H. B. 2319
(By Mr. Speaker, Mr. Chambers, and Delegates Kiss
(By Request) and Johnson
[Introduced February 1, 1995 ; referred to the
Committee on Political Subdivisions.]
A BILL to amend article thirteen, chapter eight of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
five-b, relating to allowing West Virginia municipalities to
impose a tax upon salaries, wages, commissions, certain
contractual payments and other compensation for work
performed and services rendered within said municipalities.
Be it enacted by the Legislature of West Virginia:
That article thirteen, chapter eight of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended by adding thereto a new section, designated section
five-b, to read as follows:
ARTICLE 13. TAXATION AND FINANCE.
§8-13-5b. Gross wage tax.
(a) Subject to the provisions set forth in subsection (c) of
this section, every municipality shall have plenary power and
authority to levy and collect a tax upon all salaries, wages,
commissions, contractual payments which are not otherwise subject
to a municipal business and occupation tax, and other
compensation and income earned for work performed and services
rendered within the municipality: Provided, That where a
municipality does not impose a municipal business and occupation
tax or hereafter repeals any ordinances imposing a municipal
business and occupation tax, then the municipality shall have
plenary power and authority to levy and collect the tax herein
upon all net income earned by proprietorships, partnerships and
corporations, including, but not limited to, limited liability
corporations and subchapter corporations, conducting and
transacting business within the corporate limits of the
municipality. The taxation of net business income does not
subject any income to both the wage tax and the business net
income tax, the purpose being to levy the one percent tax only once on any given wage and business income.
Any ordinance imposing the tax shall provide that it shall
not exceed one percent of the gross salaries, wages, commissions,
contractual payments not subject to a municipal business and
occupation tax, or other income or compensation levied upon
pursuant to the provisions of this section.
The generation of proceeds by the levy of the tax herein
within the municipality in the first year of the imposition
pursuant to this section shall be accompanied at the beginning of
the second year of its imposition by a reduction of the
municipality"s business and occupation tax rates in an amount not
less than seventy-five percent of the amount of the tax herein
collected in the previous year. The reduction in municipal
business and occupation revenues shall be accomplished by a
permanent rate reduction, or an exemption credit increase, or a
combination of the two foregoing actions.
(b) There shall be no double taxation resulting from the
application and enforcement of the provisions of this section,
and reciprocity shall be maintained between all municipalities
imposing the tax herein, or any similar tax, including any municipal taxes levied upon nonresidents of this state. The tax
shall be levied, collected and retained by the municipality in
which the taxpayer is employed and earns compensation. In any
case where the municipality, in which the taxpayer resides,
imposes the tax herein at a higher percentage rate than the
municipality in which the taxpayer is employed and compensated,
the municipality in which the taxpayer resides shall levy,
collect and retain the difference between its percentage rate and
the percentage rate paid to the municipality in which such
taxpayer has earned such compensation.
(c) The following income, regardless of its recipient, is
exempt from the tax herein:
(1) All proceeds of life insurance policies paid to the
individual beneficiaries upon the death of the insured;
(2) All amounts paid to the insured which constitute a
return of premium or premiums paid pursuant to life insurance or
endowment contracts, either during the term of the contract or at
the maturity of the term mentioned therein, or upon surrender
thereof;
(3) All amounts received which constitute unemployment benefits, workers' compensation awards, social security benefits,
veterans' benefits conferred by reason of honorable service in
the armed forces of the United States, compensation for personal
injuries or sickness, monetary damages, whether compensatory or
punitive, received on account of the injuries or sickness, or
through the war risk insurance act or any other applicable law or
regulation enacted or adopted for the benefit and relief of
injured or disabled persons or members of the armed forces of the
United States of America;
(4) The value of any property acquired by gift, bequest,
devise or descent: Provided, That income derived from such
property may constitute income and be subject to the tax herein
as outlined in subsection (a) of this section;
(5) Interest upon the obligations of this state, or any
political subdivision thereof, or upon the obligations of the
United States of America or its possession;
(6) Any other income or compensations which is exempted by
this code or federal laws and regulations.
(d) Every municipality shall have plenary power and
authority to impose, by ordinance, upon employers the duty to collect and remit to the municipality the tax herein levied upon
the earnings of employees or compensation paid for contracted
labor and service, and to prescribe penalties for failure to
perform such duties. In the event a municipality imposes upon
employers the duty to collect and remit the tax herein, the
employers shall be entitled to deduct and retain one and one-half
percent of the total amount collected as compensation to the
employers for collecting and remitting the tax.
(e) No ordinance enacted pursuant to the provisions of this
section may require any taxpayer to provide the municipality with
copies of the taxpayer's state or federal income tax returns or
any other personal financial information.
(f) The state and all of its political subdivisions,
agencies and instrumentalities shall deduct from the wages and
salaries of their employees the amount of any municipal wage tax
imposed and levied upon the income of the employees pursuant to
this section and pay the same over to the municipality levying
the tax, and further, shall be entitled to deduct and retain the
following percentages from the total amounts collected as
compensation for collecting and remitting the tax to the municipality: (1) Three percent if the tax is one half of one
percent of gross earnings; and (2) one and one-half percent if
the tax is more than one-half percent of gross earnings.
NOTE: The purpose of this bill is to allow West Virginia
municipalities to impose a tax upon salaries, wages, commissions,
certain contractual payments and other compensation for work
performed and services rendered within the municipalities for the
purpose of eliminating or significantly reducing the B & O taxes,
thus, allowing municipalities to be more competitive
economically, especially as it relates to municipalities on the
border of our State which must compete with border state and
municipalities which do not impose a B & O tax.
This section §-8-13-5b is new; therefore, strike-throughs
and underscoring have been omitted.