WEST virginia legislature

2017 regular session

Introduced

Senate Bill 335

By Senators Karnes, Carmichael (Mr. President), Mullins, Maynard, Weld, Clements, Ferns, Cline, Smith, Sypolt, Azinger, Swope, Blair, Gaunch, Takubo, Boso, Mann and Trump

[Introduced February 16, 2017; Referred
to the Select Committee on Tax Reform; and then to the Committee on Finance]

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new section, designated §11-13A-26; to amend said code by adding thereto a new section, designated §11-15-34; to amend said code by adding thereto a new section, designated §11-15A-30; to amend said code by adding thereto a new article, designated §11-15C-1, §11-15C-2, §11-15C-3, §11-15C-4, §11-15C-5, §11-15C-6, §11-15C-7, §11-15C-8, §11-15C-9, §11-15C-10, §11-15C-11, §11-15C-12, §11-15C-13, §11-15C-14, §11-15C-15, §11-15C-16, §11-15C-17, §11-15C-18, §11-15C-19,  §11-15C-20, §11-15C-21,  §11-15C-22, §11-15C-23, §11-15C-24, §11-15C-25, §11-15C-26 and §11-15C-27; to amend said code by adding thereto a new section, designated §11-21-97; to amend said code by adding thereto a new article, designated §11-21A-1, §11-21A-2, §11-21A-3, §11-21A-4, §11-21A-5, §11-21A-6 and §11-21A-7; and to amend and reenact §11-24-4 of said code, all relating generally to the prospective repeal of the consumers sales and service tax and of the use tax; repealing personal income tax and the phase out and repeal of corporation net income tax and to the enactment of the general consumption tax law and of the temporary single rate income tax; making findings; defining terms; imposing the tax; authorizing exemptions; providing compliance procedures; and establishing an effective date with respect thereto.

Be it enacted by the Legislature of West Virginia:

That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new section, designated §11-13A-26; that said code be amended by adding thereto a new section, designated §11-15-34; that said code be amended by adding thereto a new section, designated §11-15A-30; that said code be amended by adding thereto a new article, designated §11-15C-1, §11-15C-2, §11-15C-3, §11-15C-4, §11-15C-5, §11-15C-6, §11-15C-7, §11-15C-8, §11-15C-9, §11-15C-10, §11-15C-11, §11-15C-12, §11-15C-13, §11-15C-14, §11-15C-15, §11-15C-16, §11-15C-17, §11-15C-18, §11-15C-19, §11-15C-20, §11-15C-21, §11-15C-22, §11-15C-23, §11-15C-24, §11-15C-25, §11-15C-26 and §11-15C-27; that said code be amended by adding thereto a new section, designated §11-21-97; that said code be amended by adding thereto a new article, designated §11-21A-1, §11-21A-2, §11-21A-3, §11-21A-4, §11-21A-5, §11-21A-6 and §11-21A-7; and that §11-24-4 of said code be amended and reenacted, all to read as follows:

                                       CHAPTER 11.  TAXATION.

ARTICLE 13A.   sEVERANCE AND bUSINESS PRIVILEGE TAX.

§11-13A-26.  Contingent Reduction of Tax Rate.

Notwithstanding anything contained in this article to the contrary, for all tax periods beginning on and after January 1, 2018, the tax imposed in this article at the rate of five percent, shall be reduced by one percentage point for each of two successive years:  Provided, That as a condition precedent to each such reduction in any tax year, the rate of the corporation net income tax imposed pursuant to article twenty-four of this chapter, for the tax year immediately preceding such year, shall be zero percent. 

ARTICLE 15.  CONSUMERS SALES AND SERVICE TAX.

§11-15-34. Prospective termination of tax, preservation for prior periods.

Each and every provision of this article is repealed for all tax periods beginning on July 1, 2017: Provided, That tax liabilities, if any, arising for taxable periods prior to July 1, 2017, shall be determined, administered, assessed and collected as if the taxes imposed by this article had not been repealed; and the rights and duties of taxpayers and the state shall be fully and completely preserved.

ARTICLE 15A.  USE TAX.

§11-15A-30. Prospective termination of tax, preservation for prior periods.

Each and every provision of this article is repealed for all tax periods beginning on July 1, 2017: Provided, That tax liabilities, if any, arising for taxable periods prior to July 1, 2017, shall be determined, administered, assessed and collected as if the taxes imposed by this article had not been repealed; and the rights and duties of taxpayers and the state shall be fully and completely preserved.

ARTICLE 15C. GENERAL CONSUMPTION TAX.

§11-15C-1. Short title.

This article is known and may be cited as the “General Consumption Tax Law.”

§11-15C-2. Legislative findings and declaration of purpose.

The Legislature finds that all vendors, purchasers and other persons, regardless of their means, benefit from the availability of goods and services in the marketplaces of this state and from the use of goods and services in this state. The Legislature further finds that the functions of state government foster and protect those marketplaces and uses, and as a result, all vendors, purchasers and other persons who avail themselves of those benefits should provide financial support for those functions of state government through a broad-based tax in the form of a general consumption tax on the selling, purchasing and using of goods and services in this state.

The Legislature further finds it to be imminently fair that, with few exceptions, the financial support which each vendor and each other person would provide for the functions of state government through such a tax should be measured by the extent to which they participate in the marketplaces or acquire such goods and services for use. Thus, the Legislature further finds that, in the free enterprise system, the best judge of a purchaser’s ability to pay, for the purchase of goods and services, is the purchaser, and, thus a broad-based consumption tax is firmly based on that principle of sound and fair taxation. The Legislature further finds that such a tax may readily be structured to enhance the economic competitiveness of the state’s economy among the economies of other states and nations.

The Legislature further finds that the only exceptions to such a broad-based general consumption tax should be those which mitigate its potential either for pyramiding tax incidences or for complicating its administration with respect to governmental purchases, purchases for charitable, educational and public safety purposes that relieve the burdens of government and purchases of goods and services by individuals for health care which are predominately paid or reimbursed by third parties - including the government.

Finally, the Legislature finds that the general consumption tax imposed by this article shall also be administered and collected in accordance with the provisions of article fifteen-B of this chapter.

The Legislature does therefore declare that the purpose of this article shall be to impose the general consumption tax for the privilege of selling, purchasing and using goods and services in this state, and it shall be construed so as to give effect to the findings in this section.

§11-15C-3. Definitions of terms.

When used in this article, the words defined in this section have the meanings ascribed to them herein, except in those instances where a different meaning is provided in this article or the context in which the word is used clearly indicates a different meaning is intended by the Legislature.

(a) Agricultural production. – The term “agricultural production” means the production of food, fiber and woodland products by means of cultivation, tillage of the soil and the conduct of animal, livestock, dairy, apiary, equine or poultry husbandry, horticulture, or any other plant or animal production and all farm practices usually or incidentally related thereto, including the storage, packing, shipping and marketing, but not including any manufacturing, milling or processing of such products by persons other than the original producer thereof.

(b) Business. – The term “business” includes all activities engaged in or caused to be engaged in with the object of gain or economic benefit, direct or indirect, and all activities of the state and its political subdivisions which involve sales of tangible personal property or the rendering of services when those sales or services compete with or may compete with the activities of other nongovernmental persons.

(c) Delegate. – The term “delegate” in the phrase “his or her delegate,” when used in reference to the tax commissioner, means any officer or employee of the state tax division of the department of tax and revenue duly authorized by the tax commissioner directly, or indirectly by one or more redelegations of authority, to perform functions mentioned or described in this article or regulations promulgated thereunder.

(d) Directly used or consumed. –

(1) General. – The term “directly used or consumed” in the activities of manufacturing, natural resource production and agricultural production means used or consumed in those activities or operations which constitute an integral and essential part of one of those activities, as contrasted with and distinguished from those activities or operations which are simply incidental, convenient or remote to one of those activities.

(2) Uses of tangible or intangible property which constitute direct use or consumption of the property in the activities of manufacturing, natural resource production or agricultural production includes only uses for the immediate purpose of:

(A) Physical incorporation of property into a finished product resulting from manufacturing, natural resource production or agricultural production;

(B) Causing a direct physical, chemical or other change upon property undergoing manufacturing, natural resource production or agricultural production;

(C) Transporting or storing property undergoing manufacturing, natural resource production or agricultural production;

(D) Measuring or verifying a change in property directly used in manufacturing, natural resource production or agricultural production;

(E) Physically controlling or directing the physical movement or operation of property directly used in manufacturing, natural resource production or agricultural production;

(F)  Directly and physically recording the flow of property undergoing manufacturing, natural resource production or agricultural production;

(G) Producing energy for property directly used in manufacturing, natural resource production or agricultural production;

(H)  Facilitating the transmission of gas, water, steam or electricity from the point of their diversion to property directly used in manufacturing, natural resource production or agricultural production;

(I) Controlling or otherwise regulating atmospheric conditions required for manufacturing, natural resource production or agricultural production;

(J) Serving as an operating supply for property undergoing manufacturing, natural resource production or agricultural production, or for property directly used in manufacturing, natural resource production or agricultural production;

(K)  Maintenance or repair of property, including maintenance equipment, directly used in manufacturing, natural resource production or agricultural production;

(L) Storage, removal or transportation of economic waste resulting from the activities of manufacturing, natural resource production or agricultural production;

(M) Pollution control or environmental quality or protection activity directly relating to the activities of manufacturing, natural resource production or agricultural production and personnel, plant, product or community safety or security activity directly relating to the activities of manufacturing, natural resource production or agricultural production; or

(N) Otherwise used as an integral and essential part of manufacturing, natural resource production or agricultural production.

(3) Uses of tangible or intangible property which do not constitute direct use or consumption in the activities of manufacturing, natural resource production or agricultural production include, but are not limited to:

(A) Heating and illumination of office buildings;

(B) Janitorial or general cleaning activities;

(C) Personal comfort of personnel;

(D) Production planning, scheduling of work or inventory control;

(E) Marketing, general management, supervision, finance, training, accounting and administration; or

(F) An activity or function merely incidental or convenient to manufacturing, natural resource production or agricultural production, rather than uses which are an integral and essential part of those production activities.

(e) Generation or production of electric power. – The term “generation of electric power” means the generation and production of electric power engaged in by persons who were subject to the business and occupation tax imposed in article thirteen of this chapter.

(f) Gross proceeds. – The term “gross proceeds” means the amount received in money, credits, property or other consideration from sales and services within this state, without deduction on account of the cost of property sold, amounts paid for interest or discounts or other expenses whatsoever. Losses may not be deducted, but any credit or refund made for goods returned may be deducted.

(g) Includes and including. - The terms “includes” and “including,” when used in a definition contained in this article, does not exclude other things within the meaning of the term being defined.

(h) Licensed health care services. – The term “licensed health care services” means those services for which a person is licensed by this state to act as a health care provider as defined in section three, article twenty-six of this chapter, as in effect on June 1, 1991.

(i) Manufacturing. –  The term “manufacturing” means a systematic operation or integrated series of systematic operations engaged in as a business or segment of a business, including the generation of electric power, which transforms or converts tangible personal property by physical, chemical or other means into a different form, composition or character from that in which it originally existed.

(j) Natural resource production. – The term  “natural resource production” means, except for oil and gas, the performance, by either the owner of the natural resources or another, of the act or process of exploring, developing, severing, extracting, reducing to possession and loading for shipment and shipment for sale, profit or commercial use of any natural resource products and any reclamation, waste disposal or environmental activities associated therewith and the construction, installation or fabrication of ventilation structures, mine shafts, slopes, boreholes, dewatering structures, including associated facilities and apparatus, by the producer or others, including contractors and subcontractors, at a coal mine or coal production facility. For the natural resources oil and gas, “natural resource production” means the performance, by either the owner of the natural resources, a contractor or a subcontractor, of the act or process of exploring, developing, drilling, well-stimulation activities such as logging, perforating or fracturing, well-completion activities such as the installation of the casing, tubing and other machinery and equipment and any reclamation, waste disposal or environmental activities associated therewith, including the installation of the gathering system or other pipeline to transport the oil and gas produced or environmental activities associated therewith and any service work performed on the well or well site after production of the well has initially commenced. All work performed to install or maintain facilities up to the point of sale for severance tax purposes would be included in the term “natural resources production” and subject to the direct use concept. “Natural resource production” includes the performance or furnishing of work, or materials or work, in fulfillment of a contract for the construction, alteration, repair, decoration or improvement of a new or existing building or structure, or any part thereof, or for the alteration, improvement or development of real property, by persons other than those otherwise directly engaged in the activities specifically set forth in this subsection as “natural resource production.”

(k) Person or persons. – The terms “person” and “persons” means any individual, firm, partnership, joint venture, joint stock company, association, public or private corporation, cooperative, estate, trust, receiver, executor, administrator, other fiduciary, court-appointed representative, state or its political subdivisions or agency of either, or any group or combination of the same acting as a unit, and the plural as well as the singular number.

(l) Personal service. – The term “personal service” means that labor or work of an individual person compensated by the payment of wage in the ordinary course of employment.

(m) Prepaid wireless calling service. – The term “prepaid wireless calling service” means a telecommunications service that provides the right to utilize wireless service as well as other nontelecommunications services, including the download of digital products delivered electronically, content and ancillary services, which must be paid for in advance and that is sold in predetermined units or dollars of which the number decline with use in a known amount.

(n)  Providing a public service or operating a public utility business. – The terms “providing a public service” or “operating a public utility business” mean the providing of a public service or the operating of a public utility business by persons subject to the business and occupation tax imposed in article thirteen of this chapter.          

(o)  Sale, sales or selling. – The terms “sale”, “sales” or “selling” means and includes any transfer of the possession or ownership of tangible personal property for a consideration, including a lease or rental, when the transfer or delivery is made in the ordinary course of the transferor’s business and is made to the transferee or his or her agent for consumption or use or any other purpose. Unless the context provides otherwise, the terms “sale”, “sales” and selling shall also mean the rendering of a service for a charge. Notwithstanding anything to the contrary in this code, “sale” also includes the furnishing of prepaid wireless calling services for consideration.

(p)  Service and selected service. – The terms “service” and “selected service” include all activities engaged in for other persons for a consideration, which involve the rendering of a service as distinguished from the sale of tangible personal property, but shall not include the services rendered by an employee to his or her employer.

(q)  Streamlined Sales and Use Tax Agreement. – The term “Streamlined Sales and Use Tax Agreement” or “agreement,” when used in this article, has the same meaning as when used in article fifteen-b of this chapter, except when the context, in which the word “agreement” is used, clearly indicates that a different meaning is intended by the Legislature.

(r)  Tax. – The term “tax” means the general consumption tax imposed in this article.

(s) Tax commissioner or commissioner. – The terms “tax commissioner” or “commissioner” are used interchangeably herein and mean the tax commissioner of the state of West Virginia, or his or her delegate.

(t) Taxpayer. – The term “taxpayer” means any person liable for the tax imposed by this article.

(u) Temporarily used in this state. – The phrase “temporarily used in this state” means a use made while passing through this state in a relatively uninterrupted manner and not intended with reference to any specific location within this state.

(v) Use. – The term “use” means and includes the exercise of any person of any right or power over tangible personal property incident to the ownership, possession or enjoyment of such property, or by any transaction in which possession of or the exercise of any right or power over tangible personal property is acquired for a consideration, including a lease, rental or conditional sale of tangible personal property. As used in this definition, the term “enjoyment” includes a person’s right to direct the disposition of the property, whether or not the person has possession of the property. The term “use” does not include the keeping, retaining or exercising of any right or power over tangible personal property for the purpose of subsequently transporting it outside this state for use thereafter solely outside this state. Proof that tangible personal property was sold for delivery in this state shall be prima facie evidence that such property was purchased for use in this state. With respect to services, the term “use” means and includes the direct receipt and active application of the results and benefits of services.

(w) Vendor. – The term “vendor” means any person engaged in this state in businesses of furnishing services taxed by this article or making sales of, or leasing, tangible personal property or custom software taxed by this article. “Vendor” and “seller” are used interchangeably in this article.

(x) Other terms used in this article are defined in article fifteen-b of this chapter, which definitions are incorporated by reference into this article. Additionally, other sections of this article may define terms primarily used in the section in which the term is defined.

§11-15C-4. Imposition of general consumption tax; debt owed to this state; allocation of obligations for charging, paying, collecting and remitting tax; rate of tax.

(a) Imposition of tax. – A general consumption tax is hereby imposed on the vendor for the privilege of selling tangible personal property and of rendering services in this state and on the purchaser for the privilege of using tangible personal property and services in this state. The tax due to be remitted or paid under this article shall, until fully remitted or paid, constitute a debt owed by the taxpayer to this state.

(b) Allocation of obligations for charging, paying, collecting and remitting the tax. – It is the intent of this article that the tax imposed herein shall be passed on by the vendor to, and shall be paid by, the purchaser, in accordance with the following allocation of obligations:

(1) Vendor obligations. –

(A) General. – The vendor shall charge the purchaser for the tax, shall collect the tax from the purchaser and shall remit the tax to the Tax Commissioner all as provided in this article. The tax shall be added to and constitute a part of the sales price, and shall be collectible as such by the vendor who shall account to the Tax Commissioner for all tax paid by the purchaser.

(B) Tax kept separate from gross proceeds of sale. – The vendor shall keep the amount of tax paid separate from the gross proceeds of sale exclusive of the tax unless authorized in writing by the Tax Commissioner to keep such amount of tax in a different manner. Where such authorization is given, the state’s claim shall be enforceable against and shall take precedence over all other claims against the moneys commingled.

(C) Nonresident vendors. – Every vendor engaging in business anywhere and making sales of tangible personal property for delivery into this state, or with the knowledge, directly or indirectly, that the property or services he, she or it are rendering are intended for use in this state, that are not exempted under the provisions of section seven of this article, shall at the time of making such sales or rendering such services, whether within or without the state, collect the tax imposed by this article from the purchaser, and give to the purchaser a receipt therefor in the manner and form prescribed by the Tax Commissioner, if the Tax Commissioner shall, by regulation, so prescribe.

Each such vendor shall list with the Tax Commissioner the name and address of all his, her or its agents operating in this state, and the location of any and all distribution or sales houses or offices or other places of business in this state. Any person required to collect the general consumption tax under the provisions of this subdivision shall be required to obtain a business registration certificate, as provided in article twelve of this chapter, unless the person does not have sufficient presence in this state so that such registration would violate any provision of the constitution or laws of this state or of the United States.

The Tax Commissioner may, in his or her discretion, upon application authorize the collection of the tax herein imposed by any person not engaging in business within this state, who, to the satisfaction of the Tax Commissioner, furnishes adequate security to insure collection and payment of the tax. Such person shall be issued, without charge, a permit to collect such tax in such manner, and subject to such regulations and agreements as the Tax Commissioner shall prescribe. When so authorized, it shall be the duty of such person to collect the applicable tax, if any, upon all tangible personal property and services sold to his, her or its knowledge for use within this state, in the same manner and subject to the same requirements as a vendor engaging in business within this state. Such authority and permit may be canceled when, at any time, the Tax Commissioner considers the security inadequate, or that such tax can more effectively be collected from the person using such property in this state.

(D) Failure to collect and remit. – If any vendor required to collect and remit the tax to the Tax Commissioner  fails to do so, he, she or it shall be personally liable for such amount as he, she or it failed to collect and remit: Provided, That, except where the transaction is shown to be exempt from tax under section nine of this article or is subject to the provisions of section eleven of this article, when a purchaser fails to pay the tax to the vendor, the vendor may avoid such liability by reporting to the Tax Commissioner, in writing with the return due to be filed for that same period, the fact of such failure and the purchaser’s name, address and such other information as the Tax Commissioner may require.

(E) Absorbing tax. – It shall be unlawful for any vendor to advertise or hold out or state to the public or to any purchaser, consumer or user, directly or indirectly, that the tax or any part thereof imposed by this article will be assumed or absorbed by the vendor or that it will not be added to the price of the property sold or service rendered, or if added that it or any part thereof will be refunded. The Tax Commissioner shall have the power to adopt and promulgate rules and regulations for adding such tax, or the equivalent thereof, by providing different methods applying uniformly to vendors within the same general classification for the purpose of enabling such vendors to add and collect, as far as practicable, the amount of such tax.

(2) Purchaser obligations. – Any person who uses any tangible personal property or service in this state upon which the tax imposed by this article has not been paid to a vendor or directly to the Tax Commissioner, is, unless the purchase or use of the property or service is exempt hereunder, liable for the amount of such tax. If any purchaser does not pay to the vendor the tax imposed by this section, or, in the case of a sale made exempt from the tax, a purchaser fails to present to the vendor an adequate written certification of the fact of, and basis by which,  the sale is not subject to this tax, or if the purchaser signs or presents to the vendor a false certificate, or after signing and presenting a proper certificate uses the items purchased in such manner that the sale would be subject to the tax, the purchaser shall be directly liable for the amount of tax applicable to the transaction or transactions: Provided, That nothing herein relieves any purchaser who owes the tax and who has not paid the tax from liability therefor. In such cases the Tax Commissioner may make an assessment against such purchaser, based upon any information within his or her possession or that may come into his or her possession. The assessment and notice thereof shall be made and given in accordance with the provisions of article ten of this chapter.

(3) Joint and separate liability. –  Unless and until the tax due has been remitted by the vendor or paid by the purchaser to the Tax Commissioner, both the vendor and the purchaser shall remain liable for the tax except as otherwise provided in this article: Provided, That the tax shall only be collected once by the Tax Commissioner.

(c) Rate of tax. –  Beginning on the effective date of this article, the general consumption tax imposed herein shall be at the rate of eight cents on each dollar of sales or services: Provided, That:

(1) Sales or use of motor vehicles shall be taxable at the rates provided in section five of this article, and

(2) Sales of gasoline and special fuel shall be taxable as provided in section twenty-one of this article.

(d) Calculation of tax on fractional parts of a dollar. -- The tax computation under subsection (c) of this section shall be carried to the third decimal place, and the tax rounded up to the next whole cent whenever the third decimal place is greater than four and rounded down to the lower whole cent whenever the third decimal place is four or less. The vendor may elect to compute the tax due on a transaction on a per item basis or on an invoice basis provided the method used is consistently used during the reporting period.

(e) Separate transactions aggregated for billing; coin-operated vending devices. –  Separate sales, such as daily or weekly deliveries, shall not be aggregated for the purpose of computation of the tax even though such sales are aggregated in the billing or payment therefor. Notwithstanding any other provision, coin-operated amusement and vending machine sales shall be aggregated for the purpose of computation of this tax.

§11-15C-5. Imposition of general consumption tax on motor vehicle sales; rate of tax; use of motor vehicle purchased out-of-state; definition of sale; definition of motor vehicle; exemptions; collection of tax by Division of Motor Vehicles; dedication of tax to highways; legislative and emergency rules.

(a) Notwithstanding any provision of this article, all motor vehicle sales to West Virginia residents shall be subject to the general consumption tax imposed by this article.

(b) Rate of tax on motor vehicles. – Notwithstanding any provision of this article to the contrary, the rate of tax on the sale and use of a motor vehicle shall be eight percent on the first $10.000 of its sale price, as defined in section two, article fifteen-b of this chapter, and six percent on any part of its sales price, so defined, in excess of $10,000: Provided, That so much of the sale price or consideration as is represented by the exchange of other vehicles on which the tax imposed by this section or section four, article three, chapter seventeen-a of this code has been paid by the purchaser shall be deducted from the total actual sale price paid for the motor vehicle, whether the motor vehicle be new or used.

(c) Motor vehicles purchased out of state. -- Notwithstanding this article to the contrary, the tax imposed by this section shall apply to all motor vehicles, used as defined in this article, within this state, regardless of whether the vehicle was purchased in a state other than West Virginia.

(d) Definition of sale. – Notwithstanding any provision of this article to the contrary, for purposes of this section, "sale", "sales" or "selling" means any transfer or lease of the possession or ownership of a motor vehicle for consideration, including isolated transactions between individuals not being made in the ordinary course of repeated and successive business and also including casual and occasional sales between individuals not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions.

(e) Definition of motor vehicle. – For purposes of this section, "motor vehicle" means every device capable of being propelled in or upon which any person or property is or may be transported or drawn upon a highway including, but not limited to: Automobiles; buses; motor homes; street-legal motorcycles; motorboats; all-terrain vehicles; snowmobiles; low-speed vehicles; trucks, truck tractors and road tractors having a weight of less than fifty-five thousand pounds; trailers, semitrailers, full trailers, pole trailers and converter gear having a gross weight of less than two thousand pounds; and motorboat trailers, fold-down camping trailers, traveling trailers, house trailers and motor homes; except that the term "motor vehicle" does not include: Modular homes, manufactured homes, mobile homes, similar nonmotive propelled vehicles susceptible of being moved upon the highways but primarily designed for habitation and occupancy; devices operated regularly for the transportation of persons for compensation under a certificate of convenience and necessity or contract carrier permit issued by the Public Service Commission; mobile equipment as defined in section one, article one, chapter seventeen-a of this code; special mobile equipment as defined in section one, article one, chapter seventeen-a of this code; trucks, truck tractors and road tractors having a gross weight of fifty-five thousand pounds or more; trailers, semitrailers, full trailers, pole trailers and converter gear having weight of two thousand pounds or greater: Provided, That notwithstanding the provisions of section nine, article fifteen, chapter eleven of this code, the exemption from tax under this section for mobile equipment as defined in section one, article one, chapter seventeen-a of this code; special mobile equipment defined in section one, article one, chapter seventeen-a of this code; Class B trucks, truck tractors and road tractors registered at a gross weight of fifty-five thousand pounds or more; and Class C trailers, semitrailers, full trailers, pole trailers and converter gear having weight of two thousand pounds or greater does not subject the sale or purchase of the vehicle to the consumer sales and service tax imposed by section three of this article.

(f) Exemptions. – Notwithstanding any other provision of this code to the contrary, the tax imposed by this section shall not be subject to any exemption in this code other than the following:

(1) The tax imposed by this section does not apply to any passenger vehicle offered for rent in the normal course of business by a daily passenger rental car business as licensed under the provisions of article six-d, chapter seventeen-a of this code. For purposes of this section, a daily passenger car means a motor vehicle having a gross weight of eight thousand pounds or less and is registered in this state or any other state. In lieu of the tax imposed by this section, there is hereby imposed a tax of not less than $5 nor more than $7.50 for each day or part of the rental period. The Commissioner of Motor Vehicles shall propose an emergency rule in accordance with the provisions of article three, chapter twenty-nine-a of this code to establish this tax.

(2) The tax imposed by this section does not apply where the motor vehicle has been acquired by a corporation, partnership or limited liability company from another corporation, partnership or limited liability company that is a member of the same controlled group and the entity transferring the motor vehicle has previously paid the tax on that motor vehicle imposed by this section. For the purposes of this section, control means ownership, directly or indirectly, of stock or equity interests possessing fifty percent or more of the total combined voting power of all classes of the stock of a corporation or equity interests of a partnership or limited liability company entitled to vote or ownership, directly or indirectly, of stock or equity interests possessing fifty percent or more of the value of the corporation, partnership or limited liability company.

(3) The tax imposed by this section does not apply where motor vehicle has been acquired by a senior citizen service organization which is exempt from the payment of income taxes under the United States Internal Revenue Code, Title 26 U.S.C. §501(c)(3) and which is recognized to be a bona fide senior citizen service organization by the Bureau of Senior Services existing under the provisions of article five, chapter sixteen of this code.

(4) The tax imposed by this section does not apply to any active duty military personnel stationed outside of West Virginia who acquires a motor vehicle by sale within nine months from the date the person returns to this state.

(5) The tax imposed by this section does not apply to motor vehicles acquired by registered dealers of this state for resale only.

(6) The tax imposed by this section does not apply to motor vehicles acquired by this state or any political subdivision thereof or by any volunteer fire department or duly chartered rescue or ambulance squad organized and incorporated under the laws of this state as a nonprofit corporation for protection of life or property.

(7) The tax imposed by this section does not apply to motor vehicles acquired by an urban mass transit authority, as defined in article twenty-seven, chapter eight of this code, or a nonprofit entity exempt from federal and state income tax under the Internal Revenue Code for the purpose of providing mass transportation to the public at large or designed for the transportation of persons and being operated for the transportation of persons in the public interest.

(8) The tax imposed by this section does not apply to the registration of a vehicle owned and titled in the name of a resident of this state if the applicant:

(A) Was not a resident of this state at the time the applicant purchased or otherwise acquired ownership of the vehicle;

(B) Presents evidence as the Commissioner of Motor Vehicles may require of having titled the vehicle in the applicant's previous state of residence;

(C) Has relocated to this state and can present such evidence as the Commissioner of Motor Vehicles may require to show bona fide residency in this state; and

(D) Makes application to the Division of Motor Vehicles for a title and registration and pays all other fees required by chapter seventeen-a of this code within thirty days of establishing residency in this state as prescribed in subsection (a), section one-a of this article.

(9) The tax imposed by this section does not apply to Class B trucks, truck tractors and road tractors registered at a gross weight of fifty-five thousand pounds or more or to Class C trailers, semitrailers, full trailers, pole trailers and converter gear having a weight of two thousand pounds or greater. If an owner of a vehicle has previously titled the vehicle at a declared gross weight of fifty-five thousand pounds or more and the title was issued without the payment of the tax imposed by this section, then before the owner may obtain registration for the vehicle at a gross weight less than fifty-five thousand pounds, the owner shall surrender to the commissioner the exempted registration, the exempted certificate of title and pay the tax imposed by this section based upon the current market value of the vehicle.

(10) The tax imposed by this section applies to, and is imposed upon, the monthly payments for the lease of any motor vehicle leased under a written contract of lease by a resident of West Virginia for a contractually specified continuous period of more than thirty days, which tax is equal to eight percent of the amount of the monthly payment, applied to each payment, and continuing for the entire term of the initial lease period. The tax shall be remitted to the Division of Motor Vehicles on a monthly basis by the lessor of the vehicle. Leases of thirty days or less are taxable under the provisions of this article without reference to this section.

(g) Division of Motor Vehicles to collect. – Notwithstanding any provision of this article and article ten of this chapter to the contrary, the Division of Motor Vehicles shall collect the tax imposed by this section: Provided, That such tax is imposed upon the monthly payments for the lease of any motor vehicle leased by a resident of West Virginia, which tax is equal to eight percent of the amount of the monthly payment, applied to each payment, and continuing for the entire term of the initial lease period. The tax shall be remitted to the Division of Motor Vehicles on a monthly basis by the lessor of the vehicle.

(h) Dedication of tax to highways. – Notwithstanding any provision of this article to the contrary, all taxes collected pursuant to this section, after deducting the amount of any refunds lawfully paid, shall be deposited in the State Road Fund in the State Treasury and expended by the Commissioner of Highways for design, maintenance and construction of roads in the state highway system.

(i) Legislative rules; emergency rules. – Notwithstanding any provision of this article and article ten of this chapter to the contrary, the Commissioner of Motor Vehicles shall promulgate legislative rules explaining and implementing this section, which rules shall be promulgated in accordance with the provisions of article three, chapter twenty-nine-a of this code and should include a minimum taxable value and set forth instances when a vehicle is to be taxed at fair market value rather than its purchase price. The authority to promulgate rules includes authority to amend or repeal those rules.

(j) Notwithstanding any other provision of this code, no municipal sales or use tax or local sales or use tax or special downtown redevelopment district excise tax or special district excise tax shall be imposed under article twenty-two, chapter seven of this code or article thirteen, chapter eight of this code or article thirteen-b of said chapter or article thirty-eight of said chapter or any other provision of this code, except this section, on sales of motor vehicles as defined in this article or on any tangible personal property excepted or exempted from tax under this section. Nothing in this subsection shall be construed to prevent the application of the municipal business and occupation tax on motor vehicle retailers and leasing companies.

§11-15C-6. Collection of fee in addition to the general consumption tax for sales of mobile factory-built homes; deposit of additional fee in West Virginia Affordable Housing Trust Fund.

(a) There is imposed, in addition to the general consumption tax imposed by the provisions of this article, a fee of twenty dollars on all sales by licensed dealers of factory-built homes as that term is defined in section two, article fifteen, chapter thirty-seven of this code to be collected as provided in article fifteen-b of this chapter and remitted to the Tax Commissioner to be deposited by the commissioner in the West Virginia Affordable Housing Trust Fund, as provided in article eighteen-d, chapter thirty-one of this code.

(b) The moneys collected from this additional fee shall be segregated from other funds in the West Virginia Affordable Housing Trust Fund and shall be accounted for separately. Not more than ten percent of these additional moneys may be expended by the West Virginia Affordable Housing Trust Fund to defray administrative and operating costs and expenses actually incurred by the West Virginia Affordable Housing Trust Fund.

§11-15C-7. Total amount collected is to be remitted.

No profit shall accrue to any person as a result of the collection of the tax imposed by this article notwithstanding the total amount of such taxes collected may be in excess of the amount for which such person would be liable by the application of the levy of eight percent to the gross proceeds of his, her or its sales, and the total of all taxes collected by such person shall be returned and remitted to the Tax Commissioner as hereinafter provided.

§11-15C-8. Vendor and purchaser must show sale or use exempt; presumption.

In the case of sales and uses exempt from the tax imposed by this article, the burden of proving that a sale or use was exempt from the tax shall be upon both the purchaser and the vendor, unless in the case of the vendor he, she or it takes from the purchaser a certificate signed by and bearing the address of the purchaser and setting forth the reason for the exemption and substantially in the form prescribed by the Tax Commissioner. To prevent evasion, it shall be presumed that all sales and uses are subject to the tax until the contrary is clearly established in a particular case.

§11-15C-9.  Exemptions.

(a) Exemptions for which exemption certificate may be issued – A person having a right or claim to any exemption set forth in this subsection may, in lieu of paying the tax imposed by this article and filing a claim for refund, execute a certificate of exemption, in the form required by the Tax Commissioner, and deliver it to the vendor of the property or service, in the manner required by theTax Commissioner. However, the Tax Commissioner may, by rule, specify those exemptions authorized in this subsection for which exemption certificates are not required. The following sales or uses of tangible personal property and services are exempt as provided in this subsection:

(1) School textbooks. –  Sales and use of textbooks required to be used in any of the schools of this state or in any institution in this state which qualifies as a nonprofit or educational institution subject to the West Virginia department of education and the arts, the board of trustees of the university system of West Virginia or the board of directors for colleges located in this state;

(2) Government purchases. –  Purchases and uses of property and services by this state, its institutions or subdivisions, governmental units, institutions or subdivisions of other states: Provided, That the law of the other state allows the same exemption to governmental units or subdivisions of this state and to the United States, including agencies of federal, state or local governments for distribution in public welfare or relief work;

(3) Certain sales to churches. –  Sales and use of property or services to churches which make no charge whatsoever for the services they render: Provided, That the exemption granted in this subdivision applies only to services, equipment, supplies, food for meals and materials directly used or consumed by these organizations and does not apply to purchases of gasoline or special fuel;

(4) Certain purchases by certain nonprofit and charitable organizations. –  Purchases and use of tangible personal property or services by a corporation or organization which is exempt from federal income taxes under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as amended, and which is:

(A) A church or a convention or association of churches as defined in Section 170 of the Internal Revenue Code of 1986, as amended;

(B) An elementary or secondary school which maintains a regular faculty and curriculum and has a regularly enrolled body of pupils or students in attendance at the place in this state where its educational activities are regularly carried on;

(C)  A corporation or organization which annually receives more than one half of its support from any combination of gifts, grants, direct or indirect charitable contributions or membership fees;

(D)  An organization which has no paid employees and its gross income from fund raisers, less reasonable and necessary expenses incurred to raise the gross income (or the tangible personal property or services purchased with the net income), is donated to an organization which is exempt from income taxes under Section 501(c) (3) of the Internal Revenue Code of 1986, as amended;

(E) A youth organization, such as the Girl Scouts of the United States of America, the Boy Scouts of America or the YMCA Indian Guide/Princess program and the local affiliates thereof, which is organized and operated exclusively for charitable purposes and has as its primary purpose the nonsectarian character development and citizenship training of its members;

(F) For purposes of this subsection:

(i) The term “support” includes, but is not limited to:

(I) Gifts, grants, contributions or membership fees;

(II) Gross receipts from fund raisers which include receipts from admissions, sales of merchandise, performance of services or furnishing of facilities in any activity which is not an unrelated trade or business within the meaning of Section 513 of the Internal Revenue Code of 1986, as amended;

(III) Net income from unrelated business activities, whether or not the activities are carried on regularly as a trade or business;

(IV) Gross investment income as defined in Section 509(e) of the Internal Revenue Code of 1986, as amended;

(V) Tax revenues levied for the benefit of a corporation or organization either paid to or expended on behalf of the organization; and

(VI) The value of services or facilities (exclusive of services or facilities generally furnished to the public without charge) furnished by a governmental unit referred to in Section 170(c) (1) of the Internal Revenue Code of 1986, as amended, to an organization without charge. This term does not include any gain from the sale or other disposition of property which would be considered as gain from the sale or exchange of a capital asset, or the value of an exemption from any federal, state or local tax or any similar benefit;

(ii) The term “charitable contribution” means a contribution or gift to or for the use of a corporation or organization, described in Section 170(c) (2) of the Internal Revenue Code of 1986, as amended; and

(iii) The term “membership fee” does not include any amounts paid for tangible personal property or specific services rendered to members by the corporation or organization;

(G) The exemption allowed by this subdivision does not apply to purchases or use of gasoline or special fuel, or to purchases or use of motor vehicles titled by the division of motor vehicles under the provisions of article three, chapter seventeen-a of this code or to purchases of tangible personal property or services to be used or consumed in the generation of unrelated business income as defined in Section 513 of the Internal Revenue Code of 1986, as amended: Provided, That the exemption granted in this subdivision applies only to purchases and use of services, equipment, supplies and materials used or consumed in the activities for which the organizations qualify as tax exempt organizations under the Internal Revenue Code and does not apply to purchases or use of gasoline or special fuel or of motor vehicles titled by the Division of Motor Vehicles under the provisions of article three, chapter seventeen-a of this code;

(5) Isolated transactions. –  An isolated transaction in which any otherwise taxable service or any tangible personal property is sold, transferred, offered for sale or delivered by the owner of the property or by his or her representative for the owner’s account, the sale, transfer, offer for sale or delivery not being made in the ordinary course of repeated and successive transactions of like character by the owner or on his or her account by the representative: Provided, That nothing contained in this subdivision may be construed to prevent an owner who sells, transfers or offers for sale tangible personal property in an isolated transaction through an auctioneer from availing himself or herself of the exemption provided in this subdivision, regardless of where the isolated sale takes place. The Tax Commissioner may propose a legislative rule for promulgation pursuant to article three, chapter twenty-nine-a of this code which he or she considers necessary for the efficient administration of this exemption;

(6) Sales for resale. – Sales of services for resale as such and of tangible personal property to a person for the purpose of reselling the tangible personal property: Provided, That sales of gasoline and special fuel by distributors and importers are taxable except when the sale is to another distributor for resale: Provided, however, That sales of building materials or building supplies or other property to any person engaging in the activity of contracting, as defined in this article, which is to be installed in, affixed to or incorporated by that person or his or her agent into any real property, building or structure is exempt under this subdivision;

(7) Prescription drugs, insulin and appliances. – Sales and use of drugs dispensed upon prescription and sales of insulin and appliances to consumers for medical purposes;

(8) Licensed health care services. – Charges to patients for licensed health care services and for goods incidental to the rendering of such services.

(9)  Licensed day care centers. – Charges for licensed day care center services.

(10) Casual and occasional sales by certain nonprofit organizations. – Casual and occasional sales of property or services not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character by a corporation or organization which is exempt from tax under subdivision (4) of this subsection on its purchases of tangible personal property or services:

(A)  For purposes of this subdivision, the term “casual and occasional sales not conducted in a repeated manner or in the ordinary course of repetitive and successive transactions of like character” means sales of tangible personal property or services at fund raisers sponsored by a corporation or organization which is exempt, under subdivision (6) of this subsection, from payment of the tax imposed by this article on its purchases, when the fund raisers are of limited duration and are held no more than six times during any twelve-month period and “limited duration” means no more than eighty-four consecutive hours; and

(B) The provisions of this subdivision apply to sales made after June 30, 2004;

(11) Sales to certain private colleges. – Sales of property or services to a school which has approval from the board of trustees of the university system of West Virginia or the board of directors of the state college system to award degrees, which has its principal campus in this state, and which is exempt from federal and state income taxes under Section 501(c) (3) of the Internal Revenue Code of 1986, as amended: Provided, That sales of gasoline and special fuel are taxable;

(12) Lottery tickets, materials and services. – Sales of lottery tickets, materials and services by licensed lottery sales agents and lottery retailers authorized by the State Lottery Commission, under the provisions of article twenty-two, chapter twenty-nine of this code;

(13) Food stamps and WIC drafts. – Any sales of tangible personal property or services lawfully paid for with food stamps pursuant to the federal food stamp program codified in 7 U.S.C. §  2011 et seq., as amended, or with drafts issued through the West Virginia Special Supplement Food Program for Women, Infants and Children codified in 42 U.S.C. §  1786;

(14) Tickets for admission to certain school activities. – Sales of tickets for admission to activities sponsored by elementary and secondary schools located within this state;

(15) Sales between related business entities. – The sale and use of tangible personal property and the rendering and use of services by one corporation, partnership or limited liability company to or for another corporation, partnership or limited liability company when the entities are members of the same controlled group or are related taxpayers as defined in Section 267 of the Internal Revenue Code. “Control” means ownership, directly or indirectly, of stock, partnership interests or membership interests possessing fifty percent or more of the total combined voting power of all classes of the stock of a corporation, partnership interests of a partnership or membership interests of a limited liability company entitled to vote or ownership, directly or indirectly, of stock, equity interests or membership interests possessing fifty percent or more of the value of the corporation, partnership or limited liability company;

(16) Certain sales or purchases of food. – Food for the following are exempt:

(A) Food used, purchased or sold by a public or private school, school-sponsored student organizations or school-sponsored parent-teacher associations to students enrolled in the school or to employees of the school for consumption during normal school hours; but not those sales of food made to the general public;

(B) Food used, purchased or sold by a public or private college or university to students enrolled at the college or university when the sales are made on a contract basis so that a fixed price is paid for consumption of food products for a specific period of time without respect to the amount of food product actually consumed by the particular individual contracting for the sale and no money is paid at the time the food product is served or consumed;

(C) Food used, purchased or sold by a charitable or private nonprofit organization, a nonprofit organization or a governmental agency under a program to provide food to low-income persons at or below cost;

(D) Food sold or used by a charitable or private nonprofit organization, a nonprofit organization or a governmental agency under a program operating in West Virginia for a minimum of five years to provide food at or below cost to individuals who perform a minimum of two hours of community service for each unit of food purchased from the organization;

(E) Food sold in an occasional sale by a charitable or nonprofit organization, including volunteer fire departments and rescue squads, if the purpose of the sale is to obtain revenue for the functions and activities of the organization and the revenue obtained is actually expended for that purpose;

(F) Food sold or used by any religious organization at a social or other gathering conducted by it or under its auspices, if the purpose in selling the food is to obtain revenue for the functions and activities of the organization and the revenue obtained from selling the food is actually used in carrying on those functions and activities: Provided, That purchases made by the organizations are not exempt as a purchase for resale;

(17) Tax prohibited transactions. – Sales and use of tangible personal property or services to any person which this state is prohibited from taxing under the laws of the United States or under the Constitution of this State;

(18) Certain babysitting services. –  Sales of baby-sitting services by individuals who baby-sit for a profit: Provided, That the gross receipts of the individual from the performance of baby-sitting services do not exceed $5,000 in a taxable year;

(19) Certain government services and materials. – Sales and use of governmental services or governmental materials sold in the normal course of government operations, including, but not limited to, sales and use of services and materials by public libraries and by libraries at either public or private, not-for-profit schools and institutions of higher learning;

(20) Certain sales by volunteer fire and emergency rescue organizations. –  Sales and use of tangible personal property and services by volunteer fire departments and rescue squads that are exempt from federal income taxes under Section 501(c) (3) or (c) (4) of the Internal Revenue Code of 1986, as amended, if the sole purpose of the sale is to obtain revenue for the functions and activities of the organization and the revenue obtained is exempt from federal income tax and actually expended for that purpose;

(21)  Certain sales of food by certain youth organizations. – Sales of food by little leagues, midget football leagues, youth football or soccer leagues, band boosters or other school or athletic booster organizations supporting activities for grades kindergarten through twelve and similar types of organizations, including scouting groups and church youth groups, if the purpose in selling the food is to obtain revenue for the functions and activities of the organization and the revenues obtained from selling the food are actually used in supporting or carrying on functions and activities of the groups: Provided, That the purchases made by the organizations are not exempt as a purchase for resale; and

(22) Special district excise tax. – Any sale, service or use upon which a special district excise tax is paid, pursuant to the provisions of section eleven, article thirteen-b, chapter eight of this code.

(23) Property and services temporarily used in this state. – All tangible personal property and services purchased in another state but temporarily used in this state by a nonresident individual, except gasoline or special fuel not contained in the supply tank of a motor vehicle that is not a motor carrier;

(24) Residence or business moved to this state. – All tangible personal property and services purchased outside this state for use outside this state by a nonresident person who, at least six months thereafter, uses such property or services in this state following the permanent establishment of his, her or its business or residence in this state.

(b) Refundable exemptions – Any person having a right or claim to any exemption set forth in this subsection shall first pay to the vendor the tax imposed by this article and then apply to the Tax Commissioner for a refund or credit, or as provided in section nine of this article, give to the vendor his, her or its West Virginia direct pay permit number. The following sales of tangible personal property and services are exempt from tax as provided in this subsection:

(1) Sales to certain charitable organizations. –  Sales of property or services to bona fide charitable organizations which make no charge whatsoever for the services they render: Provided, That the exemption granted in this subdivision applies only to services, equipment, supplies, food, meals and materials directly used or consumed by these organizations and does not apply to purchases of gasoline or special fuel;

(2) Sales for direct use in certain production activities. – Sales and use of tangible personal property, such as machinery, supplies, materials and other tangible personal property directly used or consumed in the activities of manufacturing, natural resource production, agricultural production or generation of electric power to persons engaged in the activities named in this subdivision as a business: Provided, That this exemption does not apply to purchases of gasoline or special fuel;

(3) Certain sales to certain fraternal or social organizations. – Sales of tangible personal property to nationally chartered fraternal or social organizations for the sole purpose of free distribution in public welfare or relief work: Provided, That sales of gasoline and special fuel are taxable;

(4) Certain sales to fire fighting organizations. – Sales and use of services, including, but not limited to, those for construction or improvement of real estate and for vehicle repair and modification, and of tangible personal property, including, but not limited to, fire fighting or station house equipment, to any volunteer fire department organized and incorporated under the laws of the state of West Virginia, if such services or property are directly used or consumed for the public safety purposes of such organizations: Provided, That sales of gasoline and special fuel are taxable.

§11-15C-10. Exemptions; exceptions for sales of liquors and wines to private clubs.

The exemption provided in this article for sales of tangible personal property for the purpose of resale in the form of tangible personal property shall not apply to persons or organizations licensed under authority of article seven, chapter sixty of this code for the purchase of liquor or wines for resale either from the alcohol beverage control commissioner or from retail liquor licensees licensed under authority of article three-a, chapter sixty of this code.

§11-15C-11.  Direct pay permits.

(a) Authorized. – Notwithstanding any other provision of this article, the Tax Commissioner may, pursuant to rules promulgated by him or her in accordance with article three, chapter twenty-nine-a of this code, authorize a person that is a purchaser, user, distributor or lessee to which sales or leases of tangible personal property are made or services provided, to pay any tax imposed by this article directly to the Tax Commissioner and waive the collection of the tax by that person’s vendor. No such authority shall be granted or exercised except upon application to the tax commissioner and after issuance by the Tax Commissioner of a direct pay permit. Each direct pay permit granted pursuant to this section is valid until surrendered by the holder or canceled for cause by the commissioner. The commissioner shall prescribe by rules promulgated in accordance with article three, chapter twenty-nine-a of this code, those activities which will cause cancellation of a direct pay permit issued pursuant to this section. Upon issuance of a direct pay permit, payment of the tax imposed or assertion of the exemptions allowed by this article on sales and leases of tangible personal property and sales of taxable services from the vendors of the personal property or services shall be made directly to the Tax Commissioner by the permit holder.

(b) Returns. – On or before the fifteenth day of each month, every permit holder shall make and file with the Tax Commissioner a general excise tax direct pay permit return for the preceding month in the form prescribed by the tax commissioner showing the total value of the tangible personal property used, the amount of taxable services purchased, the amount of general excise tax due from the permit holder, which shall be paid to the Tax Commissioner with the return, and any other information as the tax commissioner considers necessary: Provided, That if the amount of tax due averages less than $250 per month, the Tax Commissioner may permit the filing of quarterly returns in lieu of monthly returns and the amount of tax shown on the returns to be due shall be remitted on or before the fifteenth day following the close of the calendar quarter; and if the amount of tax due averages less than $150 per calendar quarter, the Tax Commissioner may permit the filing of an annual direct pay permit return and the amount of tax shown on the return to be due shall be remitted on or before the last day of January each year: Provided, however, That the Tax Commissioner may, by nonemergency legislative rules promulgated pursuant to article three, chapter twenty-nine-a of this code, change the minimum amounts established in this subsection. The Tax Commissioner, upon written request by the permit holder, may grant a reasonable extension of time, upon such terms as the Tax Commissioner may require, for the making and filing of direct pay permit returns and paying the tax due. Interest on the tax shall be chargeable on every extended payment at the rate specified in section seventeen, article ten of this chapter.

(c) Term of permit. – A permit issued pursuant to this section is valid until expiration of the taxpayer’s registration year under article twelve of this chapter. This permit is automatically renewed when the taxpayers business registration certificate is issued for the next succeeding fiscal year, unless the permit is surrendered by the holder or canceled for cause by the Tax Commissioner.

(d) Effect of holding permit. – Persons who hold a direct payment permit which has not been canceled are not required to pay the tax to the vendor as otherwise provided in this article. In lieu of paying the tax, such persons shall notify each vendor from whom tangible personal property is purchased or leased or from whom services are purchased of their direct payment permit number and that the tax is being paid directly to the Tax Commissioner. Upon receipt of the notice, the vendor is absolved from all duties and liabilities imposed by this chapter for the collection and remittance of the tax with respect to sales of tangible personal property and sales of services to the permit holder. Vendors who make sales upon which the tax is not collected by reason of the provisions of this section shall maintain records in such manner that the amount involved and identity of each purchaser may be ascertained.

(e) Termination of permit. – Upon the expiration, cancellation or surrender of a direct payment permit, the provisions of this chapter, without regard to this section, will thereafter apply to the person who previously held the permit, and that person shall promptly notify in writing vendors from whom tangible personal property or services are purchased or leased of the cancellation or surrender. Upon receipt of the notice, the vendor is subject to the provisions of this chapter, without regard to this section, with respect to all sales, distributions, leases or storage of tangible personal property, thereafter made to or for that person.

§11-15C-12. Discretionary designation of per se exemptions.

Notwithstanding any other provision of this code, the Tax Commissioner may, by rule, specify those exemptions authorized in this article or in other provisions of this code or applicable federal law for which exemption certificates or direct pay permits are not required.

§11-15C-13. Apportionment of gross proceeds.

(a) Exempt and taxable uses. –  Whenever a taxpayer uses or will use purchased or leased tangible personal property, a service or the results of a service for both exempt and nonexempt purposes, to determine the portion of  the gross proceeds  paid to the vendor for such property or service upon which the tax imposed by this article shall apply, the gross proceeds shall be apportioned between the exempt and taxable uses in a manner established as reasonable by the Tax Commissioner by regulations the Tax Commissioner may prescribe.

(b) Uses inside and outside this state. – Whenever a person uses purchased or leased tangible personal property, a service or the results of a service both inside and outside this state, to determine the portion of the gross proceeds paid to the vendor for such property or service upon which the tax imposed by this article shall apply, the gross proceeds shall be apportioned between the in-state and out-of-state uses in a manner established as reasonable by the tax commissioner by regulations the Tax Commissioner may prescribe.

§11-15C-14. Agreements by competing taxpayers.

To provide uniform methods of adding the average equivalent of the tax to the selling price in each sale or transaction subject to the tax, appropriate rules and regulations, except as otherwise herein provided, may be agreed upon or adopted by competing taxpayers or associations of taxpayers, except that all collections shall be made on the basis of the total transaction at the time of sale, without regard to the value of the separate items making up the total amount of the sale. Such rules and regulations, if they do not involve price fixing, shall not be deemed illegal as in restraint of trade or commerce. The Tax Commissioner shall cooperate in formulating such rules and regulations, and, in the event appropriate rules and regulations are not submitted to him or her within thirty days after this article takes effect, or within a reasonable extended period fixed by the Tax Commissioner, he or she shall formulate and promulgate appropriate rules and regulations to effectuate the purpose of this section.

§11-15C-15. Collection of tax when sale on credit.

A vendor doing business wholly or partially on a credit basis shall require the purchaser to pay the full amount of tax due upon a credit sale at the time such sale is made or within thirty days thereafter.

§11-15C-16.  When separate records of sales required.

(a)  Each vendor shall keep records necessary to account for:

(1) The vendor's gross proceeds from sales of personal property and services;

(2) The vendor's gross proceeds from taxable sales;

(3) The vendor's gross proceeds from exempt sales;

(4) The amount of taxes collected under this article, which taxes shall be held in trust for the state of West Virginia until paid over to the tax commissioner; and

(5) Any other information as required by this article, or article fifteen-b of this chapter, or as required by the tax commissioner.

(b)  If any vendor engaged in a business making sales or rendering services subject to the tax imposed under this article, who is at the same time engaged in some other kind of business making sales or rendering services, not taxable under this article, fails to keep such the separate records required by this section, there shall be levied upon such vendor a tax based upon the entire gross proceeds of both or all of his, her or its businesses.

§11-15C-17. Sales to affiliated companies or persons.

In determining gross proceeds of sales from one to another of two or more related or affiliated  persons, or under other circumstances where as a result of the relationship or affiliation between the vendor and purchaser the gross proceeds from a sale are not indicative of the true value of the subject matter of the sale, the Tax Commissioner shall prescribe uniform and equitable rules for determining the amount upon which the tax shall be imposed, corresponding as nearly as possible to gross proceeds from the sale of similar products or services of like quality or character, where no common interest exists between the parties.

§11-15C-18. Tax return and payment; exception.

(a) Payment of tax. – The tax levied by this article is due and payable in monthly installments, on or before the twentieth day of the month next succeeding the month in which the tax accrued, except as otherwise provided in this article.

(b) Tax return. – The taxpayer shall, on or before the twentieth day of each month, make out and mail to the Tax Commissioner a return for the preceding month, in the form prescribed by the Tax Commissioner, showing:

(1) The total gross proceeds of the vendor's business for the preceding month;

(2) The gross proceeds of the vendor's business upon which the tax is based;

(3) The amount of the tax for which the vendor is liable; and

(4) Any further information necessary in the computation and collection of the tax which the Tax Commissioner may require, except as otherwise provided in this article or article fifteen-b of this chapter.

(c) Remittance to accompany return. – Except as otherwise provided in this article or article fifteen-b of this chapter, a remittance for the amount of the tax shall accompany the return.

(d) Deposit of collected tax. – Tax collected by the Tax Commissioner shall be deposited as provided in section thirty of this article, except that:

(1) Tax collected on sales of gasoline and special fuel shall be deposited in the State Road Fund; and

(2) Any tax collected by the Alcohol Beverage Control Commissioner from persons or organizations licensed under authority of article seven, chapter sixty of this code shall be paid into a revolving fund account in the State Treasury, designated the Drunk Driving Prevention Fund, to be administered by the Commission on Drunk Driving Prevention, subject to appropriations by the Legislature.

(e) Return to be signed. – A return shall be signed by the taxpayer or the taxpayer's duly authorized agent, when a paper return is prepared and filed. When the return is filed electronically, the return shall include the digital mark or digital signature, as defined in article three, chapter thirty-nine-a of this code, or the personal identification number of the taxpayer, or the taxpayer's duly authorized agent, made in accordance with any procedural rule that may be promulgated by the Tax Commissioner.

(f) Accelerated payment. –

(1) Notwithstanding any other provision of this code to the contrary, taxpayers whose average monthly payment of the taxes levied by this article during the previous calendar year exceeds $100,000, shall remit the tax attributable to the first fifteen days of June each year by June 20.

(2) For purposes of complying with subdivision (1) of this subsection, the taxpayer shall remit an amount equal to the amount of tax imposed by this article on actual taxable sales of tangible personal property and custom software and sales of taxable services during the first fifteen days of June or, at the taxpayer's election, the taxpayer may remit an amount equal to fifty percent of the taxpayer's liability for tax under this article on taxable sales of tangible personal property and custom software and sales of taxable services made during the preceding month of May.

(3) For a business which has not been in existence for a full calendar year, the total tax due from the business during the prior calendar year shall be divided by the number of months, including fractions of a month, that it was in business during the prior calendar year; and if that amount exceeds $100,000, the tax attributable to the first fifteen days of June each year shall be remitted by June 20 as provided in subdivision (2) of this subsection.

(4) When a taxpayer required to make an advanced payment of tax under subdivision (1) of this subsection makes out its return for the month of June, which is due by July 20, the taxpayer may claim as a credit against liability under this article for tax on taxable transactions during the month of June the amount of the advanced payment of tax made under subdivision (1) of this subsection.

(g) Quarterly and annual returns exception.

(1) When the total general consumption tax remittance for which a person is liable does not exceed an average monthly amount over the taxable year of $250, he or she may pay the tax and make a quarterly return on or before the twentieth day of the first month in the next succeeding quarter in lieu of monthly returns.  

(2)  When the total general consumption tax remittance for which a person is liable does not in the aggregate exceed $600 for the taxable year, he or she may pay the tax and make an annual return on or before thirty days after the end of his or her taxable year for federal income tax purposes.

(3) The Tax Commissioner may, by nonemergency legislative rules promulgated pursuant to article three, chapter twenty-nine-a of this code, change either or both the minimum amounts established in this subsection.

§11-15C-19. Liability of officers of corporation.

If a vendor is an association or corporation, the officers thereof having actual control of the funds thereof, or any other responsible person, shall be personally liable, jointly and severally, for any default on the part of the association or corporation in complying with the provisions of this article, and payment of the tax and any additions to tax, penalties and interest thereon imposed with respect thereto by article ten of this chapter may be enforced against them as against the association or corporation which they represent.

§11-15C-20. Receivership; bankruptcy; priority of tax.

In the distribution, voluntary or compulsory, in receivership, bankruptcy or otherwise, of the property or estate of any person, all taxes due and unpaid under this article shall be paid from the first money available for distribution in priority to all claims and liens except taxes and debts due the United States which under federal law are given priority over the debts and liens created by this article. Any person charged with the administration or distribution of any such property or estate who shall violate the provisions of this section shall be personally liable for any taxes accrued and unpaid under this article which are chargeable against the person whose property or estate is in administration or distribution.

§11-15C-21. Tax on motor fuel.

(a) General. – All sales of motor fuel and alternative fuel subject to the flat rate of the tax imposed by section five, article fourteen-c of this chapter, are subject to the tax imposed by this article and comprises the variable component of the tax imposed by section five, article fourteen-c of this chapter and is collected and remitted at the time the tax imposed by said section is remitted. Sales of motor fuel and alternative fuel upon which the tax imposed by this article has been paid is not again taxed under the provisions of this article. This section means that all gallons of motor fuel and equivalent gallons of alternative fuel sold and delivered or delivered in this state are taxed one time.

(b) Measure of tax. – The measure of tax imposed by this article is as follows:

(1)  On sales of motor fuel, the average wholesale price as defined and determined in section five, article fourteen-c of this chapter. For purposes of maintaining revenue for highways, and recognizing that the tax imposed by this article is generally imposed on gross proceeds from sales to ultimate consumers, whereas the tax on motor fuel herein is imposed on the average wholesale price of the motor fuel; in no case, for the purposes of taxation under this article, may the average wholesale price be determined to be less than 97¢ per gallon of motor fuel for all gallons of motor fuel sold during the reporting period, notwithstanding any provision of this article to the contrary. For the purpose of taxation under this article, in no case may the average wholesale price be determined to be less than $2.34 per gallon of motor fuel for all gallons of motor fuel sold during the reporting period notwithstanding any provision of this article to the contrary. Any limitation on the average wholesale price of motor fuel contained in this subsection shall not be applicable to alternative fuel.

(2) On sales of alternative fuel, the average wholesale price as defined and determined in section five, article fourteen-c of this chapter.

(c) Definitions. – For purposes of this article, the terms “gasoline” and “special fuel” and “alternative fuel” are defined as provided in section two, article fourteen-c of this chapter. Other terms used in this section have the same meaning as when used in a similar context in said article.

(d) Tax return and tax due. –

(1) The tax imposed by this article on sales of motor fuel shall be paid by each taxpayer on or before the last day of the calendar month by check, bank draft, certified check or money order payable to the Tax Commissioner for the amount of tax due for the preceding month notwithstanding any provision of this article to the contrary. The commissioner may require all or certain taxpayers to file tax returns and payments electronically. The return required by the commissioner shall accompany the payment of tax. If no tax is due, the return required by the commissioner shall be completed and filed on or before the last day of the month.

(2) The tax due under this article comprising the variable component of the tax due under article fourteen-c of this chapter on alternative fuel, is due and shall be collected and remitted at the time the tax imposed by section five, article fourteen-c of this chapter is due, collected and remitted.

(e) Compliance. – To facilitate ease of administration and compliance by taxpayers, the Tax Commissioner shall require persons liable for the tax imposed by this article on sales of motor fuel to file a combined return and make a combined payment of the tax due under this article on sales of motor fuel and the tax due under article fourteen-c of this chapter on motor fuel. In order to encourage use of a combined return each month and the making of a single payment each month for both taxes, the due date of the return and tax due under article fourteen-c of this chapter is the last day of each month notwithstanding any provision in said article to the contrary. The Tax Commissioner may prescribe reporting and payment requirements for tax due under this article on alternative fuel which accommodate the due dates and requirements prescribed in this article and article fourteen-c of this chapter, either under a separate return and payment or a combined return and payment, within the discretion of the Tax Commissioner.

(f) Dedication of tax. – All tax collected under the provisions of this section, after deducting the amount of refunds lawfully paid, shall be deposited in the road fund in the State Treasurer's office and used only for the purpose of construction, reconstruction, maintenance and repair of highways and payment of principal and interest on state bonds issued for highway purposes. Notwithstanding any provision to the contrary, tax collected on the sale of aviation fuel after deducting the amount of refunds lawfully paid shall be deposited in the State Treasurer's office and transferred to the State Aeronautical Commission to be used for the purpose of matching federal funds available for the reconstruction, maintenance and repair of public airports and airport runways.

(g) Construction. – This section does not tax a sale of motor fuel which this state is prohibited from taxing under the Constitution of this State or the Cconstitution or laws of the United States.

§11-15C-22. Keeping and preserving of taxpayer records; nonresidents.

(a) General. –  Each taxpayer shall keep complete and accurate records of taxable sales, purchases and of charges, together with a record of the tax collected or paid thereon, and shall keep all invoices, bills of lading and such other pertinent documents in such form as the tax commissioner may by regulation require. Such records and other documents shall be preserved for a period of time not less than three years, unless the Tax Commissioner shall consent in writing to their destruction within that period or by order require that they be kept longer.

(b) Nonresidents. – A nonresident person engaged in a business within this state in conduct as a result of which the tax imposed by this article becomes due, shall keep within this state adequate records concerning the operation of the business, and all taxes collected and paid in the course of the business. The amount of the tax collected shall not be transmitted outside of this state without the written consent of, and in accordance with the conditions prescribed by the Tax Commissioner.

§11-15C-23. Records of Tax Commissioner; preservation of returns.

The Tax Commissioner shall keep full and accurate records of all moneys received by him or her. He or she shall preserve all returns filed with him or her hereunder for five years.

§11-15C-24. Proceeds of tax; appropriation of certain revenues.

(a) The proceeds of the tax imposed by this article shall be deposited in the General Revenue Fund of the state except as otherwise expressly provided in this article.

(b) School Major Improvement Fund. -- After the payment or commitment of the proceeds or collections of this tax for the purposes set forth in section sixteen of this article, on the first day of each month, there shall be dedicated monthly from the collections of this tax, the amount of $416,667 and the amount dedicated shall be deposited on a monthly basis into the School Major Improvement Fund created pursuant to section six, article nine-d, chapter eighteen of this code: Provided, That for fiscal year 2016, the amount so dedicated and deposited annually under this subdivision is reduced by $2,000,004, and the amount so dedicated and deposited monthly is reduced to $250,000 for fiscal year 2016. This reduction shall cease for fiscal years beginning after June 30, 2016: Provided, That for fiscal year 2017, the amount so dedicated and deposited annually under this subdivision is reduced by $999,996 and the amount so dedicated and deposited monthly is reduced to $333,334 for fiscal year 2017.  This reduction shall cease for fiscal years beginning after June 30, 2017.

(c) School Construction Fund. – After the payment or commitment of the proceeds or collections of this tax for the purposes set forth in section sixteen of this article:

(1) On the first day of each month, there shall be dedicated monthly from the collections of this tax the amount of $1,416,667 and the amount dedicated shall be deposited into the School Construction Fund created pursuant to section six, article nine-d, chapter eighteen of this code.

(2) Except as provided in subdivision (3) of this subsection, effective July 1, 1998, there shall be dedicated from the collections of this tax an amount equal to any annual difference that may occur between the debt service payment for the 1997 fiscal year for school improvement bonds issued under the Better School Building Amendment under the provisions of article nine-c, chapter eighteen of this code and the amount of funds required for debt service on these school improvement bonds in any current fiscal year thereafter. This annual difference shall be prorated monthly, added to the monthly deposit in subdivision (1) of this subsection and deposited into the School Construction Fund created pursuant to section six, article nine-d, chapter eighteen of this code.

(3) After June 30, 2015, the provisions of subdivisions (1) and (2) of this subsection shall have no force or effect. After June 30, 2015, there shall be dedicated from the collections of this tax the amount of $27,216,996 annually. This amount shall be prorated monthly and deposited into the School Construction Fund created pursuant to section six, article nine-d, chapter eighteen of this code: Provided, That for fiscal year 2016, the amount so dedicated annually under this subdivision is reduced by $6 million. This reduction shall cease for fiscal years beginning after June 30, 2016: Provided, however, That for fiscal year 2017, the amount so dedicated and deposited annually under this subdivision is reduced by $3 million.  This reduction shall cease for fiscal years beginning after June 30, 2017.  Amendments to this subdivision enacted in the 2016 regular legislative session are retroactive, in accordance with dates and fiscal years specified herein.

(d) Prepaid wireless calling service. – The proceeds or collections of this tax from the sale of prepaid wireless service are dedicated as follows:

(1) The tax imposed by this article upon the sale of prepaid wireless calling service is in lieu of the wireless enhanced 911 fee imposed by section six-b, article six, chapter twenty-four of this code.

(2) Within thirty days following the end of each calendar month, the Tax Commissioner shall remit to the Public Service Commission the proceeds of the tax imposed by this article upon the sale of prepaid wireless calling service in the preceding month, determined as follows: For purposes of determining the amount of those monthly proceeds, the Tax Commissioner shall use an amount equal to one twelfth of the wireless enhanced 911 fees collected from prepaid wireless calling service under section six-b, article six, chapter twenty-four of this code during the period beginning on July 1, 2007, and ending on June 30, 2008. Beginning on July 1, 2009, the Tax Commissioner shall adjust this amount annually by an amount proportionate to the increase or decrease in the enhanced wireless 911 fees paid to the Public Service Commission under said section during the previous twelve months. The Public Service Commission shall receive, deposit and disburse the proceeds in the manner prescribed in said section.

(e)  After the payment or commitment of the proceeds or collections of this tax as provided  in section eighteen of this article, and after satisfaction of the provisions of subsections (b), (c) and (d) of this section, commencing on July 1 of the first year following the year in which the voters ratify the  Fair and Simple Tax Reform Amendment to the constitution of this state, and continuing in each year thereafter, if the combined balance of funds, as of the thirtieth day of June of that same year, in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code, exceeds ten percent of the general revenue fund budgeted for the fiscal year ending on that same said date, then one half of the amount, if any, by which the annual receipts from the tax imposed by this article in that year exceeds the amount of receipts budgeted to be collected therefrom in the fiscal year commencing on July 1, 2017, shall be deposited into the Revenue Fund Shortfall Reserve Fund, to be retained and applied as provided herein and in article two, of chapter eleven-b of this code, and the balance of such excess shall remain in the General Fund: Provided, That, notwithstanding any provision of this code to the contrary, the funds to be deposited in the Revenue Fund Shortfall Reserve Fund pursuant to this section shall, in any given fiscal year, only be appropriated for expenditure in an amount which exceeds the difference between the amount of revenue estimated to be collected for that year from the corporation net income tax imposed by  article twenty-four, of chapter eleven of this code and the amount which would have been estimated to be collected for that year from the imposition of the said corporation net income tax but for the reduction in the rate of such tax provided  in section four of that article, if any.

§11-15C-25. Construction and severability.

(a) Construction. – If a court of competent jurisdiction finds that the provisions of this article and of article fifteen-b of this chapter conflict and cannot be harmonized, then the provisions of article fifteen-b shall control.

(b) Severability. – If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this article is for any reason held to be invalid, unlawful or unconstitutional, that decision may not affect the validity of the remaining portions of this article or any part thereof.

§11-15C-26. General procedure and administration; Streamlined Sales and Use Tax Agreement.

Each and every provision of articles ten and fifteen-b of this chapter shall apply to the tax imposed by this article with like effect as if said articles were applicable only to the tax imposed by this article and were set forth in extenso in this article.

§11-15C-27. Effective date.

This article shall take effect on July 1, 2017.

ARTICLE 21. PERSONAL INCOME TAX.

§11-21-97. Repeal of tax, preservation for prior periods.

Each and every other provision of this article, except this section, is repealed for all tax periods beginning on the January 1, 2018:  Provided, That tax liabilities, if any, arising for taxable periods prior to January 1, 2018, shall be determined, administered, assessed and collected as if the tax imposed by this article had not been repealed; and the rights and duties of taxpayers and the state shall be fully and completely preserved.

ARTICLE 21A. TEMPORARY SINGLE RATE INCOME TAX.

§11-21A-1. Short title.

This article is known and may be cited as the “Temporary Single Rate Income Tax Law.”

§11-21A-2. Imposition of tax.

There is hereby imposed an annual tax on the West Virginia taxable income of each resident individual and on the West Virginia source taxable income of each nonresident individual.

(a) In the case of taxable periods beginning on and after January 1, 2018, the rate of the tax shall be 0.60 percent.

(b) In the case of taxable periods beginning on and after January 1, 2019, the rate of the tax shall be 0.40 percent.

(c) In the case of taxable periods beginning on and after January 1, 2020, the rate of the tax shall be 0.20 percent.

(d) The Legislature may by general law accelerate the rate reduction or eliminate the tax imposed by this article altogether.

§11-21A-3. Definitions.

For the purposes of this article, the following terms shall have the meanings set forth in this section:

(a) “Nonresident individual” means an individual natural person who is not a resident of this state for the entire taxable year.

 (b) “Part-year resident individual” means a resident individual natural person who is not a resident of this state for the entire taxable year.

(c) “Resident individual” means an individual natural person who maintains his or her permanent place of abode in this state.

(d) “West Virginia source taxable income” means the sum of the net amount of income, gain, loss and deduction entering into the federal adjusted gross income of a nonresident taxpayer for the taxable year, reduced by $2,000 for each personal or dependent exemption claimed, which income is derived from or connected with West Virginia sources, including:

(1) His or her distributive share of partnership income, gain, loss and deductions, determined for federal income tax purposes; and

(2) His or her pro rata share of S corporation income, loss and deductions, increased by deductions for taxes, determined for federal income tax purposes; and

(3) His or her share of estate or trust income, gain, loss and deductions, determined for federal income tax purposes.

(4) Income, gain, loss and deduction derived from or connected with West Virginia sources shall be those items attributable to: (A) The ownership of any interest in real or tangible personal property in this state; (B) a business, trade, profession or occupation carried on in this state; (C) in the case of a shareholder of an S corporation, the ownership of shares issued by such corporation, to the extent the income of such an entity is apportioned or allocated to this state pursuant to regulations promulgated by the Tax Commissioner; and (D) prizes awarded under article twenty-two, chapter twenty-nine of this code by the West Virginia State Lottery Commission: Provided, That, the  deduction allowed by section 215 of the Internal Revenue Code, relating to alimony, shall not constitute income or deduction derived from West Virginia sources regardless of whether the recipient of such alimony is resident individual: Provided, however, That a nonresident individual, other than a dealer holding property for sale to customers in the ordinary course of his or her trade or business, shall not be deemed to carry on a business, trade, profession or occupation in this state solely by reason of the purchase and sale of property for his or her own account.

(e) “West Virginia taxable income” means the federal adjusted gross income reported by a resident taxpayer, including a part-year resident individual, reduced by $2,000 for each personal or dependent exemption claimed, on his or her federal income tax return for the taxable year.

(f) Every term used in this article has the same meaning as when used in a comparable context in the laws of the United States relating to income taxes, unless a different meaning is clearly required. Any reference in this article to the laws of the United States means the provisions of the Internal Revenue Code of 1986, as amended, and any other provisions of the laws of the United States that relate to the determination of income for federal income tax purposes. All amendments made to the laws of the United States after December 31, 2014, but prior to January 1, 2016, shall be given effect in determining the taxes imposed by this article to the same extent those changes are allowed for federal income tax purposes, whether the changes are retroactive or prospective, but no amendment to the laws of the United States made on or after January 1, 2016, may be given any effect.

§11-21A-4. Credit for income tax of another state.

(a) Credit for resident individuals. – A resident individual, including a part-year resident individual, shall be allowed a credit against the tax otherwise due under this article for any income tax imposed for the taxable year by another state of the United States or by the District of Columbia, upon income both derived therefrom and subject to tax under this article.

(b) Limitations. – (1) The credit under subsection (a) of this section shall not exceed the percentage of the tax otherwise due under this article determined by dividing the portion of the taxpayer's West Virginia taxable income also subject to taxation by such other jurisdiction by the total amount of the taxpayer's West Virginia taxable income.

(2) The credit under this section shall not reduce the tax otherwise due under this article to an amount less than would have been due if the income subject to taxation by such other jurisdiction were excluded from the taxpayer's West Virginia income.

(c) Exception. – No credit shall be allowed under subsection (a) of this section for a tax of a jurisdiction which allows residents of this state a credit against the taxes imposed by such other jurisdiction for the tax under this article, if such other credit is substantially similar to the credit granted in subsection (d) of this section.

(d) Credit for nonresident individuals. A nonresident individual shall be allowed a credit against the tax otherwise due under this article for any income tax imposed for the taxable year by another state of the United States or by the District of Columbia, of which the taxpayer is a resident: Provided, That the credit under this section shall not exceed either:

(1) The percentage of the other tax determined by dividing the portion of the taxpayer's West Virginia income which is also subject to the other tax by the total amount of his or her  income subject to such other tax, or

(2) The percentage of the tax otherwise due under this article, determined by dividing the portion of the taxpayer's West Virginia source income which is also subject to the other tax by the total amount of the taxpayer's federal adjusted gross income.

(3) No credit may be allowed to a nonresident individual under this subsection for a taxable year beginning after the December 31, 2017, except pursuant to a written agreement between this state and the nonresident individual's state of residence. The State Tax Commissioner is hereby authorized to enter into such agreements necessary to effectuate the purpose of this section when he or she determines that such agreements are in the best interest of this state and its residents.

§11-21A-5. Computation of tax on income of part-year resident individuals.

The tax due under this article on taxable income derived from sources in this state by a part-year resident individual shall be calculated as provided in this section.

(a) An individual shall first calculate tax liability under this article as if he or she were a resident of this state for the entire taxable year. When determining tentative tax liability under this subdivision, a part-year resident individual shall be allowed the same deductions, exemptions and credits that would be allowable if taxpayer were a nonresident individual, as the case may be, for the entire taxable year, except that no credit shall be allowed under section four of this article.

(b) The amount of tentative tax determined under subdivision (a) of this section shall then be multiplied by a fraction the numerator of which is the taxpayer's West Virginia source income for the taxable year, and the denominator of which is such taxpayer's “federal adjusted gross income” for the taxable year: Provided, That if this computation produces a result that is out of all appropriate proportion to the amount of taxpayer's West Virginia source income, the Tax Commissioner may provide such equitable relief as the Tax Commissioner, in his or her discretion, considers to be appropriate under the circumstances.

(c) For purposes of this section, the “federal adjusted gross income” of a part-year resident individual shall be the taxpayer's federal adjusted gross income for the taxable year, increased or decreased, as the case may be, for items which are not otherwise included in federal adjusted gross income for the taxable year, and decreased or increased, as the case may be, for items which are included in federal adjusted gross income for the taxable year; due to his or her change of residence during the year, all as provided in forms and instructions issued for such purposes by the Tax Commissioner.

§11-21A-6. General procedure and administration.

Each and every provision of the “West Virginia Tax Procedure and Administration Act” set forth in article ten of this chapter shall apply to the tax imposed by this article twenty-one-a with like effect as if said act were applicable only to the tax imposed by this article twenty-one-a and were set forth in extenso in this article twenty-one-a.

§11-21A-7. Effective date, termination.

The tax imposed in this article shall first apply to taxable periods beginning January 1, 2018, and, unless extended or reenacted by an affirmative vote of not less than three fifths of the members of each house of the Legislature, shall terminate and no longer apply to taxable periods beginning on and after January 1, 2021: Provided, That tax liabilities arising for taxable periods prior to January 1, 2021, shall be determined, administered, assessed and collected as if this article had not terminated; and the rights and duties of taxpayers and the state for such prior periods shall be fully and completely preserved.

ARTICLE 24.  CORPORATION NET INCOME TAX.

§11-24-4. Imposition of primary tax and rate thereof; effective and termination dates.

Primary tax. – (1) In the case of taxable periods beginning after June 30, 1967, and ending prior to the January 1, 1983, a tax is hereby imposed for each taxable year at the rate of six percent per annum on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five.

(2) In the case of taxable periods beginning on or after January 1, 1983, and ending prior to July 1, 1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, and any banks, banking associations or corporations, trust companies, building and loan associations and savings and loan associations, at the rates which follow:

(A) On taxable income not in excess of $50,000, the rate of six percent; and

(B) On taxable income in excess of $50,000, the rate of seven percent.

(3) In the case of taxable periods beginning on or after July 1,1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of nine and three-quarters percent. Beginning July 1, 1988, and on each first day of July thereafter for four successive calendar years, the rate shall be reduced by fifteen one hundredths of one percent per year, with such rate to be nine percent on and after July 1, 1992.

(4) In the case of taxable periods beginning on or after January 1, 2007, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and three-quarters percent.

(5) In the case of taxable periods beginning on or after January 1, 2009, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and one-half percent.

(6) In the case of taxable periods beginning on or after January 1, 2012, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven and three-quarters percent: Provided, That the reduction in tax authorized by this subsection shall be suspended if the combined balance of funds as of June 30, 2011, in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the general revenue fund budgeted for the fiscal year commencing July 1, 2011: Provided, however, That the rate reduction schedule will resume in the calendar year immediately following any subsequent fiscal year when the combined balance of funds as of0 June 30 of that fiscal year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B next equals or exceeds ten percent of the general revenue fund budgeted for the immediately succeeding fiscal year.

(7) In the case of taxable periods beginning on or after January 1, 2013, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (6) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the general revenue fund budgeted for the fiscal year commencing the first day of July of the preceding year.

(8) In the case of taxable periods beginning on or after January 1, 2014, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of six and one-half percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (7) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the general revenue fund budgeted for the fiscal year commencing the first day of July of the preceding year.

(9)  In the case of taxable periods beginning on and after January 1, 2018, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at a rate which is one percent lower than the percentage that was the rate of such tax that applied to the immediately preceding taxable year or zero percent, whichever is greater: Provided, That the reduction in the rate of tax on the first day of any calendar year authorized by this subsection shall be suspended if either; (i) the tax rate authorized in section two, article twenty-one-A of this chapter is greater than zero percent or (ii) the combined balance of funds as of the thirtieth day of June of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the general revenue fund budgeted for the fiscal year commencing the first day of July of the preceding year, and such rate reduction shall be postponed until the next subsequent taxable year, following the first year thereafter in which both the same two said contingencies, herein otherwise requiring suspension of the rate reduction, are next satisfied: Provided, That once the rate of the corporation income tax has been reduced pursuant to this subsection, that rate shall not again be raised, notwithstanding any such contingency.

Note: The purpose of this bill is to prospectively repeal the consumer sales and service tax, the use tax and the personal income tax, to enact the general consumption tax law and the temporary single rate income tax law and to phase out and repeal the corporation net income tax.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.