H. B. 3232
(By Delegates Michael, Kominar,
Craig, Pino and Proudfoot)
[Introduced March 25, 2005; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-21-30 of the Code of West Virginia,
1931, as amended, relating to personal income tax; and making
a technical change in the computation of tax for nonresidents
and part-year residents.
Be it enacted by the Legislature of West Virginia:
That §11-21-30 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-30. Computation of tax on income of nonresidents and
part-year residents.
(a)
Computation of tax. -- For taxable years beginning after
the thirty-first day of December, one thousand nine hundred
ninety-one, the tax due under this article on taxable income
derived from sources in this state by a nonresident individual,
estate, or trust or by a part-year resident individual shall be calculated as provided in this section.
(1) Taxpayer shall first calculate tax liability under this
article as if taxpayer, whether an individual, estate or trust,
were a resident of this state for the entire taxable year. When
determining tentative tax liability under this subdivision, a
nonresident shall be allowed the same deductions, exemptions and
credits that would be allowable if taxpayer were a resident
individual, estate or trust, as the case may be, for the entire
taxable year, except that no credit shall be allowed under section
twenty of this article.
(2) The amount of tentative tax determined under subdivision
(1) of this subsection shall then be multiplied by a fraction the
numerator of which is the taxpayer's West Virginia source income,
determined in accordance with Part III of this article for the
taxable year, and the denominator of which is such taxpayer's
"
federal West Virginia adjusted gross income" for the taxable year
as defined in section nine of this article.
(b)
Special rules for estates and trusts. -- For purposes of
subdivision (1) of subsection (a):
(1) The "federal adjusted gross income" of an estate or trust
shall be determined as if such estate or trust were an individual;
and
(2) In the case of a trust, "federal adjusted gross income"
shall be its "federal adjusted gross income" for the taxable year increased by the amount of any includible gain, reduced by any
deductions properly allocable thereto, upon which the tax is
imposed for the taxable year pursuant to section 644 of the
Internal Revenue Code.
(c)
Special rules for part-year residents. --
(1) For purposes of subdivision (1) of subsection (a), the
"federal adjusted gross income" of a part-year resident individual
shall be taxpayer's federal adjusted gross income for the taxable
year, as defined in section nine of this article, increased or
decreased, as the case may be, by the items accrued under
subdivision (1), subsection (b), section forty-five of this
article, to the extent such items are not otherwise included in
federal adjusted gross income for the taxable year, and decreased
or increased, as the case may be by the items accrued under
subdivision (2), subsection (b) of said section forty-five, to the
extent such items are included in federal adjusted gross income for
the taxable year; and
(2) In computing the tax due as if taxpayer were a resident of
this state for the entire tax year, West Virginia adjusted gross
income shall include the accruals specified in subdivision (1) of
this subsection (c), with the applicable modifications described in
section forty-five of this article.
(d)
Definitions.
(1) "Nonresident estate" means an estate of a decedent who was not a resident of this state at the time of his or her death.
(2) "Nonresident trust" means a trust which is not a resident
trust, as defined in section seven.
(3) "Part-year resident individual" means an individual who is
not a resident or nonresident of this state for the entire taxable
year.
(e)
Effective date. --
(1) The provisions of this section
shall apply to taxable years beginning after the thirty-first day
of December, one thousand nine hundred ninety-one. As to taxable
years beginning prior to that date, the provisions of this article
as then in effect shall apply and be controlling, and for that
purpose, prior law is fully and completely preserved.
(2) The amendments to this section enacted in the first
regular session of the Legislature in two thousand five are
effective for tax years beginning on or after the first day of
January, two thousand five.
NOTE: The purpose of this bill is to make a technical change
in the computation of personal income tax on income of nonresidents
and part-year residents. Currently, tentative tax is multiplied by
a fraction - West Virginia source income divided by federal
adjusted gross income (AGI). Using federal AGI in the denominator
causes an unreasonable tax liability for some taxpayers who have
modifications to their federal AGI. The bill changes the
denominator of the fraction from federal AGI to West Virginia AGI,
which is federal AGI after the modifications required by W. Va.
Code §11-21-12 are made. This change will reduce the tax liability
of nonresident and part-year residents who have income from sources
not included in their federal AGI but included in their West
Virginia AGI.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would
be added.