Senate Bill No. 441
(By Senators Helmick, McCabe, Green, Unger, Plymale, Foster,
Kessler and Wells)
____________
[Introduced February 2, 2010; referred to the Committee
on Finance.]
____________
A BILL to amend and reenact §11-13Z-1, §11-13Z-2 and §11-13Z-3 of
the Code of West Virginia, 1931, as amended; and to amend
said code by adding thereto eight new sections, designated
§11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8,
§11-13Z-9, §11-13Z-10 and §11-13Z-11, all relating to the
tax credit for residential solar energy systems; identifying
legislative purpose; creating certain definitions; defining
"solar energy system"; limiting amount of credit to a
maximum of $2,000; specifying application of credit and
carryforward periods; establishing burden of proof on
taxpayer; requiring that written application for credit be
filed with the Tax Commissioner not later than specified
date; allowing a penalty of fifty percent of credit for
failure to make timely application; establishing eligibility
requirements for credit; disqualifying from credit taxpayer
that purchases solar energy systems from related persons;
providing for credit recapture and imposition of recapture
tax if property disposed of in the first or succeeding tax
year the system put into service; authorizing promulgation
of rules; specifying credit exclusion when other credits are
applied, or where federal grant or federal deduction
applies, indicating nontransferability of credit; requiring
Tax Commissioner to undertake a solar energy tax credit
review beginning in 2013 and report results to the Governor,
the President of the Senate and the Speaker of the House of
Delegates; requiring taxpayers to submit confidential data
for inclusion in said review and report; and terminating the
solar energy tax credit in 2013.
Be it enacted by the Legislature of West Virginia:
That §11-13Z-1, §11-13Z-2 and §11-13Z-3 of the Code of West
Virginia, 1931, as amended, be amended and reenacted; and that
said code be amended by adding thereto eight new sections,
designated §11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8,
§11-13Z-9, §11-13Z-10 and §11-13Z-11, all to read as follows:
ARTICLE 13Z. RESIDENTIAL SOLAR ENERGY TAX CREDIT.
§
11-13Z-1. Legislative purpose.
The purpose of this article is to provide a tax credit
against West Virginia state personal income tax for qualified
purchases and installation of solar energy systems by qualified
taxpayers.
§11-13Z-2. Definitions.
(a) When used in this article, words defined in subsection
(b) of this section shall have the meanings ascribed to them in
this section, except in those instances where a different meaning
is provided in this article or the context in which the word is
used clearly indicates that a different meaning is intended by
the Legislature.
(b)
Definitions. --
(1) "Cost to purchase and install" means amounts actually
invested and expended by a taxpayer to acquire and place into
service equipment and components of a solar energy system in a
residence.
.
(A) "Cost to purchase and install" includes: Architectural
and engineering services and costs of designs and plans directly
related to the construction or installation of the solar energy
system; labor costs properly allocable to on-site preparation,
assembly and original installation; materials costs and delivery
fees.
(B) "Cost to purchase and install" does not include: Any
amount not includable under federal income tax law in the
Taxpayer's federal income tax basis in the residential property
into which the solar energy system is installed, any amount that
has been or will be deducted, or which is allowable as a
deduction, from federal adjusted gross income in determining the
taxpayer's federal income tax liability, costs attributable to
extended warranties, guarantees and optional insurance on the
solar energy system, discounts; rebates; refunds or any cost paid
with a federal grant or state grant or other grants, fees for use
permits or variances; interest or other finance charges; land
costs; legal fees and costs and court costs, deed preparation
costs, operating and maintenance costs, patent search fees;
repair costs; service contracts, costs for supplemental heating
equipment used with, or in addition to, solar collectors; any
amount that is not an actual cost or monetary outlay, including
but not limited to, unpaid costs of equipment or materials, and
unpaid labor, including the taxpayer's labor. For purposes of
this credit, there shall be deducted from the cost to purchase
and install a solar energy system any amount of federal tax
credit that has offset, or will offset, the taxpayer's federal
income tax liability or a portion thereof, that is based upon, or
calculated from, the cost to purchase or the cost to install the
solar energy system, or both the cost to purchase and the cost
to install the solar energy system.
(2) "Nonresident individual" means a natural person who is
not a resident.
(3) "Placed in service" means that condition and
circumstance in which a solar energy system is ready and
available to produce useable energy, with all solar energy
equipment, apparatus, components, connections and installations
having been fully completed.
(4) "Residence" means the dwelling place of a natural
person, owned or rented by that person, used as that person's
primary abode, and not held out for rent or other income
generating activity by that person.
(5) "Resident" means (A) a natural person, distinct from
legally recognized "persons" such as a corporation, who is
domiciled in this state, and who spends in the aggregate more
than one hundred eighty-three days of the taxable year in this
state, or (B) a natural person, who is not domiciled in this
state but who maintains a permanent place of abode in this state
and who spends in the aggregate more than one hundred eighty-
three days of the taxable year in this state.
(6) "Solar energy system" means:
(A) A solar thermal system or solar photovoltaic system
which uses solar energy to generate electricity; heat or cool a
structure or provide hot water for use in the structure or to
provide solar process heat, including controls, tanks, pumps,
heat exchangers, and other equipment used directly and
exclusively for the solar energy system.
(B) The term "solar energy system" does not include land or
structural elements of the building, such as walls, roofs, or
other equipment or structures ordinarily contained in the
structure, or a swimming pool, hot tub or any other energy
storage medium that has a function other than energy storage; or
a system which derives less than fifty percent of its energy to
heat or cool from the sun.
(7) "Taxpayer" means a natural person who is subject to the
West Virginia personal income tax imposed in article twenty-one
of this chapter.
§11-13Z-3. Amount of credit.
Any taxpayer who purchases and installs, or who purchases
and causes to be installed through a contractor, a solar energy
system on property located in this state within or on property
owned and used by the taxpayer as the taxpayer's personal
residence, on or after July 1, 2009, shall be allowed a credit
against the taxes imposed in article twenty-one of this chapter
in an amount equal to thirty percent of the cost to purchase and
install a solar energy system up to a maximum amount of $2,000.
§11-13Z-4. Application of credit.
(a) The credit provided in this article shall be applied
against the tax imposed by article twenty-one of this chapter and
shall be credited against the taxpayer's tax liability as
follows:
(1) The tax credit authorized in this article shall be
applied against the taxpayer's tax liability imposed by article
twenty-one of this chapter, for the first tax year during which
the solar energy system is first place in service and;
(2) Remaining credit, if any, may be carried forward, until
used up, or until the end of the four year carry forward period,
whichever comes first. Credit carried forward after the first tax year during which the solar energy system is first placed in
service shall be applied against the taxpayer's tax liability
imposed by article twenty-one of this chapter, for a carry
forward period not exceeding the four consecutive tax years
immediately succeeding the end of the first tax year when the
solar energy system is first place in service, for a total
maximum credit application period of five consecutive years. The
credit may not be carried forward beyond those five tax years,
and may not be carried back to prior taxable years;
(3) Any tax credit remaining after the fifth tax year is
forfeited.
(b) Application of the credit authorized by this article, by
itself, or in combination with all other applicable tax credits,
exemptions and deductions shall in no event reduce the tax
liability of the taxpayer below zero, and shall in no
circumstances be applied as a refundable tax credit, or result in
a refundable tax credit.
§11-13Z-5. Burden of proof; application required; failure to
make timely application.
(a) The burden of proof is on the taxpayer to establish by
clear and convincing evidence that the taxpayer is entitled to
the benefits allowed by this article.
(b) Application for credit required:
(1) Application required. -- Notwithstanding any provision
of this article to the contrary, no credit is allowed or may be
applied under this article for any cost to purchase and install a
solar energy system until the person asserting a claim for the
allowance of credit under this article makes written application
to the Tax Commissioner for allowance of credit as provided in
this article. An application for credit shall be filed, in the
form prescribed by the Tax Commissioner, no later than the last
day for filing the tax returns, determined by including any
authorized extension of time for filing the return, required
under article twenty-one of this chapter for the taxable year in
which the solar energy system to which the credit relates is
placed in service, and all information required by the form shall
be provided.
(2) Failure to make timely application. -- The failure to
timely apply for the credit results in the forfeiture of fifty
percent of the total credit otherwise allowable under this
article.
§11-13Z-6. Eligibility for credit.
(a) The credit authorized by this section is available to
any taxpayer, as defined in this article, who installs or causes
to be installed a solar energy system as defined in this article,
on property located in this state and owned by the taxpayer and
used and occupied as a residence by the taxpayer for at least one
hundred eighty-three days during a taxable year beginning on or
after January 1, 2009.
(b) The credit authorized by this section is available for qualified taxpayers and qualified solar energy systems
notwithstanding the availability and application of any federal
tax credits for solar energy systems: Provided, That the credit
authorized by this article shall not be available for any portion
of the purchase cost or installation cost of the solar energy
system that is funded by a federal grant or a state grant or any
other grant source.
(c) The credit authorized by this article shall not be
available to a taxpayer who purchases the solar energy system
from a person whose relationship to the taxpayer would result in
the disallowance of deductions under 26 U.S.C. §267 or §707 or
§707(b) of the United States Internal Revenue Code of 1986, as
amended.
§11-13Z-7. Recapture Of credit; recapture tax imposed, rules.
(a) When recapture tax applies. -- A qualified taxpayer who
purchases and installs a solar energy system for use in a
residential property who has applied for and received the tax
credit provided in this article, and who disposes of such
residential property in either the first tax year during which
the solar energy system is first placed in service or the next
immediately succeeding tax year, shall be subject to the
recapture tax imposed by subsection (b) of this section.
(b) Recapture tax imposed. --
(1) Full recapture. -- If the qualified taxpayer disposes
of the residential property for which the solar energy system was
installed in either the first tax year during which the solar
energy system is first place in service or the next immediately
succeeding tax year, and has applied for and received the credit
provided in this article, the taxpayer shall be subject to full
recapture of the credit. The amount of tax due under this
subdivision shall be an amount equal to the full amount of credit
received by the taxpayer for the purchase and installation of the
solar energy system.
(2) Payment of recapture tax. -- The amount of tax
recaptured under this section is due and payable on the day the
taxpayer's annual return, under article twenty-one of this
chapter, is due for the taxable year in which this section
applies.
(c) Rules. -- The Tax Commissioner may promulgate such
rules as may be useful or necessary to carry out the purposes of
this article and to implement the intent of the Legislature.
Rules shall be promulgated in accordance with the provisions of
article three, chapter twenty-nine-a of this code.
§11-13Z-8. Credit exclusion.
Any taxpayer that has taken the credits authorized by
section eight-a or eight-g, article twenty-one of this chapter
based on installation or purchase of a solar energy system is not
eligible for application of the credit authorized by this article
for installation or purchase of the same solar energy system or
any part thereof.
§11-13Z-9. Credit is nontransferable.
Taxpayers eligible for the credit provided in this article
may not sell, assign or otherwise transfer their credit to
another taxpayer. No tax credit shall be allowed under this
article to grantees, lessees, transferees, or successor owners of
residential property in which a solar energy system has been
installed or placed in service by any grantor, lessor, transferor
or predecessor owner of such property, or for which tax credit
has been authorized pursuant to this article for any grantor,
lessor, transferor or predecessor owner of such property. No
credit may be authorized under this article for a speculative
builder of residential property in which a solar energy system
has been installed or placed in service, or for any person who
purchases from a speculative builder, residential property in
which a solar energy system has been installed or placed in
service by the speculative builder.
§11-13z-10. Tax credit review and accountability.
(a) Beginning on February 1, 2013, and every third year
thereafter, the Tax Commissioner shall submit to the Governor,
the President of the Senate and the Speaker of the House of
Delegates a tax credit review and accountability report
evaluating the cost of the credit set forth in this article,
during the most recent three-year period for which information is
available. The criteria to be evaluated shall include, but not
be limited to, for each year of the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The cost of the credit;
(b) Taxpayers claiming the credit shall provide any
information the Tax Commissioner may require to prepare the
report. The information provided shall not be subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter because the information
relates to individual taxpayers for whom personal tax information
confidentiality would be compromised by disclosure of personal
tax credit information.
§11-13Z-11. Credit termination.
No taxpayer shall be entitled to take any credit pursuant to
this article for a solar energy system placed in service on or
after July 1, 2013.
NOTE: The purpose of this bill is to clarify application of,
and limitations on, the tax credit against West Virginia state
personal income tax for qualified purchases and installation of
solar energy systems by qualified taxpayers.
§11-13Z-1, §11-13Z-2 and §11-13Z-3 have been completely
rewritten; therefore strike-throughs and underscoring have been
omitted from those sections.
§§11-13Z-4, 11-13Z-5, 11-13Z-6, 11-13Z-7 11-13Z-8, 11-13Z-9,
11-13Z-10 and 11-13Z-11 are new; therefore, strike-throughs and
underscoring have been omitted from those sections.