposed under the provisions of this article with
respect to (a) the period beginning on and after the first day of
July, one thousand nine hundred eighty-three, and through the
thirtieth day of June, one thousand nine hundred eighty-four, there
shall be an exemption in every case of twenty-five dollars per
month; (b) the period beginning on and after the first day of July,
one thousand nine hundred eighty-four and through the thirtieth day
of June, one thousand nine hundred eighty-five, there shall be an
exemption in every case of thirty-three dollars and thirty-three
cents per month; and (c) the period
beginning on or after the first
day of July, one thousand nine hundred eighty-five, there shall be
an exemption in every case of forty-one dollars and sixty-seven
cents per month in amount of tax computed under the provisions of
this article. Only one exemption shall be allowed to any one
he the person
exercises one or more privileges
(b) Exemptions from tax. --
The provisions of this article
shall not apply to:
Insurance companies which pay the State of West
Virginia a tax upon premiums: Provided,
That said exemption shall not extend to that part of the gross income of insurance companies
which is received for the use of real property, other than property
in which any
company maintains its office or offices, in
this state, whether
income be in the form of rentals or
(b) nonprofit (2) Nonprofit
cemetery companies organized and
operated for the exclusive benefit of their members;
(c) fraternal (3) Fraternal
societies, organizations and
associations organized and operated for the exclusive benefit of
their members and not for profit: Provided, That
exemption shall not extend to that part of the gross income arising
from the sale of alcoholic liquor, food and related services of
fraternal societies, organizations and associations which are
licensed as private clubs under the provisions of article seven,
chapter sixty of this code;
(d) corporations (4) Corporations
, associations and societies
organized and operated exclusively for religious or charitable
; (e) and
production credit associations, organized under
the provisions of the federal Farm Credit Act of 1933;
(f) any (5) Any
credit union organized under the provisions of
chapter thirty-one of this code or any other chapter of this code:
That the exemptions of this section shall not apply to
corporations or cooperative associations organized under the
provisions of article four, chapter nineteen of this code;
(g) gross (6) Gross
income derived from advertising service
rendered in the business of radio and television broadcasting; and
(h) the gross income or gross proceeds of sale of a
gasification or liquefaction of coal project in the demonstration,
pilot or research stages: And provided further, That prior to the
commencement of operation of any such project, the tax commissioner
shall have first certified the project as eligible for such
exemption: And provided further, That such exemption shall expire
seven years from the date the project first receives gross income
or gross proceeds from sales.(7) Gross income of a nonprofit homeowners' association
received from assessments on its members for community services
such as road maintenance, common area maintenance, water service,
sewage service and security service.