H. B. 2953
(By Delegates Caputo, DeLong, Boggs and Barker)
[Introduced February 8, 2007; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-13-2f of the Code of West
Virginia, 1931, as amended, relating to the expiration date
of the tax for the manufacturing or production of synthetic
fuel from coal.
Be it enacted by the Legislature of West Virginia:
That §11-13-2f of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
§11-13-2f. Manufacturing or producing synthetic fuel from coal;
rate and measure of tax; definitions; dedication,
deposit and distribution of tax; expenditure of
distributions received by synthetic fuel-producing
counties for economic development and
infrastructure improvement pursuant to plan approved by West Virginia development office;
priority for expenditure of distributions received
by other county commissions; date for expiration
of tax.
(a) Rate and measure of tax. -- There is hereby imposed an
annual tax, in accordance with section two of this article, upon
every person engaging or continuing within this state in the
business of manufacturing or producing synthetic fuel from coal
for sale, profit or commercial use, either directly or through
the activity of others, in whole or in part, and the amount of
the tax shall be equal to fifty cents per ton of synthetic fuel
manufactured or produced for sale, profit or commercial use
during the taxable year. When a fraction of a ton is included in
the measure of tax, the rate of tax as to that fraction of a ton
shall be proportional. The measure of tax is the total number of
tons of synthetic fuel product manufactured or produced in this
state during the taxable year for sale, profit or commercial use
regardless of the place of sale or the fact that deliveries may
be made to points outside this state. Liability for payment of
this tax shall accrue when the synthetic fuel product is sold by
the manufacturer or producer, determined by when the producer or
manufacturer recognizes gross receipts for federal income tax
purposes. When there is no sale of the synthetic fuel product, liability for tax shall accrue when the synthetic fuel product is
shipped from the manufacturing facility for commercial use,
whether by the taxpayer or by a related party, except as
otherwise provided in legislative rules promulgated by the tax
commissioner as provided in article three, chapter twenty-nine-a
of this code.
(b) Definitions. -- For purposes of this section:
(1) "Fiscal year" means the fiscal year of this state.
(2) "Fuel" means material that produces usable heat or power
upon combustion.
(3) "Fuel manufactured or produced from coal" means liquid,
gaseous or solid fuels produced from coal, including, but not
limited to, such fuels when used as feedstocks.
(4) "Office of chief inspector" means the state auditor as
ex officio chief inspector and supervisor of local government
offices in accordance with section eleven, article nine, chapter
six of this code.
(5) "Provisional share" means the portion of the synthetic
fuel-producing counties grant fund that is available for possible
distribution to each synthetic fuel-producing county. The amount
of each county's provisional share is derived by dividing the
share computation base by the number of synthetic fuel-producing
counties in this state during the fiscal year. The share computation base is the sum of: (A) Net revenues deposited in the
synthetic fuel-producing counties grant fund for the fiscal year;
and (B) any amounts repooled for the fiscal year into the
synthetic fuel-producing counties grant fund under this section;
less (C) the amount dedicated and allotted to the director of the
development office under this section for administration of the
synthetic fuel-producing counties grant program. A county shall
be counted as a synthetic fuel-producing county only if a
synthetic fuel-manufacturing plant actively produced synthetic
fuel in the county for at least one hundred eighty days during
the fiscal year.
(6) "Synthetic fuel manufactured or produced from coal" or
"synthetic fuel" means and includes, but is not limited to, any
fuel that is made or formed into a briquette, fragment, sheet,
flake or other solid form by combining a binder or binding
substance with coal dust, coal fines, crushed coal, pulverized
coal, stoker fines, waste coal, coal or material derived from
slurry ponds, coal or material derived from gob piles or any
combination of the aforementioned materials without regard to
whether any federal tax credit is, or would have been, available
for or with relation to the production of such fuel. The term
"synthetic fuel manufactured or produced from coal" or "synthetic
fuel" also means, but is not limited to, fuel manufactured or produced from coal for which credit is allowable for federal
income tax purposes under section twenty-nine of the United
States Internal Revenue Code, as in effect on the first day of
January, two thousand one, or for which credit would have been
allowable if the synthetic fuel was produced from a facility, or
expansion of a facility, that meets the requirement of section
twenty-nine of the Internal Revenue Code or would have met the
requirements on the first day of January, two thousand one,
notwithstanding that such facility or expansion of a facility may
have been placed in service either prior to or subsequent to the
first day of January, two thousand one. "Synthetic fuel" does not
include coke or coke gas.
(7) "Synthetic fuel-producing county" means a county of this
state in which a synthetic fuel-manufacturing plant is physically
located that actively produces synthetic fuel for at least one
hundred eighty days during the fiscal year. For purposes of
determining whether a county is a synthetic fuel-producing
county, the location of the synthetic fuel-manufacturing company
headquarters, the state of incorporation or organization of the
company or the location of any managerial office or facility or
other office or facility of the company, other than the synthetic
fuel-manufacturing plant, and the physical location where the
coal or other material used in synthetic fuel manufacturing is extracted from the earth shall not be determinative of the
designation of a county as a synthetic fuel-producing county.
(8) "Synthetic fuel-nonproducing county" means any county of
this state other than a synthetic fuel-producing county.
(9) "Ton" means two thousand pounds.
(10) "Director of the development office" or "director"
means the director of the West Virginia development office
created and continued under article two, chapter five-b of this
code.
(c) Credits not allowed against tax. -- When determining the
amount of tax due under this section, no credit shall be allowed
under section three-c or three-d of this article or under any
other article of this chapter or any other chapter of this code
unless it is expressly provided that the credit applies to the
business and occupation tax on the privilege of manufacturing or
producing synthetic fuel.
(d) Emergency rule authorized. -- The tax commissioner may,
in the commissioner's discretion, promulgate an emergency rule as
provided in article three, chapter twenty-nine-a of this code
that clarifies, explains or implements the provisions of this
section.
(e) Dedication and distribution of proceeds, creation of
funds. --
(1) The first four million dollars of the net amount of tax
collected during each fiscal year for exercise of the privilege
taxed under this section shall be deposited into the "Mining and
Reclamation Operations Fund" created in the state treasury by
section thirty-two, article three, chapter twenty-two of this
code.
(2) There is hereby created a fund in the state treasury
entitled the "synthetic fuel-producing counties grant fund" which
shall be a revolving fund that shall carry over each fiscal year.
The net amount of tax collected for exercise of the privilege
taxed under this section in excess of the first four million
dollars during each fiscal year, not to exceed two million sixty
thousand dollars, shall be deposited in the synthetic fuel-
producing counties grant fund. Moneys in the synthetic fuel-
producing counties grant fund in excess of moneys allocated to
the director of the development office shall be dedicated to and
distributed among the synthetic fuel-producing counties under the
synthetic fuel-producing counties grant program as provided in
this section. The county commission of a synthetic fuel-producing
county shall use ninety percent of the funds distributed to the
county out of the synthetic fuel-producing counties grant fund
for infrastructure improvement and ten percent of the funds distributed to the county out of the synthetic fuel-producing
counties grant fund for economic development.
(3) There is hereby created in the state treasury a fund
entitled the "synthetic fuel-nonproducing counties fund" which
shall be a revolving fund that shall carry over each fiscal year.
The net amount of tax collected for exercise of the privilege
taxed under this section in excess of the first six million sixty
thousand dollars during each fiscal year, not to exceed two
million dollars, shall be deposited in the synthetic fuel-
nonproducing counties fund and equally divided and distributed
among the synthetic fuel-nonproducing counties. The county
commission of a synthetic fuel-nonproducing county shall first
use such moneys for regional jail and correctional authority and
county jail expenses, and shall use any remainder for such lawful
public purposes as the county commission may prescribe.
(4) The net amount of the tax collected in excess of eight
million sixty thousand dollars during each fiscal year shall be
dedicated to the general revenue fund.
(5) The office of chief inspector shall annually determine
that a county's expenditures of moneys distributed under this
section is in compliance with the requirements of this section.
(6) For purposes of this subsection, "net amount of tax
collected" means the gross amount of tax collected under this
section less allowed refunds and credits.
(f) Administration of the synthetic fuel-producing counties
grant program. --
(1) The director of the development office is hereby
authorized and empowered to administer the distribution of moneys
in the synthetic fuel-producing counties grant fund.
(A) On or before the plan submission due date prescribed by
the director of the development office, the county commission of
each synthetic fuel-producing county may annually, or with such
frequency as may be prescribed by the director of the development
office, submit a plan to the director of the development office
for use of the county's provisional share of the synthetic fuel-
producing counties grant fund.
(B) A grant of moneys out of the synthetic fuel-producing
counties grant fund shall only be distributed to a synthetic
fuel-producing county or encumbered for the use of a synthetic
fuel-producing county after approval by the director of the
development office of the plan for use of the county's
provisional share of the fund, submitted to the director of the
development office by the county commission. The director of the
development office shall approve the synthetic fuel-producing county's plan for use if the plan for use reasonably conforms to
the requirements of this section and the rules promulgated with
relation thereto.
(C) If the county's plan is approved, the director of the
development office may authorize a grant of money out of the
synthetic fuel-producing counties grant fund to the county to be
used by the county as specified in the approved plan for use.
(D) The director of the development office may authorize
distribution of any amount encumbered for the use of the county
and carried over from a prior period in accordance with
applicable plans for use previously approved.
(E) The director of the development office may authorize
encumbrances for any synthetic fuel-producing county of moneys in
the synthetic fuel-producing counties grant fund, up to the
amount of the county's provisional share for the fiscal year, for
one or more qualified uses specified in the county's plan for use
if the county's approved plan for use of the moneys sets forth a
qualified use for the county's provisional share over a period of
several fiscal years or a qualified use of the moneys calling for
accumulation and distribution to the county in one or more
subsequent fiscal years. Encumbered funds may carry over to
succeeding fiscal years and may be used to accumulate reserves
over a period of time for use by the county.
(F) In no case may an amount distributed to a synthetic
fuel-producing county exceed the amount of a county's provisional
share for the fiscal year plus the amount of moneys encumbered in
the fund for the use of the particular county and carried over
from a prior period.
(2) The director of the development office may approve
distributions of a county's provisional share of the synthetic
fuel-producing counties grant fund for use as the county's share
for state or federal matching funds programs so long as, in the
aggregate, ninety percent of the funds distributed to the county
out of the synthetic fuel-producing counties grant fund are used
for infrastructure improvement and ten percent of the funds
distributed to the county out of the synthetic fuel-producing
counties grant fund are used for economic development: Provided,
That no county may use any amount distributed out of the
synthetic fuel-producing counties grant fund as money to be
matched under the funds matching program authorized by subsection
(b), section three, article two, chapter five-b of this code.
(3) Repooling. --
(A) Any synthetic fuel-producing county that has failed to
have its plan, or amended and resubmitted plan or plans, approved
by the director of the development office for a period of
eighteen months immediately subsequent to the initial plan submission date shall lose its entitlement to the provisional
share of revenues deposited in the fund and attributable to the
fiscal year to which that plan relates and the provisional share
that would have been attributable to that county for that fiscal
year shall be pooled with all other receipts in the synthetic
fuel-producing counties grant fund attributable to revenues for
the fiscal year during which the eighteen-month period ends and
shall then be reallocated equally to all synthetic fuel-producing
counties as part of the provisional share of each, as if the
repooled moneys were tax revenues deposited into the fund during
the fiscal year in which the eighteen-month period ended. For
purposes of this subsection, the "initial plan submission date"
means the earlier of: (i) The required submission date, as
prescribed by the director of the development office, for the
initial plan for use of the county's provisional share of the
synthetic fuel-producing counties grant fund for the fiscal year,
with such extensions of time to file as may be authorized under
rules promulgated by the director of the development office; or
(ii) the actual date of submission of the initial plan for the
fiscal year. For purposes of this subsection, the term "initial
plan" means the first plan for use that was submitted, or that
should have been submitted, by a county for the fiscal year, before the submission of any amended, revised or resubmitted plan
by the county for that fiscal year.
(B) Any synthetic fuel-producing county which fails to
timely submit a plan for use of its provisional share of the
synthetic fuel-producing counties grant fund, with such
extensions of time to file as may be authorized under rules
promulgated by the director of the development office, shall lose
its entitlement to its provisional share of revenues deposited in
the fund and attributable to that fiscal year and the provisional
share that would have been attributable to that county for that
year shall be pooled with all other receipts in the synthetic
fuel-producing counties grant fund attributable to revenues for
the fiscal year and shall be reallocated equally among the
remaining synthetic fuel-producing counties other than the county
or counties that have failed to timely file the plan for use and
shall be made available for distribution to those remaining
counties, as part of their provisional share for the fiscal year.
(C) Funds encumbered pursuant to approval of the director of
the development office under this subsection shall not be subject
to repooling: Provided, That if the director of the development
office determines that moneys previously distributed to a county
out of the synthetic fuel-producing counties grant fund have not
been used as required under the approved plan for the county or determines that previously distributed moneys derived from
encumbered funds have not been used for the qualified purpose for
which the encumbrance was originally approved or if there appears
to be a reasonable probability that encumbered funds will not be
used for that qualified purpose, the director of the development
office may revoke the encumbrance of any funds of that synthetic
fuel-producing county remaining in the fund and repool the funds
so encumbered for reallocation to all synthetic fuel-producing
counties. The director of the development office may, in the
director's discretion, give the county an opportunity to cure the
nonqualified use of moneys derived from the synthetic fuel-
producing counties grant fund or to submit an alternative plan
for use of the encumbered funds which may be approved by the
director if that plan complies with the requirements of this
section.
(g) Promulgation of rules by the director of the development
office authorized. -- The director of the development office, in
his or her discretion, may promulgate an emergency rule as
provided in article three, chapter twenty-nine-a of this code
that clarifies, explains or implements the synthetic fuel-
producing counties grant program, distribution of moneys out of
or encumbrance of moneys in the synthetic fuel-producing counties
grant fund. The director of the development office is hereby granted continuing authority to promulgate in accordance with
article three, chapter twenty-nine-a of this code such
interpretive, legislative or procedural rules, or any combination
thereof, for administration of the synthetic fuel-producing
counties grant program as the director of the development office
may find necessary and appropriate. The director of the
development office may prescribe criteria for qualification under
the infrastructure improvement use requirement and the economic
development requirement of this section.
(h) There is hereby dedicated and allocated to the West
Virginia development office sixty thousand dollars annually for
administration of the synthetic fuel-producing counties grant
program under this section. Sixty thousand dollars shall be paid
out of the synthetic fuel-producing counties grant fund to the
director of the development office each fiscal year for
administration of the synthetic fuel-producing counties grant
program.
(i) Effective date. --
(1) This section as enacted in the year two thousand took
effect upon enactment. The measure of tax shall include all
synthetic fuel sold or shipped after the first day of January,
two thousand one, regardless of when the synthetic fuel was
manufactured or produced in this state.
(2) Amendments to this section enacted during the fifth
extraordinary session of the Legislature in the year two thousand
one shall have retroactive effect to the first day of January,
two thousand one, and the measure of tax shall include all
synthetic fuel sold or shipped after the first day of January,
two thousand one, regardless of when the synthetic fuel was
manufactured or produced in this state.
(j) Expiration date. -- The tax imposed in this section
shall expire and become void and of no effect for synthetic fuels
produced after the thirtieth day of June, two thousand seven.
NOTE: The purpose of this bill is to
eliminate the
expiration date of the tax for the manufacturing or production of
synthetic fuel from coal.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.