WEST VIRGINIA LEGISLATURE
2022 REGULAR SESSION
ENGROSSED
House Bill 4568
By Delegates Barrett, Householder, Storch, Criss, Espinosa, Linville, Ellington, Rowan, Riley, Graves, and Hardy
[Introduced February 07, 2022; referred to the Committee on Finance]
A BILL to amend and reenact §11-24-23a of the Code of West Virginia, 1931, as amended, relating to tax credits for qualified rehabilitation expenditures for certified historic structures; elimination of certain limitations on and allocations of tax credits allowed against corporation net income tax and personal income tax per year and per rehabilitation of a certified historic structure; elimination of allocation of portion of limited tax credits for certified rehabilitation projects with proposed tax credits of $500,000; authorizing phased rehabilitations of certified historic structures; tax credit certificates for completed phases of a phased rehabilitation; providing for recapture of tax credits; removing provisions providing for guarantee of tax credits; and requiring issuance of tax credit certificates based on issuance of Phase Advisory Determination.
Be it enacted by the Legislature of West Virginia:
ARTICLE 24. CORPORATION NET INCOME TAX.
§11-24-23a. Credit for qualified rehabilitated buildings investment.
(a) A credit against the tax imposed by the provisions of this article shall be allowed as follows:
Certified historic structures. — For certified historic structures, the credit is equal to 10 percent of qualified rehabilitation expenditures as defined in §47(c)(2), Title 26 of the United States Code, as amended: Provided, That for qualified rehabilitation expenditures made after December 31, 2017, pursuant to an historic preservation certification application, Part 2 – Description of Rehabilitation, received by the state historic preservation office after December 31, 2017, the credit allowed by this section is equal to 25 percent of the qualified rehabilitation expenditure: Provided, however, That the credit authorized by this section for qualified rehabilitation expenditures made after December 31, 2017, may not be used to offset tax liabilities of the taxpayer prior to the tax year beginning on or after January 1, 2020: Provided further, That the taxpayer is not entitled to this credit if, when the applicant begins to claim the credit and throughout the time period within which the credit is claimed, the taxpayer is in arrears in the payment of any tax administered by the Tax Division or the taxpayer is delinquent in the payment of any local or municipal tax, or the taxpayer is delinquent in the payment of property taxes on the property containing the certified historic tax structure when the applicant begins to claim the credit and throughout the time period within which the credit is claimed. The Tax Commissioner shall promulgate procedural rules in accordance with §29A-3-1 et seq. of this code that provide what information must accompany any claim for the tax credit for the determination that the taxpayer is not in arrears in the payment of any tax administered by the Tax Division, is not delinquent in the payment of any local or municipal tax, nor is the taxpayer delinquent in the payment of property taxes on the property containing the certified historic tax structure, and such other administrative requirements as the Tax Commissioner may specify. This credit is available for both residential and nonresidential buildings located in this state that are reviewed by the West Virginia Division of Culture and History and designated by the National Park Service, United States Department of the Interior as “certified historic building”, and further defined as a “qualified rehabilitated building”, as defined under §47(c)(1), Title 26, of the United States Code, as amended.
(b) Allocations and
maximum amounts of tax credits per project and per fiscal year —
(1) No more than $10 million
of the tax credits authorized by this section and section eight-a, article
twenty-one of this chapter may be allocated, reserved or issued by the state
historic preservation officer to any single certified rehabilitation.
(2) No more than $30
million of the tax credits authorized by this section and section eight-a,
article twenty-one of this chapter cumulatively may be issued by the state
historic preservation officer for use in any given West Virginia state fiscal
year, and any amount remaining up to $30 million may not be carried over to a
subsequent West Virginia state fiscal year.
(3) At the beginning of
each fiscal year, no less than $5 million of the tax credits authorized by this
section and §11-21-8a of this code shall be set aside for reservation and the
issuance of tax credits for certified rehabilitation
projects with proposed tax credits of $500,000. The balance of any amount
set aside for these projects that has not been reserved pursuant to the
procedures in subsection (c) of this section by the end of the fiscal year
shall be allocated by the state historic preservation officer for the projects
in any amount of other pending applicants otherwise eligible for the issuance
of tax credits under this section and §11-21-8a of this code in the order that
the applications for those projects were received
(b) Phased rehabilitations. — Phased rehabilitations are authorized for any rehabilitation completed after July 1, 2022. For certified rehabilitations that may reasonably be expected to be completed in phases set forth in a plan of rehabilitation submitted contemporaneously with the Description of Rehabilitation, which may be amended by the applicant, the state historic preservation officer shall permit phased rehabilitations. A rehabilitation may reasonably be expected to be completed in phases if it consists of two or more distinct stages of development. A phased rehabilitation plan shall be consistent with phasing guidance issued by the National Park Service. The state historic preservation officer may review each phase as it is presented, but a phased rehabilitation cannot be designated a certified rehabilitation until all of the phases are completed. The owner may elect to claim the credit allowable for each completed phase of a phased rehabilitation, upon receipt from the state historic preservation officer of a written tax credit certificate, for each phase of the phased rehabilitation. Written tax credit certificates for completed phases of a phased rehabilitation shall be issued when the substantial rehabilitation test has been satisfied with respect to the completed phase and the completed phase has been placed into service, consistent with phase advisory guidance issued by the National Park Service. Any claims of a tax credit associated with a completed phase of a phased rehabilitation are contingent upon final certification of the completed project. Tax credits claimed by a taxpayer, including, but not limited to, the applicant or a third-party transferee of the tax credit, as applicable, associated with a completed phase of a phased rehabilitation are subject to recapture by the Tax Commissioner if an applicant for tax credits fails to submit an approved historic preservation certification application, Part 3 – Request for Certification of Completed Work, for the rehabilitation within 60 months of the date of the advisory determination by the National Park Service that such phase has been completed in accordance with the Secretary of the Interior standards for rehabilitation.
(c) Procedure for issuance of tax credits reservations and certificates by the state historic preservation officer —
(1) Any claim for the tax credits authorized pursuant to this section and §11-21-8a of this code shall be accompanied by a tax credit certificate issued by the state historic preservation officer.
(2) The tax credits will
be awarded on a first come, first served basis. At the time the historic
preservation certification application, Part 2 – Description of Rehabilitation,
is received by the state historic preservation office, the project will be
placed on a reservation list, which will reserve the tax credit amount listed
on the application. The historic preservation certification application,
Part 2 – Description of Rehabilitation, will be reviewed by the State Historic
Preservation Office for completion and submitted to the National Park Service
for full review. At the time the historic preservation certification
application, Part 2 – Description of Rehabilitation, is submitted to the
National Park Service, the state historic preservation officer shall send a
request for the fee prescribed in subsection (e) of this section to the
property owner. Upon approval of the historic preservation certification
application, Part 2 – Description of Rehabilitation, from the National Park
Service, including approval with conditions, that the project will meet the
Secretary of the Interior’s standards for rehabilitation, the owner of the
building will receive guarantee of the tax credits from the State Historic
Preservation Office
(3) The state historic
preservation officer shall issue tax credit certificates for certified
rehabilitation projects that the National Park Service has determined have met
the Secretary of the Interior standards for rehabilitation based on the
issuance of an approved historic preservation certification application, Part 3
– Request for Certification of Completed Work, or a Phase Advisory
Determination.
(4) Once the state
historic preservation officer has allocated and reserved the maximum tax
credits authorized for any given West Virginia state fiscal year, the state
historic preservation officer then shall allocate and reserve tax credits
against the maximum tax credits authorized for use in the succeeding West
Virginia state fiscal year.
(5) If an applicant for
tax credits that receives a reservation for tax credits for any given West
Virginia state fiscal year fails to submit an approved historic preservation
certification application, Part 3 – Request for Certification of Completed Work
in the instance of a certified rehabilitation within 36 months of the date of
the approved historic preservation certification application, Part 2 –
Description of Rehabilitation, therefor or in the instance of a phased project
as determined by the National Park Service within 60 months of the date of the
advisory determination by the National Park Service therefor that such phase
has been completed in accordance with the Secretary of the Interior standards
for rehabilitation then the state historic preservation officer may reallocate
part or all of the tax credits reserved therefor to other applicants in the order
their applications were received.
(d) The state historic
preservation officer shall prescribe and publish a form and instructions for an
application for reservation and issuance of the tax credits authorized
by this section and §11-21-8a of this code.
(e) Application fee - Each application for tax credits authorized pursuant to this section and §11-21-8a of this code shall require a fee payable to the state historic preservation officer equal to the lesser of: (1) 0.5% of the amount of the tax credits requested for in such application; and (2) $10,000. The state historic preservation officer shall review and act on all such applications within 30 days of receipt.
Fees collected under this subsection shall be deposited into a special revenue account which is hereby created. The fund shall be administered by the state historic preservation officer and expended for the purposes of administering the provisions of this section and §11-21-8a of this code.
NOTE: The purpose of this bill is to allow phased rehabilitations of certified historic structures and to remove certain limitations on and allocations of tax credits allowed against corporation net income tax and personal income tax per year and per rehabilitation and phased rehabilitation of certified historic structures.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.