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ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 650
(Senators Tomblin, Mr. President, Oliverio,
Kessler, Chafin, Craigo,
Sprouse, McCabe, Plymale,
Minard, Anderson, Minear, McKenzie, Mitchell, Ross, Hunter, Snyder,
Prezioso, Sharpe and Unger, original sponsors)
____________
[Passed March 12, 1999; in effect ninety days from passage.]
____________
AN ACT to amend and reenact sections three, five, six and twelve,
article thirteen-j, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
all relating to reauthorizing the neighborhood investment
program act; stating definitions; establishing amount of
credit allowed; permitting application of credit within five
years; setting forth application of annual credit allowance;
requiring forfeiture of unused credit; requiring independent
program evaluation; and setting termination date for the
act.
Be it enacted by the Legislature of West Virginia:
That sections three, five, six and twelve, article thirteen- j, chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, be amended and reenacted, all to
read as follows:
ARTICLE 13J.NEIGHBORHOOD INVESTMENT PROGRAM.
§11-13J-3. Definitions.
(a) General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b)
of this section 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
in this article.
(b) Terms defined.
(1) Affiliate. -- The terms "affiliate" or "affiliates"
include all concerns which are affiliates of each other when
either directly or indirectly:
(A) One concern controls or has the power to control the
other; or
(B) A third party or third parties control or have the power
to control both. In determining whether concerns are
independently owned and operated and whether or not affiliation
exists, consideration shall be given to all appropriate factors,
including common ownership, common management and contractual
relationships.
(2) Capacity building. -- The term "capacity building" means
to generally enhance the capacity of the community to achieve
improvements and to obtain the community services described in
items subparagraphs (i) through (v), inclusive, of the definition of
that term, as set forth in subdivision (4) of this subsection.
Capacity building includes, but is not limited to, improvement of
the means, or capacity, to:
(i) Access, obtain and use private, charitable and
governmental assistance programs, administrative assistance and
private, charitable and governmental resources or funds;
(ii) Fulfill legal, bureaucratic and administrative
requirements and qualifications for accessing assistance,
resources or funds; and
(iii) Attract and direct political and community attention
to needs of the community for the purpose of increasing access to
and use of assistance, resources or funds for a given purpose,
goal or need.
(3) Commissioner or tax commissioner. -- The terms
"commissioner" and "tax commissioner" are used interchangeably
herein and mean the tax commissioner of the state of West
Virginia, or his or her delegate.
(4) Community services. -- "Community services" means
services, provided at no charge whatsoever, of:
(i) Providing any type of health, personal finance, psychological or behavioral, religious, legal, marital,
educational or housing counseling and advice to economically
disadvantaged citizens or a specifically designated group of
economically disadvantaged citizens or in an economically
disadvantaged area; or
(ii) Providing emergency assistance or medical care to
economically disadvantaged citizens or to a specifically
designated group of economically disadvantaged citizens or in an
economically disadvantaged area; or
(iii) Establishing, maintaining or operating recreational
facilities, or housing facilities for economically disadvantaged
citizens or a specifically designated group of economically
disadvantaged citizens or in an economically disadvantaged area;
or
(iv) Providing economic development assistance to
economically disadvantaged citizens or a specifically designated
group of economically disadvantaged citizens; without regard to
whether they are located in an economically disadvantaged area,
or to individuals, groups or neighborhood or community
organizations, in an economically disadvantaged area; or
(v) Providing community technical assistance and capacity
building to economically disadvantaged citizens or a specifically
designated group of economically disadvantaged citizens, or to
individuals, groups or neighborhood or community organizations in an economically disadvantaged area.
(5) Compensation. -- The term "compensation" means wages,
salaries, commissions and any other form of remuneration paid to
employees for personal services.
(6) Corporation. -- The term "corporation" means any
corporation, joint-stock company or association and any business
conducted by a trustee or trustees wherein interest or ownership
is evidenced by a certificate of interest or ownership or similar
written instrument.
(7) Crime prevention. -- "Crime prevention" means any
activity which aids in the reduction of crime.
(8) Delegate. -- The term "delegate" in the phrase "or his
or her delegate", when used in reference to the tax commissioner,
means any officer or employee of the tax division of the
department of tax and revenue duly authorized by the tax
commissioner directly, or indirectly by one or more redelegations
of authority, to perform the functions mentioned or described in
this article.
(9) Director or director of the West Virginia development
office. -- The term "director" or "director of the West Virginia
development office" means the director of the West Virginia
office.
(10) Economically disadvantaged area. -- The term
"economically disadvantaged area" means:
(A) In a municipality -- any area not exceeding fifteen
square miles in West Virginia which contains any portion of an
incorporated municipality and:
(i) In which area the aggregate poverty rate of persons
residing in the area, based upon the most recent decennial census
of population, is at least one hundred twenty-five percent of the
statewide poverty rate; and
(ii) That is certified as an economically disadvantaged area
by the West Virginia development office;
(B) In a rural area -- any area not exceeding twenty-five
square miles in West Virginia:
(i) Which area is located in a rural area and which contains
no incorporated municipalities or portions thereof;
(ii) In which area the aggregate poverty rate of persons
residing in the area, based upon the most recent decennial census
of population, is at least one hundred twenty-five percent of the
statewide poverty rate; and
(iii) That is certified as an economically disadvantaged
area by the West Virginia development office;
(C) An economically disadvantaged area shall qualify as such
only pursuant to a certification issued by the West Virginia
development office. Such certifications issued by the West
Virginia development office shall expire after the passage of
five calendar years, unless specifically limited to a shorter time by specific order of the West Virginia development office,
and no area shall hold the status of a certified economically
disadvantaged area for a period of time greater than ten years,
either consecutively or in the aggregate;
(D) The certification of an economically disadvantaged area
shall be made on the basis of a determination by the development
office that an area meets the poverty criteria established in
paragraphs (A) and (B) of this subdivision;
(E) No economically disadvantaged area may be certified
within twenty-five miles of any other certified economically
disadvantaged area. Not more than six economically disadvantaged
areas may hold the status of certified economically disadvantaged
areas at any one time in this state;
(F) At least a majority of all economically disadvantaged
areas holding designations as economically disadvantaged areas at
any one time shall be located in rural areas; and
(G) Such certification shall be filed with the secretary of
state and shall specifically set forth the boundaries of the
economically disadvantaged area by both description and map, the
date of certification of the area as an economically
disadvantaged area, the date on which such certification will
terminate and a statement of the director's findings as to the
aggregate poverty rate of persons living in the certified
economically disadvantaged area.
(11) Economically disadvantaged citizen. -- The term
"economically disadvantaged citizen" means a natural person, who
during the current taxable year has, or during the immediately
preceding taxable year had, an annual gross personal income not
exceeding one hundred twenty-five percent of the federal
designated poverty level for personal incomes, and who is a
domiciliary and resident of this state.
(12) Education. -- "Education" means any type of scholastic
instruction to, or scholarship by, an individual that enables
such individual to prepare for better life opportunities.
Education does not include courses in physical training, physical
conditioning, physical education, sports training, sports camps
and similar training or conditioning courses (except for physical
therapy prescribed by a physician or other person licensed to
prescribe courses of medical treatment under West Virginia law).
(13) Eligible contribution. --
(A) An eligible contribution consists of cash, publicly
traded common or preferred stock representing ownership in a
corporation valued at the closing price on the date of transfer,
tangible personal property valued at its fair market value, real
property valued at its fair market value: Provided, That any
common or preferred stock contributed shall be sold by the
project transferee within one hundred eighty days of its receipt;
or a contribution of in kind professional services valued at seventy-five percent of fair market value;
(B) For purposes of this definition, the value of in kind
professional services will not qualify as an eligible
contribution unless the services are:
(i) Reasonably priced and valued, and reasonably necessary
services customarily and normally provided by the contributor in
the normal course of business to customers, clients or patients
other than those encompassed by the project plan;
(ii) Not reimbursable, in whole or in part, from sources
other than the tax credit provided under this article; and
(iii) Are services which are not available without cost
elsewhere in the community;
(C) The term "professional services" means only those
services provided directly by a physician licensed to practice in
this state, those services provided directly by a dentist
licensed to practice in this state, those services provided
directly by a lawyer licensed to practice in this state, those
services provided directly by a registered nurse, licensed
practical nurse, dental hygienist or other health care
professional licensed to practice in this state and those
services provided directly by a certified public accountant or
public accountant licensed to practice in this state;
(D) Minimum contribution. -- No contribution of cash, stock,
property or professional services or any combination thereof contributed in any tax year by any taxpayer having a fair market
value of less than five hundred dollars qualifies as an eligible
contribution;
(E) Maximum contribution. -- No contribution of cash, stock,
property or professional services or any combination thereof
contributed in any tax year by any taxpayer having a fair market
value in excess of two hundred thousand dollars qualifies as an
eligible contribution; and
(F) Limitations. -- Not more than twenty-five percent of
total eligible contributions to a certified project may be in
kind contributions. Not more than twenty-five percent of total
eligible contributions made by any taxpayer to any certified
project may be in kind contributions.
(14) Eligible taxpayer. --
(A) The term "eligible taxpayer" means any person subject to
the taxes imposed by article twenty-one, twenty-three or twenty- four of this chapter which makes an eligible contribution to a
qualified charitable organization pursuant to the terms of a
certified project plan for the purpose of providing neighborhood
assistance, community services or crime prevention, or for the
purpose of providing job training or education for individuals
not employed by the contributing taxpayer or an affiliate of the
contributing taxpayer or a person related to the contributing
taxpayer;
(B) "Eligible taxpayer" also includes an affiliated group of
taxpayers if such group elects to file a consolidated corporation
net income tax return under article twenty-four of this chapter
and if one or more affiliates included in such affiliated group
would qualify as an eligible taxpayer under paragraph (A) of this
subdivision.
(15) Includes and including. -- The terms "includes" and
"including", when used in a definition contained in this article,
shall not be deemed considered to exclude other things otherwise within
the meaning of the term defined.
(16) Job training. -- "Job training" means instruction to an
individual that enables the individual to acquire vocational
skills so as to become employable or to be able to seek a higher
grade of employment.
(17) Natural person or individual. -- The term "natural
person" and the term "individual" means a human being. The terms
"natural person" and "individual" do not mean, and specifically
exclude any corporation, limited liability company, partnership,
joint venture, trust, organization, association, agency,
governmental subdivision, syndicate, affiliate or affiliation,
group, unit or any entity other than a human being.
(18) Neighborhood assistance. -- "Neighborhood assistance"
means either:
(A) Furnishing financial assistance, labor, material and technical advice to aid in the physical or economic improvement
of any part or all of an economically disadvantaged area; or
(B) Furnishing technical advice to promote higher employment
in an economically disadvantaged area.
(19) Neighborhood organization. -- "Neighborhood
organization" means any organization:
(A) Which is performing community services, as defined in
this section; and
(B) Which is exempt from income taxation under Section
501(c)(3) of the Internal Revenue Code.
(20) Partnership and partner. -- The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization through or by means of which any
business, financial operation or venture is carried on, and which
is not a trust or estate, a corporation or a sole proprietorship.
The term "partner" includes a member in such a syndicate, group,
pool, joint venture or organization.
(21) Person. -- The term "person" includes any natural
person, corporation, limited liability company or partnership.
(22) Project transferee. -- The term "project transferee"
means any neighborhood organization, qualified charitable
organization, charitable organization or other organization,
entity or person that receives an eligible contribution or part
of an eligible contribution from an eligible taxpayer for the purpose of directly or indirectly providing neighborhood
assistance, community services or crime prevention, or for the
purpose of providing job training or education or other services
or assistance pursuant to a project plan. The project transferee
is typically the first entity or person receiving eligible
contributions from eligible taxpayers under a project plan.
However, in the case of eligible contributions of in kind
services or other eligible contributions or portions thereof made
pursuant to a certified project plan directly to indigent,
disadvantaged or needy persons, economically disadvantaged
citizens or other persons or organizations under the sponsorship
or auspices of any neighborhood organization, qualified
charitable organization, charitable organization or other
organization, entity or person as a certified project
participant, such eligible contributions shall be deemed considered to
have been made to the entity, organization or person under whose
sponsorship or auspices such eligible contributions are made, and
that entity, organization or person is deemed considered to be the
project transferee with relation to those eligible contributions.
The project transferee is the entity, organization or person that
is liable under this article for payment of the project
certification fee to the West Virginia development office. The
term "project transferee" shall mean and include any deemed considered
project transferee, deemed considered as such under the provisions of this article.
(23) Qualified charitable organization. -- The term
"qualified charitable organization" means a neighborhood
organization, as defined in this section, which is the sponsor of
a project which has received certification by the director of the
West Virginia development office pursuant to the requirements of
this article: Provided, That no organization may qualify as a
qualified organization for purposes of this article if such the
organization is not registered with this state as required under
the solicitation of charitable funds act.
(24) Related person. -- The term "related person" or "person
related to" a stated taxpayer means:
(A) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof
controlled by the taxpayer; or
(B) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is
in control of the taxpayer; or
(C) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof
controlled by an individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is
in control of the taxpayer; or
(D) A member of the same controlled group as the taxpayer.
For purposes of this article, "control", with respect to a
corporation means ownership, directly or indirectly, of stock
possessing fifty percent or more of the total combined voting
power of all classes of the stock of such the corporation which
entitles its owner to vote. "Control", with respect to a trust,
means ownership, directly or indirectly, of fifty percent or more
of the beneficial interest in the principal or income of such the
trust. The ownership of stock in a corporation, of a capital or
profits interest in a partnership or association or of a
beneficial interest in a trust shall be determined in accordance
with the rules for constructive ownership of stock provided in
Section 267(c), other than paragraph (3) of such section, of the
United States Internal Revenue Code, as amended.
(25) State fiscal year. -- "State fiscal year" means a
twelve-month period beginning on the first day of July and ending
on the thirtieth day of June.
(26) Taxpayer. -- The term "taxpayer" means any person
subject to the tax imposed by article twenty-one, twenty-three or
twenty-four of this chapter (or any one or combination of such the
articles of this chapter).
(27) Technical assistance. -- The term "technical
assistance" means:
(A) Assistance in understanding, using and fulfilling the
legal, bureaucratic and administrative requirements and qualifications which must be negotiated for the purpose of
effectively accessing, obtaining and using private, charitable,
not-for-profit or governmental assistance, resources or funds,
and maximizing the value thereof;
(B) Assistance provided by any person holding a license
under West Virginia law to practice any licensed profession or
occupation, whereby such the person, in the practice of such the profession
or occupation, assists economically disadvantaged citizens or the
persons in an economically disadvantaged area by:
(i) Providing any type of health, personal finance,
psychological or behavioral, religious, legal, marital,
educational or housing counseling and advice to economically
disadvantaged citizens or a specifically designated group of
economically disadvantaged citizens or in an economically
disadvantaged area; or
(ii) Providing emergency assistance or medical care to
economically disadvantaged citizens or to a specifically
designated group of economically disadvantaged citizens or in an
economically disadvantaged area; or
(iii) Establishing, maintaining or operating recreational
facilities, or housing facilities for economically disadvantaged
citizens or a specifically designated group of economically
disadvantaged citizens or in an economically disadvantaged area;
or
(iv) Providing economic development assistance to
economically disadvantaged citizens or a specifically designated
group of economically disadvantaged citizens, without regard to
whether they are located in an economically disadvantaged area,
or to individuals, groups or neighborhood or community
organizations, in an economically disadvantaged area; or
(v) Providing community technical assistance and capacity
building to economically disadvantaged citizens or a specifically
designated group of economically disadvantaged citizens or to
individuals, groups or neighborhood or community organizations in
an economically disadvantaged area.
§11-13J-5. Amount of credit allowed.
(a) Credit allowed. -- Eligible taxpayers shall be allowed
a credit against taxes imposed by this state, the application of
which and the amount of which shall be determined as provided in
this article.
(b) Amount of credit. -- The amount of credit allowable is
fifty percent of the amount of the taxpayer's "eligible
contribution".
(c) Application of credit over within five years. -- The amount
of credit allowable must be taken over within a five-year period, at
the rate of one fifth of the amount thereof per tax year,
beginning with the tax year in which the taxpayer irrevocably
transfers its eligible contribution to the project plan
transferee. Notwithstanding any other provision of this article to the contrary, the tax credit which a taxpayer receives under
this article may not exceed one hundred thousand dollars in any
tax year of the eligible taxpayer. A tax credit shall be
allowable under this article only for the tax year of the
eligible taxpayer in which the eligible contribution is
irretrievably transferred to the project plan transferee, and for
the next succeeding four tax years.
§11-13J-6. Application of annual credit allowance.
(a) In general. -- The aggregate annual credit allowance for
a current tax year is an amount equal to the sum of the
following:
(1) The one-fifth part portion allowed under section five of this article
for an eligible contribution placed into service or use during a
prior tax year; plus
(2) The one-fifth part portion allowed under section five of this article
for an eligible contribution placed into service or use during
the current tax year.
(b) Application of current year annual credit allowance. -- The amount
determined under subsection (a) of this section shall be allowed
as a credit for tax years ending on and after the first day of
July, one thousand nine hundred ninety-six, as follows:
(1) Business franchise taxes. --
The amount determined under subsection (a) of this section
shall be applied to reduce up to fifty percent of the taxes imposed by article twenty-three of this chapter for the tax 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) Corporation net income taxes. -- After application of
subdivision (1) of this subsection, any unused credit shall next
be applied to reduce up to fifty percent of the taxes imposed by
article twenty-four of this chapter, for the tax year (determined
before application of allowable credits against tax).
(3) Personal income taxes. --
(A) If the eligible taxpayer is an electing small business
corporation (as defined in Section 1361 of the United States
Internal Revenue Code), a limited liability company treated as a
partnership for purposes of the federal income tax, a partnership
or a sole proprietorship, then any unused credit (after
application of subdivisions (1) and (2) of this subsection) shall
be allowed as a credit against up to fifty percent of the taxes
imposed by article twenty-one of this chapter on income of
proprietors, partners or shareholders, subject to the limitations
set forth in parts (B) and (C) of this subdivision.
(B) Electing small business corporations, partnerships and
other unincorporated organizations shall allocate the credit
allowed by this article among the members thereof in the same
manner as profits and losses are allocated for the tax year.
(C) No credit may be allowed under this section against any
tax due under article twenty-one of this chapter on any wage,
salary or other compensation paid to any employee of any electing
small business corporation, limited liability company,
partnership, other unincorporated organization or sole
proprietorship or against any amount of tax due on any wage,
salary or other compensation reported on federal form W2.
(c) Unused credit forfeited. -- If any annual credit to an eligible
taxpayer remains after application of subsections (a) and (b) of
this section, the amount thereof shall be forfeited. No
carryover to a subsequent tax year or carryback to a prior tax
year shall be allowed for the amount of any unused portion of any
annual credit allowance under this article may be carried forward no more
than four years from the tax year in which the contribution was
made. Unused credits of an eligible taxpayer may not be carried
forward beyond the time limits imposed under section five of this
article and the total maximum aggregate tax credits certified in
any state fiscal year may not exceed two million dollars.
(d) Addition of deductions, decreasing adjustments or
decreasing modifications taken in determining taxable income for
which credit is taken. -- Any deduction, decreasing adjustment or
decreasing modification taken by any taxpayer in determining
federal taxable income which affects West Virginia taxable income
or in determining West Virginia taxable income under article
twenty-one or twenty-four of this chapter for the taxable year
for any charitable contribution, or payment or portion thereof,
which qualifies as an eligible contribution under this article and for which credit is claimed, shall be added to West Virginia
taxable income in determining the tax liability of the taxpayer
under article twenty-one or twenty-four of this chapter, as
appropriate, before application of the credit allowed under this
article for the taxable year.
(e) Annual limit. - The aggregate annual credit allowance to
any taxpayer may not exceed one hundred thousand dollars in any
tax year.
§11-13J-12. Program evaluation; expiration of credit;
preservation of entitlement.
On or before the thirtieth fifteenth day of September December, one two thousand nine
hundred ninety-eight one,
the board director shall secure an independent review of the
neighborhood investment program created by this article and
present the findings to the Legislature. Pursuant to this
report, and any independent evaluation that the Legislature or
the joint committee on government operations may wish to
initiate, the joint committee on government operations shall
issue a recommendation to the Legislature, not later than the
first day of February, one thousand nine hundred ninety-nine, as
to whether the program should continue. Unless sooner
terminated by law, the neighborhood investment program act shall
terminate on the first day of July, one two thousand nine hundred
ninety-nine two. No
entitlement to the tax credit under this article shall result
from any contribution made to any certified project after the
first day of July, one two thousand nine hundred ninety-nine two, and no credit shall be
available to any taxpayer for any contribution made after that
date. Taxpayers which have gained entitlement to the credit
pursuant to eligible contributions made to certified projects
prior to the first day of July, one two thousand nine hundred ninety-
nine two, shall retain
that entitlement and apply the credit in due course pursuant to the requirements and limitations of this article.