ENROLLED
Senate Bill No. 129
(By Senators Craigo, Plymale and Oliverio)
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[Passed February 19, 1996; in effect from passage.]
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AN ACT to amend and reenact sections five-a, nine and twenty-
seven, article twenty-three, chapter eleven of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; to further amend said article by adding thereto a
new section, designated section nine-a; to amend and reenact
sections seven-b, thirteen-a and twenty-four, article
twenty-four of said chapter; and to further amend said
article by adding thereto a new section, designated section
thirty-eight, all relating generally to how financial
organizations and other corporations determine tax
liability, file returns and pay business franchise and
corporation net income taxes; and specifying effective dates.
Be it enacted by the Legislature of West Virginia:
That sections five-a, nine and twenty-seven, article twenty-
three, chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted;
that said article twenty-three be further amended by adding
thereto a new section, designated section nine-a; that sections
seven-b, thirteen-a and twenty-four, article twenty-four of said
chapter be amended and reenacted; and that said article twenty-
four be further amended by adding thereto a new section,
designated section thirty-eight, all to read as follows:
ARTICLE 23. BUSINESS FRANCHISE TAX.
§11-23-5a. Special apportionment rules -- Financial
organizations.
(a)
General. -- The Legislature hereby finds that the
general formula set forth in section five of this article for
apportioning the tax base of corporations and partnerships
taxable in this state as well as in another state is
inappropriate for use by financial organizations due to the
particular characteristics of those organizations and the manner
in which their business is conducted. Accordingly, the general
formula set forth in section five of this article may not be used to apportion the tax base of such financial organizations which
shall use only the apportionment formula and methods set forth in
this section.
(b)
West Virginia financial organizations taxable in another
state. -- A financial organization that has its commercial
domicile in this state and which is taxable in another state may
not apportion its tax base as provided in section five of this
article, but shall allocate all of its tax base to West Virginia
without apportionment:
Provided, That such financial
organization shall be allowed as a credit against its tax
liability under this article the credit described in section
twenty-seven of this article.
(c)
Out-of-state financial organizations with business
activities in this state. -- A financial organization that does
not have its commercial domicile in this state and which
regularly engages in business in this state shall apportion its
tax base to this state by multiplying it by the special gross
receipts factor calculated as provided in subsection (f) of this
section. The product of this multiplication is the portion of
its tax base that is attributable to business activity in this
state.
(d)
Engaging in business -- nexus presumptions and
exclusions. -- A financial organization that has its commercial
domicile in another state is presumed to be regularly engaging in
business in this state if during any year it obtains or solicits
business with twenty or more persons within this state, or if the
sum of the value of its gross receipts attributable to sources in
this state equals or exceeds one hundred thousand dollars.
However, gross receipts from the following types of property (as
well as those contacts with this state reasonably and exclusively
required to evaluate and complete the acquisition or disposition
of the property, the servicing of the property or the income from
it, the collection of income from the property, or the
acquisition or liquidation of collateral relating to the
property) shall not be a factor in determining whether the owner
is engaging in business in this state:
(1) An interest in a real estate mortgage investment
conduit, a real estate investment trust or a regulated investment
company;
(2) An interest in a loan backed security representing
ownership or participation in a pool of promissory notes or
certificates of interest that provide for payments in relation to payments or reasonable projections of payments on the notes or
certificates;
(3) An interest in a loan or other asset from which the
interest is attributed to a consumer loan, a commercial loan or
a secured commercial loan, and in which the payment obligations
were solicited and entered into by a person that is independent,
and not acting on behalf, of the owner;
(4) An interest in the right to service or collect income
from a loan or other asset from which interest on the loan is
attributed as a loan described in the previous paragraph, and in
which the payment obligations were solicited and entered into by
a person that is independent, and not acting on behalf, of the
owner; and
(5) Any amounts held in an escrow or trust account with
respect to property described above.
(e)
Definitions. -- For purposes of this section:
(1) "Commercial domicile". See section three of this
article.
(2) "Deposit" means: (A) The unpaid balance of money or
its equivalent received or held by a financial organization in
the usual course of business and for which it has given or it is obligated to give credit, either conditionally or
unconditionally, to a commercial, checking, savings, time or
thrift account whether or not advance notice is required to
withdraw the credit funds, or which is evidenced by a certificate
of deposit, thrift certificate, investment certificate or
certificate of indebtedness, or other similar name, or a check or
draft drawn against a deposit account and certified by the
financial organization, or a letter of credit or a traveler's
check on which the financial organization is primarily liable:
Provided, That without limiting the generality of the term "money
or its equivalent", any such account or instrument must be
regarded as evidencing the receipt of the equivalent of money
when credited or issued in exchange for checks or drafts or for
a promissory note upon which the person obtaining any such credit
or instrument is primarily or secondarily liable or for a charge
against a deposit account or in settlement of checks, drafts or
other instruments forwarded to such bank for collection;
(B) Trust funds received or held by such financial
organization, whether held in the trust department or held or
deposited in any other department of such financial organization;
(C) Money received or held by a financial organization or the credit given for money or its equivalent received or held by
a financial organization in the usual course of business for a
special or specific purpose, regardless of the legal relationship
thereby established, including, without being limited to, escrow
funds, funds held as security for an obligation due the financial
organization or other (including funds held as dealers' reserves)
or for securities loaned by the financial organization, funds
deposited by a debtor to meet maturing obligations, funds
deposited as advance payment on subscriptions to United States
government securities, funds held for distribution or purchase of
securities, funds held to meet its acceptances or letters of
credit and withheld taxes:
Provided, That there shall not be
included funds which are received by the financial organization
for immediate application to the reduction of an indebtedness to
the receiving financial organization, or under condition that the
receipt thereof immediately reduces or extinguishes such an
indebtedness;
(D) Outstanding drafts (including advice or authorization
to charge a financial organization's balance in another such
organization), cashier's checks, money orders or other officer's
checks issued in the usual course of business for any purpose, but not including those issued in payment for services, dividends
or purchases or other costs or expenses of the financial
organization itself; and
(E) Money or its equivalent held as a credit balance by a
financial organization on behalf of its customer if such entity
is engaged in soliciting and holding such balances in the regular
course of its business.
(3) "Financial organization" means a financial organization
as defined in subdivision (13), subsection (b), section three of
this article, as well as a partnership which derives more than
fifty percent of its gross business income from one or more of
the activities enumerated in subparagraphs (1) through (6),
paragraph (C) of said subdivision.
(4) "Sales" means: For purposes of apportionment under
this section, the gross receipts of a financial organization
included in the gross receipts factor described in subsection (f)
of this section, regardless of their source.
(f)
Special gross receipts factor. -- The gross receipts
factor is a fraction, the numerator of which is the total gross receipts of the taxpayer from sources within this state during
the taxable year and the denominator of which is the total gross
receipts of the taxpayer wherever earned during the taxable year:
Provided, That neither the numerator nor the denominator of the
gross receipts factor shall include receipts from obligations
described in paragraphs (A), (B), (C) and (D), subdivision (1),
subsection (f), section six, article twenty-four of this chapter.
(1)
Numerator. -- The numerator of the gross receipts factor
shall include, in addition to items otherwise includable in the
sales factor under section five of this article, the following:
(A) Gross receipts from the lease or rental of real or
tangible personal property (whether as the economic equivalent of
an extension of credit or otherwise) if the property is located
in this state;
(B) Interest income and other receipts from assets in the
nature of loans which are secured primarily by real estate or
tangible personal property if such security property is located
in the state. In the event that such security property is also
located in one or more other states, such receipts shall be
presumed to be from sources within this state, subject to
rebuttal based upon factors described in rules to be promulgated by the tax commissioner, including the factor that the proceeds
of any such loans were applied and used by the borrower entirely
outside of this state;
(C) Interest income and other receipts from consumer loans
which are unsecured or are secured by intangible property that
are made to residents of this state, whether at a place of
business, by traveling loan officer, by mail, by telephone or
other electronic means or otherwise;
(D) Interest income and other receipts from commercial
loans and installment obligations which are unsecured or are
secured by intangible property if and to the extent that the
borrower or debtor is a resident of or is domiciled in this
state:
Provided, That such receipts are presumed to be from
sources in this state and such presumption may be overcome by
reference to factors described in rules to be promulgated by the
tax commissioner, including the factor that the proceeds of any
such loans were applied and used by the borrower entirely outside
of this state;
(E) Interest income and other receipts from a financial
organization's syndication and participation in loans, under the
rules set forth in (A) through (D), above;
(F) Interest income and other receipts, including service
charges, from financial institution credit card and travel and
entertainment credit card receivables and credit card holders'
fees if the borrower or debtor is a resident of this state or if
the billings for any such receipts are regularly sent to an
address in this state;
(G) Merchant discount income derived from financial
institution credit card holder transactions with a merchant
located in this state. In the case of merchants located within
and without this state, only receipts from merchant discounts
attributable to sales made from locations within this state shall
be attributed to this state. It shall be presumed, subject to
rebuttal, that the location of a merchant is the address shown on
the invoice submitted by the merchant to the taxpayer;
(H) Gross receipts from the performance of services are
attributed to this state if:
(i) The service receipts are loan-related fees, including
loan servicing fees, and the borrower resides in this state,
except that, at the taxpayer's election, receipts from loan-
related fees which are either: (I) "Pooled" or aggregated for
collective financial accounting treatment; or (II) manually written as nonrecurring extraordinary charges to be processed
directly to the general ledger may either be attributed to a
state based upon the borrowers' residences or upon the ratio that
total interest sourced to that state bears to total interest from
all sources;
(ii) The service receipts are deposit-related fees and the
depositor resides in this state, except that, at the taxpayer's
election, receipts from deposit-related fees which are either:
(I) "Pooled" or aggregated for collective financial accounting
treatment; or (II) manually written as nonrecurring extraordinary
charges to be processed directly to the general ledger may either
be attributed to a state based upon the depositors' residences or
upon the ratio that total deposits sourced to that state bears to
total deposits from all sources;
(iii) The service receipt is a brokerage fee and the
account holder is a resident of this state;
(iv) The service receipts are fees related to estate or
trust services and the estate's decedent was a resident of this
state immediately before death, or the grantor who either funded
or established the trust is a resident of this state; or
(v) The service receipt is associated with the performance of any other service not identified above and the service is
performed for an individual resident of, or for a corporation or
other business domiciled in, this state and the economic benefit
of such service is received in this state;
(I) Gross receipts from the issuance of travelers' checks
and money orders if such checks and money orders are purchased in
this state; and
(J) All other receipts not attributed by this rule to a
state in which the taxpayer is taxable shall be attributed
pursuant to the laws of the state of the taxpayer's commercial
domicile.
(2)
Denominator. -- The denominator of the gross receipts
factor shall include all of the taxpayer's gross receipts from
transactions of the kind included in the numerator, but without
regard to their source or situs.
(g)
Effective date. -- The provisions of this section
enacted in chapter one hundred sixty-seven, acts of the
Legislature, one thousand nine hundred ninety-one, shall apply to
all taxable years beginning on or after the first day of January,
one thousand nine hundred ninety-one. The amendments to this section, enacted in the year one thousand nine hundred ninety-
six, shall apply to taxable years beginning after the thirty-
first day of December, one thousand nine hundred ninety-five.
§11-23-9. Annual returns.
(a)
In general. -- Every person subject to the tax imposed
by this article shall make and file an annual return for its
taxable year with the tax commissioner on or before:
(1) The fifteenth day of the third month of the next
succeeding taxable year if the person is a corporation; or
(2) The fifteenth day of the fourth month of the next
succeeding taxable year if the corporation is a partnership.
The annual return shall include such information as the tax
commissioner may require for determining the amount of taxes due
under this article for the taxable year.
(b)
Special rule for tax exempt organizations with unrelated
business taxable income. -- Notwithstanding the provisions of
subsection (a) of this section, when a business franchise tax
return is required from an organization generally exempt from tax
under subsection (b), section seven of this article, which has
unrelated business taxable income, the annual return shall be
filed on or before the fifteenth day of the fifth month following the close of the taxable year.
(c)
Effective date. -- The amendments to this section, made
in the year one thousand nine hundred ninety-six, shall apply to
tax returns that become due for taxable years beginning on or
after the first day of that year.
§11-23-9a. Method of filing for business taxes.
(a)
Privilege to file consolidated return. -- An affiliated
group of corporations (as defined for purposes of filing a
consolidated federal income tax return) shall, subject to the
provisions of this section and in accordance with any regulations
prescribed by the tax commissioner, have the privilege of filing
a consolidated return with respect to the tax imposed by this
article for the taxable year in lieu of filing separate returns.
The making of a consolidated return shall be upon the condition
that all corporations which at any time during the taxable year
have been members of the affiliated group are included in such
return and consent to the filing of such return. The filing of
a consolidated return shall be considered as such consent. When
a corporation is a member of an affiliated group for a fractional
part of the year, the consolidated return shall include the tax base of such corporation for that part of the year during which
it is a member of the affiliated group.
(b)
Election binding. -- If an affiliated group of
corporations elects to file a consolidated return under this
article, such election once made shall not be revoked for any
subsequent taxable year without the written approval of the tax
commissioner consenting to the revocation.
(c)
Consolidated return -- financial organizations. -- An
affiliated group that includes one or more financial
organizations may elect under this section to file a consolidated
return when that affiliated group complies with all of the
following rules:
(1) The affiliated group of which the financial organization
is a member must file a federal consolidated income tax return
for the taxable year;
(2) All members of the affiliated group included in the
federal consolidated return must consent to being included in the
consolidated return filed under this article. The filing of a
consolidated return under this article is conclusive proof of
such consent;
(3) The taxable capital of the affiliated group shall be the sum of:
(A) The pro forma West Virginia taxable capital of all
financial organizations having their commercial domicile in this
state that are included in the federal consolidated return, as
shown on a combined pro forma West Virginia return prepared for
such financial organizations; plus
(B) The pro forma West Virginia taxable capital of all
financial organizations not having their commercial domicile in
this state that are included in the federal consolidated return,
as shown on a combined pro forma West Virginia return prepared
for such financial organizations; plus
(C) The pro forma West Virginia taxable capital of all other
members included in the federal consolidated income tax return,
as shown on a combined pro forma West Virginia return prepared
for all such nonfinancial organization members, except that the
capital, apportionments factors and other items considered when
determining tax liability shall not be included in the pro forma
return prepared under this paragraph for a member that is totally
exempt from tax under section seven of this article, or for a
member that is subject to a different special industry
apportionment rule provided for in this article. When a different special industry apportionment rule applies, the
taxable capital of a member(s) subject to that special industry
apportionment rule shall be determined on a separate pro forma
West Virginia return for the member(s) subject to that special
industry rule and the taxable capital so determined shall be
included in the consolidated return;
(4) The West Virginia consolidated return is prepared in
accordance with regulations of the tax commissioner promulgated
as provided in article three, chapter twenty-nine-a of this code;
and
(5) The filing of a consolidated return does not distort the
taxable capital of the affiliated group. In any proceeding, the
burden of proof that the taxpayer's method of filing does not
distort taxable capital under this article shall be upon the
taxpayer.
(d)
Combined return. -- A combined return may be filed under
this article by a unitary group, including a unitary group that
includes one or more financial organizations, only pursuant to
the prior written approval of the tax commissioner. A request
for permission to file a combined return must be filed on or
before the statutory due date of the return, determined without inclusion of any extension of time to file the return.
Permission to file a combined return may be granted by the tax
commissioner only when taxpayer submits evidence that
conclusively establishes that failure to allow the filing of a
combined return will result in an unconstitutional distortion of
the measure of tax under this article. When permission to file
a combined return is granted, combined filing will be allowed for
the year(s) stated in the tax commissioner's letter. The
combined return must be filed in accordance with regulations of
the tax commissioner promulgated in accordance with article
three, chapter twenty-nine-a of this code.
(e)
Method of filing under this article deemed controlling
for purposes of other business taxes articles. -- The taxpayer
shall file on the same basis under article twenty-four of this
chapter as such taxpayer files under this article for the taxable
year.
(f)
Regulations. -- The tax commissioner shall prescribe
such regulations as he may deem necessary in order that the tax
liability of any affiliated group of corporations filing a
consolidated return, or of any unitary group of corporations
filing a combined return, and of each corporation in an affiliated or unitary group, both during and after the period of
affiliation, may be returned, determined, computed, assessed,
collected and adjusted, in such manner as the tax commissioner
deems necessary to clearly reflect tax liability under this
article and the factors necessary for the determination of such
liability, and in order to prevent avoidance of such tax
liability.
(g)
Computation and payment of tax. -- In any case in which
a consolidated or combined return is filed, or required to be
filed, the tax due under this article from the affiliated or
unitary group shall be determined, computed, assessed, collected
and adjusted in accordance with regulations prescribed by the tax
commissioner, in effect on the last day prescribed by section
nine of this article for the filing of such return, and such
affiliated or unitary group, as the case may be, shall be treated
as the taxpayer. However, when any member of an affiliated or
unitary group that files a consolidated or combined return under
this article is allowed to claim credit against its tax liability
under this article for payment of any other tax, the amount of
credit allowed may not exceed that member's proportionate share
of the affiliated or unitary group's precredit tax liability under this article, as shown on its pro forma return.
(h)
Consolidated or combined return may be required. -- If
any affiliated group of corporations has not elected to file a
consolidated return, or if any unitary group of corporations has
not applied for permission to file a combined return, the tax
commissioner may require such corporations to make a consolidated
or combined return, as the case may be, in order to clearly
reflect taxable capital of such corporations.
(i)
Effective date. -- This section shall apply to taxable
years beginning on or after the first day of January, one
thousand nine hundred ninety-six, except that financial
organizations that are part of an affiliated group may elect,
after the effective date of this act, to file a consolidated
return prepared in accordance with the provisions of this section
and subject to applicable statutes of limitation, for taxable
years beginning on or after the first day of January, one
thousand nine hundred ninety-one, but before the first day of
January, one thousand nine hundred ninety-six, notwithstanding
provisions then in effect prohibiting out-of-state financial
organizations from filing consolidated returns for those years:
Provided, That when the statute of limitations on filing an amended return for any of those years expires before the first
day of July, one thousand nine hundred ninety-six, the
consolidated return for such year, if filed, must be filed by
said first day of July.
§11-23-27. Credit for franchise tax paid to another state.
(a) Effective for taxable years beginning on or after the
first day of January, one thousand nine hundred ninety-one, and
notwithstanding any provisions of this code to the contrary, any
financial organization having its commercial domicile in this
state shall be allowed a credit against the tax imposed by this
article for any taxable year for taxes paid to another state.
That credit shall be equal in amount to the lesser of:
(1) The taxes such financial organization shall actually
have paid, which payments were made on or before the filing date
of the annual return required by this article, to any other
state, and which tax was based upon or measured by the financial
organization's capital and was paid with respect to the same
taxable year; or
(2) The portion of the tax actually paid that the financial
organization would have paid if the rate of tax imposed by this
article is applied to the tax base determined under the law of such other state.
(b) Any additional payments of such tax to other states, or
to political subdivisions thereof, by a financial organization
described in this section, and any refunds of such taxes, made or
received by such financial organization with respect to the
taxable year, but after the due date of the annual return
required by this article for the taxable year, including any
extensions, shall likewise be accounted for in the taxable year
in which such additional payment is made or such refund is
received by the financial organization.
ARTICLE 24. CORPORATION NET INCOME TAX.
§11-24-7b. Special apportionment rules -- Financial
organizations.
(a)
General. -- The Legislature hereby finds that the
general formula set forth in section seven of this article for
apportioning the business income of corporations taxable in this
state as well as in another state is inappropriate for use by
financial organizations due to the particular characteristics of
those organizations and the manner in which their business is
conducted. Accordingly, the general formula set forth in section
seven of this article may not be used to apportion the business income of such financial organizations, which shall use only the
apportionment formula and methods set forth in this section.
(b)
West Virginia financial organizations taxable in another
state. -- The West Virginia taxable income of a financial
organization that has its commercial domicile in this state and
which is taxable in another state shall be the sum of: (1) The
nonbusiness income component of its adjusted federal taxable
income for the taxable year which is allocated to this state as
provided in subsection (d), section seven of this article; plus
(2) the total amount of the business income component of its
adjusted federal taxable income for the taxable year, without
apportionment, regardless of where such business income was
derived:
Provided, That such financial organization shall be
allowed as a credit against its tax liability under this article
the credit described in section twenty-four of this article.
(c)
Out-of-state financial organizations with business
activities in this state. -- The West Virginia taxable income of
a financial organization that does not have its commercial
domicile in this state but which regularly engages in business in
this state shall be the sum of: (1) The nonbusiness income
component of its adjusted federal taxable income for the taxable year which is allocated to this state as provided in subsection
(d), section seven of this article; plus (2) the business income
component of its adjusted federal taxable income for the taxable
year which is apportioned to this state as provided in this
section.
(d)
Engaging in business -- nexus presumptions and
exclusions. -- A financial organization that has its commercial
domicile in another state is presumed to be regularly engaging in
business in this state if during any year it obtains or solicits
business with twenty or more persons within this state, or if the
sum of the value of its gross receipts attributable to sources in
this state equals or exceeds one hundred thousand dollars.
However, gross receipts from the following types of property (as
well as those contacts with this state reasonably and exclusively
required to evaluate and complete the acquisition or disposition
of the property, the servicing of the property or the income from
it, the collection of income from the property, or the
acquisition or liquidation of collateral relating to the
property) shall not be a factor in determining whether the owner
is engaging in business in this state:
(1) An interest in a real estate mortgage investment conduit, a real estate investment trust or a regulated investment
company;
(2) An interest in a loan backed security representing
ownership or participation in a pool of promissory notes or
certificates of interest that provide for payments in relation to
payments or reasonable projections of payments on the notes or
certificates;
(3) An interest in a loan or other asset from which the
interest is attributed to a consumer loan, a commercial loan or
a secured commercial loan, and in which the payment obligations
were solicited and entered into by a person that is independent,
and not acting on behalf, of the owner;
(4) An interest in the right to service or collect income
from a loan or other asset from which interest on the loan is
attributed as a loan described in the previous paragraph, and in
which the payment obligations were solicited and entered into by
a person that is independent, and not acting on behalf, of the
owner; and
(5) Any amounts held in an escrow or trust account with
respect to property described above.
(e)
Definitions. -- For purposes of this section:
(1) "Commercial domicile". See section three-a of this
article;
(2) "Deposit" means: (A) The unpaid balance of money or
its equivalent received or held by a financial organization in
the usual course of business and for which it has given or it is
obligated to give credit, either conditionally or
unconditionally, to a commercial, checking, savings, time or
thrift account whether or not advance notice is required to
withdraw the credit funds, or which is evidenced by a certificate
of deposit, thrift certificate, investment certificate or
certificate of indebtedness, or other similar name, or a check or
draft drawn against a deposit account and certified by the
financial organization, or a letter of credit or a traveler's
check on which the financial organization is primarily liable:
Provided, That without limiting the generality of the term "money
or its equivalent", any such account or instrument must be
regarded as evidencing the receipt of the equivalent of money
when credited or issued in exchange for checks or drafts or for
a promissory note upon which the person obtaining any such credit
or instrument is primarily or secondarily liable or for a charge
against a deposit account or in settlement of checks, drafts or other instruments forwarded to such bank for collection;
(B) Trust funds received or held by such financial
organization, whether held in the trust department or held or
deposited in any other department of such financial organization;
(C) Money received or held by a financial organization or
the credit given for money or its equivalent received or held by
a financial organization in the usual course of business for a
special or specific purpose, regardless of the legal relationship
thereby established, including, without being limited to, escrow
funds, funds held as security for an obligation due the financial
organization or other (including funds held as dealers' reserves)
or for securities loaned by the financial organization, funds
deposited by a debtor to meet maturing obligations, funds
deposited as advance payment on subscriptions to United States
government securities, funds held for distribution or purchase of
securities, funds held to meet its acceptances or letters of
credit, and withheld taxes:
Provided, That there shall not be
included funds which are received by the financial organization
for immediate application to the reduction of an indebtedness to
the receiving financial organization, or under condition that the
receipt thereof immediately reduces or extinguishes such an indebtedness;
(D) Outstanding drafts (including advice or authorization
to charge a financial organization's balance in another such
organization), cashier's checks, money orders or other officer's
checks issued in the usual course of business for any purpose,
but not including those issued in payment for services, dividends
or purchases or other costs or expenses of the financial
organization itself; and
(E) Money or its equivalent held as a credit balance by a
financial organization on behalf of its customer if such entity
is engaged in soliciting and holding such balances in the regular
course of its business;
(3) "Financial organization". See section three-a of this
article; and
(4) "Sales" means, for purposes of apportionment under this
section, the gross receipts of a financial organization included
in the gross receipts factor described in subsection (g) of this
section, regardless of their source.
(f)
Apportionment rules. -- A financial organization not
having its commercial domicile in this state which regularly engages in business both within and without this state shall
apportion the business income component of its federal taxable
income, after adjustment as provided in section six of this
article, by multiplying the amount thereof by the special gross
receipts factor determined as provided in subsection (g) of this
section.
(g)
Special gross receipts factor. -- The gross receipts
factor is a fraction, the numerator of which is the total gross
receipts of the taxpayer from sources within this state during
the taxable year and the denominator of which is the total gross
receipts of the taxpayer wherever earned during the taxable year:
Provided, That neither the numerator nor the denominator of the
gross receipts factor shall include receipts from obligations
described in paragraphs (A), (B), (C) and (D), subdivision (1),
subsection (f), section six of this article.
(1)
Numerator. -- The numerator of the gross receipts factor
shall include, in addition to items otherwise includable in the
sales factor under section seven of this article, the following:
(A) Receipts from the lease or rental of real or tangible
personal property (whether as the economic equivalent of an
extension of credit or otherwise) if the property is located in this state;
(B) Interest income and other receipts from assets in the
nature of loans which are secured primarily by real estate or
tangible personal property if such security property is located
in the state. In the event that such security property is also
located in one or more other states, such receipts shall be
presumed to be from sources within this state, subject to
rebuttal based upon factors described in rules to be promulgated
by the tax commissioner, including the factor that the proceeds
of any such loans were applied and used by the borrower entirely
outside of this state;
(C) Interest income and other receipts from consumer loans
which are unsecured or are secured by intangible property that
are made to residents of this state, whether at a place of
business, by traveling loan officer, by mail, by telephone or
other electronic means or otherwise;
(D) Interest income and other receipts from commercial
loans and installment obligations which are unsecured or are
secured by intangible property if and to the extent that the
borrower or debtor is a resident of or is domiciled in this
state:
Provided, That such receipts are presumed to be from sources in this state and such presumption may be overcome by
reference to factors described in rules to be promulgated by the
tax commissioner, including the factor that the proceeds of any
such loans were applied and used by the borrower entirely outside
of this state;
(E) Interest income and other receipts from a financial
organization's syndication and participation in loans, under the
rules set forth in items (A) through (D), above;
(F) Interest income and other receipts, including service
charges, from financial institution credit card and travel and
entertainment credit card receivables and credit card holders'
fees if the borrower or debtor is a resident of this state or if
the billings for any such receipts are regularly sent to an
address in this state;
(G) Merchant discount income derived from financial
institution credit card holder transactions with a merchant
located in this state. In the case of merchants located within
and without this state, only receipts from merchant discounts
attributable to sales made from locations within this state shall
be attributed to this state. It shall be presumed, subject to
rebuttal, that the location of a merchant is the address shown on the invoice submitted by the merchant to the taxpayer;
(H) Gross receipts from the performance of services are
attributed to this state if:
(i) The service receipts are loan-related fees, including
loan servicing fees, and the borrower resides in this state,
except that, at the taxpayer's election, receipts from loan-
related fees which are either: (I) "Pooled" or aggregated for
collective financial accounting treatment; or (II) manually
written as nonrecurring extraordinary charges to be processed
directly to the general ledger may either be attributed to a
state based upon the borrowers' residences or upon the ratio that
total interest sourced to that state bears to total interest from
all sources;
(ii) The service receipts are deposit-related fees and the
depositor resides in this state, except that, at the taxpayer's
election, receipts from deposit-related fees which are either:
(I) "Pooled" or aggregated for collective financial accounting
treatment; or (II) manually written as nonrecurring extraordinary
charges to be processed directly to the general ledger may either
be attributed to a state based upon the depositors' residences or
upon the ratio that total deposits sourced to that state bears to total deposits from all sources;
(iii) The service receipt is a brokerage fee and the
account holder is a resident of this state;
(iv) The service receipts are fees related to estate or
trust services and the estate's decedent was a resident of this
state immediately before death, or the grantor who either funded
or established the trust is a resident of this state; or
(v) The service receipt is associated with the performance
of any other service not identified above and the service is
performed for an individual resident of, or for a corporation or
other business domiciled in, this state and the economic benefit
of such service is received in this state;
(I) Gross receipts from the issuance of travelers' checks
and money orders if such checks and money orders are purchased in
this state; and
(J) All other receipts not attributed by this rule to a
state in which the taxpayer is taxable shall be attributed
pursuant to the laws of the state of the taxpayer's commercial
domicile.
(2)
Denominator. -- The denominator of the gross receipts
factor shall include all of the taxpayer's gross receipts from transactions of the kind included in the numerator, but without
regard to their source or situs.
(h)
Effective date. -- The provisions of this section
enacted as chapter one hundred sixty-seven, acts of the
Legislature, one thousand nine hundred ninety-one, shall apply to
all taxable years beginning on or after the first day of January,
one thousand nine hundred ninety-one. Amendments to this section
enacted in the year one thousand nine hundred ninety-six shall
apply to taxable years beginning after the thirty-first day of
December, one thousand nine hundred ninety-five.
§11-24-13a. Method of filing for business taxes.
(a)
Privilege to file consolidated return. -- An affiliated
group of corporations (as defined for purposes of filing a
consolidated federal income tax return) shall, subject to the
provisions of this section and in accordance with any regulations
prescribed by the tax commissioner, have the privilege of filing
a consolidated return with respect to the tax imposed by this
article for the taxable year in lieu of filing separate returns.
The making of a consolidated return shall be upon the condition
that all corporations which at any time during the taxable year have been members of the affiliated group are included in such
return and consent to the filing of such return. The filing of
a consolidated return shall be considered as such consent. When
a corporation is a member of an affiliated group for a fractional
part of the year, the consolidated return shall include the
income of such corporation for that part of the year during which
it is a member of the affiliated group.
(b)
Election binding. -- If an affiliated group of
corporations elects to file a consolidated return under this
article for any taxable year ending after the thirtieth day of
June, one thousand nine hundred eighty-seven, such election once
made shall not be revoked for any subsequent taxable year without
the written approval of the tax commissioner consenting to the
revocation.
(c)
Consolidated return -- financial organizations. -- An
affiliated group that includes one or more financial
organizations may elect under this section to file a consolidated
return when that affiliated group complies with all of the
following rules:
(1) The affiliated group of which the financial organization
is a member must file a federal consolidated income tax return for the taxable year.
(2) All members of the affiliated group included in the
federal consolidated return must consent to being included in the
consolidated return filed under this article. The filing of a
consolidated return under this article is conclusive proof of
such consent.
(3) The West Virginia taxable income of the affiliated group
shall be the sum of:
(A) The pro forma West Virginia taxable income of all
financial organizations having their commercial domicile in this
state that are included in the federal consolidated return, as
shown on a combined pro forma West Virginia return prepared for
such financial organizations; plus
(B) The pro forma West Virginia taxable income of all
financial organizations not having their commercial domicile in
this state that are included in the federal consolidated return,
as shown on a combined pro forma West Virginia return prepared
for such financial organizations; plus
(C) The pro forma West Virginia taxable income of all other
members included in the federal consolidated income tax return,
as shown on a combined pro forma West Virginia return prepared for all such nonfinancial organization members, except that
income, income adjustments and exclusions, apportionment factors
and other items considered when determining tax liability shall
not be included in the pro forma return prepared under this
paragraph for a member that is totally exempt from tax under
section five of this article, or for a member that is subject to
a different special industry apportionment rule provided for in
this article. When a different special industry apportionment
rule applies, the West Virginia taxable income of a member(s)
subject to that special industry apportionment rule shall be
determined on a separate pro forma West Virginia return for the
member(s) subject to that special industry rule and the West
Virginia taxable income so determined shall be included in the
consolidated return.
(4) The West Virginia consolidated return is prepared in
accordance with regulations of the tax commissioner promulgated
as provided in article three, chapter twenty-nine-a of this code.
(5) The filing of a consolidated return does not distort
taxable income. In any proceeding, the burden of proof that
taxpayer's method of filing does not distort taxable income shall
be upon the taxpayer.
(d)
Combined return. -- A combined return may be filed under
this article by a unitary group, including a unitary group that
includes one or more financial organizations, only pursuant to
the prior written approval of the tax commissioner. A request
for permission to file a combined return must be filed on or
before the statutory due date of the return, determined without
inclusion of any extension of time to file the return.
Permission to file a combined return may be granted by the tax
commissioner only when taxpayer submits evidence that
conclusively establishes that failure to allow the filing of a
combined return will result in an unconstitutional distortion of
taxable income. When permission to file a combined return is
granted, combined filing will be allowed for the year(s) stated
in the tax commissioner's letter. The combined return must be
filed in accordance with regulations of the tax commissioner
promulgated in accordance with article three, chapter twenty-
nine-a of this code.
(e)
Method of filing under this article deemed controlling
for purposes of other business taxes articles. -- The taxpayer
shall file on the same basis under article twenty-three of this
chapter as such taxpayer files under this article for the taxable year.
(f)
Regulations. -- The tax commissioner shall prescribe
such regulations as he may deem necessary in order that the tax
liability of any affiliated group of corporations filing a
consolidated return, or of any unitary group of corporations
filing a combined return, and of each corporation in the
affiliated or unitary group, both during and after the period of
affiliation, may be returned, determined, computed, assessed,
collected and adjusted, in such manner as the tax commissioner
deems necessary to clearly reflect the income tax liability and
the income factors necessary for the determination of such
liability, and in order to prevent avoidance of such tax
liability.
(g)
Computation and payment of tax. -- In any case in which
a consolidated or combined return is filed, or required to be
filed, the tax due under this article from the affiliated or
unitary group shall be determined, computed, assessed, collected
and adjusted in accordance with regulations prescribed by the tax
commissioner, in effect on the last day prescribed by section
thirteen of this article for the filing of such return, and such
affiliated or unitary group, as the case may be, shall be treated as the taxpayer. However, when any member of an affiliated or
unitary group that files a consolidated or combined return under
this article is allowed to claim credit against its tax liability
under this article for payment of any other tax, the amount of
credit allowed may not exceed that member's proportionate share
of the affiliated or unitary group's precredit tax liability
under this article, as shown on its pro forma return.
(h)
Consolidated or combined return may be required. -- If
any affiliated group of corporations has not elected to file a
consolidated return, or if any unitary group of corporations has
not applied for permission to file a combined return, the tax
commissioner may require such corporations to make a consolidated
or combined return, as the case may be, in order to clearly
reflect the taxable income of such corporations.
(i)
Effective date. -- The amendments to this section made
by chapter one hundred seventy-nine, acts of the Legislature in
the year one thousand nine hundred ninety, shall apply to all
taxable years ending after the eighth day of March, one thousand
nine hundred ninety. Amendments to this article enacted by this
act in the year one thousand nine hundred ninety-six, shall apply
to taxable years beginning on or after the first day of January, one thousand nine hundred ninety-six, except that financial
organizations that are part of an affiliated group may elect,
after the effective date of this act, to file a consolidated
return prepared in accordance with the provisions of this
section, as amended, and subject to applicable statutes of
limitation, for taxable years beginning on or after the first day
of January, one thousand nine hundred ninety-one, but before the
first day of January, one thousand nine hundred ninety-six,
notwithstanding provisions then in effect prohibiting out-of-
state financial organizations from filing consolidated returns
for those years:
Provided, That when the statute of limitation
on filing an amended return for any of those years expires before
the first day of July, one thousand nine hundred ninety-six, the
consolidated return for such year, if filed, must be filed by
said first day of July.
§11-24-24. Credit for income tax paid to another state.
(a) Effective for taxable years beginning on or after the
first day of January, one thousand nine hundred ninety-one, and
notwithstanding any provisions of this code to the contrary, any
financial organization, the business activities of which take
place, or are deemed to take place, entirely within this state, shall be allowed a credit against the tax imposed by this article
for any taxable year for taxes paid to another state. That
credit shall be equal in amount to the lesser of:
(1) The taxes such financial organization shall actually
have paid, which payments were made on or before the filing date
of the annual return required by this article, to any other
state, and which tax was based upon or measured by the financial
organization's net income and was paid with respect to the same
taxable year; or
(2) The amount of such tax the financial organization would
have paid if the rate of tax imposed by this article is applied
to the tax base determined under the laws of such other state.
(b) Any additional payments of such tax to other states, or
to political subdivisions thereof, by a financial organization
described in this section, and any refunds of such taxes, made or
received by such financial organization with respect to the
taxable year, but after the due date of the annual return
required by this article for the taxable year, including any
extensions, shall likewise be accounted for in the taxable year
in which such additional payment is made or such refund is
received by the financial organization.
§11-24-38. Deposit of revenue.
(a) Section thirteen of this article authorizes the tax
commissioner to combine into one form the annual returns due
under this article and article twenty-three of this chapter. To
facilitate combining returns, reports and declarations for these
two taxes, and to allow a taxpayer to pay both taxes with one
remittance, the amount of taxes collected under this article and
article twenty-three of this chapter, including any additions to
tax, penalties or interest collected with respect to such taxes,
pursuant to a combined return, report or declaration shall be
deposited in one account:
Provided, That the tax commissioner
shall keep such records as may be necessary to separately account
for the amount of each tax collected, including additions to tax,
penalties or interest collected with respect to each tax, during
each fiscal year of the state.
(b) Overpayments of the tax imposed by article twenty-three
of this chapter may be applied against tax due under this article
for same taxable year, and overpayments of the tax imposed by
this article may be applied against underpayment of the tax
imposed by article twenty-three of this chapter for the same
taxable year.
(c) The provisions of this section shall take effect upon
passage.