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FISCAL NOTE
2023 REGULAR SESSION
Introduced
House Bill 3403
By Delegates Howell, Fehrenbacher, Martin, Young, Criss, Miller, and Storch
[Introduced February 13, 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 section, designated §11-21-98; and to amend said code by adding thereto a new section, designated §11-24-45, all relating to providing a tax credit against the state corporate net income tax and the state personal income tax for expenditures related to the operation of existing employer-provided or sponsored childcare facilities; defining terms; providing for rulemaking; setting the amount of the credit; providing for limitation of the credit; providing for transferrable credit available to non-profit corporations; and providing for a recapture process.
Be it enacted by the Legislature of West Virginia:
(a) Definitions -- As used in this section, the term:
(1) "Commissioner" or "Tax Commissioner" are used interchangeably herein and mean the Tax Commissioner of the State of West Virginia, or his or her delegate;
(2) "Cost of operation" means reasonable direct operational costs incurred by an employer as a result of providing employer provided or employer sponsored childcare facilities: Provided, That the term cost of operation shall exclude the cost of any property that is qualified childcare property.
(3) "Department" or "Tax Department" means the West Virginia State Tax Department.
(4) "Employer" means any employer upon whom an income tax is imposed by this article.
(5) "Employer provided" refers to childcare offered on the premises of the employer.
(6) "Premises of the employer" refers to any location within the State of West Virginia and located on the workplace premises of the employer providing the child care or one of the employers providing the child care in the event that the childcare property is owned jointly or severally by the taxpayer and one or more unaffiliated employers: Provided, That if such workplace premises are impracticable or otherwise unsuitable for the on-site location of such childcare facility, as determined by the commissioner, such facility may be located within a reasonable distance of the premises of the employer.
(7) "Qualified childcare property" means all real property, other than land, and tangible personal property for use exclusively in the improvement or operation of an employer provided childcare facility, but only if:
(A) The children who use the facility are primarily children of employees of:
(i) The taxpayer and other employers in the event that the childcare property is owned jointly or severally by the taxpayer and one or more employers; or
(ii) A corporation that is a member of the taxpayer’s "affiliated group" within the meaning of section 1504(a) of the Internal Revenue Code; and
(B) The taxpayer does not qualify for, or claim, any tax credit for the cost of operation for such qualified childcare property described in § 11-21-97 or § 11-24-44 of this code.
Qualified childcare property includes, but is not limited to, amounts expended on improvements, furniture, fixtures, and equipment directly related to the operation of childcare property as defined in this section.
(b) Credit for operating existing childcare facility. — A taxpayer who operates an existing childcare facility shall be allowed a credit against the tax imposed under this article. The aggregate amount of the credit shall equal 100 percent of the total amount expended by a taxpayer during a taxable year for the operation of an existing, qualified childcare facility less any amounts paid for by employees during a taxable year. In the case of a qualified childcare property jointly owned by two or more unaffiliated employers, each employer’s credit is limited to that employer’s respective contribution to the cost of operating the qualified childcare facility.
(c) Limitations on Existing Childcare Facility Credit. — The tax credit allowable under subsection (b) of this section shall be subject to the following conditions and limitations:
(1) Such credit shall when combined with the credit allowed under subsection (b) of this section shall not exceed 100 percent of the amount of the taxpayer's income tax liability for the taxable year as determined without regard to any other credits;
(2) Any such credit claimed but not used in any taxable year may be carried forward for five years from the close of the taxable year in which the cost of operation was incurred; and
(3) The employer shall certify to the department the names of the employees, the name of the childcare provider, and such other information as may be required by the department to ensure that credits are granted only to employers who provide or sponsor approved childcare pursuant to this section.
(e) Rules. — The Tax Commissioner may promulgate such interpretive, legislative and procedural rules as the commissioner deems to be useful or necessary to carry out the purpose of this section and to implement the intent of the Legislature. The Tax Commissioner may promulgate emergency rules pursuant to the provisions of §29A-3-15 of this code.
(a) Definitions -- As used in this section, the term:
(1) "Commissioner" or "Tax Commissioner" are used interchangeably herein and mean the Tax Commissioner of the State of West Virginia, or his or her delegate;
(2) "Cost of operation" means reasonable direct operational costs incurred by an employer as a result of providing employer provided or employer sponsored childcare facilities: Provided, That the term cost of operation shall exclude the cost of any property that is qualified child care property.
(3) "Department" or "Tax Department" means the West Virginia State Tax Department.
(4) "Employer" means any employer upon whom an income tax is imposed by this article.
(5) "Employer provided" refers to childcare offered on the premises of the employer.
(6) "Premises of the employer" refers to any location within the State of West Virginia and located on the workplace premises of the employer providing the child care or one of the employers providing the childcare are in the event that the childcare property is owned jointly or severally by the taxpayer and one or more unaffiliated employers: Provided, That if such workplace premises are impracticable or otherwise unsuitable for the on-site location of such childcare facility, as determined by the commissioner, such facility may be located within a reasonable distance of the premises of the employer.
(7) "Qualified child care property" means all real property, other than land, and tangible personal property for use exclusively in the improvement or operation of an employer provided childcare facility, but only if:
(A) The children who use the facility are primarily children of employees of:
(i) The taxpayer and other employers in the event that the childcare property is owned jointly or severally by the taxpayer and one or more employers; or
(ii) A corporation that is a member of the taxpayer’s "affiliated group" within the meaning of section 1504(a) of the Internal Revenue Code; and
(B) The taxpayer does not qualify for, or claim, any tax credit for the cost of operation for such qualified childcare property described in § 11-21-97 or § 11-24-44 of this code.
Qualified childcare property includes, but is not limited to, amounts expended on improvements, furniture, fixtures, and equipment directly related to the operation of child care property as defined in this section.
(b) Credit for operating existing childcare facility. — A taxpayer who operates an existing childcare facility shall be allowed a credit against the tax imposed under this article. The aggregate amount of the credit shall equal 100 percent of the total amount expended by a taxpayer during a taxable year for the operation of an existing, qualified childcare facility less any amounts paid for by employees during a taxable year. In the case of a qualified childcare property jointly owned by two or more unaffiliated employers, each employer’s credit is limited to that employer’s respective contribution to the cost of operating the qualified childcare facility.
(c) Limitations on Existing Childcare Facility Credit. — The tax credit allowable under subsection (b) of this section shall be subject to the following conditions and limitations:
(1) Such credit shall when combined with the credit allowed under subsection (b) of this section shall not exceed 100 percent of the amount of the taxpayer's income tax liability for the taxable year as determined without regard to any other credits;
(2) Any such credit claimed but not used in any taxable year may be carried forward for five years from the close of the taxable year in which the cost of operation was incurred; and
(3) The employer shall certify to the department the names of the employees, the name of the childcare provider, and such other information as may be required by the department to ensure that credits are granted only to employers who provide or sponsor approved childcare pursuant to this section.
(d) Transferrable credit available to non-profit corporations. — In the case of nonprofit corporations organized under Internal Revenue Code §501(c)(3) or §501(c)(6), which are exempt from tax under this article pursuant to §11-24-5 of this code, a credit in the amount calculated under the provisions of this section shall be available as a transferrable credit that may be transferred, sold, or assigned to any other taxpayer to be applied against the tax owed under this article. Pursuant to rules promulgated by the Tax Department, a nonprofit corporation applicant shall provide a schedule to the Tax Department with all information required under §11-24-44(c)(3) of this code. The Tax Department shall within 90 days certify the amount of transferrable credit available to be transferred, sold, or assigned to another taxpayer. Any transferee, purchaser, or assignee of nonprofit corporation credits certified to a nonprofit corporation under this section takes the transferred, purchased, or assigned credits subject to any limitations placed on the amount of credit taken in a given year by §11-24-45(b) and §11-24-45(c) of this code.
(e) Rules. — The Tax Commissioner may promulgate such interpretive, legislative and procedural rules as the commissioner deems to be useful or necessary to carry out the purpose of this section and to implement the intent of the Legislature. The Tax Commissioner may promulgate emergency rules pursuant to the provisions of §29A-3-15 of this code.
NOTE: The purpose of this bill is to provide a tax credit against the state corporate net income tax and the state personal income tax for expenditures related to the operation of existing employer-provided or sponsored childcare facilities.
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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