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FISCAL NOTE
2023 REGULAR SESSION
Introduced
House Bill 3209
By Delegates Westfall and Skaff
[By Request of the Auditor's Office]
[Introduced February 02, 2023; Referred to the Committee on Economic Development and Tourism then Finance
A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §11-13MM-1, §11-13MM-2, §11-13MM-3, §11-13MM-4, §11-13MM-5, and §11-13MM-6, all relating to creating the Rehabilitation of Blighted Properties Tax Credit Act; providing for a credit against state corporate net income taxes and personal income taxes; providing for carryback and carryforward of certain tax credits; providing for the allowance of certain tax credits in specific taxable years; providing for the application of certain tax credits; providing definitions; and authorizing rulemaking.
Be it enacted by the Legislature of West Virginia:
Tax Credit. A credit against the tax imposed by the provisions of §11-24-1 et seq. and §11-21-1 et seq. of this code shall be allowed as follows:
Rehabilitation of Blighted Properties. — For blighted property, the credit is equal to 100 percent of blighted property rehabilitation and improvement expenditures: Provided, 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 blighted property when the applicant begins to claim the credit and throughout the time period within which the credit is claimed. This credit is available for both residential and nonresidential buildings located in this state that are blighted property.
Any unused portion of the credit for blighted property rehabilitation and improvement expenditures authorized by section one of this article which may not be taken in the taxable year to which the credit applies shall qualify for carryback and carryforward treatment: Provided, That the amount of such credit taken in a taxable year shall in no event exceed the tax liability due for the taxable year: Provided, however, That any unused portion of the credit authorized by section one of this article may be carried over to each of the next five tax years following the first tax year for which the credit entitlement is authorized under this article for a specific blighted property rehabilitation and improvement expenditure until used to exhaustion or forfeited due to lapse of time.
Subject to the provisions of section three of this article, the credit authorized in section one of this article, for a specific blighted property rehabilitation and improvement expenditure made by a taxpayer in any taxable year beginning on the January 1, 2024, and thereafter, shall be allowed against the tax imposed by this article in the applicable taxable year. The tax commissioner shall require disclosure of information regarding the credits allowed in section one of this article in accordance with the provisions of section five-s, article ten of this chapter.
The credits granted, pursuant to section one of this article, to an electing small business corporation (S corporation), limited partnership, general partnership, limited liability company or multiple owners of property shall be passed through to the shareholders, partners, members or owners, either pro rata or pursuant to an agreement among the shareholders, partners, members or owners documenting an alternative distribution method. Taxpayers eligible for the credits may transfer, sell or assign the credits.
As used in this code article, the term:
(1) "Blighted property" means a tract or parcel of real property located in West Virginia that, by reason of abandonment, dilapidation, deterioration, age or obsolescence, inadequate provisions for ventilation, light, air or sanitation, high density of population and overcrowding, deterioration of site or other improvements, or the existence of conditions that endanger life or property by fire or other causes, or any combination of such factors, is detrimental to the public health, safety, or welfare.
(2) "Blighted property rehabilitation and improvement expenditure" means a reasonable direct cost incurred by a taxpayer for the demolition, restoration or improvement of a blighted property that is reasonably anticipated to increase the fair market value of the blighted property and to cause the property to no longer qualify as blighted property: Provided, That the term Blighted property rehabilitation and improvement expenditure does not include acquisition costs of a blighted property, including interest incurred on indebtedness that is attributable to the acquisition, enlargement costs of a blighted property where the total volume of the building is increased, or costs attributed to work done to facilities related to the building (for example, sidewalks and parking lots).
(a) The Tax Commissioner shall propose rules for legislative approval in accordance with the provisions of §29A-3-1 et seq. of this code as may be necessary to carry out the purpose of this article.
(b) The Tax Commissioner may create forms and require the submission of documentation from any taxpayer who claims entitlement to the credit authorized by this article in order to verify such entitlement.
NOTE: The purpose of this bill is to provide tax credits to incentivize investments and improvements in blighted properties in West Virginia.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
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