Introduced Version
Senate Bill 531 History
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Senate Bill No. 531
(By Senators Sprouse, Yoder, Guills and Harrison)
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[Introduced February 8, 2006; referred to the Committee
on Finance.]
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A BILL to amend and reenact §11-15-9 of the Code of West
Virginia, 1931, as amended, relating to consumers sales and
service tax on food.
Be it enacted by the Legislature of West Virginia:
That §11-15-9 of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 15. CONSUMERS SALES TAX.
§11-15-9. 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 the Tax 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 of tangible personal
property and services are exempt as provided in this subsection:
(1) Sales of gas, steam and water delivered to consumers
through mains or pipes and sales of electricity;
(2) Sales 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;
(3) Sales of property or services to this state, its
institutions or subdivisions, governmental units, institutions or
subdivisions of other states: Provided, That the law of the
other state provides 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;
(4) Sales of vehicles which are titled by the Division of
Motor Vehicles and which are subject to the tax imposed by
section four, article three, chapter seventeen-a of this code or
like tax;
(5) Sales 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;
(6) Sales of tangible personal property or services to a
corporation or organization which has a current registration
certificate issued under article twelve of this chapter, 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) or (c)(4) 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 sales of gasoline or special fuel or to sales 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. The exemption granted in this subdivision applies only to 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 of
gasoline or special fuel;
(7) An isolated transaction in which any 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;
(8) Sales of tangible personal property or of any taxable
services rendered for use or consumption in connection with the
commercial production of an agricultural product the ultimate sale of which is subject to the tax imposed by this article or
which would have been subject to tax under this article:
Provided, That sales of tangible personal property and services
to be used or consumed in the construction of or permanent
improvement to real property and sales of gasoline and special
fuel are not exempt: Provided, however, That nails and fencing
may not be considered as improvements to real property;
(9) Sales of tangible personal property to a person for the
purpose of resale in the form of tangible personal property:
Provided, That sales of gasoline and special fuel by distributors
and importers is 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 not exempt under this
subdivision;
(10) Sales of newspapers when delivered to consumers by
route carriers;
(11) Sales of drugs, durable medical goods, mobility-
enhancing equipment and prosthetic devices dispensed upon
prescription and sales of insulin to consumers for medical
purposes. The amendment to this subdivision shall apply to sales made after the thirty-first day of December, two thousand three;
(12) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(13) Sales and services performed by day care centers;
(14) 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 (6) of this subsection on its purchases of tangible
personal property or services. 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: Provided, That sales for volunteer fire departments and
volunteer school support groups, with duration of events being no
more than eighty-four consecutive hours at a time, which are held
no more than eighteen times in a twelve-month period for the purposes of this subdivision are considered "casual and
occasional sales not conducted in a repeated manner or in the
ordinary course of repetitive and successive transactions of a
like character";(15) 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;
(16) Sales of lottery tickets and materials 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;
(17) Leases of motor vehicles titled pursuant to the
provisions of article three, chapter seventeen-a of this code to
lessees for a period of thirty or more consecutive days;
(18) Notwithstanding the provisions of section eighteen or
eighteen-b of this article or any other provision of this article
to the contrary, sales of propane to consumers for poultry house
heating purposes, with any seller to the consumer who may have
prior paid the tax in his or her price, to not pass on the same
to the consumer, but to make application and receive refund of the tax from the Tax Commissioner pursuant to rules which are
promulgated after being proposed for legislative approval in
accordance with chapter twenty-nine-a of this code by the Tax
Commissioner;
(19) Any sales of tangible personal property or services
purchased and 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;
(20) Sales of tickets for activities sponsored by elementary
and secondary schools located within this state;
(21) Sales of electronic data processing services and
related software: Provided, That for the purposes of this
subdivision, "electronic data processing services" means:
(A) The processing of another's data, including all
processes incident to processing of data such as keypunching,
keystroke verification, rearranging or sorting of previously
documented data for the purpose of data entry or automatic
processing and changing the medium on which data is sorted,
whether these processes are done by the same person or several
persons; and
(B) Providing access to computer equipment for the purpose
of processing data or examining or acquiring data stored in or accessible to the computer equipment;
(22) Tuition charged for attending educational summer camps;
(23) Dispensing of services performed by one corporation,
partnership or limited liability company 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, equity
interests or membership interests possessing fifty percent or
more of the total combined voting power of all classes of the
stock of a corporation, equity 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;
(24) Food for the following are exempt:
(A) Food 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 during normal school hours; but not
those sales of food made to the general public;
(B) Food purchased or sold by a public or private college or
university or by a student organization officially recognized by the 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 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 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 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 out
those functions and activities: Provided, That purchases made by
the organizations are not exempt as a purchase for resale; or
(G) Food sold 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, when the 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;
(25) 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 is 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;
(26) Charges for room and meals by fraternities and sororities to their members: Provided, That the purchases made
by a fraternity or sorority are not exempt as a purchase for
resale;
(27) Sales of or charges for the transportation of
passengers in interstate commerce;
(28) Sales 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;
(29) Sales of tangible personal property or services to any
person who claims exemption from the tax imposed by this article
or article fifteen-a of this chapter pursuant to the provision of
any other chapter of this code;
(30) Charges for the services of opening and closing a
burial lot;
(31) Sales of livestock, poultry or other farm products in
their original state by the producer of the livestock, poultry or
other farm products or a member of the producer's immediate
family who is not otherwise engaged in making retail sales of
tangible personal property; and sales of livestock sold at public
sales sponsored by breeders or registry associations or livestock
auction markets: Provided, That the exemptions allowed by this
subdivision may be claimed without presenting or obtaining
exemption certificates provided the farmer maintains adequate
records;
(32) Sales of motion picture films to motion picture
exhibitors for exhibition if the sale of tickets or the charge
for admission to the exhibition of the film is subject to the tax
imposed by this article and sales of coin-operated video arcade
machines or video arcade games to a person engaged in the
business of providing the machines to the public for a charge
upon which the tax imposed by this article is remitted to the Tax
Commissioner: Provided, That the exemption provided in this
subdivision may be claimed by presenting to the seller a properly
executed exemption certificate;
(33) Sales of aircraft repair, remodeling and maintenance
services when the services are to an aircraft operated by a
certified or licensed carrier of persons or property, or by a
governmental entity, or to an engine or other component part of
an aircraft operated by a certificated or licensed carrier of
persons or property, or by a governmental entity and sales of
tangible personal property that is permanently affixed or
permanently attached as a component part of an aircraft owned or
operated by a certificated or licensed carrier of persons or
property, or by a governmental entity, as part of the repair,
remodeling or maintenance service and sales of machinery, tools
or equipment, directly used or consumed exclusively in the
repair, remodeling or maintenance of aircraft, aircraft engines
or aircraft component parts, for a certificated or licensed carrier of persons or property, or for a governmental entity;
(34) Charges for memberships or services provided by health
and fitness organizations relating to personalized fitness
programs;
(35) Sales of 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 five
thousand dollars in a taxable year;
(36) Sales of services by public libraries or by libraries
at academic institutions or by libraries at institutions of
higher learning;
(37) Commissions received by a manufacturer's
representative;
(38) Sales of primary opinion research services when:
(A) The services are provided to an out-of-state client;
(B) The results of the service activities, including, but
not limited to, reports, lists of focus group recruits and
compilation of data are transferred to the client across state
lines by mail, wire or other means of interstate commerce, for
use by the client outside the State of West Virginia; and
(C) The transfer of the results of the service activities is
an indispensable part of the overall service.
For the purpose of this subdivision, the term "primary
opinion research" means original research in the form of telephone surveys, mall intercept surveys, focus group research,
direct mail surveys, personal interviews and other data
collection methods commonly used for quantitative and qualitative
opinion research studies;
(39) Sales of property or services to persons within the
state when those sales are for the purposes of the production of
value-added products: Provided, That the exemption granted in
this subdivision applies only to services, equipment, supplies
and materials directly used or consumed by those persons engaged
solely in the production of value-added products: Provided,
however, That this exemption may not be claimed by any one
purchaser for more than five consecutive years, except as
otherwise permitted in this section.
For the purpose of this subdivision, the term "value-added
product" means the following products derived from processing a
raw agricultural product, whether for human consumption or for
other use. For purposes of this subdivision, the following
enterprises qualify as processing raw agricultural products into
value-added products: Those engaged in the conversion of:
(A) Lumber into furniture, toys, collectibles and home
furnishings;
(B) Fruits into wine;
(C) Honey into wine;
(D) Wool into fabric;
(E) Raw hides into semifinished or finished leather
products;
(F) Milk into cheese;
(G) Fruits or vegetables into a dried, canned or frozen
product;
(H) Feeder cattle into commonly accepted slaughter weights;
(I) Aquatic animals into a dried, canned, cooked or frozen
product; and
(J) Poultry into a dried, canned, cooked or frozen product;
(40) Sales of music instructional services by a music
teacher and artistic services or artistic performances of an
entertainer or performing artist pursuant to a contract with the
owner or operator of a retail establishment, restaurant, inn,
bar, tavern, sports or other entertainment facility or any other
business location in this state in which the public or a limited
portion of the public may assemble to hear or see musical works
or other artistic works be performed for the enjoyment of the
members of the public there assembled when the amount paid by the
owner or operator for the artistic service or artistic
performance does not exceed three thousand dollars: Provided,
That nothing contained herein may be construed to deprive private
social gatherings, weddings or other private parties from
asserting the exemption set forth in this subdivision. For the
purposes of this exemption, artistic performance or artistic service means and is limited to the conscious use of creative
power, imagination and skill in the creation of aesthetic
experience for an audience present and in attendance and
includes, and is limited to, stage plays, musical performances,
poetry recitations and other readings, dance presentation,
circuses and similar presentations and does not include the
showing of any film or moving picture, gallery presentations of
sculptural or pictorial art, nude or strip show presentations,
video games, video arcades, carnival rides, radio or television
shows or any video or audio taped presentations or the sale or
leasing of video or audio tapes, air shows, or any other public
meeting, display or show other than those specified herein:
Provided, however, That nothing contained herein may be construed
to exempt the sales of tickets from the tax imposed in this
article. The State Tax Commissioner shall propose a legislative
rule pursuant to article three, chapter twenty-nine-a of this
code establishing definitions and eligibility criteria for
asserting this exemption which is not inconsistent with the
provisions set forth herein: Provided further, That nude dancers
or strippers may not be considered as entertainers for the
purposes of this exemption;
(41) Charges to a member by a membership association or
organization which is exempt from paying federal income taxes
under Section 501(c)(3) or (c)(6) of the Internal Revenue Code of 1986, as amended, for membership in the association or
organization, including charges to members for newsletters
prepared by the association or organization for distribution
primarily to its members, charges to members for continuing
education seminars, workshops, conventions, lectures or courses
put on or sponsored by the association or organization, including
charges for related course materials prepared by the association
or organization or by the speaker or speakers for use during the
continuing education seminar, workshop, convention, lecture or
course, but not including any separate charge or separately
stated charge for meals, lodging, entertainment or transportation
taxable under this article: Provided, That the association or
organization pays the tax imposed by this article on its
purchases of meals, lodging, entertainment or transportation
taxable under this article for which a separate or separately
stated charge is not made. A membership association or
organization which is exempt from paying federal income taxes
under Section 501(c)(3) or (c)(6) of the Internal Revenue Code of
1986, as amended, may elect to pay the tax imposed under this
article on the purchases for which a separate charge or
separately stated charge could apply and not charge its members
the tax imposed by this article or the association or
organization may avail itself of the exemption set forth in
subdivision (9) of this subsection relating to purchases of tangible personal property for resale and then collect the tax
imposed by this article on those items from its member;
(42) Sales of governmental services or governmental
materials by county assessors, county sheriffs, county clerks or
circuit clerks in the normal course of local government
operations;
(43) Direct or subscription sales by the Division of Natural
Resources of the magazine currently entitled "Wonderful West
Virginia" and by the Division of Culture and History of the
magazine currently entitled "Goldenseal" and the journal
currently entitled "West Virginia History";
(44) Sales of soap to be used at car wash facilities;
(45) Commissions received by a travel agency from an
out-of-state vendor;
(46) The service of providing technical evaluations for
compliance with federal and state environmental standards
provided by environmental and industrial consultants who have
formal certification through the West Virginia Department of
Environmental Protection or the West Virginia Bureau for Public
Health or both. For purposes of this exemption, the service of
providing technical evaluations for compliance with federal and
state environmental standards includes those costs of tangible
personal property directly used in providing such services that
are separately billed to the purchaser of such services and on which the tax imposed by this article has previously been paid by
the service provider;
(47) Sales 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;
(48) Lodging franchise fees, including royalties, marketing
fees, reservation system fees or other fees assessed after the
first day of December, one thousand nine hundred ninety-seven,
that have been or may be imposed by a lodging franchiser as a
condition of the franchise agreement; and
(49) Sales of the regulation size United States flag and the
regulation size West Virginia flag for display; and
(50)
Sales of food and food products, sold for human
consumption off the premises, where sold is exempt from consumer
sales tax according to the following schedule:
(A) On and after the first day of January, two thousand
seven, the consumer sales tax on food and food products, sold for
human consumption off the premises, where sold is reduced to four
percent;
(B) On and after the first day of January, two thousand eight, the consumer sales tax on food and food products, sold for
human consumption off the premises, where sold is reduced to two
percent.
(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-d of this article, give to the vendor his or her
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 of property or services to bona fide charitable
organizations who 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 of services, machinery, supplies and materials
directly used or consumed in the activities of manufacturing,
transportation, transmission, communication, production of
natural resources, gas storage, generation or production or
selling electric power, provision of a public utility service or
the operation of a utility service or the operation of a utility
business, in the businesses or organizations named in this subdivision and does not apply to purchases of gasoline or
special fuel;
(3) Sales of property or services 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) Sales and services, fire fighting or station house
equipment, including construction and automotive, made to any
volunteer fire department organized and incorporated under the
laws of the State of West Virginia: Provided, That sales of
gasoline and special fuel are taxable; and
(5) Sales of building materials or building supplies or
other property to an organization qualified under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as
amended, which are to be installed in, affixed to or incorporated
by the organization or its agent into real property or into a
building or structure which is or will be used as permanent
low-income housing, transitional housing, an emergency homeless
shelter, a domestic violence shelter or an emergency children and
youth shelter if the shelter is owned, managed, developed or
operated by an organization qualified under Section 501(c)(3) or
(c)(4) of the Internal Revenue Code of 1986, as amended.
NOTE: The purpose of this bill is to establish the Food Tax Relief Act and to eliminate by a three-year phase-out the
consumer sales tax on food and food products sold for human
consumption off the premises where sold.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.