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Introduced Version Senate Bill 418 History

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Key: Green = existing Code. Red = new code to be enacted

FISCAL NOTEWEST virginia Legislature

2016 regular session

Introduced

Senate Bill 418

By Senators Miller, Laird and Beach

[Introduced January 28, 2016;
Referred to the Committee on Finance.
]

A BILL to repeal §11-21-22a of the Code of West Virginia, 1931, as amended; to amend and reenact §11-15-3a of said code; and to amend and reenact §11-21-22 and §11-21-22b of said code, all relating generally to taxation; requiring sales tax on the sale of food; dedicating revenue generated by sales tax on food to Public Employees Insurance Agency; creating West Virginia Earned Income Tax Credit; authorizing a refundable tax credit based upon the federal Earned Income Tax Credit; determining eligibility for the credit; and determining amount of the credit.

Be it enacted by the Legislature of West Virginia:


That §11-21-22a of the Code of West Virginia, 1931, as amended, be repealed; that §11-15-3a of said code be amended and reenacted; and that §11-21-22 and §11-21-22b of said code be amended and reenacted, all to read as follows:


ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.


§11-15-3a. Rate of tax on food and food ingredients intended for human consumption; reductions and cessations of tax.

(a) Rate of tax on food and food ingredients and usage of revenue generated. -- Notwithstanding any provision of this article or article fifteen-a of this chapter to the contrary:

(1) Rate reduction. -- The rate of tax on sales, purchases and uses of food and food ingredients intended for human consumption after June 30, 2008 2016, shall be three percent of its sales price, as defined in section two, article fifteen-b of this chapter. All revenue generated by this section shall be dedicated to the employer share of the aggregate premium cost-sharing for the Public Employees Insurance Agency required by article sixteen, chapter five of this code with respect to public employees health care services.

(2) Additional rate reduction. -- The rate of tax on sales, purchases and uses of food and food ingredients as defined in that section that is intended for human consumption after December 31, 2011, shall be two percent of its sales price, as defined in that section. After June 30, 2012, the rate of tax on sales, purchases and uses of food and food ingredients as defined in that section that is intended for human consumption shall be one percent of its sales price, as defined in that section.

(3) Contingent termination of tax on food. -- The tax on sales, purchases and uses of food and food ingredients as defined in section two, article fifteen-b of this chapter that is intended for human consumption shall cease after June 30, 2013, and no such tax shall be imposed on sales, purchases and uses of food and food ingredients so defined: Provided, That the cessation of tax after June 30, 2013, authorized by this subsection shall be suspended if the balance of funds as of December 31, 2012, in the Revenue Shortfall Reserve Fund established in section twenty, article two, chapter eleven-b of this code does not equal or exceed twelve and one-half percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, 2012. Such suspension shall terminate, and the cessation of tax shall proceed, beginning on July 1 of any calendar year beginning after December 31, 2013, in which the balance of funds as of December 31 of the preceding fiscal year in said Revenue Shortfall Reserve Fund equals or exceeds twelve and one-half percent of the General Revenue Fund budgeted for the immediately succeeding fiscal year.

(b) Calculation of tax on fractional parts of a dollar. -- The tax computation under this section shall be carried to the third decimal place and the tax rounded up to the next whole cent whenever the third decimal place is greater than four and rounded down to the lower whole cent whenever the third decimal place is four or less. The seller may elect to compute the tax due on a transaction on a per item basis or on an invoice basis provided the method used is consistently used during the reporting period.

(c) Federal Food Stamp and Women, Infants and Children programs, other exemptions. -- Nothing in this section affects application of the exemption from tax provided in section nine of this article for food purchased by an eligible person using food stamps, electronic benefits transfer cards or vouchers issued by or pursuant to authorization of the United States Department of Agriculture to individuals participating in the Federal Food Stamp Program, by whatever name called, or the Women, Infants and Children (WIC) program, or application of any other exemption from tax set forth in this article or article fifteen-a of this chapter.


ARTICLE 21. PERSONAL INCOME TAX.


§11-21-22. Low-income family tax credit.

In order to eliminate West Virginia personal income tax on families with low incomes below the federal poverty guidelines and to reduce the West Virginia personal income tax on working families with moderate incomes that are immediately above the federal poverty guidelines, there is hereby created a nonrefundable refundable tax credit, to be known as the low-income family tax credit West Virginia Earned Income Tax Credit, against the West Virginia personal income tax. The low-income family tax credit is based upon family size and the federal poverty guidelines. The low-income tax credit reduces the tax imposed by the provisions of this article on families with modified federal adjusted gross income below or near the federal poverty guidelines: Provided, That for tax years beginning on and after January 1, 2009, any person who is required to pay the federal alternative minimum income tax in the current tax year is disqualified from receiving any tax credit provided under this section. The West Virginia Earned Income Tax Credit is based upon the federal earned income tax credit.


§11-21-22b. Amount of credit.

(a) (1) For each taxable year beginning after December 31, 2015, a West Virginia resident who is eligible for the federal earned income tax credit under Section 32 of the Internal Revenue Code is eligible for a credit under this article equal to twenty-five percent of the amount of the federal earned income tax credit that the individual:

(A) Is eligible to receive in the taxable year; and

(B) Claimed for the taxable year under Section 32 of the Internal Revenue Code.

(2) If the West Virginia resident is not eligible for the federal earned income tax credit under Section 32 of the Internal Revenue Code solely because the resident does not have a qualifying child the resident is eligible for a credit under this section equal to twenty-five percent of the amount of the federal earned income tax credit that the individual would have been eligible for if he or she had one qualifying child.

(b) If other credits allowed are used by the taxpayer for the taxable year, the West Virginia Earned Income Tax Credit shall be applied last.

(c) If the amount of the credit allowed exceeds the taxpayer's West Virginia personal income tax liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the amount of the excess, without interest.

(d) The commissioner shall make an effort every year to inform taxpayers who may be eligible to receive the credit provided under this section.

 

NOTE: The purpose of this bill is to place a sales tax on the sale of food. The bill dedicates the revenue generated by the sales tax on food to the Public Employees Insurance Agency. The bill creates the West Virginia Earned Income Tax Credit. The bill authorizes a refundable tax credit based upon the federal earned income tax credit. The bill determines eligibility for the credit. The bill determines the amount of the credit.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

§11-21-22b has been completely rewritten; therefore, it has been completely underscored.

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