Introduced Version
House Bill 3040 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 3040
(By Delegates Howell, Armstead, Andes, Storch, Lynch,
Moye, Miller and Craig)
[Introduced March 21, 2013; referred to the
Committee on Energy, Industry and Labor, Economic
Development and Small Business then Finance.]
A BILL to amend and reenact §11-6F-2 of the Code of West Virginia,
1931, as amended; and to amend and reenact §11-13S-3 and
§11-13S-4 of said code, all relating generally to the tax
treatment of manufacturing entities generally; amending
definition of manufacturing for purposes of special method for
appraising qualified capital additions to manufacturing
facilities for property tax purposes; amending definition of
manufacturing for purposes of manufacturing investment tax
credit; and the
amount of credit allowed for manufacturing
investment, to include small arms manufacturing.
Be it enacted by the Legislature of West Virginia:
That §11-6F-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that §11-13S-3 and §11-13S-4 of said
code be amended and reenacted, all to read as follows:
ARTICLE 6F. SPECIAL METHOD FOR APPRAISING QUALIFIED CAPITAL ADDITIONS TO MANUFACTURING FACILITIES.
§11-6F-2. Definitions.
As used in this article, the term:
(a) "Certified capital addition property" means all real
property and personal property included within or to be included
within a qualified capital addition to a manufacturing facility
that has been certified by the State Tax Commissioner in accordance
with section four of this article: Provided, That airplanes and
motor vehicles licensed by the Division of Motor Vehicles shall in
no event constitute certified capital addition property.
(b) "Manufacturing" means any business activity classified as
having a sector identifier, consisting of the first two digits of
the six-digit North American Industry Classification System code
number of thirty-one, thirty-two or thirty-three or the six digit
code number 211112; or, the six-digit North American Industry
Classification System code numbers 332992 and 332994.
(c) "Manufacturing facility" means any factory, mill, chemical
plant, refinery, warehouse, building or complex of buildings,
including land on which it is located, and all machinery,
equipment, improvements and other real property and personal
property located at or within the facility used in connection with
the operation of the facility in a manufacturing business.
(d) "Personal property" means all property specified in
subdivision (q), section ten, article two, chapter two of this code and includes, but is not limited to, furniture, fixtures, machinery
and equipment, pollution control equipment, computers and related
data processing equipment, spare parts and supplies.
(e) "Qualified capital addition to a manufacturing facility"
means either:
(1) All real property and personal property, the combined
original cost of which exceeds $50 million to be constructed,
located or installed at or within two miles of a manufacturing
facility owned or operated by the person making the capital
addition that has a total original cost before the capital addition
of at least $100 million. If the capital addition is made in a
steel, chemical or polymer alliance zone as designated from
time-to-time by executive order of the Governor, then the person
making the capital addition may for purposes of satisfying the
requirements of this subsection join in a multiparty project with
a person owning or operating a manufacturing facility that has a
total original cost before the capital addition of at least $100
million if the capital addition creates additional production
capacity of existing or related products or feedstock or derivative
products respecting the manufacturing facility, consists of a
facility used to store, handle, process or produce raw materials
for the manufacturing facility, consists of a facility used to
store, handle or process natural gas to produce fuel for the
generation of steam or electricity for the manufacturing facility or consists of a facility that generates steam or electricity for
the manufacturing facility, including but not limited to a facility
that converts coal to a gas or liquid for the manufacturing
facility's use in heating, manufacturing or generation of
electricity. Beginning on and after July 1, 2011, when the new
capital addition is a facility that is or will be classified under
the North American Industry Classification System with a six digit
code number 211112, or is a manufacturing facility that uses
product produced at a facility with code number 211112, then
wherever the term "100 million" is used in this subsection, the
term "20 million" shall be substituted and where the term "50
million" is used, the term "10 million" shall be substituted; and
that beginning on and after July 1, 2013, when the new capital
addition is a facility that is or will be classified under the
North American Industry Classification System with a six-digit
North American Industry Classification System code a product
produced at a facility with code numbers 332992 and 332994, then
wherever the term "100 million" is used in this subsection, the
term "2 million" shall be substituted and where the term "50
million" is used, the term "1 million" shall be substituted; or
(2) (A) All real property and personal property, the combined
original cost of which exceeds $2 billion to be constructed,
located or installed at a facility, or a combination of facilities
by a single entity or combination of entities engaged in a unitary business, that:
(i) Is or will be classified under the North American Industry
Classification System with a six digit code number 211112, or, the
six-digit North American Industry Classification System code
numbers 332992 and 332994; or
(ii) Is a manufacturing facility that uses one or more
products produced at a facility with code number 211112; or, the
six-digit North American Industry Classification System code
numbers 332992 and 332994; or
(iii) Is a manufacturing facility that uses one or more
products produced at a facility described in subparagraph (ii) of
this subdivision.
(B) No preexisting investment made, or in place before the
capital addition shall be required for property specified in this
subdivision (2). The requirements set forth in subdivision (1) of
this subsection shall not apply to property specified in this
subdivision (2) relating to:
(i) Location or installation of investment at or within two
miles of a manufacturing facility owned or operated by the person
making the capital addition;
(ii) Total original cost of preexisting investment before the
capital addition of at least $100 million or $20 million; or
(iii) Multiparty projects.
(f) "Real property" means all property specified in subdivision (p), section ten, article two, chapter two of this code
and includes, but is not limited to, lands, buildings and
improvements on the land such as sewers, fences, roads, paving and
leasehold improvements: Provided, That for capital additions
certified on or after July 1, 2011, the value of the land before
any improvements shall be subtracted from the value of the capital
addition and the unimproved land value shall not be given salvage
value treatment.
ARTICLE 13S. MANUFACTURING INVESTMENT TAX CREDIT.
§11-13S-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 purpose of this article, the term:
(1) "Eligible taxpayer" means an industrial taxpayer who
purchases new property for the purpose of industrial expansion or
for the purpose of industrial revitalization of an existing
industrial facility in this state.
(2) "Industrial expansion" means capital investment in a new
or expanded industrial facility in this state.
(3) "Industrial facility" means any factory, mill, plant,
refinery, warehouse, building or complex of buildings located
within this state, including the land on which it is located, and
all machinery, equipment and other real and tangible personal property located at or within the facility primarily used in
connection with the operation of the manufacturing business.
(4) "Industrial revitalization" or "revitalization" means
capital investment in an industrial facility located in this state
to replace or modernize buildings, equipment, machinery and other
tangible personal property used in connection with the operation of
the facility in an industrial business of the taxpayer including
the acquisition of any real property necessary to the industrial
revitalization.
(5) "Industrial taxpayer" means any taxpayer who is primarily
engaged in a manufacturing business.
(6) "Manufacturing" means any business activity classified as
having a sector identifier, consisting of the first two digits of
the six-digit North American Industry Classification System code
number, of thirty-one, thirty-two or thirty-three or the six digit
code number 211112
or the six digit code number 211112 or the
six-digit North American Industry Classification System code
numbers 332992 and 332994.
(7) "Property purchased for manufacturing investment" means
real property, and improvements thereto, and tangible personal
property but only if the property was constructed or purchased on
or after January 1, 2003, for use as a component part of a new,
expanded or revitalized industrial facility. This term includes
only that tangible personal property with respect to which depreciation, or amortization in lieu of depreciation, is allowable
in determining the federal income tax liability of the industrial
taxpayer, that has a useful life, at the time the property is
placed in service or use in this state, of four years or more.
Property acquired by written lease for a primary term of ten years
or longer, if used as a component part of a new or expanded
industrial facility, is included within this definition.
(A) "Property purchased for manufacturing investment" does not
include:
(i) Repair costs, including materials used in the repair,
unless for federal income tax purposes, the cost of the repair must
be capitalized and not expensed;
(ii) Motor vehicles licensed by the Department of Motor
Vehicles;
(iii) Airplanes;
(iv) Off-premises transportation equipment;
(v) Property which is primarily used outside this state; and
(vi) Property which is acquired incident to the purchase of
the stock or assets of an industrial taxpayer which property was or
had been used by the seller in his or her industrial business in
this state or in which investment was previously the basis of a
credit against tax taken under any other article of this chapter.
(B) Purchases or acquisitions of land or depreciable property
qualify as purchases of property purchased for manufacturing investment for purposes of this article only if:
(i) The property is not acquired from a person whose
relationship to the person acquiring it would result in the
disallowance of deductions under section 267 or 707(b) of the
United States Internal Revenue Code of 1986, as amended;
(ii) The property is not acquired from a related person or by
one component member of a controlled group from another component
member of the same controlled group. The Tax Commissioner may
waive this requirement if the property was acquired from a related
party for its then fair market value; and
(iii) The basis of the property for federal income tax
purposes, in the hands of the person acquiring it, is not
determined, in whole or in part, by reference to the federal
adjusted basis of the property in the hands of the person from whom
it was acquired or under Section 1014(e) of the United States
Internal Revenue Code of 1986, as amended.
(8) "Qualified manufacturing investment" means that amount
determined under section five of this article as qualified
manufacturing investment.
(9) "Taxpayer" means any person subject to any of the taxes
imposed by article thirteen-a, twenty-three or twenty-four of this
chapter or any combination of those articles of this chapter.
§11-13S-4. Amount of credit allowed for manufacturing investment.
(a) Credit allowed. -- There is allowed to eligible taxpayers and to persons described in subdivision (5), subsection (b) of this
section a credit against the taxes imposed by articles thirteen-a,
twenty-three and twenty-four of this chapter: Provided, That a tax
credit for any eligible taxpayer operating a business activity
classified as having a sector identifier, consisting of the six
digit code number 211112 or, the six-digit North American Industry
Classification System code numbers 332992 and 332994
such eligible
taxpayer must comply with the provisions of subsection (e) of this
section for all construction related thereto in order to be
eligible for any credit under this article. The amount of credit
shall be determined as hereinafter provided in this section.
(b) Amount of credit allowable. -- The amount of allowable
credit under this article is equal to five percent of the qualified
manufacturing investment (as determined in section five of this
article) and shall reduce the severance tax, imposed under article
thirteen-a of this chapter, the business franchise tax imposed
under article twenty-three of this chapter and the corporation net
income tax imposed under article twenty-four of this chapter, in
that order, subject to the following conditions and limitations:
(1) The amount of credit allowable is applied over a ten-year
period, at the rate of one-tenth thereof per taxable year,
beginning with the taxable year in which the property purchased for
manufacturing investment is first placed in service or use in this
state;
(2) Severance tax. -- The credit is applied to reduce the
severance tax imposed under article thirteen-a of this chapter
(determined before application of the credit allowed by section
three, article twelve-b of this chapter and before any other
allowable credits against tax and before application of the annual
exemption allowed by section ten, article thirteen-a of this
chapter). The amount of annual credit allowed may not reduce the
severance tax, imposed under article thirteen-a of this chapter,
below fifty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax: Provided,
That for tax years beginning on and after January 1, 2009, the
amount of annual credit allowed may not reduce the severance tax,
imposed under article thirteen-a of this chapter, below forty
percent of the amount which would be imposed for such taxable year
in the absence of this credit against tax. When in any taxable
year the taxpayer is entitled to claim credit under this article
and article thirteen-d of this chapter, the total amount of all
credits allowable for the taxable year may not reduce the amount of
the severance tax, imposed under article thirteen-a of this
chapter, below fifty percent of the amount which would be imposed
for such taxable year (determined before application of the credit
allowed by section three, article twelve-b of this chapter and
before any other allowable credits against tax and before
application of the annual exemption allowed by section ten, article thirteen-a of this chapter): Provided, however, That when in any
taxable year beginning on and after January 1, 2009, the taxpayer
is entitled to claim credit under this article and article
thirteen-d of this chapter, the total amount of all credits
allowable for the taxable year may not reduce the amount of the
severance tax imposed under article thirteen-a of this chapter,
below forty percent of the amount which would be imposed for such
taxable year as determined before application of the credit allowed
by section three, article twelve-b of this chapter and before any
other allowable credits against tax and before application of the
annual exemption allowed by section ten, article thirteen-a of this
chapter;
(3) Business franchise tax. --
After application of subdivision (2) of this subsection, any
unused credit is next 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). The
amount of annual credit allowed will not reduce the business
franchise tax, imposed under article twenty-three of this chapter,
below fifty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax: Provided,
That for tax years beginning on and after January 1, 2009, the amount of annual credit allowed will not reduce the business
franchise tax, imposed under article twenty-three of this chapter,
below forty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax. When in
any taxable year the taxpayer is entitled to claim credit under
this article and article thirteen-d of this chapter, the total
amount of all credits allowable for the taxable year will not
reduce the amount of the business franchise tax, imposed under
article twenty-three of this chapter, below fifty percent of the
amount which would be imposed for the taxable year (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): Provided,
however, That when in any taxable year beginning on and after
January 1, 2009, the taxpayer is entitled to claim credit under
this article and article thirteen-d of this chapter, the total
amount of all credits allowable for the taxable year will not
reduce the amount of the business franchise tax, imposed under
article twenty-three of this chapter, below forty percent of the
amount which would be imposed for the taxable year as 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;
(4) Corporation net income tax. --
After application of subdivision (3) of this subsection, any
unused credit is next applied to reduce the corporation net income
tax imposed under article twenty-four of this chapter (determined
before application of any other allowable credits against tax).
The amount of annual credit allowed will not reduce corporation net
income tax, imposed under article twenty-four of this chapter,
below fifty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax: Provided,
That for tax years beginning on and after January 1, 2009, the
amount of annual credit allowed will not reduce corporation net
income tax, imposed under article twenty-four of this chapter,
below forty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax. When in
any taxable year the taxpayer is entitled to claim credit under
this article and article thirteen-d of this chapter, the total
amount of all credits allowable for the taxable year may not reduce
the amount of the corporation net income tax, imposed under article
twenty-four of this chapter, below fifty percent of the amount
which would be imposed for the taxable year (determined before
application of any other allowable credits against tax): Provided,
however, That when in any taxable year beginning on and after
January 1, 2009, the taxpayer is entitled to claim credit under
this article and article thirteen-d of this chapter, the total
amount of all credits allowable for the taxable year may not reduce the amount of the corporation net income tax, imposed under article
twenty-four of this chapter, below forty percent of the amount
which would be imposed for the taxable year as determined before
application of any other allowable credits against tax;
(5) Pass-through entities. --
(A) If the eligible taxpayer is a limited liability company,
small business corporation or a partnership, then any unused credit
(after application of subdivisions (2), (3) and (4) 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.
(B) The amount of annual credit allowed will not reduce
corporation net income tax, imposed under article twenty-four of
this chapter, below fifty percent of the amount which would be
imposed on the conduit income directly derived from the eligible
taxpayer by each owner for such taxable year in the absence of this
credit against the taxes (determined before application of any
other allowable credits against tax): Provided, That for tax years
beginning on and after January 1, 2009, the amount of annual credit
allowed will not reduce corporation net income tax, imposed under article twenty-four of this chapter, below forty percent of the
amount which would be imposed on the conduit income directly
derived from the eligible taxpayer by each owner for such taxable
year in the absence of this credit against the taxes as determined
before application of any other allowable credits against tax.
(C) When in any taxable year the taxpayer is entitled to claim
credit under this article and article thirteen-d of this chapter,
the total amount of all credits allowable for the taxable year will
not reduce the corporation net income tax imposed on the conduit
income directly derived from the eligible taxpayer by each owner
below fifty percent of the amount that would be imposed for such
taxable year on the conduit income (determined before application
of any other allowable credits against tax): Provided, That when in
any taxable year beginning on and after January 1, 2009, the
taxpayer is entitled to claim credit under this article and article
thirteen-d of this chapter, the total amount of all credits
allowable for the taxable year will not reduce the corporation net
income tax imposed on the conduit income directly derived from the
eligible taxpayer by each owner below forty percent of the amount
that would be imposed for such taxable year on the conduit income
as determined before application of any other allowable credits
against tax;
(6) Small business corporations, limited liability companies,
partnerships and other unincorporated organizations shall allocate any unused credit after application of subdivisions (2), (3) and
(4) of this subsection among their members in the same manner as
profits and losses are allocated for the taxable year; and
(7) No credit is allowed under this article against any tax
imposed by article twenty-one of this chapter.
(c) No carryover to a subsequent taxable year or carryback to
a prior taxable year is allowed for the amount of any unused
portion of any annual credit allowance. Any 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 investment property
placed in service or use 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 and shall provide the number and
type of jobs created, if any, by the manufacturing investment, the
average wage rates and benefits paid to employees filling the new
jobs and any other information the Tax Commissioner may require.
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-one or twenty-four of this chapter for the taxable year in which the property to which the credit
relates is placed in service or use.
(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 the
application is filed.
(e) (1) Any person or entity undertaking any construction
related to any business activity included within North American
Industrial Code six-digit code number 211112, the value of which is
an amount equal to or greater than $500,000, shall hire at least
seventy-five percent of employees for said construction from the
local labor market, to be rounded off, with at least two employees
from outside the local labor market permissible for each employer
per project, "the local labor market" being defined as every county
in West Virginia and any county outside of West Virginia if any
portion of that county is within fifty miles of the border of West
Virginia.
(2) Any person or entity unable to employ the minimum number
of employees from the local labor market shall inform the nearest
office of the bureau of employment programs' division of employment
services of the number of qualified employees needed and provide a
job description of the positions to be filled.
(3) If, within three business days following the placing of a job order, the division is unable to refer any qualified job
applicants to the person or entity engaged in said construction or
refers less qualified job applicants than the number requested,
then the division shall issue a waiver to the person or entity
engaged in said construction stating the unavailability of
applicants and shall permit the person or entity engaged in said
construction to fill any positions covered by the waiver from
outside the local labor market. The waiver shall be either oral or
in writing and shall be issued within the prescribed three days.
A waiver certificate shall be sent to the person or entity engaged
in said construction for its permanent project records.
(f) The amendments made to section three of this article, this
section and to section two, article six-f of this chapter are
enacted to provide manufacturing investment tax credit to small
arms manufacturers and may be cited as the "West Virginia Small
Arms Investment Act".
NOTE: The purpose of this bill is to provide manufacturing
investment tax credit generally for
small arms manufacturing
. It
amends the definition of manufacturing for purposes of special
method for appraising qualified capital additions to manufacturing
facilities for property tax purposes and the definition of
manufacturing for purposes of manufacturing investment tax credit.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.