H. B. 3309
(By Mr. Speaker, Mr. Kiss and Delegates
R. M. Thompson, Susman, Mahan and Sumner)
[Introduced March 25, 2005; referred to the
Committee on Finance.]
A BILL to amend and reenact
of the Code of West Virginia,
1931, as amended, relating to exempting comprehensive mental
retardation centers from the provider tax.
Be it enacted by the Legislature of West Virginia:
That §11-13A-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 13A. SEVERANCE TAXES.
(a) General rule. -- When used in this article, or in the
administration of this article, the terms defined in subsection
(b), (c) or (d) of this section shall have the meanings ascribed to
them by this section, unless a different meaning is clearly
required by the context in which the term is used or by specific
(b) General terms defined. -- Definitions in this subsection
apply to all persons subject to the taxes imposed by this article.
(1) "Business" includes all activities engaged in, or caused
to be engaged in, with the object of gain or economic benefit,
direct or indirect, and whether engaged in for profit, or not for
profit, or by a governmental entity: Provided, That "business"
does not include services rendered by an employee within the scope
of his or her contract of employment. Employee services, services
by a partner on behalf of his or her partnership and services by a
member of any other business entity on behalf of that entity are
the business of the employer or partnership, or other business
entity as the case may be, and reportable as such for purposes of
the taxes imposed by this article.
(2) "Corporation" includes associations, joint-stock companies
and insurance companies. It also includes governmental entities
when and to the extent such governmental entities engage in
activities taxable under this article.
(3) "Delegate" in the phrase "or his delegate", when used in
reference to the Tax Commissioner, means any officer or employee of
the State Tax Division of the Department of Revenue duly authorized
by the Tax Commissioner directly, or indirectly by one or more
redelegations of authority, to perform the function mentioned or
described in this article or regulations promulgated thereunder.
(4) "Fiduciary" means and includes a guardian, trustee,
executor, administrator, receiver, conservator or any person acting
in any fiduciary capacity for any person.
(5) "Gross proceeds" means the value, whether in money or
other property, actually proceeding from the sale or lease of
tangible personal property, or from the rendering of services,
without any deduction for the cost of property sold or leased or
expenses of any kind.
(6) "Includes" and "including", when used in a definition
contained in this article, shall not be deemed to exclude other
things otherwise within the meaning of the term being defined.
(7) "Partner" includes a member of a syndicate, group, pool,
joint venture or other organization which is a "partnership" as
defined in this section.
(8) "Partnership" includes a syndicate, group, pool, joint
venture or other unincorporated organization through or by means of
which any privilege taxable under this article is exercised and
which is not within the meaning of this article a trust or estate
or corporation. "Partnership" includes a limited liability company
which is treated as a partnership for federal income tax purposes.
(9) "Person" or "company" are herein used interchangeably and
include any individual, firm, partnership, mining partnership,
joint venture, association, corporation, trust or other entity, 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 declared by the context.
(10) "Sale" includes any transfer of the ownership or title to
property, whether for money or in exchange for other property or
services, or any combination thereof. "Sale" includes a lease of
property, whether the transaction be characterized as a rental,
lease, hire, bailment or license to use. "Sale" also includes
rendering services for a consideration, whether direct or indirect.
(11) "Service" includes all activities engaged in by a person
for a consideration which involve the rendering of a service as
distinguished from the sale of tangible personal property:
Provided, That "service" does not include: (A) Services rendered
by an employee to his or her employer under a contract of
employment; (B) contracting; or (C) severing or processing natural
(12) "Tax" means any tax imposed by this article and, for
purposes of administration and collection of such tax, it includes
any interest, additions to tax or penalties imposed with respect
thereto under article ten of this chapter.
(13) "Tax Commissioner" or "Commissioner" means the tax
Commissioner of the State of West Virginia or his or her delegate.
(14) "Taxable year" means the calendar year, or the fiscal
year ending during the calendar year, upon the basis of which a tax
liability is computed under this article. In the case of a return made under this article, or regulations of the Tax Commissioner,
for a fractional part of a year, the term "taxable year" means the
period for which such return is made.
(15) "Taxpayer" means any person subject to any tax imposed by
(16) "This code" means the Code of West Virginia, one thousand
nine hundred thirty-one, as amended.
(17) "This state" means the State of West Virginia.
(18) "Withholding agent" means any person required by law to
deduct and withhold any tax imposed by this article or under
regulations promulgated by the Tax Commissioner.
(c) Specific definitions for producers of natural resources.
(1) "Barrel of oil" means forty-two U.S. gallons of two
hundred thirty-one cubic inches of liquid at a standard temperature
of sixty degrees Fahrenheit.
(2) "Coal" means and includes any material composed
predominantly of hydrocarbons in a solid state.
(3) "Cubic foot of gas" means the volume of gas contained in
one cubic foot at a standard pressure base of fourteen point
seventy-three pounds per square inch (absolute) and a standard
temperature of sixty degrees Fahrenheit.
(4) "Economic interest" for the purpose of this article is
synonymous with the economic interest ownership required by Section 611 of the Internal Revenue Code in effect on the thirty-first day
of December, one thousand nine hundred eighty-five, entitling the
taxpayer to a depletion deduction for income tax purposes:
Provided, That a person who only receives an arm's length royalty
shall not be considered as having an economic interest.
(5) "Extraction of ores or minerals from the ground" includes
extraction by mine owners or operators of ores or minerals from the
waste or residue of prior mining only when such extraction is sold.
(6) "Gross value" in the case of natural resources means the
market value of the natural resource product, in the immediate
vicinity where severed, determined after application of post
production processing generally applied by the industry to obtain
commercially marketable or usable natural resource products. For
all natural resources, "gross value" is to be reported as follows:
(A) For natural resources severed or processed (or both
severed and processed) and sold during a reporting period, gross
value is the gross proceeds received or receivable by the taxpayer.
(B) In a transaction involving related parties, gross value
shall not be less than the fair market value for natural resources
of similar grade and quality.
(C) In the absence of a sale, gross value shall be the fair
market value for natural resources of similar grade and quality.
(D) If severed natural resources are purchased for the purpose
of processing and resale, the gross value is the amount received or receivable during the reporting period reduced by the amount paid
or payable to the taxpayer actually severing the natural resource.
If natural resources are severed outside the state of West Virginia
and brought into the State of West Virginia by the taxpayer for the
purpose of processing and sale, the gross value is the amount
received or receivable during the reporting period reduced by the
fair market value of natural resources of similar grade and quality
and in the same condition immediately preceding the processing of
the natural resources in this state.
(E) If severed natural resources are purchased for the purpose
of processing and consumption, the gross value is the fair market
value of processed natural resources of similar grade and quality
reduced by the amount paid or payable to the taxpayer actually
severing the natural resource. If severed natural resources are
severed outside the State of West Virginia and brought into the
State of West Virginia by the taxpayer for the purpose of
processing and consumption, the gross value is the fair market
value of processed natural resources of similar grade and quality
reduced by the fair market value of natural resources of similar
grade and quality and in the same condition immediately preceding
the processing of the natural resources.
(F) In all instances, the gross value shall be reduced by the
amount of any federal energy tax imposed upon the taxpayer after
the first day of June, one thousand nine hundred ninety-three, but shall not be reduced by any state or federal taxes, royalties,
sales commissions or any other expense.
(G) For natural gas, gross value is the value of the natural
gas at the wellhead immediately preceding transportation and
(H) For limestone or sandstone quarried or mined, gross value
is the value of such stone immediately upon severance from the
(7) "Mining" includes not merely the extraction of ores or
minerals from the ground, but also those treatment processes
necessary or incidental thereto.
(8) "Natural resources" means all forms of minerals including,
but not limited to, rock, stone, limestone, coal, shale, gravel,
sand, clay, natural gas, oil and natural gas liquids which are
contained in or on the soils or waters of this state and includes
(9) "Processed" or "processing" as applied to:
(A) Oil and natural gas shall not include any conversion or
refining process; and
(B) Limestone or sandstone quarried or mined shall not include
any treatment process or transportation after the limestone or
sandstone is severed from the earth.
(10) "Related parties" means two or more persons,
organizations or businesses owned or controlled directly or indirectly by the same interests. Control exists if a contract or
lease, either written or oral, is entered into whereby one party
mines or processes natural resources owned or held by another party
and the owner or lessor participates in the severing, processing or
marketing of the natural resources or receives any value other than
an arm's length passive royalty interest. In the case of related
parties, the Tax Commissioner may apportion or allocate the
receipts between or among such persons, organizations or businesses
if he or she determines that such apportionment or allocation is
necessary to more clearly reflect gross value.
(11) "Severing" or "severed" means the physical removal of the
natural resources from the earth or waters of this state by any
means: Provided, That "severing" or "severed" shall not include
the removal of natural gas from underground storage facilities into
which the natural gas has been mechanically injected following its
initial removal from earth: Provided, however, That "severing" or
"severed" oil and natural gas shall not include any separation
process of oil or natural gas commonly employed to obtain
marketable natural resource products.
(12) "Stock" includes shares in an association, joint-stock
company or corporation.
(13) "Taxpayer" means and includes any individual,
partnership, joint venture, association, corporation, receiver,
trustee, guardian, executor, administrator, fiduciary or representative of any kind engaged in the business of severing or
processing (or both severing and processing) natural resources in
this state for sale or use. In instances where contracts (either
oral or written) are entered into whereby persons, organizations or
businesses are engaged in the business of severing or processing
(or both severing and processing) a natural resource but do not
obtain title to or do not have an economic interest therein, the
party who owns the natural resource immediately after its severance
or has an economic interest therein is the taxpayer.
(d) Specific definitions for persons providing health care
items or services. -- "Behavioral health services" means services
provided for the care and treatment of persons with mental illness,
mental retardation, developmental disabilities or alcohol or drug
abuse problems in an inpatient, residential or outpatient setting,
including, but not limited to, habilitative or rehabilitative
interventions or services and cooking, cleaning, laundry and
personal hygiene services provided for such care: Provided, That
gross receipts derived from providing behavioral health services
that are included in the provider's measure of tax under article
twenty-seven of this chapter shall not be
include included in that
provider's measure of tax under this article. The amendment to
this definition in the year two thousand four is intended to
clarify the intent of the Legislature as to the activities that
qualify as behavioral health services, and this clarification shall be applied retrospectively to the effective date of the amendment
to this section in which the definition of "behavioral health
services" was originally provided as enacted during the first
extraordinary session of the Legislature in the year one thousand
nine hundred ninety-three: Provided, That beginning on the first
day of July, two thousand five, comprehensive community mental
retardation centers, as designated by the Secretary of the
Department of Health and Human Resources, are no longer included
in the definition of behavioral health services for the purposes of