WEST virginia legislature
2017 SECOND EXTRAORDINARY session
By Mr. Speaker (Mr. Armstead) and Delegate Miley
(By
[
A
BILL to amend and reenact §11-21-8a and §11-21-8e of the Code of West Virginia,
1931, as amended; and to amend and reenact §11-24-23a and §11-24-23e of said
code, all relating generally to tax credits for rehabilitation of historic buildings
and structures; increasing the amount of tax credit against personal and
corporate net income taxes from ten percent to twenty-five percent for
expenditures made on or after December 31, 2017; providing for the use of tax
credit on or after January 1, 2020; prohibiting eligibility for credit if the
taxpayer is in arrears on certain tax payments; providing rule-making authority
to the Tax Commissioner; amending carryback and carryforward provisions for tax
credit; limiting the maximum amount available for tax credit per project and in
the aggregate per West Virginia state fiscal year; requiring the state historic
preservation officer to reserve a certain amount of available tax credits for
projects where proposed tax credits will not exceed $500,000 per project;
authorizing the state historic preservation officer to reallocate unused
credits reserved for certain projects; providing procedures for the issuance of
tax credit reservations and certificates by the state historic preservation
officer; requiring the state historic preservation officer to prescribe and
publish a form and instructions for applications for credits; providing for an
application fee payable to the state historic preservation officer; requiring
the state historic preservation officer to review and act upon applications
within thirty days of receipt; and providing a sunset provision.
Be it enacted by the
Legislature of West Virginia:
That §11-21-8a and §11-21-8e of the
Code of West Virginia, 1931, as amended, be amended and reenacted; and that §11-24-23a and §11-24-23e of
said code be amended and reenacted, all to read as follows:
ARTICLE 21. PERSONAL
INCOME TAX.
§11-21-8a. Credit for
qualified rehabilitated buildings investment.
A credit against the tax
imposed by the provisions of this article shall be is allowed as follows:
(a) Certified historic structures. – For certified historic structures, the credit is
equal to ten percent of qualified rehabilitation expenditures as defined
in §47(c)(2), Title 26 of the United States Code, as amended: Provided, That
for qualified rehabilitation expenditures made after December 31, 2017,
pursuant to an historic preservation certification application, Part 2 –
Description of Rehabilitation, received by the state historic preservation
office after December 31, 2017, the credit allowed by this section is equal to
twenty-five percent of the qualified rehabilitation expenditure: Provided,
however, That the credit
authorized by this section for qualified rehabilitation expenditures made after
December 31, 2017, may not be used to offset tax liabilities of the taxpayer
prior to the tax year beginning on or after January 1, 2020: Provided
further, That the taxpayer is not entitled to this credit if, when
the applicant begins to claim the credit and throughout the time period within
which the credit is claimed, the taxpayer is in arrears in the payment of any
tax administered by the Tax Division or the taxpayer is delinquent in the
payment of property taxes on the property containing the certified historic tax
structure when the applicant begins to claim the credit and throughout the time
period within which the credit is claimed. The Tax Commissioner shall
promulgate procedural rules in accordance with article three, chapter
twenty-nine-a of this code that provide what information must accompany any
claim for the tax credit for the determination that the taxpayer is not in
arrears in the payment of any tax administered by the Tax Division nor is the
taxpayer delinquent in the payment of property taxes on the property containing
the certified historic tax structure, and such other administrative
requirements as the Tax Commissioner may specify. This credit is available
for both residential and nonresidential buildings located in this state, that
are reviewed by the West Virginia Division of Culture and History and
designated by the National Park Service, United States Department of the
Interior as “certified historic structures,” and further defined as a
“qualified rehabilitated building,” as defined under §47(c)(1), Title 26 of the
United States Code, as amended.
(b)
Unless extended by action of the Legislature, the provisions of this section
will terminate and have no more effect on or after December 31, 2022.
§11-21-8e. Carryback,
carryforward.
(a) Any unused portion of
the credit for qualified rehabilitated buildings investment authorized by
section eight-a of this article which may not be taken in the taxable year to
which the credit applies qualifies for carryback and carryforward treatment subject
to the identical general provisions under §39, Title 26 of the United States
Code, as amended: Provided, That the amount of the credit taken in a
taxable year shall in no event exceed the tax liability due for the taxable
year: Provided, however, That for tax years beginning on and
after January 1, 2020, any unused portion of the credit authorized by section
eight-a of this article, may not be carried back to any prior taxable year: Provided
further, That for tax years beginning on and after January 1, 2020, any
unused portion of the credit authorized by section eight-a of this article may
be carried over to each of the next ten tax years following the first tax year
for which the credit entitlement is authorized under this article for a
specific qualified rehabilitation buildings investment until used to exhaustion
or forfeited due to lapse of time.
(b) Effective for taxable
years beginning on and after January 1, 2001, credits granted to an electing
small business corporation (S corporation), limited partnership, general
partnership, limited liability company or multiple owners of property shall be
passed through to the shareholders, partners, members or owners, either pro
rata or pursuant to an agreement among the shareholders, partners, members or owners
documenting an alternative distribution method. The Tax Commissioner shall
promulgate procedural rules in accordance with article three, chapter
twenty-nine-a of this code that provide the method of reporting the alternative
method of distribution authorized by this section.
ARTICLE 24. CORPORATION
NET INCOME TAX.
§11-24-23a. Credit for
qualified rehabilitated buildings investment.
(a) A credit against the tax imposed by the provisions of
this article shall be allowed as follows:
Certified historic structures. – For certified historic structures, the credit is
equal to ten percent of qualified rehabilitation expenditures as defined in
§47(c)(2), Title 26 of the United States Code, as amended: Provided, That
for qualified rehabilitation expenditures made after December 31, 2017,
pursuant to an historic preservation certification application, Part 2 –
Description of Rehabilitation, received by the state historic preservation
office after December 31, 2017, the credit allowed by this section is equal to
twenty-five percent of the qualified rehabilitation expenditure: Provided,
however, That the credit
authorized by this section for qualified rehabilitation expenditures made after
December 31, 2017, may not be used to offset tax liabilities of the taxpayer
prior to the tax year beginning on or after January 1, 2020: Provided
further, That the taxpayer is not entitled to this credit if, when
the applicant begins to claim the credit and throughout the time period within
which the credit is claimed, the taxpayer is in arrears in the payment of any
tax administered by the Tax Division or the taxpayer is delinquent in the
payment of any local or municipal tax, or the taxpayer is delinquent in the
payment of property taxes on the property containing the certified historic tax
structure when the applicant begins to claim the credit and throughout the time
period within which the credit is claimed. The Tax Commissioner shall
promulgate procedural rules in accordance with article three, chapter twenty-nine-a
of this code that provide what information must accompany any claim for the tax
credit for the determination that the taxpayer is not in arrears in the payment
of any tax administered by the Tax Division nor is the taxpayer delinquent in
the payment of property taxes on the property containing the certified historic
tax structure, and such other administrative requirements as the Tax
Commissioner may specify. This credit is available for both residential and
nonresidential buildings located in this state that are reviewed by the West
Virginia Division of Culture and History and designated by the National Park
Service, United States Department of the Interior as "certified historic
building", and further defined as a "qualified rehabilitated
building", as defined under §47(c)(1), Title 26, of the United States
Code, as amended.
(b) Allocations and maximum amounts of tax credits per project and per
fiscal year -
(1) No more than $10
million of the tax credits authorized by this section and section eight-a,
article twenty-one of this chapter may be allocated, reserved or issued by the
state historic preservation officer to any single certified rehabilitation.
(2) No more than $30
million of the tax credits authorized by this section and section eight-a, article
twenty-one of this chapter cumulatively may be issued by the state historic
preservation officer for use in any given West Virginia state fiscal year, and
any amount remaining up to $30 million may not be carried over to a subsequent
West Virginia state fiscal year.
(3) No less than $5
million of the tax credits authorized by this section and section eight-a,
article twenty-one of this chapter shall be allocated to and reserved by the
state historic preservation officer in any West Virginia state fiscal year for
certified rehabilitation projects with proposed tax credits of $500,000 or
less. If after the end of each West Virginia state fiscal year, the state
historic preservation officer has not issued to applicants for which
reservations have been made tax credit certificates cumulatively equal to $5
million, then the state historic preservation officer shall reallocate the
unused tax credits to other applicants in the order that their applications
were received irrespective of the amounts of the tax credits requested.
(c) Procedure for issuance of tax credits reservations and certificates by
the state historic preservation officer –
(1) Any claim for the
tax credit authorized pursuant to this section and section eight-a, article
twenty-one of this chapter shall be accompanied by a tax credit certificate
issued by the state historic preservation officer.
(2) The tax credits will
be awarded on a first come, first served basis. At the time the historic
preservation certification application, Part 2 – Description of Rehabilitation,
is received by the state historic preservation office, the project will be
placed on a reservation list, which will reserve the tax credit amount listed
on the application. The historic preservation certification application, Part 2
– Description of Rehabilitation, will be reviewed by the state historic
preservation office for completion and submitted to the National Park Service
for full review. At the time the historic preservation certification
application, Part 2 – Description of Rehabilitation, is submitted to the
National Park Service, a fee request will be sent to the property owner. Upon
approval of the historic preservation certification application, Part 2 –
Description of Rehabilitation, from the National Park Service, including
approval with conditions, that the project will meet the Secretary of the
Interior’s standards for rehabilitation, the owner of the building will receive
guarantee of the tax credits from the state historic preservation office.
(3) The state historic
preservation officer shall issue tax credit certificates for certified
rehabilitation projects that the National Park Service has determined have met
the Secretary of the Interior standards for rehabilitation based on the
issuance of an approved historic preservation certification application, Part 3
– Request for Certification of Completed Work.
(4) Once the state
historic preservation officer has allocated and reserved the maximum tax
credits authorized for any given West Virginia state fiscal year, the state
historic preservation officer then shall allocate and reserve tax credits
against the maximum tax credits authorized for use in the succeeding West
Virginia state fiscal year.
(5) If an applicant for
tax credits that receives a reservation for tax credits for any given West
Virginia state fiscal year fails to submit an approved historic preservation
certification application, Part 3 – Request for Certification of Completed Work
in the instance of a certified rehabilitation within thirty-six (36) months of
the date of the approved historic preservation certification application, Part
2 – Description of Rehabilitation, therefor or in the instance of a phased
project as determined by the National Park Service within sixty (60) months of
the date of the advisory determination by the National Park Service therefor
that such phase has been completed in accordance with the Secretary of the
Interior standards for rehabilitation then the state historic preservation
officer may reallocate part or all of the tax credits reserved therefor to
other applicants in the order their applications were received.
(d) The state historic
preservation officer shall prescribe and publish a form and instructions for an
application for reservation and issuance of the tax credits authorized by this
section and section eight-a, article twenty-one of this chapter.
(e) Application fee - Each application for tax credits authorized
pursuant to this section shall be accompanied by a fee payable to the state
historic preservation officer equal to the lesser of (1) 0.5% of the amount of
the tax credits requested for in such application and (2) $10,000. The state
historic preservation officer shall review and act on all such applications
within thirty days of receipt.
(f) Unless extended by
action of the Legislature, the provisions of this section will terminate and
have no more effect on or after December 31, 2022.
§11-24-23e. Carryback,
carryforward.
Any unused portion of the
credit for qualified rehabilitated buildings investment authorized by section
twenty-three-a of this article which may not be taken in the taxable year to
which the credit applies shall qualify for carryback and carryforward treatment
subject to the identical general provisions under §39, Title 26 of the United
States Code, as amended: Provided, That the amount of such credit taken
in a taxable year shall in no event exceed the tax liability due for the
taxable year: Provided, however, That for tax years beginning
on and after January 1, 2020, any unused portion of the credit authorized by
section twenty-three a of this article, may not be carried back to any prior
taxable year: Provided further, That for tax years beginning on and
after January 1, 2020, any unused portion of the credit authorized by section
twenty-three-a of this article may be carried over to each of the next ten tax
years following the first tax year for which the credit entitlement is
authorized under this article for a specific qualified rehabilitation buildings
investment until used to exhaustion or forfeited due to lapse of time.
NOTE: The purpose of this bill is
to increase the amount of tax credit for qualified rehabilitation expenditures
on historic structures to be used against personal and corporate net income
taxes from 10 percent to 25 percent for expenditures made on or after December
31, 2017, to provide for use of the tax credit on or after January 1, 2020, and
to make these changes subject to certain annual and per-project caps. Also,
this bill provides for a five-year sunset period on the historic tax
credit.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.