ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 4326
(By Mr. Speaker, Mr. Kiss, and Delegates
Beach, Kelley, Michael, Mezzatesta and Martin)
[Passed March 14, 1998; in effect from passage.]
AN ACT 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 thirteen-o, relating
to allowing a tax credit of two hundred fifty dollars per
full-time hourly employees for eligible taxpayers engaged in
new aluminum or polymer manufacturing operations manufacturing
value-added products and beginning operations within this
state after the first day of July, one thousand nine hundred
ninety-eight, or for the addition of a new product or line of
an existing value-added aluminum or polymer product
manufacturing facility after the first day of July, one
thousand nine hundred ninety-eight; setting forth legislative
purpose; specifying definitions; setting eligibility for
credit; creation of the credit; amount of credit allowed;
expiration of the credit; annual credit allowance; proration
of credit; annual computation; credit to successors; credit recapture; administrative rules; construction and 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 thirteen-o, to read as follows:
ARTICLE 13O. TAX CREDIT FOR NEW ALUMINUM OR POLYMER MANUFACTURING
OPERATIONS AFTER JULY 1, 1998.
§11-13O-1. Legislative purpose.
The Legislature finds that production of value-added products
is very important to the economy of this state and that a sound
economy is in the public interest and promotes the general welfare
of the people of this state. In order to encourage capital
investment in this state, through the manufacture of value-added
aluminum and polymer products after the thirtieth day of June, one
thousand nine hundred ninety-eight, thereby increasing employment
and economic development, there is hereby provided to eligible
taxpayers a credit for each new job filled by a full-time hourly
employee who works in a new value-added aluminum or polymer product
manufacturing facility, or in a new value-added aluminum or polymer
product line of an existing manufacturing facility, that begins
operating in this state after the thirtieth day of June, one
thousand nine hundred ninety-eight.
§11-13O-2. Definitions.
(a)
General. -- 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) "Affiliate" means and includes all persons, as defined in
this section, which are affiliates of each other when either
directly or indirectly:
(A) One person controls or has the power to control the other;
or
(B) A third party or third parties control or have the power
to control two persons, the two thus being affiliates. In
determining whether concerns are independently owned and operated
and whether or not an affiliation exists, consideration shall be
given to all appropriate factors, including common ownership,
common management and contractual relationships.
(2) "Commissioner" or "tax commissioner" means the tax
commissioner of the state of West Virginia or the tax
commissioner's delegate.
(3) "Corporation" includes any corporation, a joint-stock
company and any association or other organization which is
classified as a corporation under federal income tax law.
(4) "Delegate", when used in reference to the tax commissioner, means any officer or employee of the tax division of
the department of tax and revenue duly authorized by the tax
commissioner directly, or indirectly by one or more redelegations
of authority, to perform the functions mentioned or described in
this article.
(5) "Eligible taxpayer" means a person who after the thirtieth
day of June, one thousand nine hundred ninety-eight, begins
manufacturing a value-added aluminum or polymer product at a new
manufacturing facility located in this state, or begins
manufacturing a new value-added aluminum or polymer product line at
an existing manufacturing facility located in this state, which
results in the creation of new jobs filled by full-time employees.
(6) "Employer" means the person for whom an individual
performs or performed any service, of whatever nature, as the
employee of such person, except that if the person for whom the
individual performs or performed the service does not have control
of the payment of wages for such services, the term "employer"
means the person having control of the payment of such wages.
(7) "Existing manufacturing facility" means a building which
at anytime during the twelve months preceding the month in which
manufacture of a value-added aluminum or polymer product begins was
used by the taxpayer, or by a related person, to manufacture
tangible personal property.
(8) "Full-time employee" means a permanent hourly employee of an eligible taxpayer, who is a West Virginia domiciled resident,
and works in a new value-added aluminum or polymer product
manufacturing facility in this state, or in a new value-added
aluminum or polymer product line of an existing manufacturing
facility in this state, more than eighteen hundred hours during the
entire twelve-month period ending on the last day of the taxable
year of the eligible employer, whether these hours are hours worked
at the manufacturing facility, or include hours of employer paid
vacation leave or other employer paid leave. Full-time employee
does not include an employee who is a part-time, seasonal or
temporary employee.
(9) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, of the United States.
(10) "Manufacturing facility" means any facility which is used
in the manufacturing of tangible personal property (including
processing resulting in a change in the condition of such
property).
(11) "New value-added aluminum or polymer product line" means
the manufacture of a value-added aluminum or polymer product in an
existing manufacturing facility in this state that first begins
manufacturing the new value-added aluminum or polymer product line
after the thirtieth day of June, one thousand nine hundred ninety- eight.
(12) "New value-added aluminum product manufacturing facility" means a building that is primarily used by the eligible taxpayer to
manufacture a value-added aluminum product that is first placed in
service and used for that purpose by the eligible taxpayer after
the thirtieth day of June, one thousand nine hundred ninety-eight.
If the facility was used by the taxpayer, or by a related person,
to manufacture tangible personal property at any time during the
twelve months preceding the month in which the facility is first
used by the taxpayer to manufacture a value-added aluminum or
polymer product, the building is not a new value-added aluminum or
polymer product manufacturing facility.
(13) "New job" means a job at a new value-added aluminum or
polymer product manufacturing facility located in this state, or at
a new value-added aluminum or polymer product line at an existing
manufacturing facility located in this state, which did not exist
in this state with any employer as of the first day of the second
calendar month preceding the calendar month in which the new value- added aluminum or polymer product manufacturing facility begins to
manufacture value-added aluminum or polymer products, or in which
the new value-added aluminum or polymer product line begins to
manufacture value-added aluminum or polymer products in an existing
manufacturing facility located in this state, that is filled by a
full-time employee of the eligible taxpayer.
(14) "Partnership" means and 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, which is classified as a partnership for federal income
tax purposes for the taxable year.
(15) "Partner" includes a member in a syndicate, group, pool,
joint venture or organization classified as a partnership for
federal income tax purposes for the taxable year.
(16) "Part-time employee" means any employee who normally
works twenty hours or less per week.
(17) "Seasonal employee" means an employee who normally works
on a full-time basis less than five months in a year.
(18) "Temporary employee" means an employee performing
services under a contractual arrangement with the employer of two
years or less duration.
(19) "Person" means and includes an individual, a trust,
estate, partnership, limited liability company, association,
company or corporation.
(20) "Related entity", "related person", "entity related to"
or "person related to" means:
(A) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof controlled
by the taxpayer;
(B) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is in
control of the taxpayer;
(C) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof controlled
by an individual, corporation, partnership, affiliate, association
or trust or any combination or group thereof that is in control of
the taxpayer; or
(D) A member of the same controlled group as the taxpayer.
For purposes of subdivision (3) of this subsection, "control," with
respect to a corporation, 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 the corporation which
entitles its owner to vote. "Control," with respect to a trust,
means ownership, directly or indirectly, of fifty percent or more
of the beneficial interest in the principal or income of the trust.
The ownership of stock in a corporation, of a capital or profits
interest in a partnership or association or of a beneficial
interest in a trust shall be determined in accordance with the
rules for constructive ownership of stock provided in section
267(c) of the Internal Revenue Code:
Provided, That paragraph (3)
of section 267(c) of the Internal Revenue Code shall not apply.
(21) "Tax year" or "taxable year," means the tax year of the
taxpayer for federal income tax purposes.
(22) "Taxpayer" means any person subject to the tax imposed by
articles twenty-one, twenty-three or twenty-four of this chapter.
(23) "Value-added aluminum or polymer product" means any product that adds to, increases or enhances the value of any raw,
base or unimproved aluminum or polymer product through processes
including, but not limited to, anodization, coating, fabrication,
machining, molding, extraction, stamping and any other processing
which adds value.
§11-13O-3. Eligibility for tax credits; creation of the credit.
There shall be allowed to every eligible taxpayer a credit
against the taxes imposed in articles twenty-one, twenty-three and
twenty-four of this chapter. The amount of this credit shall be
determined and applied as provided in this article.
§11-13O-4. Amount of credit allowed; expiration of the credit.
(a)
Credit allowable. -- The amount of annual credit allowable
under this article to an eligible taxpayer shall be two hundred
fifty dollars for each new job at a new value-added aluminum or
polymer product manufacturing facility located in this state, or
at a new value-added aluminum or polymer product line of an
existing manufacturing facility located in this state, that is
filled by a full-time employee of the eligible taxpayer during the
taxable year, subject to the following:
(1) When the new value-added aluminum or polymer product
manufacturing facility, or the new aluminum or polymer product
line of an existing value-added aluminum or polymer product
manufacturing facility, is in operation for less than twelve months
of the taxable year in which it is placed in service, the credit allowed by subsection (a) of this section shall be prorated by the
ratio that the number of months in the taxpayer's taxable year
during which the new value-added aluminum or polymer product
facility, or the new products line of an existing value-added
aluminum or polymer product manufacturing facility, was in service
bears to twelve;
(2) When the eligible taxpayer stops manufacturing value- added aluminum or polymer products at the new value-added aluminum
product manufacturing facility, or at the new aluminum or polymer
product line of an existing value-added aluminum or polymer product
manufacturing facility, during the taxable year, the credit allowed
by subsection (a) of this section shall be prorated by the ratio
that the number of months in the taxpayer's taxable year during
which the new value-added aluminum or polymer product facility, or
the new products line of an existing value-added aluminum or
polymer product manufacturing facility, was in operation
manufacturing value-added aluminum or polymer products bears to
twelve;
(3) When determining the number of full-time employees who
fill new jobs at the new value-added aluminum or polymer product
manufacturing facility located in this state, or who fill new jobs
at a new value-added aluminum or polymer product line of an
existing manufacturing facility located in this state, the eligible
taxpayer shall not include any position occupied by any employee of the eligible taxpayer, or of a related person, which existed in
this state as of the first day of the second calendar month
preceding the calendar month in which the new value-added aluminum
or polymer product manufacturing facility, or a new value-added
aluminum or polymer product line at an existing value-added
aluminum or polymer products manufacturing facility first becomes
operational, whether such positions are filled by permanent,
seasonal, temporary or part-time employees;
(4) The amount of credit allowable each taxable year shall be
calculated annually based upon the number of new jobs filled by
full-time employees during the taxable year:
Provided, That the
credit provided for in this article may only be taken one time for
each new job created, and once claimed in a tax year for a new job
the credit may not be claimed in a subsequent year for that
position.
(b)
Expiration of credit. -- This credit shall expire on the
first day of July, two thousand two. When the first day of July in
the year two thousand two falls during the taxable year of the
eligible taxpayer, the amount of credit allowable for that taxable
year shall be limited to that portion of the amount of credit that
would have been allowable had the credit not expired multiplied by
the ratio the number of months during taxpayers taxable year ending
before the first day of July, two thousand two, bears to twelve.
§11-13O-5. Application of annual credit allowance.
(a)
Application of credit against business franchise tax. --
The amount of credit allowed under section four of this article
shall first be applied against the eligible taxpayer's liability
for the tax imposed by article twenty-three of this chapter that is
attributable to a new value-added aluminum or polymer product
manufacturing facility located in this state and to a new value- added aluminum or polymer product production line at an existing
manufacturing facility located in this state.
(b)
Application of remaining credit against income tax. --
After application of the allowable credit against the tax imposed
by article twenty-three of this chapter, as provided in subsection
(a) of this section, any remaining credit may be applied against
the taxes imposed by article twenty-one or twenty-four of this
chapter to the extent those taxes are attributable to a new value- added aluminum or polymer product manufacturing facility located in
this state and to a new value-added aluminum or polymer product
production line at an existing manufacturing facility located in
this state:
Provided, That no credit shall be allowed against
employer withholding taxes due under article twenty-one of this
chapter.
(c)
Excess credit forfeited. -- If after application of
subsections (a) and (b) of this section, any credit remains for the
taxable year, the amount remaining and not used is forfeited.
Unused credit may not be carried back to any prior taxable year and shall not carry forward to any subsequent taxable year.
(d)
Application of this credit when other credits apply. --
The credit allowed under this article shall be applied after
application of all other applicable tax credits allowed for the
taxable year against the taxes imposed by article twenty-one,
twenty-three or twenty-four of this chapter.
(e)
Completion of annual schedule to assert credit. -- To
assert this credit against tax, the eligible taxpayer shall prepare
and file with the annual tax return filed under article
twenty-one, twenty-three or twenty-four of this chapter, an annual
schedule showing the amount of tax paid for the taxable year, and
the amount of credit allowed under this article. This annual
schedule shall set forth the information and be in the form
prescribed by the tax commissioner.
(f)
Payments of estimated tax. -- A taxpayer may consider the
amount of credit allowed under this article when determining the
taxpayer's liability under articles twenty-one, twenty-three and
twenty-four of this chapter for periodic payments of estimated tax
for the taxable year, in accordance with the procedures and
requirements prescribed by the tax commissioner. The annual total
tax liability and total tax credit allowed under this article are
subject to adjustment and reconciliation pursuant to the filing of
the annual schedule required by subsection (e) of this section.
§11-13O-6. Proration of credit among partners, members of limited liability companies, or shareholders in small business
corporations.
The amount of credit allowed under this article for the
taxable year to a partnership or limited liability company
classified as a partnership for the taxable year, or to an electing
small business corporation, that remains after application the
credit against the tax imposed by article twenty-three of this
chapter as provided in subsection (a), section five of this article
shall be allocated to the individual partners, members or
shareholders, as the case may be, in proportion to their ownership
interest in the partnership, limited liability company or electing
small business corporation. The amount of credit allocated to the
individual partners, members or shareholders, as the case may be,
may be applied against the taxes imposed by articles twenty-one and
twenty-four of this chapter in accordance with the rule set forth
in subsection (b), section five of this article.
§11-13O-7. Annual computation of the number of new jobs held by
full-time employees.
(a) The eligible taxpayer shall annually determine the number
of new jobs held by full-time permanent employees of the eligible
taxpayer in the taxable year by calculating the average number of
full-time employees holding jobs for each month of the taxable year
by averaging the beginning and ending monthly employment of
full-time employees, then totaling the monthly averages and dividing that total by twelve.
(b) The eligible taxpayer shall also annually determine the
number of new jobs filled during the taxable year by full-time
employees of the eligible taxpayer employed at a new value- added aluminum or polymer product manufacturing facility, or at a
new value-added aluminum or polymer product line at an existing
manufacturing facility, located in this state that is owned or
operated by the eligible taxpayer, by calculating the average
number of new jobs held by full-time employees for each month of
the taxable year by averaging the beginning and ending monthly
employment of full-time employees holding new jobs, then totaling
the monthly averages and dividing that total by twelve.
(c) Preexisting jobs carried over from a corporation or other
entity merged with the taxpayer, and not reflective of a true
increase in the number of new jobs in West Virginia, or preexisting
jobs formerly in place with a contract service provider which are
taken over or supplanted by the internal operations of the
taxpayer, or any other increase in the count of jobs in place with
a taxpayer which is not reflective of new jobs, as defined in
section two of this article, shall not count as new jobs for
purposes of the credit allowed under this article.
(d) The tax commissioner may prescribe by rule alternative
methods for determining the number of jobs held by full-time
permanent employees in the taxable year upon a finding by the tax commissioner that an alternative method is appropriate for
ascertaining an accurate and realistic determination of new jobs
held by full-time employees in the taxable year. For purposes of
prescribing alternative methods, the tax commissioner may require
the deduction or inclusion of jobs in place with contract service
providers that provide or at any time provided any service to any
eligible taxpayer or to any member of the affiliated group related
to any eligible taxpayer or to any one or more entities related to
the eligible taxpayer:
Provided, That deduction, or inclusion of
those jobs shall only pertain to jobs held by employees of the
contract service provider that are attributable or that were
formerly attributable to the service provided by the contract
service provider to the taxpayer. The tax commissioner may require
any deconsolidation of any filing entity, or may require an
alternative method based on separate accounting, unitary
combination, combination of the affiliated group or combination of
the taxpayer and one or more entities related to the taxpayer, or
any other method determined by the tax commissioner to be
appropriate for ascertaining an accurate and realistic
determination of new jobs held by full-time employees in the
taxable year.
§11-13O-8. Availability of credit to successors.
(a)
Transfer or sale. -- When there is a transfer or sale of
the business assets of an eligible taxpayer to a successor taxpayer which continues to operate the new value-added aluminum or polymer
product manufacturing facility located in this state, or the new
value-added aluminum or polymer product line of an existing
manufacturing facility located in this state, the successor
taxpayer is entitled to the credit allowed under this article:
Provided, That the successor taxpayer otherwise remains in
compliance with the requirements of this article for entitlement to
the credit.
(b)
Allocation of credit between eligible taxpayer and
successor eligible taxpayer. -- For any taxable year during which
a transfer, or sale of the business assets of an eligible taxpayer
to a successor taxpayer under this section occurs, or a merger
allowed under this section occurs, the credit allowed under this
article shall be apportioned between the predecessor eligible
taxpayer and the successor taxpayer based on the number of days
during the taxable year that each taxpayer acted as the legal
employer of individuals filling new jobs for which the credit
allowed under this article is based and the number of days during
the taxable year that each taxpayer owned the new value-added
aluminum or polymer product manufacturing facility located in this
state, or the new value-added aluminum or polymer product line of
an existing manufacturing facility located in this state.
(c)
Stock purchases. -- When a corporation which is an
eligible taxpayer entitled to the credit allowed under this article is purchased through a stock purchase by a new owner, and the
corporation remains a legal entity so as to retain its corporate
identity, the entitlement of that corporation to the credit allowed
under this article will not be affected by the ownership change.
(d)
Mergers. --
(1) When a corporation or other entity which is an eligible
taxpayer entitled to the credit allowed under this article is
merged with another corporation or entity, the surviving
corporation or entity, shall be entitled to the credit to which the
predecessor eligible taxpayer was originally entitled only if the
surviving corporation or entity, otherwise complies with the
provisions of this article.
(2) The amount of credit available in any taxable year during
which a merger occurs shall be apportioned between the predecessor
eligible taxpayer and the successor eligible taxpayer based on the
number of days during the taxable year that each taxpayer acted as
the legal employer of employees holding the new jobs upon which the
credit allowed under this article is based and the number of days
during the taxable year that each owned the transferred business
assets:
Provided, That when the taxable year of the predecessor
eligible taxpayer and the taxable year of the successor eligible
taxpayer are different, the apportionment shall be made in
accordance with legislative rules prescribed by the tax
commissioner.
(e) No provision of this section or of this article shall be
construed to allow sales or other transfers of the tax credit
allowed under this article. The credit allowed under this article
may be transferred only in circumstances where there is a valid
successorship as described under this section.
§11-13O-9. Credit recapture; interest; penalties; additions to
tax; statute of limitations.
(a) If it appears upon audit or otherwise that any person has
improperly claimed the credit allowed by this article, the amount
improperly claimed and which the person was not entitled to take
shall be recaptured. Amended returns shall be filed for any
taxable year for which the credit was improperly taken. Any
additional taxes due under this chapter shall be remitted with the
amended return or returns filed with the tax commissioner, along
with interest, as provided in section seventeen, article ten of
this chapter, and a ten percent penalty plus such other penalties
and additions to tax as may be applicable under the provisions of
article ten of this chapter.
(b)
Recapture for jobs lost. --
(1) In any tax year the number of individuals employed in
full-time positions by the eligible taxpayer decreases by more than
ten percent, credit recapture shall apply, and the taxpayer shall
return to the state an amount of tax determined by multiplying five
hundred dollars by the number of full-time jobs lost which exceed ten percent. An amended return shall be filed for the tax year for
which credit recapture is required. Any additional taxes due under
this chapter shall be remitted with the amended return filed with
the tax commissioner, along with interest, as provided in section
seventeen, article ten of this chapter, and a ten percent penalty
plus such other penalties and additions to tax as may be applicable
under the provisions of article ten of this chapter.
(2) Notwithstanding the provisions of article ten of this
chapter, penalties and additions to tax imposed under article ten
of this chapter and the ten percent penalty imposed under this
section may be waived, in whole or in part, at the discretion of
the tax commissioner. However, interest may not be waived.
(c) Notwithstanding the provisions of article ten of this
chapter, the time within which a notice of assessment may be issued
by the tax commissioner to recover recaptured tax shall be five
years from the date of filing of any tax return on which this
credit was taken or five years from the date of payment of any tax
liability calculated pursuant to the assertion of the credit
allowed under this article, whichever is later.
§11-13O-10. Administrative rules.
The tax commission may prescribe such rules as may be
necessary to carry out the purposes of this article, including, but
not limited to, rules relating to applicability of credit, method
of claiming credit, credit recapture, documentation necessary to claim credit and rules preventing abuse of this article by related
persons or by change in the form of doing business. All rules
promulgated under this article shall be promulgated in accordance
with article three, chapter twenty-nine-a of this code.
§11-13O-11. Construction of article.
The provisions of this article shall be reasonably construed.
The burden of proof is on the person claiming the credit allowed by
this article to establish by clear and convincing evidence that the
person is entitled to the amount of credit asserted for the taxable
year.
§11-13O-12. Effective date.
This article shall be effective for taxable years beginning on
or after the first day of July, one thousand nine hundred
ninety-eight.