Senate Bill No. 689
(By Senator Unger)
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[Introduced March 21, 2005; referred to the Committee
on Finance.]
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A BILL to amend and reenact §11-15-9h of the Code of West Virginia,
1931, as amended, relating to providing an exemption for sales
of high-technology business services by high-technology
businesses; and removing the limitation on the application of
the exemption to sales of such services directly used in the
fulfillment of government contracts.
Be it enacted by the Legislature of West Virginia:
That §11-15-9h of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-9h. Exemptions for sales of computer hardware and software
directly incorporated into manufactured products;
certain leases; sales of electronic data processing
service; sales of computer hardware and software
directly used in communication; sales of educational software; sales of internet advertising; sales of
high technology business services; definitions.
(a) In order to modernize the exemptions from tax contained in
this article as a result of technological advances in computers and
the expanded role of computers, the internet and global instant
communications in business, and to encourage computer software
developers, computer hardware designers, systems engineering firms,
electronic data processing companies and other high technology
companies to locate and expand their businesses in West Virginia,
the following sales of tangible personal property and software are
exempt:
(1) Sales of computer hardware or software (including custom
designed software) to be directly incorporated by a manufacturer
into a manufactured product. For purposes of this subsection, the
payment of licensing fees for the right to incorporate hardware or
software developed by persons other than the manufacturer into a
manufactured product is exempt from the tax imposed by this
article;
(2) Sales of computer hardware or software (including custom
designed software) directly used in communication as defined in
this article;
(3) Sales of electronic data processing services;
(4) Sales of educational software required to be used in any
of the public schools of this state or in any institution in this state which qualifies as a nonprofit or educational institution
subject to administration, regulation, certification or approval of
the Department of Education, the Department of Education and the
Arts or the Higher Education Policy Commission;
(5) Sales of internet advertising of goods and services; and
(6) Sales of high technology business services
to by high
technology businesses.
which enter into contracts with this state,
its institutions and subdivisions, governmental units, institutions
or subdivisions of other states, or with the United States,
including agencies of federal, state or local governments for
direct use in fulfilling the government contract.
(b)
Definitions. -- As used in this article, the following
terms have the following meanings:
(1) "Computer hardware" means a computer, as defined in
article fifteen-b of this chapter, and the directly and immediately
connected physical equipment involved in the performance of data
processing or communications functions, including data input, data
output, data processing, data storage, and data communication
apparatus that is directly and immediately connected to the
computer. The term "computer hardware" does not include computer
software.
(2) "High technology business" means, and is limited to,
businesses primarily engaged in the following activities: Computer
hardware design and development; computer software design, development, customization and upgrade; computer systems design and
development; website design and development; network design and
development; design and development of new manufactured products
which incorporate computer hardware and software; electronic data
processing; network management, maintenance, engineering,
administration and security services; website management,
maintenance, engineering, administration and security services and
computer systems management, maintenance, engineering,
administration and security services:
Provided, That high
technology business as defined herein is intended to include
businesses which engage in the activities enumerated in this
definition as their primary business activity, and not as a
secondary or incidental activity and not as an activity in support
of, or incidental to, business activity not specifically enumerated
in this definition.
(3) "High technology business services" means and is limited
to computer hardware design and development; computer software
design, development, customization and upgrade; computer systems
design and development; website design and development; network
design and development; electronic data processing; computer
systems management; computer systems maintenance; computer systems
engineering; computer systems administration; and computer systems
security services.
NOTE: The purpose of this bill is to provide a sales tax
exemption for high technology services by removing the requirement
that high technology business must be fulfilling a government
contract before the sales tax exemption for high technology service
applies.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.