Senate Bill No. 17
(By Senator Bailey)
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[Introduced January 11, 2006; referred to the Committee
on Transportation and Infrastructure; and then to the Committee
on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §11-13W-1, §11-13W-2,
§11-13W-3, §11-13W-4, §11-13W-5, §1-13W-6, §11-13W-7,
§11-13W-8 and §11-13W-9, all relating to establishing a
railroad track maintenance tax credit for expenditure by
railroads for maintaining and repairing railroad tracks in
West Virginia.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §11-13W-1, §11-13W-2,
§11-13W-3, §11-13W-4, §11-13W-5, §1-13W-6, §11-13W-7, §11-13W-8 and
§11-13W-9, all to read as follows:
ARTICLE 13W. MAINTENANCE OF RAILROAD TRACK CREDIT.
11-13W-1. Short title.
This article may be cited as the "West Virginia Railroad Track
Maintenance Tax Credit Act".
§11-13W-2. Legislative findings and purpose.
The Legislature finds that the encouragement of the
maintenance, expansion, growth and revitalization of railroad
tracks in this state is in the public interest and promotes the
general welfare of the people of this state.
§11-13W-3. Definitions.
(a) Any term used in this article has the meaning ascribed by
this section, unless a different meaning is clearly required by the
context of its use or by definition in this article.
(b) For the purpose of this article, the term:
(1) Commissioner or Tax Commissioner. -- The terms
"Commissioner" and "Tax Commissioner" are used interchangeably
herein and mean the Tax Commissioner of the State of West Virginia,
or his or her designee.
(2) Designee. -- The term "designee" in the phrase "or his or
her designee," when used in reference to the Commissioner, means
any officer or employee of the State Tax Department duly authorized
by the Commissioner directly, or indirectly by one or more
redelegations of authority, to perform the functions mentioned or
described in this article.
(3) Eligible taxpayer. -- The term "eligible taxpayer" means:
(A) Any Class I, Class II, or Class III railroad, as these terms are defined by the Surface Transportation Board; and
(B) Any person who transports property using the rail
facilities of a person described in paragraph (A) or who furnishes
railroad-related property or services to such a person. "Eligible
taxpayer" shall also include an affiliated group of taxpayers if
the group elects to file a consolidated corporation net income tax
return under article twenty-four of this chapter.
(4) Includes and including. -- The terms "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 defined.
(5) Leased property. -- The term "leased property" does not
include property which the taxpayer is required to show on its
books and records as an asset under generally accepted principles
of financial accounting. If the taxpayer is prohibited from
deducting the lease payments for federal income tax purposes, the
property shall be treated as purchased property under this section.
(6) Partnership and partner. -- The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization through or by means of which any
business, financial operation or venture is carried on, and which
is not a trust or estate, a corporation or a sole proprietorship.
The term "partner" includes a member in such a syndicate, group,
pool, joint venture or organization.
(7) Person. -- The term "person" includes any natural person,
corporation or partnership.
(8) Qualified railroad track maintenance expenditures. -- The
term "qualified railroad track maintenance expenditures" means
expenditures (whether or not otherwise chargeable to capital
account) for maintaining railroad track (including roadbed,
bridges, and related track structures) owned or leased on or after
the first day of July, two thousand six, in this state by a Class
I, Class II or Class III railroad. The term "qualified railroad
track maintenance expenditures" does not include administrative
costs.
(9) Taxpayer. -- The term "taxpayer" means any person subject
to any of the taxes imposed by article thirteen, twenty-one,
twenty-three or twenty-four of this chapter (or any combination of
those articles of this chapter).
§11-13W-4. Amount of credit allowed for railroad track
maintenance.
(a) Credit allowed. -- There is allowed to eligible taxpayers
a credit against the taxes imposed by article twenty-three of this
chapter. The amount of credit shall be determined as hereinafter
provided in this section.
(b) Amount of credit allowable. -- The amount of credit
allowable is equal to twenty-five percent of the qualified railroad
track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year, and shall reduce the business
franchise tax imposed under article twenty-three of this chapter,
subject to the following conditions and limitations:
(1) Business franchise tax. -- The credit is applied to reduce
the business franchise tax imposed under article twenty-three of
this chapter (determined after application of the credits against
tax provided in section seventeen, article twenty-three of this
chapter, but before application of any other allowable credits
against tax).
(2) Limitation. -- The credit allowed under subsection (a) for
any taxable year shall not exceed the product of one thousand
dollars, and the number of miles of railroad track (including
roadbed, bridges and related track structures) owned or leased by
the taxpayer in this state as of the close of the taxable year.
(3) Phase-in of credit. -- The amount of credit allowed under
subsection (b), section four, article thirteen-w of chapter eleven
shall be further limited as follows:
For tax years of the taxpayer beginning on or after the first
day of January, two thousand seven, the credit is limited to fifty
percent of the amount of credit otherwise allowable.
For tax years of the taxpayer beginning on or after the first
day of January, two thousand eight, the credit is limited to sixty
percent of the amount of credit otherwise allowable.
For tax years of the taxpayer beginning on or after the first day of January, two thousand nine, the credit is limited to seventy
percent of the amount of credit otherwise allowable.
For tax years of the taxpayer beginning on or after the first
day of January, two thousand ten, the credit is limited to eighty
percent of the amount of credit otherwise allowable.
For tax years of the taxpayer beginning on or after the first
day of January, two thousand eleven, the credit is limited to
ninety percent of the amount of credit otherwise allowable.
For tax years of the taxpayer beginning on or after the first
day of January, two thousand twelve, the credit is limited to one
hundred percent of the amount of credit otherwise allowable.
(4) Pass-through entities. -- If the eligible taxpayer is a
limited liability company, small business corporation or a
partnership, then any unused credit (after application of
subdivision (2) of this subsection) is allowed as a credit against
the taxes imposed by article twenty-four of this chapter on owners
of the eligible taxpayer on the conduit income directly derived
from the eligible taxpayer by its owners. Only those portions of
the tax imposed by article twenty-four of this chapter that are
imposed on income directly derived by the owner from the eligible
taxpayer are subject to offset by this credit.
(5) Small business corporations. -- Limited liability
companies, partnerships and other unincorporated organizations
shall allocate any unused credit (after application of subdivision (2) of this subsection) among their members in the same manner as
profits and losses are allocated for the taxable year.
(6) No credit is allowed under this article against any tax
imposed by article twenty-one of this chapter.
(c) No carry-over to a subsequent taxable year or carry back
to a prior taxable year is allowed for the amount of any unused
portion of any annual credit allowance. Such unused credit is
forfeited.
(d) Application for credit required. --
(1) Application required. -- Notwithstanding any provision of
this article to the contrary, no credit is allowed or may be
applied under this article for any qualified railroad track
maintenance expenditures until the person claiming the credit makes
written application to the Tax Commissioner for allowance of credit
as provided in this section. This application shall be in the form
prescribed by the Tax Commissioner. This application shall be
filed with the Tax Commissioner no later than the last day for
filing the annual return, determined by including any authorized
extension of time for filing the return, required under article
twenty-three of this chapter for the taxable year in which the
qualified railroad track maintenance expenditures are incurred.
(2) Failure to file. -- The failure to timely apply the
application for credit under this section results in forfeiture of
fifty percent of the annual credit allowance otherwise allowable under this article. This penalty applies annually until such
application is filed.
§11-13W-5. Forfeiture of tax credits.
Disposition of property or cessation of use. -- If during any
taxable year, property with respect to which a tax credit has been
allowed under this article:
(a) Is disposed of prior to the end of the taxable year; or
(b) Ceases to be used in an industrial facility of the
taxpayer in this state prior to the end of the taxable year, then
the taxpayer is only allowed a credit for qualified railroad track
maintenance expenditures incurred prior to the date of the
disposition of the property or the cessation of its use.
§11-13W-6. Transfer of railroad track to successors.
(a) Mere change in form of business. -- Property may not be
treated as disposed of under section five of this article, by
reason of a mere change in the form of conducting the business as
long as the property is retained in a business in this state for
use in the activity of railroad transportation in West Virginia,
and the taxpayer retains a controlling interest in the successor
business. In this event, the successor business is allowed to
claim the amount of credit still available with respect to the
property or industrial facility transferred, and the taxpayer
(transferor) may not be required to redetermine the amount of
credit allowed in earlier years.
(b) Transfer or sale to successor. -- Property will not be
treated as disposed of under section five of this article by reason
of any transfer or sale to a successor business which continues to
use the property in railroad transportation in West Virginia. Upon
transfer or sale, the successor shall be allowed a credit for
qualified railroad track maintenance expenditures incurred on or
after the transfer or sale, and the taxpayer (transferor) shall not
be required to redetermine the amount of credit allowed in earlier
years.
§11-13W-7. Identification of qualified railroad track maintenance
expenditures.
Every taxpayer who claims credit under this article shall
maintain sufficient records to establish each amount of qualified
railroad track maintenance expenditures.
§11-13W-8. Failure to keep records of qualified railroad track
maintenance expenditures.
A taxpayer who does not keep the records required for
qualified railroad track maintenance expenditures, is subject to
the following rules:
(a) A taxpayer is treated as having not incurred any qualified
railroad track maintenance expenditures; and
(b) If a taxpayer cannot establish when qualified railroad
track maintenance expenditures reported for purposes of claiming
this credit returned during the taxable year were incurred, the taxpayer is treated as having incurred the expenditures in the most
recent prior year in which similar expenditures were incurred.
§11-13W-9. Tax credit review and accountability.
(a) Beginning on the first day of February, two thousand ten,
and on the first day of February every third year thereafter, the
Commissioner shall submit to the Governor, the President of the
Senate and the Speaker of the House of Delegates a tax credit
review and accountability report evaluating the cost effectiveness
of the credit allowed under this article during the most recent
three-year period for which information is available. The criteria
to be evaluated includes, but is not limited to, for each year of
the three-year period:
(1) The numbers of taxpayers claiming the credit; and
(2) The cost of the credit.
(b) Taxpayers claiming the credit shall provide information as
the Tax Commissioner may require to prepare the report: Provided,
That the information is subject to the confidentiality and
disclosure provisions of sections five-d and five-s, article ten of
this chapter.
Note: The purpose of this bill is to establish a railroad
track maintenance tax credit for the expenditure by railroads for
maintaining and repairing railroad track in West Virginia. The new
credit would apply against the Business Franchise Tax.
This article is new; therefore, strike-throughs and
underscoring have been omitted.