WEST virginia Legislature
2016 regular session
House Bill 4570
By Delegates Bates, Miley, Fluharty, Morgan, Shaffer, Guthrie, Manchin, Fleischauer, Hornbuckle, Perdue and Moore
[Introduced February 16,
to the Committee on Finance.]
A BILL to amend and reenact §11-13V-4 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new article, designated §11-13DD-1, §11-13DD-2 and §11-13DD-3, all relating to continuing certain severance taxes that are dedicated to the Workers' Compensation Debt Reduction Fund towards the State Road Fund upon satisfaction of debt; and providing a tax credit against the tax for taxpayers that create value-added jobs.
Be it enacted by the Legislature of West Virginia:
That §11-13V-4 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code be amended by adding thereto a new article, designated §11-13DD-1, §11-13DD-2 and §11-13DD-3, all to read as follows:
ARTICLE 13V. WORKERS COMPENSATION DEBT REDUCTION ACT.
§11-13V-4. Imposition of tax.
(a) Imposition of
additional tax on privilege of severing coal. -- Upon every person
exercising the privilege of engaging within this state in severing, extracting,
reducing to possession or producing coal for sale, profit or commercial use,
hereby imposed an additional annual severance tax for
exercising the privilege after November 30, 2005. The tax shall be is
$.56 per ton and the measure of the tax is tons of clean coal severed or
produced in this state by the taxpayer after November 30, 2005, for sale,
profit or commercial use during the taxable year. When the person mining the
coal sells raw coal, the measure of tax shall be is per ton of
clean coal, determined in accordance with rules promulgated by the Tax
Commissioner as provided in article three, chapter twenty-nine-a of this code.
If this rule is filed for public comment before July 1, 2005, the rule may be
promulgated as an emergency legislative rule. This tax shall be is
in addition to all taxes imposed with respect to the severance and production
of coal in this state including, but not limited to, the taxes imposed by
articles twelve-d and thirteen-a of this chapter and the taxes imposed by
sections eleven and thirty-two, article three, chapter twenty-two of this code,
(b) Imposition of
additional tax on privilege of severing natural gas. -- For the privilege
of engaging or continuing within this state in the business of severing natural
gas for sale, profit or commercial use, there is
hereby levied and shall
be collected from every person exercising this privilege an additional annual
privilege tax. The rate of this additional tax shall be is $.047
per mcf of natural gas and the measure of the tax is natural gas produced after
November 30, 2005, determined at the point where the production privilege ends
for purposes of the tax imposed by section three-a, article thirteen-a of this
chapter, and with respect to which the tax imposed by section three-a of said
article thirteen-a is paid. The additional tax imposed by this subsection shall
be collected with respect to natural gas produced after November 30, 2005.
(c) Imposition of
additional tax on privilege of severing timber. -- For the privilege of
engaging or continuing within this state in the business of severing timber for
sale, profit or commercial use, there is
hereby levied and shall be
collected from every person exercising this privilege an additional annual
privilege tax equal to two and seventy-eight hundredths percent of the gross
value of the timber produced, determined at the point where the production
privilege ends for purposes of the tax imposed by section three-b, article
thirteen-a of this chapter and upon which the tax imposed by section three-b of
said article thirteen-a is paid. The additional tax imposed by this subsection
shall be collected with respect to timber produced after November 30, 2005: Provided,
That during the period of discontinuance of the tax as provided in subsection
(d), section three-b, article thirteen-a of this chapter, the additional tax
imposed by this subsection shall be determined as provided in this subsection
in the same manner as if the tax described under section three-b, article
thirteen-a of this chapter is being imposed and collected, subject to the
provisions of subsection (g) of this section.
(d) No pyramiding of tax burden. -- Each ton of coal and each mcf of natural gas severed in this state after the effective date of the taxes imposed by this section shall be included in the measure of a tax imposed by this section only one time.
(e) Effect on utility
rates. -- The Public Service Commission shall, upon the application of any
public utility that, as of the effective date of the taxes imposed by this
section, is not currently making periodic adjustments to its approved rates and
charges to reflect changes in its fuel costs because the mechanism historically
used to make
such periodic adjustments is suspended by an order of the
commission, allow such the utility to defer, for future recovery
from its customers, any increase in its costs attributable to the taxes imposed
by this section upon: Coal and natural gas severed in this state and utilized
in the production of electricity generated or produced in this state and sold
to customers in this state; coal and natural gas severed in this state and
utilized in the production of electricity not generated or produced in this
state that is sold to customers in this state; and natural gas severed in this
state that is sold to customers in this state.
(f) Dedication of new taxes. -- The net amount of all moneys received by the Tax Commissioner from collection of the taxes imposed by this section, including any interest, additions to tax, or penalties collected with respect to these taxes pursuant to article ten, chapter eleven of this code, shall be deposited in the Workers Compensation Debt Reduction Fund created in article two-d, chapter twenty-three of this code. As used in this section, “net amount of all taxes received by the Tax Commissioner” means the gross amount received by the Tax Commissioner less the amount of any refunds paid for overpayment of the taxes imposed by this article, including the amount of any interest on the overpayment amount due the taxpayer under the provisions of section fourteen, article ten of this chapter.
date of taxes Redirection of tax to State Road Fund -- The new
taxes imposed by this section shall, expire and not be imposed with
respect to privileges exercised, be redirected to the State Road Fund as
provided in section one, article three of chapter seventeen of this code, on
and after the first day of the month following the month in which the Governor
certifies to the Legislature that: (1) The revenue bonds issued pursuant to
article two-d, chapter twenty-three of this code, have been retired, or payment
of the debt service provided for; and (2) that an independent certified actuary
has determined that the unfunded liability of the old fund, as defined in
chapter twenty-three of this code, has been paid or provided for in its
entirety. Expiration of the taxes imposed in this section as provided in
this subsection shall not relieve any person from payment of any tax imposed
with respect to privileges exercised before the expiration date.
ARTICLE 13DD. TAX CREDIT FOR VALUE-ADDED PRODUCTS FOR INDUSTRIES PAYING ROAD FUND PRESERVATION TAXES.
§11-13DD-1. Legislative purpose.
The Legislature finds and declares that the crisis of funding for state roads has risen to a critical point and the continuation of the Workers’ Compensation Fund reduction tax established in section four, article thirteen-v of this chapter is necessary to preserve the state’s infrastructure without further tax increases in this state. The Legislature further finds that establishing a tax credit against this continued assessment to reward industries that add jobs in West Virginia by converting raw materials to valued-added products will incentivize extractive industries to develop businesses in this state rather than exporting raw materials, and will also fulfill a critical need by creating new jobs in West Virginia. Therefore, a tax credit against the Workers’ Compensation/Highway Fund assessment on these industries will facilitate economic growth in this state.
§11-13DD-2. Credit allowed; amount and duration of credit; recapture of credit and effective date.
(a) There is allowed to eligible taxpayers a credit against the taxes imposed in articles twenty-one and twenty-four of this chapter. For the purpose of this article, "eligible taxpayer" means a person, firm, partnership, corporation or other entity who is subject to the tax assessed provided in section four, article thirteen-v of this chapter, and that also invests capital into hiring employees to produce valued-added products in state for sale or export. For purposes of this section, "value-added product" means products derived from processing a raw product. The following enterprises established and placed into production in this state, following enactment of this article, qualify as processing extracted or severed materials into value-added products: (1) The conversion of lumber into furniture, toys, collectibles and home furnishings or other similar products; (2) the conversion of natural gas and coal bed methane gas into electric production or through utilizing other derivatives of gas that are used for industrial and commercial activities and products produced, and (3) the conversion of coal and coal products into electrical energy or other products.
(b) Effective for taxable years beginning July 1, 2016, any entity subject to the tax and engaged in the production of value added products in West Virginia is allowed a tax credit, according to the schedule herein, for every one hour spent by a new permanent, full time employee training to learn a skill specific thereto, or production of, value added products.
(c) For purposes of this section, tax credits for hours spent by a new permanent, full time employee is allowed for wages for every one hour spent by a new employee as specified herein up to the maximum tax paid pursuant by the taxpayer to this section.
(d) The credit set forth in this article applies to personal income tax liabilities and corporation net income tax liabilities arising after December 31, 2015.
(e) As a condition of receiving the credit established in this article, the eligible taxpayer shall employ the person or persons for a period of time at least equal to one year. In the event the person is employed for less than one year the credit shall be recaptured at the rate of twenty percent of the dollar value of the credit for each month under twelve months the person works.
§11-13DD-3. Application of credit; limitation of credit; Tax Commissioner may promulgate legislative rule; notice of credit.
(a) The credit allowed in this article shall be applied to either the taxpayer's personal income tax liability or corporation net income tax liability, as the case may be.
(b) The credit allowed in this article may not exceed the maximum tax due and is not refundable, or carried forward or backward to other tax years.
(c) The Tax Commissioner may propose rules for promulgation in accordance with the provisions of article three, chapter twenty-nine-a of this code as necessary to effectuate the purposes of this article, including adding to the list of activities considered “valued added products” that are appropriate for treatment as value added products eligible for the tax credit created pursuant to section two of this article.
(d) The Tax Commissioner shall develop a written notice setting forth the availability of this credit and shall transmit this to make employers aware of the tax credit allowed in this article.
NOTE: The purpose of this bill is to extend the current tax paid by extraction industries for the purpose of funding the State Road Fund and providing a tax credit from the tax for production of value-added products that employ state workers.
Strike-throughs indicate language that would be stricken from a heading or the present law, and underscoring indicates new language that would be added.