H. B. 2068


(By Delegate Jenkins)
[Introduced January 13, 1999; referred to the
Committee on Finance.]




A BILL to amend chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article six-h, generally relating to taxation; setting forth short title; defining terms, specifying the valuation of commercial computer property for purposes of the ad valorem property tax; specifying initial determination of whether a given item of property is commercial computer property to be made by county assessor of the county, setting forth methods and procedures for protest and appeal and time limitations therefor; setting forth effective date.

Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article six-h, to read as follows:
ARTICLE 6H.
SPECIAL METHOD FOR VALUATION OF CERTAIN COMPUTER PROPERTY.

§11-6H-1. Short title.
This article shall be known and cited as the "Commercial Computer Property Valuation Act."
§11-6H-2. Definitions.
(a) When used in this article, or in the administration of this article, terms defined in subsection (b) of this section 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.
(b) Terms defined.
(1) "Business" means any person holding a valid current West Virginia business registration certificate under article twelve-c of this chapter engaging in business in this state.
(2) "Commercial computer property" means computer property directly used in manufacturing.
(3) "Computer" means an electronic, magnetic, optical, electrochemical or other high speed data processing device the primary end use function of which includes performing logical, arithmetical, or data storage operations. The term "computer" includes any data storage apparatus or communication apparatus directly related to or operating in conjunction with such device. The term "computer" includes any connected or directly related device, equipment or apparatus which enables the computer to store, retrieve or communicate computer programs, computer data or the results of computer operations to or from a person, another computer or another device. The term "computer" includes, but is not limited to, personal computers, desk top computers, lap-top computers, palm-top computers, microcomputers, mainframe computers, server computers and super computers, but such term does not include an automated typewriter or typesetter, a portable hand-held calculator or other similar device, any device that is excluded from the definition of a computer supply, or any device with a processor, the function of which facilitates some other end use operation, such as a household appliance or motor vehicle.
(4) "Computer data" means any representation of knowledge, facts, concepts, instruction or other information computed, classified, processed, transmitted, received, retrieved, originated, stored, manifested, measured, detected, recorded, reproduced, handled or utilized by a computer, computer network, computer program or computer software, and may be in any medium, including, but not limited to, computer printouts, microfilm, microfiche, magnetic storage media, optical storage media, punch paper tape or punch cards, or it may be stored internally in read-only memory or random access memory of a computer or any other peripheral device.
(5) "Computer network" means a set of connected devices and communication facilities, including more than one computer, with the capability to transmit computer data among such devices through such communication facilities, and includes local area networks.
(6) "Computer program" means an ordered set of computer data representing instructions or statements, in a form readable by a computer, which controls, directs or otherwise influences the functioning of a computer or computer network.
(7) "Computer property" means all computers, computer software, computer data, computer networks, computer programs and computer supplies, but does not include any printer, or other peripheral devices connected to or operated by a computer, or any manufacturing machinery controlled by a computer or any other machine or device controlled by a computer which does not itself constitute a computer or computer supply.
(8) "Computer software" means a set of computer programs, procedures and associated documentation concerned with computer data or with the operation of a computer, computer program or computer network.
(9) "Computer supply" or "computer supplies" means punch cards, paper tape, magnetic tape, magnetic disks or diskettes, optical disks or diskettes, disk or diskette packs, modems, computer input scanners, and any other tangible input, transmission or storage medium used in connection with a computer, a computer network, computer data, computer software or a computer program. The term "computer supplies" also includes, but is not limited to, computer work stations, computer monitors, computer keyboards, computer mice, computer track balls and other computer pointing devices, computer modems, computer central processing units, computer hard disk drives, computer floppy disk drives, computer tape drives, computer drum storage memory drives and computer compact disk read only memory units (CD ROMS). The term "computer supplies" includes computer driven and controlled printers or plotters for the printing of ordinary office correspondence and similar documents. However, no printer or printing press or other printing device used in the manufacture of newspapers or other large volume printing operations shall be included as a computer supply for purposes of this article. The term "computer supply" shall not include any manufacturing machinery controlled by a computer or any other machine or device controlled by a computer which does not itself constitute a computer or computer supply. The term "computer supplies" includes computer driven and controlled fax machines or facsimile machines that interface directly with a computer, but does not include ordinary stand alone fax machines not interfaced with a computer, notwithstanding the fact that such ordinary fax machines may have memory features and other electronic or cybernetic features similar to those found in a computer.
(10) "Directly used in manufacturing," in relation to computer property directly used in manufacturing, means directly used in West Virginia by a manufacturer or manufacturing service provider in those activities or operations which constitute an integral and essential part of the manufacturing activity, as contrasted with and distinguished from those activities or operations which are simply incidental, convenient or remote to the manufacturing activity.
(11) "Manufacturer" means a person engaged in the activity of manufacturing in this state.
(12) "Manufacturing" means a systematic operation or integrated series of systematic operations engaged in as a business or segment of a business which transforms or converts tangible personal property by physical, chemical or other means into a different form, composition or character from that in which it originally existed. Manufacturing includes software development and software manufacturing. In no case does the term "manufacturing" include the activities of building construction, construction of other structures or facilities affixed to or on realty, retailing or agriculture, food processing or food manufacturing, the operation of any restaurant or retail food preparation or sales operation, the production of any natural resource, contract mining or any other activity of severing, producing, processing or extracting any natural resource. Manufacturing production begins with the arrival of raw materials and ends when the property has reached that point where no further chemical, physical or other changes are to be made to the resultant property in the production process.
(13) "Manufacturing service provider" means a person engaged in a manufacturing activity who does not have legal title to or any economic interest in the tangible personal property transformed or converted by the manufacturing process, and who engages in the manufacturing activity as a service to another person.
(14) "Person" means any natural person, individual, firm, general partnership, limited partnership, trust, association, corporation, joint venture, limited liability company, joint stock company, this state or any subdivision, branch, department or agency thereof, or any county or municipal government of this state or any subdivision, branch, department or agency thereof, the government of the United States or any subdivision, branch, department or agency thereof, any public or private corporation, municipal corporation of this state, cooperative, estate, trust, business trust, receiver, executor, administrator, any other fiduciary, any representative appointed by order of any court or otherwise acting on behalf of others, or any other group or combination acting as a unit.
(15) "Salvage value" means the lower of fair market salvage value or five percent of the original cost of the property.
§11-6H-3. Valuation of commercial computer property.
Notwithstanding any other provision of this code to the contrary, the value of commercial computer property, for the purpose of ad valorem property taxation under this chapter and under article X of the constitution of this state, shall be its salvage value.
§11-6H-4. Initial determination by county assessor.
The assessor of the county in which a specific item of property is located shall determine, in writing, whether that specific item of property is commercial computer property subject to valuation in accordance with this article. Upon making a determination that a taxpayer has commercial computer property, the county assessor shall notify the tax commissioner of that determination, and shall provide such information to the tax commissioner as the tax commissioner may require relating to that determination.
§11-6H-5. Protest and appeal.
At any time after the property is returned for taxation, but prior to the first day of January of the assessment year, any taxpayer may apply to the county assessor for information regarding the issue of whether any particular item or items or property constitute commercial computer property under this article which should be subject to valuation in accordance with this article. If the taxpayer believes that some portion of the taxpayer's property is subject to the provisions of this article, the taxpayer shall file objections in writing with the county assessor. The county assessor shall decide the matter by either sustaining the protest and making proper corrections, or by stating, in writing if requested, the reasons for the county assessor's refusal. The county assessor may, and if the taxpayer requests, the county assessor shall, before the first day of January of the assessment year, certify the question to the tax commissioner in a statement sworn to by both parties, or if the parties are unable to agree, in separate sworn statements. The sworn statement or statements shall contain a full description of the property and any other information which the tax commissioner may require.
The tax commissioner shall, as soon as possible on receipt of the question, but in no case later than the twenty-eighth day of February of the assessment year, instruct the county assessor as to how the property shall be treated. The instructions issued and forwarded by mail to the county assessor are binding upon the county assessor, but either the county assessor or the taxpayer may apply to the circuit court of the county for review of the question of the applicability of this article to the property in the same fashion as is provided for appeals from the county commission in section twenty-five, article three of this chapter. The tax commissioner shall prescribe forms on which the questions under this section shall be certified and the tax commissioner has the authority to pursue any inquiry and procure any information which may be necessary for disposition of the matter.
§11-6H-6. Effective date.
This article shall be effective on and after the first day of July, one thousand nine hundred ninety-nine.



NOTE: The purpose of this bill is to make certain adjustments and changes to the tax laws. This bill requires valuation of computers and certain related property directly used in manufacturing in West Virginia at the lower of fair market salvage value or five percent of the original cost of the property for purposes of the ad valorem property tax.

This article is new; therefore, strike-throughs and underscoring have been omitted.