Senate Bill No. 617
(By Senators McCabe, Wells, Edgell, Foster, Minard, Deem, Unger
and Jenkins)
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[Introduced February 8, 2008; referred to the Committee on the
Judiciary; and then to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-5-13b, relating
to exempting manufacturing inventory from ad valorem property
taxation in the state.
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 §11-5-13b, to read as
follows:
ARTICLE 5. ASSESSMENT OF PERSONAL PROPERTY.
§11-5-13b. Application of exemption of manufacturing inventory.
(a) This section is intended to clarify the intent of the
Legislature and the citizens in establishing the exemption from ad
valorem property taxation granted by section one-c, article ten of
the West Virginia Constitution and section thirteen of this article as it pertains to manufacturing inventory. It is the intent of the
Legislature that the provisions of this section are to be liberally
construed in favor of a person claiming exemption from tax pursuant
to section one-c, article ten of the West Virginia Constitution and
section thirteen of this article.
(b) The term "manufacturing inventory" includes stocks of raw
or unfinished materials, unassembled parts, work in progress,
finished products, supplies and shipping containers.
(c) The term "manufacturer" means any person or business
entity that engages in activities in which materials are
substantially modified, altered or changed in the ordinary course
of the taxpayer's manufacturing, processing or production
operations in this state:
Provided, That person or business entity
is subject to regulation by any administrative agency of the United
States, including, but not limited to, the Department of Labor, the
Department of Transportation, the Environmental Protection Agency
or the Department of Homeland Security.
(d) In addition to the property exempt from ad valorem
taxation as proscribed in section thirteen-a, article six of this
chapter, manufacturing inventory owned by or consigned for any
manufacturer in West Virginia for a period of time not to exceed
one year is deemed to be moving in interstate commerce over the
territory of the state and therefore is exempt from ad valorem
property tax and does not have a tax situs in West Virginia for purposes of ad valorem taxation:
Provided, That a portion of the
manufacturer's finished goods is reasonably anticipated to be sold
to customers in West Virginia, the portion of the manufacturing
inventory that is exempt from taxation shall be the same as the
portion of the finished goods that is reasonably anticipated to be
sold to customers outside of West Virginia to the total of all
finished goods.
(e) The portion of the manufacturer's finished goods that will
be sold to customers outside of West Virginia may be established
through a historical sales or shipment analysis, either of which
uses information from the preceding calendar year, or other
reasonable documented method. Such other reasonable, documented
method may only be used in the case of a new business, in the case
of a substantial change in scope of an existing business or in
other unusual situations where a historical sales or shipment
analysis does not adequately reflect future anticipated shipments
to a final destination outside this state. It is not necessary
that the actual final destination be known as of the first day of
July in order to qualify for this exemption.
(f) It is hereby declared to be the policy of this state,
through the exemption of manufacturing inventory property from ad
valorem taxation to encourage the development and retention of
manufacturers in the State of West Virginia.
(g) This section is intended to be declarative of the law as of the enactment thereof and shall be fully retroactive.
NOTE: The purpose of this bill is to exempt manufacturing
inventory from ad valorem property taxation in this state.
This section is new; therefore, strike-throughs and
underscoring have been omitted.
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