ENGROSSED
Senate Bill No. 588
(By Senators Fanning, Bailey, McKenzie and Kessler)
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[Introduced February 14, 2007; referred to the Committee on
Energy, Industry and Mining; and then to the Committee on
Finance.]
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A BILL to amend and reenact §11-13-2f of the Code of West Virginia,
1931, as amended, relating to removing the expiration date of
the tax on manufacturing or production of synthetic fuel from
coal which is scheduled to expire on the thirtieth day of
June, two thousand seven.
Be it enacted by the Legislature of West Virginia:
That §11-13-2f of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 13. BUSINESS AND OCCUPATION TAX.
§11-13-2f. Manufacturing or producing synthetic fuel from coal;
rate and measure of tax; definitions; dedication,
deposit and distribution of tax; expenditure of
distributions received by synthetic fuel-producing counties for economic development and infrastructure
improvement pursuant to plan approved by West
Virginia Development Office; priority for
expenditure of distributions received by other
county commissions; date for expiration of tax.
(a) Rate and measure of tax. -- There is hereby imposed an
annual tax, in accordance with section two of this article, upon
every person engaging or continuing within this state in the
business of manufacturing or producing synthetic fuel from coal for
sale, profit or commercial use, either directly or through the
activity of others, in whole or in part, and the amount of the tax
shall be equal to fifty cents per ton of synthetic fuel
manufactured or produced for sale, profit or commercial use during
the taxable year. When a fraction of a ton is included in the
measure of tax, the rate of tax as to that fraction of a ton shall
be proportional. The measure of tax is the total number of tons of
synthetic fuel product manufactured or produced in this state
during the taxable year for sale, profit or commercial use
regardless of the place of sale or the fact that deliveries may be
made to points outside this state. Liability for payment of this
tax shall accrue when the synthetic fuel product is sold by the
manufacturer or producer, determined by when the producer or
manufacturer recognizes gross receipts for federal income tax
purposes. When there is no sale of the synthetic fuel product, liability for tax shall accrue when the synthetic fuel product is
shipped from the manufacturing facility for commercial use, whether
by the taxpayer or by a related party, except as otherwise provided
in legislative rules promulgated by the Tax Commissioner as
provided in article three, chapter twenty-nine-a of this code.
(b) Definitions. -- For purposes of this section:
(1) "Fiscal year" means the fiscal year of this state.
(2) "Fuel" means material that produces usable heat or power
upon combustion.
(3) "Fuel manufactured or produced from coal" means liquid,
gaseous or solid fuels produced from coal, including, but not
limited to, such fuels when used as feedstocks.
(4) "Office of chief inspector" means the state Auditor as ex
officio chief inspector and supervisor of local government offices
in accordance with section eleven, article nine, chapter six of
this code.
(5) "Provisional share" means the portion of the Synthetic
Fuel-Producing Counties Grant Fund that is available for possible
distribution to each synthetic fuel-producing county. The amount
of each county's provisional share is derived by dividing the share
computation base by the number of synthetic fuel-producing counties
in this state during the fiscal year. The share computation base
is the sum of: (A) Net revenues deposited in the synthetic
fuel-producing counties grant fund for the fiscal year; and (B) any
amounts repooled for the fiscal year into the synthetic fuel-producing counties grant fund under this section; less (C) the
amount dedicated and allotted to the director of the Development
Office under this section for administration of the synthetic
fuel-producing counties grant program. A county shall be counted
as a synthetic fuel-producing county only if a synthetic
fuel-manufacturing plant actively produced synthetic fuel in the
county for at least one hundred eighty days during the fiscal year.
(6) "Synthetic fuel manufactured or produced from coal" or
"synthetic fuel" means and includes, but is not limited to, any
fuel that is made or formed into a briquette, fragment, sheet,
flake or other solid form by combining a binder or binding
substance with coal dust, coal fines, crushed coal, pulverized
coal, stoker fines, waste coal, coal or material derived from
slurry ponds, coal or material derived from gob piles or any
combination of the aforementioned materials without regard to
whether any federal tax credit is, or would have been, available
for or with relation to the production of such fuel. The term
"synthetic fuel manufactured or produced from coal" or "synthetic
fuel" also means, but is not limited to, fuel manufactured or
produced from coal for which credit is allowable for federal income
tax purposes under section twenty-nine of the United States
Internal Revenue Code, as in effect on the first day of January,
two thousand one, or for which credit would have been allowable if
the synthetic fuel was produced from a facility, or expansion of a
facility, that meets the requirement of section twenty-nine of the Internal Revenue Code or would have met the requirements on the
first day of January, two thousand one, notwithstanding that such
facility or expansion of a facility may have been placed in service
either prior to or subsequent to the first day of January, two
thousand one. "Synthetic fuel" does not include coke or coke gas.
(7) "Synthetic fuel-producing county" means a county of this
state in which a synthetic fuel-manufacturing plant is physically
located that actively produces synthetic fuel for at least one
hundred eighty days during the fiscal year. For purposes of
determining whether a county is a synthetic fuel-producing county,
the location of the synthetic fuel-manufacturing company
headquarters, the state of incorporation or organization of the
company or the location of any managerial office or facility or
other office or facility of the company, other than the synthetic
fuel-manufacturing plant, and the physical location where the coal
or other material used in synthetic fuel manufacturing is extracted
from the earth shall not be determinative of the designation of a
county as a synthetic fuel-producing county.
(8) "Synthetic fuel-nonproducing county" means any county of
this state other than a synthetic fuel-producing county.
(9) "Ton" means two thousand pounds.
(10) "Director of the Development Office" or "director" means
the director of the West Virginia Development Office created and
continued under article two, chapter five-b of this code.
(c) Credits not allowed against tax. -- When determining the amount of tax due under this section, no credit shall be allowed
under section three-c or three-d of this article or under any other
article of this chapter or any other chapter of this code unless it
is expressly provided that the credit applies to the business and
occupation tax on the privilege of manufacturing or producing
synthetic fuel.
(d) Emergency rule authorized. -- The Tax Commissioner may, in
the commissioner's discretion, promulgate an emergency rule as
provided in article three, chapter twenty-nine-a of this code that
clarifies, explains or implements the provisions of this section.
(e) Dedication and distribution of proceeds, creation of
funds. --
(1) The first four million dollars of the net amount of tax
collected during each fiscal year for exercise of the privilege
taxed under this section shall be deposited into the Mining and
Reclamation Operations Fund created in the State Treasury by
section thirty-two, article three, chapter twenty-two of this code.
(2) There is hereby created a fund in the State Treasury
entitled the Synthetic Fuel-Producing Counties Grant Fund which
shall be a revolving fund that shall carry over each fiscal year.
The net amount of tax collected for exercise of the privilege taxed
under this section in excess of the first four million dollars
during each fiscal year, not to exceed two million sixty thousand
dollars, shall be deposited in the Synthetic Fuel-Producing
Counties Grant Fund. Moneys in the Synthetic Fuel-Producing Counties Grant Fund in excess of moneys allocated to the director
of the Development Office shall be dedicated to and distributed
among the synthetic fuel-producing counties under the Synthetic
Fuel-Producing Counties Grant Program as provided in this section.
The county commission of a synthetic fuel-producing county shall
use ninety percent of the funds distributed to the county out of
the Synthetic Fuel-Producing Counties Grant Fund for infrastructure
improvement and ten percent of the funds distributed to the county
out of the Synthetic Fuel-Producing Counties Grant Fund for
economic development.
(3) There is hereby created in the State Treasury a fund
entitled the synthetic fuel-nonproducing counties fund which shall
be a revolving fund that shall carry over each fiscal year. The net
amount of tax collected for exercise of the privilege taxed under
this section in excess of the first six million sixty thousand
dollars during each fiscal year, not to exceed two million dollars,
shall be deposited in the synthetic fuel-nonproducing counties fund
and equally divided and distributed among the synthetic fuel-
nonproducing counties. The county commission of a synthetic fuel-
nonproducing county shall first use such moneys for Regional Jail
and Correctional Facility Authority and county jail expenses, and
shall use any remainder for such lawful public purposes as the
county commission may prescribe.
(4) The net amount of the tax collected in excess of eight
million sixty thousand dollars during each fiscal year shall be dedicated to the General Revenue Fund.
(5) The office of chief inspector shall annually determine
that a county's expenditures of moneys distributed under this
section is in compliance with the requirements of this section.
(6) For purposes of this subsection, "net amount of tax
collected" means the gross amount of tax collected under this
section less allowed refunds and credits.
(f) Administration of the Synthetic Fuel-Producing Counties
Grant Program. --
(1) The Director of the Development Office is hereby
authorized and empowered to administer the distribution of moneys
in the Synthetic Fuel-Producing Counties Grant Fund.
(A) On or before the plan submission due date prescribed by
the Director of the Development Office, the county commission of
each synthetic fuel-producing county may annually, or with such
frequency as may be prescribed by the Director of the Development
Office, submit a plan to the Director of the Development Office for
use of the county's provisional share of the synthetic
fuel-producing counties grant fund.
(B) A grant of moneys out of the Synthetic Fuel-Producing
Counties Grant Fund shall only be distributed to a synthetic
fuel-producing county or encumbered for the use of a synthetic
fuel-producing county after approval by the Director of the
Development Office of the plan for use of the county's provisional
share of the fund, submitted to the Director of the Development Office by the county commission. The Director of the Development
Office shall approve the synthetic fuel-producing county's plan for
use if the plan for use reasonably conforms to the requirements of
this section and the rules promulgated with relation thereto.
(C) If the county's plan is approved, the Director of the
Development Office may authorize a grant of money out of the
Synthetic Fuel-Producing Counties Grant Fund to the county to be
used by the county as specified in the approved plan for use.
(D) The Director of the Development Office may authorize
distribution of any amount encumbered for the use of the county and
carried over from a prior period in accordance with applicable
plans for use previously approved.
(E) The Director of the Development Office may authorize
encumbrances for any synthetic fuel-producing county of moneys in
the Synthetic Fuel-Producing Counties Grant Fund, up to the amount
of the county's provisional share for the fiscal year, for one or
more qualified uses specified in the county's plan for use if the
county's approved plan for use of the moneys sets forth a qualified
use for the county's provisional share over a period of several
fiscal years or a qualified use of the moneys calling for
accumulation and distribution to the county in one or more
subsequent fiscal years. Encumbered funds may carry over to
succeeding fiscal years and may be used to accumulate reserves over
a period of time for use by the county.
(F) In no case may an amount distributed to a synthetic fuel-producing county exceed the amount of a county's provisional
share for the fiscal year plus the amount of moneys encumbered in
the fund for the use of the particular county and carried over from
a prior period.
(2) The Director of the Development Office may approve
distributions of a county's provisional share of the Synthetic
Fuel-Producing Counties Grant Fund for use as the county's share
for state or federal matching funds programs so long as, in the
aggregate, ninety percent of the funds distributed to the county
out of the Synthetic Fuel-Producing Counties Grant Fund are used
for infrastructure improvement and ten percent of the funds
distributed to the county out of the Synthetic Fuel-Producing
Counties Grant Fund are used for economic development: Provided,
That no county may use any amount distributed out of the Synthetic
Fuel-Producing Counties Grant Fund as money to be matched under the
funds matching program authorized by subsection (b), section three,
article two, chapter five-b of this code.
(3) Repooling. --
(A) Any synthetic fuel-producing county that has failed to
have its plan, or amended and resubmitted plan or plans, approved
by the Director of the Development Office for a period of eighteen
months immediately subsequent to the initial plan submission date
shall lose its entitlement to the provisional share of revenues
deposited in the fund and attributable to the fiscal year to which
that plan relates and the provisional share that would have been attributable to that county for that fiscal year shall be pooled
with all other receipts in the Synthetic Fuel-Producing Counties
Grant Fund attributable to revenues for the fiscal year during
which the eighteen-month period ends and shall then be reallocated
equally to all synthetic fuel-producing counties as part of the
provisional share of each, as if the repooled moneys were tax
revenues deposited into the fund during the fiscal year in which
the eighteen-month period ended. For purposes of this subsection,
the "initial plan submission date" means the earlier of: (i) The
required submission date, as prescribed by the Director of the
Development Office, for the initial plan for use of the county's
provisional share of the Synthetic Fuel-Producing Counties Grant
Fund for the fiscal year, with such extensions of time to file as
may be authorized under rules promulgated by the Director of the
Development Office; or (ii) the actual date of submission of the
initial plan for the fiscal year. For purposes of this subsection,
the term "initial plan" means the first plan for use that was
submitted, or that should have been submitted, by a county for the
fiscal year, before the submission of any amended, revised or
resubmitted plan by the county for that fiscal year.
(B) Any synthetic fuel-producing county which fails to timely
submit a plan for use of its provisional share of the Synthetic
Fuel-Producing Counties Grant Fund, with such extensions of time to
file as may be authorized under rules promulgated by the Director
of the Development Office, shall lose its entitlement to its provisional share of revenues deposited in the fund and
attributable to that fiscal year and the provisional share that
would have been attributable to that county for that year shall be
pooled with all other receipts in the Synthetic Fuel-Producing
Counties Grant Fund attributable to revenues for the fiscal year
and shall be reallocated equally among the remaining synthetic
fuel-producing counties other than the county or counties that have
failed to timely file the plan for use and shall be made available
for distribution to those remaining counties, as part of their
provisional share for the fiscal year.
(C) Funds encumbered pursuant to approval of the Director of
the Development Office under this subsection shall not be subject
to repooling: Provided, That if the Director of the Development
Office determines that moneys previously distributed to a county
out of the Synthetic Fuel-Producing Counties Grant Fund have not
been used as required under the approved plan for the county or
determines that previously distributed moneys derived from
encumbered funds have not been used for the qualified purpose for
which the encumbrance was originally approved or if there appears
to be a reasonable probability that encumbered funds will not be
used for that qualified purpose, the Director of the Development
Office may revoke the encumbrance of any funds of that synthetic
fuel-producing county remaining in the fund and repool the funds so
encumbered for reallocation to all synthetic fuel-producing
counties. The Director of the Development Office may, in the director's discretion, give the county an opportunity to cure the
nonqualified use of moneys derived from the synthetic
fuel-producing counties grant fund or to submit an alternative plan
for use of the encumbered funds which may be approved by the
director if that plan complies with the requirements of this
section.
(g) Promulgation of rules by the director of the Development
Office authorized. -- The Director of the Development Office, in
his or her discretion, may promulgate an emergency rule as provided
in article three, chapter twenty-nine-a of this code that
clarifies, explains or implements the Synthetic Fuel-Producing
Counties Grant Program, distribution of moneys out of or
encumbrance of moneys in the Synthetic Fuel-Producing Counties
Grant Fund. The Director of the Development Office is hereby
granted continuing authority to promulgate in accordance with
article three, chapter twenty-nine-a of this code such
interpretive, legislative or procedural rules, or any combination
thereof, for administration of the Synthetic Fuel-Producing
Counties Grant Program as the Director of the Development Office
may find necessary and appropriate. The director of the
Development Office may prescribe criteria for qualification under
the infrastructure improvement use requirement and the economic
development requirement of this section.
(h) There is hereby dedicated and allocated to the West
Virginia Development Office sixty thousand dollars annually for administration of the Synthetic Fuel-Producing Counties Grant
Program under this section. Sixty thousand dollars shall be paid
out of the Synthetic Fuel-Producing Counties Grant Fund to the
director of the Development Office each fiscal year for
administration of the Synthetic Fuel-Producing Counties Grant
Program.
(i) Effective date. --
(1) This section as enacted in the year two thousand took
effect upon enactment. The measure of tax shall include all
synthetic fuel sold or shipped after the first day of January, two
thousand one, regardless of when the synthetic fuel was
manufactured or produced in this state.
(2) Amendments to this section enacted during the fifth
extraordinary session of the Legislature in the year two thousand
one shall have retroactive effect to the first day of January, two
thousand one, and the measure of tax shall include all synthetic
fuel sold or shipped after the first day of January, two thousand
one, regardless of when the synthetic fuel was manufactured or
produced in this state.
(j) Expiration date. -- The tax imposed in this section shall
expire and become void and of no effect for synthetic fuels
produced after the thirtieth day of June, two thousand seven.