ENROLLED
COMMITTEE SUBSTITUTE
FOR
SENATE BILL NO. 17
(Senators Craigo, Tomblin, Mr. President, Chafin, Jackson,
Wooton, Bailey, Walker, Wagner, Manchin, Anderson, Plymale, White,
Whitlow, Dittmar, Bowman, Macnaughtan, Miller, Helmick, Sharpe,
Ross, Schoonover, Love, Blatnik, Grubb, Oliverio, Wiedebusch,
Buckalew, Deem, Kimble, Yoder, Boley, Minear, Scott and Dugan,
original sponsors)
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[Passed January 23, 1996; in effect from passage.]
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AN ACT to amend article twenty-one, chapter eleven of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
ten; to amend and reenact sections fifty-one and seventy-one
of said article; and to amend and reenact section six, article
twenty-three of said chapter, all relating generally to
reductions in personal income and business franchise taxes;
providing a low income exclusion from federal adjusted gross
income; increasing threshold for filing certain income tax
returns; making technical corrections; reducing the rate of
business franchise tax; and specifying effective dates.
Be it enacted by the Legislature of West Virginia:
That article twenty-one, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended by adding thereto a new section, designated section ten;
that sections fifty-one and seventy-one of said article be amended
and reenacted; and that section six, article twenty-three of said
chapter be amended and reenacted, all to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-10. Low income exclusion.
(a)
Earned income exclusion. -- In the case of an eligible
taxpayer, there shall be allowed as a deduction from federal
adjusted gross income the amount of his or her earned income
included therein, not to exceed ten thousand dollars, except that
when a husband and wife file separate returns under this article
this exclusion shall not exceed five thousand dollars per separate
return:
Provided, That for the taxable year beginning the first
day of January, one thousand nine hundred ninety-six, the exclusion
provided for in this section shall apply only to earned income
received after the thirtieth day of June, one thousand nine hundred
ninety-six, and the amount excluded shall not exceed fifty percent
of the annual low income exclusion amounts set forth in this
subsection.
(b)
"Eligible taxpayer" defined. -- The term "eligible
taxpayer" means:
(1) Any unmarried individual and any husband and wife filing
a joint return under this article who has or have federal adjusted
gross income of ten thousand dollars or less for the taxable year; or
(2) Any husband or wife filing a separate return under this
article who has federal adjusted gross income of five thousand
dollars or less.
(c)
"Earned income" defined. --
(1) The term "earned income" means:
(A) Wages, salaries, tips, and other employee compensation;
plus
(B) The amount of the taxpayer's net earnings from self-
employment for the taxable year (within the meaning of Section
1402(a) of the Internal Revenue Code), but such net earnings shall
be determined with regard to the deduction allowed to the taxpayer
under Section 164 of the Internal Revenue Code.
(2) For purposes of this section:
(A) The earned income of an individual shall be computed
without regard to any community property laws;
(B) No amount received as pension or annuity shall be taken
into account; and
(C) No amount received for services provided by an individual
while the individual is an inmate at a penal institution shall be
taken into account.
(d)
Taxable year must be full taxable year. -- Except in the
case of a taxable year closed by reason of the death of the
taxpayer, no credit shall be allowed under this section in the case
of a taxable year covering a period of less than twelve months.
§11-21-51. Returns and liabilities.
(a)
General. -- On or before the fifteenth day of the fourth
month following the close of a taxable year, an income tax return
under this article shall be made and filed by or for:
(1) Every resident individual required to file a federal
income tax return for the taxable year, or having West Virginia
adjusted gross income for the taxable year, determined under
section twelve of this article in excess of the sum of his or her
West Virginia personal exemptions:
Provided, That the tax
commissioner shall by legislative rule specify circumstances when
an individual is not required to file a return as a result of the
application of section ten of this article;
(2) Every resident estate or trust required to file a federal
income tax return for the taxable year, or having any West Virginia
taxable income for the taxable year, determined under section
eighteen of this article;
(3) Every nonresident individual having any West Virginia
adjusted gross income for the taxable year, determined under
section thirty-two of this article, in excess of the sum of his or
her West Virginia personal exemptions, except when all of such
nonresident individual's West Virginia source income is taxed on a
composite return filed under this article for the taxable year; and
(4) Every nonresident estate or trust having items of income
or gain derived from West Virginia sources, determined in
accordance with the applicable rules of section thirty-two of this
article as in the case of a nonresident individual, in excess of
its West Virginia exemption.
(b)
Husband and wife. --
(1) If the federal income tax liability of husband or wife is
determined on a separate federal income tax return, their West
Virginia income tax liabilities and returns shall be separate.
(2) If the federal income tax liabilities of husband and wife
other than a husband and wife described in subdivision (3) of this
subsection are determined on a joint federal return, or if neither
files a federal return:
(A) They shall file a joint West Virginia income tax return,
and their tax liabilities shall be joint and several; or
(B) They may elect to file separate West Virginia income tax
returns on a single or separate form, as may be required by the tax
commissioner, if they comply with the requirements of the tax
commissioner in setting forth information, and in such event their
tax liabilities shall be separate.
(3) If either husband or wife is a resident and the other is
a nonresident, they shall file separate West Virginia income tax
returns on such single or separate forms as may be required by the
tax commissioner, and in such event their tax liabilities shall be
separate.
(c)
Decedents. -- The return of any deceased individual shall
be made and filed by his or her executor, administrator or other
person charged with his or her property.
(d)
Individuals under a disability. -- The return for an
individual who is unable to make a return by reason of minority or
other disability shall be made and filed by his or her guardian, committee, fiduciary or other person charged with the care of his
or her person or property (other than a receiver in possession of
only a part of his or her property), by his or her duly authorized
agent.
(e)
Estates and trusts. -- The return for an estate or trust
shall be made and filed by the fiduciary.
(f)
Joint fiduciaries. -- If two or more fiduciaries are
acting jointly, the return may be made by any one of them.
(g)
Tax a debt. -- Any tax under this article, and any
increase, interest or penalty thereon, shall, from the time it is
due and payable, be a personal debt of the person liable to pay the
same, to the state of West Virginia.
(h)
Cross reference. -- For provisions as to information
returns by partnerships, employers and other persons, see section
fifty-eight of this article. For provisions as to composite
returns of nonresidents, see section fifty-one-a of this article.
For provisions as to information returns by electing small business
corporations, see section thirteen-b, article twenty-four of this
chapter.
(i)
Effective date. -- This section, as amended by this act in
the year one thousand nine hundred ninety-six, shall apply to all
taxable years beginning after the thirty-first day of December, one
thousand nine hundred ninety-five.
§11-21-71. Requirement of withholding tax from wages.
(a)
General. -- Every employer maintaining an office or
transacting business within this state and making payment of any wage taxable under this article to a resident or nonresident
individual shall deduct and withhold from such wages for each
payroll period a tax computed in such manner as to result, so far
as practicable, in withholding from the employee's wages during
each calendar year an amount substantially equivalent to the tax
reasonably estimated to be due under this article resulting from
the inclusion in the employee's West Virginia adjusted gross income
of wages received during such calendar year. The method of
determining the amount to be withheld shall be prescribed by the
tax commissioner, with due regard to the West Virginia withholding
exemption of the employee and any low income exclusion allowed to
such employee under section ten of this article and asserted in
good faith by the employee. This section shall not apply to
payments by the United States for service in the armed forces of
the United States:
Provided, That the tax commissioner may execute
an agreement with the secretary of the treasury, as provided in 5
U. S. C. §5517, for the mandatory withholding of tax under this
section on pay to members of the national guard while participating
in exercises or performing duty under 32 U. S. C. §502, and on pay
to members of the ready reserve while participating in scheduled
drills or training periods or serving on active duty for training
under 10 U. S. C. §270(a).
(b)
Withholding exemptions. -- For purposes of this section:
(1) An employee shall be entitled to the same number of West
Virginia withholding exemptions as the number of withholding
exemptions to which he or she is entitled for federal income tax withholding purposes. An employer may rely upon the number of
federal withholding exemptions claimed by the employee, except
where the employee claims a higher number of West Virginia
withholding exemptions.
(2) With respect to any taxable year beginning after the
thirty-first day of December, one thousand nine hundred eighty-six,
the amount of each West Virginia exemption shall be two thousand
dollars whether the individual is a resident or nonresident.
(c)
Exception for certain nonresidents. -- If the income tax
law of another state of the United States or of the District of
Columbia results in its residents being allowed a credit under
section forty sufficient to offset all taxes required by this
article to be withheld from wages of an employee, the tax
commissioner may by regulation relieve the employers of such
employees from withholding requirements of this article with
respect to such employees.
(d)
Effective date. -- The provisions of this section, as
amended in the year one thousand nine hundred ninety-six, shall
apply to all taxable years or portions thereof beginning after the
thirtieth day of June, one thousand nine hundred ninety-six.
ARTICLE 23. BUSINESS FRANCHISE TAX.
§11-23-6. Imposition of tax; change in rate of tax.
(a)
General. -- An annual business franchise tax is hereby
imposed on the privilege of doing business in this state and in
respect of the benefits and protection conferred. Such tax shall
be collected from every domestic corporation, every corporation having its commercial domicile in this state, every foreign or
domestic corporation owning or leasing real or tangible personal
property located in this state or doing business in this state and
from every partnership owning or leasing real or tangible personal
property located in this state or doing business in this state,
effective on and after the first day of July, one thousand nine
hundred eighty-seven.
(b)
Amount of tax and rate; effective date. --
(1) On and after the first day of July, one thousand nine
hundred eighty-seven, the amount of tax shall be the greater of
fifty dollars or fifty-five one hundredths of one percent of the
value of the tax base, as determined under this article:
Provided,
That when the taxpayer's first taxable year under this article is
a short taxable year, the taxpayer's liability shall be prorated
based upon the ratio which the number of months in which such short
taxable year bears to twelve:
Provided, however, That this
subdivision shall not apply to taxable years beginning on or after
the first day of January, one thousand nine hundred eighty-nine.
(2)
Taxable years after December 31, 1988. -- For taxable
years beginning on or after the first day of January, one thousand
nine hundred eighty-nine, the amount of tax due under this article
shall be the greater of fifty dollars or seventy-five one
hundredths of one percent of the value of the tax base as
determined under this article.
(3)
Taxable years after June 30, 1997. -- For taxable years
beginning on or after the first day of July, one thousand nine hundred ninety-seven, the amount of tax due under this article
shall be the greater of fifty dollars or seventy hundredths of one
percent of the value of the tax base as determined under this
article.
(c)
Short taxable years. -- When the taxpayer's taxable year
for federal income tax purposes is a short taxable year, the tax
determined by application of the tax rate to the taxpayer's tax
base shall be prorated based upon the ratio which the number of
months in such short taxable year bears to twelve:
Provided, That
when the taxpayer's first taxable year under this article is less
than twelve months, the taxpayer's liability shall be prorated
based upon the ratio which the number of months the taxpayer was
doing business in this state bears to twelve but in no event shall
the tax due be less than fifty dollars.