ENGROSSED
Senate Bill No. 569
(Senators Craigo and Plymale)
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[Originating in the Committee on Finance;
reported February 28, 1995.]
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A BILL to amend and reenact section nine, article fifteen,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to
exemptions from consumers sales tax; and exempting members
of the music teacher's national association and
commissions received by a manufacturer's representative
from consumers sales tax.
Be it enacted by the Legislature of West Virginia:
That section nine, article fifteen, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 15. CONSUMERS SALES TAX.
§11-15-9. Exemptions.
The following sales and services are exempt:
(a) Sales of gas, steam and water delivered to consumers
through mains or pipes and sales of electricity;
(b) Sales of textbooks required to be used in any of the
schools of this state or in any institution in this state which
qualifies as a nonprofit or educational institution subject to
the West Virginia department of education and the arts, board
of trustees of the university system of West Virginia or the
board of directors for colleges located in this state;
(c) Sales of property or services to the state, its
institutions or subdivisions, governmental units, institutions
or subdivisions of other states: Provided, That the law of
such other state provides the same exemption to governmental
units or subdivisions of this state and to the United States,
including agencies of federal, state or local governments for
distribution in public welfare or relief work;
(d) Sales of vehicles which are titled by the division of
motor vehicles and which are subject to the tax imposed by
section four, article three, chapter seventeen-a of this code,
or like tax;
(e) Sales of property or services to churches and bona
fide charitable organizations who make no charge whatsoever for
the services they render: Provided, That the exemption herein granted shall apply only to services, equipment, supplies, food
for meals and materials directly used or consumed by these
organizations, and may not apply to purchases of gasoline or
special fuel;
(f) Sales of tangible personal property or services to a
corporation or organization which has a current registration
certificate issued under article twelve of this chapter is
exempt from federal income taxes under Section 501(c)(3) or
(c)(4) of the Internal Revenue Code of 1986, as amended, and
is:
(1) A church or a convention or association of churches as
defined in Section 170 of the Internal Revenue Code of 1986, as
amended;
(2) An elementary or secondary school which maintains a
regular faculty and curriculum and has a regularly enrolled
body of pupils or students in attendance at the place in this
state where its educational activities are regularly carried
on;
(3) A corporation or organization which annually receives
more than one half of its support from any combination of
gifts, grants, direct or indirect charitable contributions or
membership fees;
(4) An organization which has no paid employees and its
gross income from fund raisers, less reasonable and necessary
expenses incurred to raise such gross income (or the tangible
personal property or services purchased with such net income),
is donated to an organization which is exempt from income taxes
under Section 501(c)(3) or (c)(4) of the Internal Revenue Code
of one 1986, as amended;
(5) A youth organization, such as the girl scouts of the
United States of America, the boy scouts of America or the YMCA
Indian guide/princess program and the local affiliates thereof,
which is organized and operated exclusively for charitable
purposes and has as its primary purpose the nonsectarian
character development and citizenship training of its members;
(6) For purposes of this subsection:
(A) The term "support" includes, but is not limited to:
(i) Gifts, grants, contributions or membership fees;
(ii) Gross receipts from fund raisers which include
receipts from admissions, sales of merchandise, performance of
services or furnishing of facilities in any activity which is
not an unrelated trade or business within the meaning of
Section 513 of the Internal Revenue Code of 1986, as amended;
(iii) Net income from unrelated business activities, whether or not such activities are carried on regularly as a
trade or business;
(iv) Gross investment income as defined in Section 509(e)
of the Internal Revenue Code of 1986, as amended;
(v) Tax revenues levied for the benefit of a corporation
or organization either paid to or expended on behalf of such
organization; and
(vi) The value of services or facilities (exclusive of
services or facilities generally furnished to the public
without charge) furnished by a governmental unit referred to in
Section 170(c)(1) of the Internal Revenue Code of 1986, as
amended, to an organization without charge. This term does not
include any gain from the sale or other disposition of property
which would be considered as gain from the sale or exchange of
a capital asset, or the value of an exemption from any federal,
state or local tax or any similar benefit;
(B) The term "charitable contribution" means a
contribution or gift to or for the use of a corporation or
organization, described in Section 170(c)(2) of the Internal
Revenue Code of 1986, as amended;
(C) The term "membership fee" does not include any amounts
paid for tangible personal property or specific services rendered to members by the corporation or organization; or
(7) The exemption allowed by this subdivision does not
apply to sales of gasoline or special fuel or to sales of
tangible personal property or services to be used or consumed
in the generation of unrelated business income as defined in
Section 513 of the Internal Revenue Code of 1986, as amended.
The provisions of this subdivision as amended by this article
shall apply to sales made after the thirtieth day of June, one
thousand nine hundred eighty-nine: Provided, That the
exemption herein granted shall apply only to services,
equipment, supplies and materials used or consumed in the
activities for which such organizations qualify as tax exempt
organizations under the Internal Revenue Code by these
organizations and may not apply to purchases of gasoline or
special fuel;
(g) Sales of property or services to persons engaged in
this state in the business of manufacturing, transportation,
transmission, communication or in the production of natural
resources: Provided, That on and after the first day of July,
one thousand nine hundred eighty-seven, the exemption provided
in this subdivision shall apply only to services, machinery,
supplies and materials directly used or consumed in the activities of manufacturing, transportation, transmission,
communication or the production of natural resources in the
businesses or organizations named above and may not apply to
purchases of gasoline or special fuel: Provided, however, That
on and after the first day of May, one thousand nine hundred
ninety-three, the exemption provided in this subdivision shall
apply only to services, machinery, supplies and materials
directly used or consumed in the activities of manufacturing,
transportation, transmission, communication, production of
natural resources, gas storage, generation or production of
selling electric power, provision of a public utility service
or the operation of a utility service or the operation of a
utility business, in the businesses or organizations named
above and may not apply to purchases of gasoline or special
fuel;
(h) An isolated transaction in which any taxable service
or any tangible personal property is sold, transferred, offered
for sale or delivered by the owner thereof or by his or her
representative for the owner's account, such sale, transfer,
offer for sale or delivery not being made in the ordinary
course of repeated and successive transactions of like
character by such owner or on his or her account by such representative: Provided, That nothing contained herein may be
construed to prevent an owner who sells, transfers or offers
for sale tangible personal property in an isolated transaction
through an auctioneer from availing himself or herself of the
exemption provided herein, regardless where such isolated sale
takes place. The tax commissioner may adopt such legislative
rule pursuant to chapter twenty-nine-a of this code as he or
she deems necessary for the efficient administration of this
exemption;
(i) Sales of tangible personal property or of any taxable
services rendered for use or consumption in connection with the
commercial production of an agricultural product the ultimate
sale of which will be subject to the tax imposed by this
article or which would have been subject to tax under this
article: Provided, That sales of tangible personal property
and services to be used or consumed in the construction of or
permanent improvement to real property and sales of gasoline
and special fuel may not be exempt: Provided, however, That
nails and fencing may not be considered as improvements to real
property;
(j) Sales of tangible personal property to a person for
the purpose of resale in the form of tangible personal property: Provided, That sales of gasoline and special fuel by
distributors and importers shall be taxable except when the
sale is to another distributor for resale: Provided, however,
That sales of building materials or building supplies or other
property to any person engaging in the activity of contracting,
as defined in this article, which is to be installed in,
affixed to or incorporated by such person or his or her agent
into any real property, building or structure may not be exempt
under this subdivision, except that sales of tangible personal
property to a person engaging in the activity of contracting
pursuant to a written contract with the United States, this
state, or with a political subdivision thereof, or with a
public corporation created by the Legislature or by another
governmental entity pursuant to an act of the Legislature, for
a building or structure, or improvement thereto, or other
improvement to real property that is or will be owned and used
by the governmental entity for a governmental or proprietary
purpose, who incorporates such property in such building,
structure or improvement shall, with respect to such tangible
personal property, nevertheless be deemed to be the vendor of
such property to the governmental entity and any person seeking
to qualify for and assert this exception must do so pursuant to such legislative rules and regulations as the tax commissioner
may promulgate and upon such forms as the tax commissioner may
prescribe. A subcontractor who, pursuant to a written
subcontract with a prime contractor who qualifies for this
exception, provides equipment, or materials and labor to such
a prime contractor shall be treated in the same manner as the
prime contractor is treated with respect to the prime contract
under this exception and the legislative rules and regulations
promulgated by the tax commissioner: Provided further, That
the exemption for government contractors in the preceding
proviso shall expire on the first day of October, one thousand
nine hundred ninety, subject to the transition rules set forth
in section eight-c of this article;
(k) Sales of property or services to nationally chartered
fraternal or social organizations for the sole purpose of free
distribution in public welfare or relief work: Provided, That
sales of gasoline and special fuel shall be taxable;
(l) Sales and services, fire fighting or station house
equipment, including construction and automotive, made to any
volunteer fire department organized and incorporated under the
laws of the state of West Virginia: Provided, That sales of
gasoline and special fuel shall be taxable;
(m) Sales of newspapers when delivered to consumers by
route carriers;
(n) Sales of drugs dispensed upon prescription and sales
of insulin to consumers for medical purposes;
(o) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(p) Sales and services performed by day-care centers;
(q) Casual and occasional sales of property or services
not conducted in a repeated manner or in the ordinary course of
repetitive and successive transactions of like character by a
corporation or organization which is exempt from tax under
subdivision (f) of this section on its purchases of tangible
personal property or services:
(1) For purposes of this subdivision, the term "casual and
occasional sales not conducted in a repeated manner or in the
ordinary course of repetitive and successive transactions of
like character" means sales of tangible personal property or
services at fund raisers sponsored by a corporation or
organization which is exempt, under subdivision (f) of this
section, from payment of the tax imposed by this article on its
purchases, when such fund raisers are of limited duration and are held no more than six times during any twelve-month period
and "limited duration" means no more than eighty-four
consecutive hours;
(2) The provisions of this subdivision, as amended by this
article, shall apply to sales made after the thirtieth day of
June, one thousand nine hundred eighty-nine;
(r) Sales of property or services to a school which has
approval from the board of trustees of the university system of
West Virginia or the board of directors of the state college
system to award degrees, which has its principal campus in this
state, and which is exempt from federal and state income taxes
under Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended: Provided, That sales of gasoline and special fuel
shall be taxable;
(s) Sales of mobile homes to be utilized by purchasers as
their principal year-round residence and dwelling: Provided,
That these mobile homes shall be subject to tax at the three
percent rate;
(t) Sales of lottery tickets and materials by licensed
lottery sales agents and lottery retailers authorized by the
state lottery commission, under the provisions of article
twenty-two, chapter twenty-nine of this code;
(u) Leases of motor vehicles titled pursuant to the
provisions of article three, chapter seventeen-a of this code
to lessees for a period of thirty or more consecutive days.
This exemption shall apply to leases executed on or after the
first day of July, one thousand nine hundred eighty-seven, and
to payments under long-term leases executed before such date,
for months thereof beginning on or after such date;
(v) Sales of propane to consumers for poultry house
heating purposes, with any seller to such consumer who may have
prior paid such tax in his or her price, to not pass on the
same to the consumer, but to make application and receive
refund of such tax from the tax commissioner, pursuant to rules
and regulations which shall be promulgated by the tax
commissioner; and notwithstanding the provisions of section
eighteen of this article or any other provisions of such
article to the contrary;
(w) Any sales of tangible personal property or services
purchased after the thirtieth day of September, one thousand
nine hundred eighty-seven, and lawfully paid for with food
stamps pursuant to the federal food stamp program codified in
7 United States Code, §2011, et seq., as amended, or with
drafts issued through the West Virginia special supplemental food program for women, infants and children codified in 42
United States Code, §1786;
(x) Sales of tickets for activities sponsored by
elementary and secondary schools located within this state;
(y) Sales of electronic data processing services and
related software: Provided, That for the purposes of this
subdivision "electronic data processing services" means: (1)
The processing of another's data, including all processes
incident to processing of data such as keypunching, keystroke
verification, rearranging or sorting of previously documented
data for the purpose of data entry or automatic processing and
changing the medium on which data is sorted, whether these
processes are done by the same person or several persons; and
(2) providing access to computer equipment for the purpose of
processing data or examining or acquiring data stored in or
accessible to such computer equipment;
(z) Tuition charged for attending educational summer
camps;
(aa) Sales of building materials or building supplies or
other property to an organization qualified under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as
amended, which are to be installed in, affixed to or incorporated by such organization or its agent into real
property, or into a building or structure which is or will be
used as permanent low-income housing, transitional housing,
emergency homeless shelter, domestic violence shelter or
emergency children and youth shelter if such shelter is owned,
managed, developed or operated by an organization qualified
under Section 501(c)(3) or (c)(4) of the Internal Revenue Code
of 1986, as amended;
(bb) Dispensing of services performed by one corporation
for another corporation when both corporations are members of
the same controlled group. "Control" means ownership, directly
or indirectly, of stock possessing fifty percent or more of the
total combined voting power of all classes of the stock of a
corporation entitled to vote or ownership, directly or
indirectly, of stock possessing fifty percent or more of the
value of the corporation;
(cc) Food for the following shall be exempt:
(1) Food purchased or sold by public or private schools,
school sponsored student organizations or school sponsored
parent-teacher associations to students enrolled in such school
or to employees of such school during normal school hours; but
not those sales of food made to the general public;
(2) Food purchased or sold by a public or private college
or university or by a student organization officially
recognized by such college or university to students enrolled
at such college or university when such sales are made on a
contract basis so that a fixed price is paid for consumption of
food products for a specific period of time without respect to
the amount of food product actually consumed by the particular
individual contracting for the sale and no money is paid at the
time the food product is served or consumed;
(3) Food purchased or sold by a charitable or private
nonprofit organization, a nonprofit organization or a
governmental agency under a program to provide food to
low-income persons at or below cost;
(4) Food sold in an occasional sale by a charitable or
nonprofit organization including volunteer fire departments and
rescue squads, if the purpose of the sale is to obtain revenue
for the functions and activities of the organization and the
revenue so obtained is actually expended for that purpose;
(5) Food sold by any religious organization at a social or
other gathering conducted by it or under its auspices, if the
purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenue obtained from selling the food is actually used in carrying on
such functions and activities: Provided, That purchases made
by such organizations may not be exempt as a purchase for
resale;
(dd) Sales of food by little leagues, midget football
leagues, youth football or soccer leagues and similar types of
organizations, including scouting groups and church youth
groups, if the purpose in selling the food is to obtain revenue
for the functions and activities of the organization and the
revenues obtained from selling the food is actually used in
supporting or carrying on functions and activities of the
groups: Provided, That such purchases made by such
organizations may not be exempt as a purchase for resale;
(ee) Charges for room and meals by fraternities and
sororities to their members: Provided, That such purchases
made by a fraternity or sorority may not be exempt as a
purchase for resale;
(ff) Sales of or charges for the transportation of
passengers in interstate commerce;
(gg) Sales of tangible personal property or services to
any person which this state is prohibited from taxing under the
laws of the United States or under the constitution of this state;
(hh) Sales of tangible personal property or services to
any person who claims exemption from the tax imposed by this
article or article fifteen-a of this chapter pursuant to the
provisions of any other chapter of this code;
(ii) Charges for the services of opening and closing a
burial lot;
(jj) Sales of livestock, poultry or other farm products in
their original state by the producer thereof or a member of the
producer's immediate family who is not otherwise engaged in
making retail sales of tangible personal property; and sales of
livestock sold at public sales sponsored by breeders or
registry associations or livestock auction markets: Provided,
That the exemptions allowed by this subdivision shall apply to
sales made on or after the first day of July, one thousand nine
hundred ninety, and may be claimed without presenting or
obtaining exemption certificates: Provided, however, That the
farmer shall maintain adequate records;
(kk) Sales of motion picture films to motion picture
exhibitors for exhibition if the sale of tickets or the charge
for admission to the exhibition of the film is subject to the
tax imposed by this article and sales of coin-operated video arcade machines or video arcade games to a person engaged in
the business of providing such machines to the public for a
charge upon which the tax imposed by this article is remitted
to the tax commissioner: Provided, That the exemption provided
in this subdivision shall apply to sales made on or after the
first day of July, one thousand nine hundred ninety, and may be
claimed by presenting to the seller a properly executed
exemption certificate;
(ll) Sales of aircraft repair, remodeling and maintenance
services when such services are to an aircraft operated by a
certified or licensed carrier of persons or property, or by a
governmental entity, or to an engine or other component part of
an aircraft operated by a certificated or licensed carrier of
persons or property, or by a governmental entity and sales of
tangible personal property that is permanently affixed or
permanently attached as a component part of an aircraft owned
or operated by a certificated or licensed carrier of persons or
property, or by a governmental entity, as part of the repair,
remodeling or maintenance service and sales of machinery, tools
or equipment, directly used or consumed exclusively in the
repair, remodeling or maintenance of aircraft, aircraft engines
or aircraft component parts, for a certificated or licensed carrier of persons or property, or for a governmental entity;
(mm) Sales of tangible personal property and services to
a person entitled to claim the tax credit for investment in
certain management information services facilities allowed
under section three-c, article thirteen-d of this chapter,
pursuant to the issuance of a management information services
tax credit certification by the tax commissioner in accordance
with subsection (e) of said section, when such property or
services are directly used or consumed by the purchaser in the
operation of the management information services facility, as
defined in section two of this article for which credit is
allowed under section three-c, article thirteen-d of this
chapter. Tangible personal property, or services, directly
used or consumed in the operation of a management information
services facility includes only: (1) Computer processing and
telecommunications equipment; (2) data storage and input/output
devices; (3) disaster recovery services; (4) supplies; (5)
application, telecommunication and operating system software;
(6) repair and maintenance of any of the aforesaid items; and
(7) other tangible personal property or services directly used
or consumed in the operation of a management information
services facility: Provided, That the property is purchased or leased after the thirty-first day of March, one thousand nine
hundred ninety-one. This exemption may not apply to tangible
personal property, or services, that are not directly used or
consumed in the operation of a management information services
facility, or to gasoline or special fuel: Provided, however,
That nothing in this paragraph may be construed to limit,
exclude or preclude the application or availability of any
other exemption set forth in this section, or elsewhere in this
code, which might otherwise apply to any sale of tangible
personal property or services;
(nn) Charges for memberships or services provided by
health and fitness organizations relating to personalized
fitness programs;
(oo) Sales of services by individuals who baby-sit for a
profit: Provided, That the gross receipts of the individual
from the performance of baby-sitting services do not exceed
five thousand dollars in a taxable year;
(pp) A corporation or organization which is a
not-for-profit entity which charges membership dues utilized
for and contributing significantly to traffic and pedestrian
safety and education programs whether or not the corporation or
organization is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code 1986, as amended;
(qq) Sales of tangible personal property or services by
any member of the music teacher's national association; and
(rr) Commissions received by a manufacturer's
representative.