H. B. 3048
(By Mr. Speaker, Mr. Thompson, and Delegate Armstead)
[By Request of the Executive]
(Originating in the House Committee on Finance)
[February 22, 2007]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-13Q-10a, relating
to the economic opportunity tax credit; providing credit for
specified high technology manufacturers; specifying
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 §11-13Q-10a, to read as
ARTICLE 13Q. ECONOMIC OPPORTUNITY TAX CREDIT.
§11-13Q-10a. Credit allowed for specified high technology
(a) High technology manufacturing business defined. -- For
purposes of this section, the term "high technology manufacturing business" means and is limited to only those businesses engaging in
a manufacturing activity properly classified as having one or more
of the following six-digit North American Industry Classification
System code numbers.
North American Industry
Classification System Code
Computer & Peripheral Equipment
Computer Storage Devices
Semiconductor & Related Devices
(b) Amount of credit allowed.
(1) Credit allowed. -- An eligible high technology
manufacturing business taxpayer is allowed a credit against the
portion of taxes imposed by this state that are attributable to and
the direct consequence of the eligible high technology
manufacturing business taxpayer's qualified investment in a new or
expanded high technology manufacturing business in this state which
results in the creation of at least twenty new jobs within twelve
months after placing qualified investment into service. The amount
of this credit is determined as provided in this section.
(2) Amount of credit. -- The annual amount of credit allowable
under this subsection is one hundred percent of the tax
attributable to qualified investment, for each consecutive year of
a twenty-year credit period.
(3) Application of credit. -- The annual credit allowance must
be taken beginning with the taxable year in which the taxpayer
places the qualified investment into service or use in this state,
unless the taxpayer elects to delay the beginning of the
twenty-year credit period until the next succeeding taxable year.
This election is made in the annual income tax return filed under
this chapter by the taxpayer for the taxable year in which the
qualified investment is first placed in service or use. Once made,
this election cannot be revoked. The annual credit allowance shall
be taken and applied against the taxes enumerated in section seven
of this article. The credit shall offset 100 percent of tax
attributable to qualified investment and shall be applied for a
period of twenty consecutive years without carryover.
(c) New jobs. -- The term "new jobs" has the meaning ascribed
to it in section three of this article.
(1) The term "new employee" has the meaning ascribed to it in
section three of this article: Provided, That this term does not
include employees filling new jobs who:
(A) Are related individuals, as defined in subsection (i),
section 51 of the Internal Revenue Code of 1986, or a person who owns ten percent or more of the business with such ownership
interest to be determined under rules set forth in subsection (b),
section 267 of the Internal Revenue Code of 1986; or
(B) Worked for the taxpayer during the six-month period ending
on the date the taxpayer's qualified investment is placed in
service or use and is rehired by the taxpayer during the six-month
period beginning on the date taxpayer's qualified investment is
placed in service or use.
(2) When a job is attributable. -- An employee's position is
directly attributable to the qualified investment if:
(A) The employee's service is performed or his or her base of
operations is at the new or expanded business facility;
(B) The position did not exist prior to the construction,
renovation, expansion or acquisition of the business facility and
the making of the qualified investment;
(C) But for the qualified investment, the position would not
have existed; and
(D) The median compensation of the new jobs attributable to
the qualified investment is greater than forty-five thousand
dollars per year: Provided, That this median compensation amount
shall be adjusted for inflation each year in accordance with the
provisions of this section.
(3) Median compensation adjusted for inflation. -- The median
compensation requirements applicable to high technology manufacturing business taxpayers for purposes of this section,
shall be adjusted for inflation by application of a cost-of-living
adjustment. The adjusted median compensation amount shall be
applicable, as adjusted, each year throughout the twenty-year
credit period. Failure of a taxpayer entitled to credit under this
section to meet the median compensation requirement for any year
will result in forfeiture of the credit for that year. However, if
in any succeeding year within the original twenty year credit
period, the taxpayer pays a median compensation to its employees
which exceeds the inflation adjusted median compensation amount for
that year, the taxpayer shall regain entitlement to take the credit
for that year only. No credit forfeited in a prior year shall be
taken, and the tax year or years to which the forfeited credit
would have been applied shall be forfeited and deducted from the
remainder of the years over which the credit can be taken.
(A) Cost-of-living adjustment. -- For purposes of this
section, the cost-of-living adjustment for any calendar year is the
percentage, if any, by which the consumer price index for the
preceding calendar year exceeds the consumer price index for the
calendar year two thousand seven.
(B) Consumer price index for any calendar year. -- For
purposes of this section, the consumer price index for any calendar
year is the average of the federal consumer price index as of the close of the twelve-month period ending on the thirty-first day of
August of such calendar year.
(C) Consumer price index. -- For purposes of this section, the
term "Federal Consumer Price Index" means the last consumer price
index for all urban consumers published by the United States
Department of Labor.
(D) Rounding. -- If any increase in the median compensation
amount under this section is not a multiple of fifty dollars, such
increase shall be rounded to the next lowest multiple of fifty
(d) Credit exclusion. --
(1) Any taxpayer that has taken the credit against tax
authorized under this section shall not be eligible for application
of the credit allowed under any other section of this article
during the twenty year credit period authorized by this section for
the same qualified investment on which credit allowed by this
article was taken.
(2) Any taxpayer that has taken the credit against tax
authorized under this section may not take the credit authorized
under any other provision of this code for the same qualified
investment on which credit allowed by this article was taken.
(e) Rules. -- The commissioner may prescribe such rules as he
or she determines necessary in order to determine the amount of credit allowed under this section to a taxpayer; to verify a
taxpayer's continued entitlement to claim the credit; and to verify
proper application of the credit allowed.
(f) Notices and reports. -- The commissioner may require a
taxpayer intending to claim credit under this section to file with
the commissioner a notice of intent to claim this credit before the
taxpayer begins reducing his or her monthly or quarterly
installment payments of estimated tax for the credit provided in
(g) Report to the Legislature. -- The Tax Commissioner shall
report to the Legislature by January 1, 2014, regarding the use of
this tax credit. The Tax Commissioner shall forward this report to
the Joint Committee on Government and Finance and the House and
Senate Finance Committees.