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FISCAL NOTE
2023 REGULAR SESSION
Introduced
House Bill 3305
By Delegates Capito, Young, Hornby, Linville and Willis
[Introduced February 06, 2023; Referred to the Committee on Economic Development and Tourism then Finance]
A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §5B-11-1, §5B-11-2, §5B-11-3, §5B-11-4, §5B-11-5, and §5B-11-6; and to amend said Code, by adding thereto a new section, designated §11-21-4g; and to amend and reenact §11-24-4 of said code; all relating to creating the Small Business and Entrepreneurship Act; requiring annual reports from the Secretary of Administration; requiring a report from the Secretary of Administration and the Office of Entrepreneurship; defining terms; creating the Office of Entrepreneurship; requiring state contract awards to new businesses under certain conditions; requiring tracking of workforce development funding; requiring funding allocations to new business development; waiving certain fees for new business; creating special tax rates on new business income; and creating special tax rates on certain new corporation income.
Be it enacted by the Legislature of West Virginia:
(a) This article shall be known as the "Small Business and Entrepreneurship Act ".
(b) No later than January 1, 2024, and annually thereafter, the Secretary of Administration shall file a report with the Joint Committee on Government and Finance that includes, but is not limited to:
(1) The number of contracts awarded to businesses that have been in operation for less than three years;
(2) The percentage of the number of contracts awarded to businesses that have been in operation for less than three years compared to the total number of contracts awarded;
(3) The total dollar amount of all contracts awarded to businesses that have been in operation for less than three years; and
(4) The percentage of the total dollar amount of contracts awarded to businesses that have been in operation for less than three years compared to the total dollar amount of contracts awarded.
(c) The Secretary of Administration, in conjunction with the Office of Entrepreneurship established under section §5B-11-2 of this code, shall produce and file a report with the Joint Committee on Government and Finance making recommendations on improving access and resources for new West Virginia businesses that have been in operation for less than three years on or before January 1, 2024.
(d) For purposes of this article, "new business" means a business entity or organization validly licensed in the applicable laws of this state, whose headquarters or principal place of business is located and maintained in this state, and that begins operations in this state on or after January 1, 2023. The term "new business" shall not include any business entity or organization that dissolves or otherwise terminates business operations and reincorporates or otherwise reinitiates operations in this state on or after January 1, 2023.
There is hereby created within the Department of Economic Development the "Office of Entrepreneurship". The office shall employ an individual to promote policies and initiatives to support the growth of entrepreneurship in the state. The office shall work with stakeholders and communities to provide information and technical support to entrepreneurs engaged in a new business. The office shall support and advise the Secretary of Administration with preparing the report pursuant to §5B-11-1 of this code.
Beginning July 1, 2023, the state shall award five percent of the total number of state contracts to new businesses: Provided, That the state may vary from the requirements of this section if a determination is made that compliance is not feasible: Provided, however, That the reasons for the necessity of the variance shall be included in the report required in §5B-11-1 of this code.
Before January 1, 2024, and before January 1, annually thereafter, the Department of Economic Development shall file a report with the Joint Committee on Government and Finance that includes:
(1) The percentage of economic development funding supporting organizations or programs for individuals starting new businesses or to those organizations or programs that provide services to new businesses; and
(2) The total dollar amount of economic development funding supporting organizations or programs for individuals starting new businesses or to those organizations or programs that provide services to new businesses.
Beginning July 1, 2023, the state shall allocate five percent of funding budgeted for economic development programs to supporting organizations or programs for individuals starting new businesses or to those organizations or programs that provide services to new businesses.
Beginning July 1, 2023, the fees to be charged by the Secretary of State pursuant to the provisions of §59-1-2 of this code and the fees to be paid to the Secretary of State pursuant to §59-1-2a of this code shall be waived for any new business or person establishing a new business, including home based businesses, for the first three years of business operations. For the fourth year of operation of a new business and for all years thereafter, all fees to be paid to the Secretary of State shall be paid in accordance with law.
(a) As used in this section, the term "new business income" means any business income from a taxpayer that begins business operations in this state on or after January 1, 2023. The term "new business income" shall not include any business income from a taxpayer that began business operations in this state prior to January 1, 2023, dissolved or otherwise terminated such business operations and reincorporates, or otherwise reinstates such business operations on or after January 1, 2023.
(b) The first $100,000 of any remaining amount of new business income included in a taxpayer's West Virginia adjusted gross income after any subtraction provided for in this chapter shall be reduced for the first through third tax years in which the taxpayer's business is in operation by 20 percent.
Primary tax. -- (1) In the case of taxable periods beginning after June 30, 1967, and ending prior to January 1, 1983, a tax is hereby imposed for each taxable year at the rate of six percent per annum on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five.
(2) In the case of taxable periods beginning on or after January 1, 1983, and ending prior to July 1, 1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, and any banks, banking associations or corporations, trust companies, building and loan associations and savings and loan associations, at the rates which follow:
(A) On taxable income not in excess of $50,000, the rate of six percent; and
(B) On taxable income in excess of $50,000, the rate of seven percent.
(3) In the case of taxable periods beginning on or after July 1, 1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of nine and three-quarters percent. Beginning July 1, 1988, and on each July 1 thereafter for four successive calendar years, the rate shall be reduced by fifteen one hundredths of one percent per year, with such rate to be nine percent on and after July 1, 1992.
(4) In the case of taxable periods beginning on or after January 1, 2007, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and three-quarters percent.
(5) In the case of taxable periods beginning on or after January 1, 2009, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and one-half percent.
(6) In the case of taxable periods beginning on or after January 1, 2012, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven and three-quarters percent: Provided, That the reduction in tax authorized by this subsection shall be suspended if the combined balance of funds as of June 30, 2011, in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, 2011: Provided, however, That the rate reduction schedule will resume in the calendar year immediately following any subsequent fiscal year when the combined balance of funds as of June 30 of that fiscal year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B next equals or exceeds ten percent of the General Revenue Fund budgeted for the immediately succeeding fiscal year.
(7) In the case of taxable periods beginning on or after January 1, 2013, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (6) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, of the preceding year.
(8) In the case of taxable periods beginning on or after January 1, 2014, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of six and one-half percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (7) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, of the preceding year.
(9)(A) As used in this subsection, the term "eligible new corporation" means a corporation validly licensed as provided in the applicable laws of this state that begins operations in this state on and after January 1, 2023. The term "eligible new corporation" shall not include any corporation that dissolves or otherwise terminates business operations and reincorporates or otherwise reinitiates operations in this state on or after January 1, 2023.
(B) Notwithstanding any provision of this code to the contrary, for all tax years beginning on and after July 1, 2024, a tax is hereby imposed upon the taxable income of each eligible new corporation for the first through third tax years of such eligible corporation of three percent for the first $100,000 of income and any remaining portion of income shall be taxed at the rate established by this section. For the fourth tax year of an eligible new corporation and for all tax years thereafter, all income shall be taxed as otherwise provided for in this section.
NOTE: The purpose of this bill is to create the Small Business and Entrepreneurship Act.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
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