ENGROSSED
Senate Bill No. 37
(By Senators Craigo and Scott)
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[Introduced January 12, 1996; referred to the Committee
on Finance.]
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A BILL to amend and reenact section nine, article fifteen,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to exemptions
from consumers sales tax; and exempting members of the music
teacher's national association and commissions received by
a manufacturer's representative from consumers sales tax.
Be it enacted by the Legislature of West Virginia:
That section nine, article fifteen, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 15. CONSUMERS SALES TAX.
§11-15-9. Exemptions.
The following sales and services are exempt:
(a) Sales of gas, steam and water delivered to consumers
through mains or pipes and sales of electricity;
(b) 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, board of
trustees of the university system of West Virginia or the board
of directors for colleges located in this state;
(c) Sales of property or services to the state, its
institutions or subdivisions, governmental units, institutions or
subdivisions of other states:
Provided, That the law of
such 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;
(d) 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;
(e) Sales of property or services to churches and bona fide
charitable organizations who make no charge whatsoever for the services they render:
Provided, That the exemption herein
granted shall apply only to services, equipment, supplies, food
for meals and materials directly used or consumed by these
organizations, and
shall may not apply to purchases of gasoline
or special fuel;
(f) 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 is exempt
from federal income taxes under Section 501(c)(3) or (c)(4) of
the Internal Revenue Code of 1986, as amended, and is:
(1) A church or a convention or association of churches as
defined in Section 170 of the Internal Revenue Code of 1986, as
amended;
(2) 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;
(3) 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;
(4) An organization which has no paid employees and its
gross income from fundraisers, less reasonable and necessary
expenses incurred to raise
such the gross income (or the tangible
personal property or services purchased with
such 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;
(5) 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;
(6) For purposes of this subsection:
(A) The term "support" includes, but is not limited to:
(i) Gifts, grants, contributions or membership fees;
(ii) Gross receipts from fundraisers 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
such 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
such 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;
(B) 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;
(C) 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; or
(7) 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 provisions
of this subsection as amended by this article shall apply to
sales made after the thirtieth day of June, one thousand nine
hundred eighty-nine:
Provided, That the exemption herein granted
shall apply only to services, equipment, supplies and materials
used or consumed in the activities for which
such the
organizations qualify as tax exempt organizations under the
Internal Revenue Code by these organizations and
shall may not
apply to purchases of gasoline or special fuel;
(g) Sales of property or services to persons engaged in this
state in the business of manufacturing, transportation,
transmission, communication or in the production of natural
resources:
Provided, That on and after the first day of July,
one thousand nine hundred eighty-seven, the exemption provided in this subdivision shall apply only to services, machinery,
supplies and materials directly used or consumed in the
activities of manufacturing, transportation, transmission,
communication or the production of natural resources in the
businesses or organizations named above and
shall may not apply
to purchases of gasoline or special fuel:
Provided, however,
That on and after the first day of May, one thousand nine hundred
ninety-three, the exemption provided in this subsection shall
apply only to 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 of
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 above and
shall may not apply to purchases of gasoline or special fuel;
(h) An isolated transaction in which any taxable service or
any tangible personal property is sold, transferred, offered for
sale or delivered by the owner thereof or by his
or her
representative for the owner's account, such sale, transfer,
offer for sale or delivery not being made in the ordinary course of repeated and successive transactions of like character by
such
the owner or on his
or her account by
such the representative:
Provided, That nothing contained herein 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 herein, regardless where
such the isolated sale takes
place. The tax commissioner may adopt
such the legislative rule
pursuant to chapter twenty-nine-a of this code as he
or she deems
necessary for the efficient administration of this exemption;
(i) 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 will be 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
shall may not be exempt:
Provided, however, That nails and
fencing
shall may not be considered as improvements to real
property;
(j) 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 shall be 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
such a person or his
or her agent into any real
property, building or structure
shall may not be exempt under
this
subsection subdivision, except that sales of tangible
personal property to a person engaging in the activity of
contracting pursuant to a written contract with the United
States, this state, or with a political subdivision thereof, or
with a public corporation created by the Legislature or by
another governmental entity pursuant to an act of the
Legislature, for a building or structure, or improvement thereto,
or other improvement to real property that is or will be owned
and used by the governmental entity for a governmental or
proprietary purpose, who incorporates
such the property in
such
the building, structure or improvement shall, with respect to
such the tangible personal property, nevertheless be deemed to be
the vendor of
such the property to the governmental entity and
any person seeking to qualify for and assert this exception must
do so pursuant to
such the legislative rules
and regulations as
the tax commissioner may promulgate and upon such forms as the
tax commissioner may prescribe. A subcontractor who, pursuant to
a written subcontract with a prime contractor who qualifies for
this exception, provides equipment, or materials and labor to
such a the prime contractor shall be treated in the same manner
as the prime contractor is treated with respect to the prime
contract under this exception and the legislative rules
and
regulations promulgated by the tax commissioner:
Provided
further, That the exemption for government contractors in the
preceding proviso shall expire on the first day of October, one
thousand nine hundred ninety, subject to the transition rules set
forth in section eight-c of this article;
(k) 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 shall be taxable;
(l) Sales and services, firefighting 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 shall be taxable;
(m) Sales of newspapers when delivered to consumers by route
carriers;
(n) Sales of drugs dispensed upon prescription and sales of
insulin to consumers for medical purposes;
(o) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(p) Sales and services performed by day-care centers;
(q) 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
subsection (f) of this section on its purchases of tangible
personal property or services:
(1) For purposes of this subsection, 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 fundraisers sponsored by a corporation or organization which
is exempt, under subsection (f) of this section, from payment of
the tax imposed by this article on its purchases, when
such the
fundraisers 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;
(2) The provisions of this subsection, as amended by this
article, shall apply to sales made after the thirtieth day of
June, one thousand nine hundred eighty-nine;
(r) 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 shall
be taxable;
(s) Sales of mobile homes to be utilized by purchasers as
their principal year-round residence and dwelling:
Provided,
That these mobile homes shall be subject to tax at the three percent rate;
(t) 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;
(u) 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. This
exemption shall apply to leases executed on or after the first
day of July, one thousand nine hundred eighty-seven, and to
payments under long-term leases executed before
such the date,
for months thereof beginning on or after
such the date;
(v) Sales of propane to consumers for poultry house heating
purposes, with any seller to
such a consumer who may have prior
paid
such the tax in his
or her price, to not pass on the same to
the consumer, but to make application and receive refund of
such
the tax from the tax commissioner, pursuant to rules
and
regulations which shall be promulgated by the tax commissioner;
and notwithstanding the provisions of section eighteen of this
article or any other provisions of
such this article to the
contrary;
(w) Any sales of tangible personal property or services
purchased after the thirtieth day of September, one thousand nine
hundred eighty-seven, 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 supplemental food program for women,
infants and children codified in 42 U. S. C., §1786;
(x) Sales of tickets for activities sponsored by elementary
and secondary schools located within this state;
(y) Sales of electronic data processing services and related
software:
Provided, That for the purposes of this subsection
"electronic data processing services" means: (1) 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 (2) providing access to computer
equipment for the purpose of processing data or examining or
acquiring data stored in or accessible to
such the computer
equipment;
(z) Tuition charged for attending educational summer camps;
(aa) 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
such 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, emergency homeless
shelter, domestic violence shelter or emergency children and
youth shelter if
such 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;
(bb) Dispensing of services performed by one corporation for
another corporation when both corporations are members of the
same controlled group. "Control" means ownership, directly or
indirectly, of stock possessing fifty percent or more of the
total combined voting power of all classes of the stock of a
corporation entitled to vote or ownership, directly or
indirectly, of stock possessing fifty percent or more of the
value of the corporation;
(cc) Food for the following shall be exempt:
(1) Food purchased or sold by public or private schools,
school sponsored student organizations or school sponsored
parent-teacher associations to students enrolled in
such the
school or to employees of
such the school during normal school
hours; but not those sales of food made to the general public;
(2) Food purchased or sold by a public or private college or
university or by a student organization officially recognized by
such the college or university to students enrolled at
such the
college or university when
such 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;
(3) 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;
(4) 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 so obtained is actually expended for that purpose;
(5) 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 on
such the functions and activities:
Provided, That purchases made
by
such the organizations
shall may not be exempt as a purchase
for resale;
(dd) Sales of food by little leagues, midget football
leagues, youth football or soccer leagues 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
such the purchases made by such organizations
shall may not
be exempt as a purchase for resale;
(ee) Charges for room and meals by fraternities and
sororities to their members:
Provided, That
such the purchases made by a fraternity or sorority
shall may not be exempt as a
purchase for resale;
(ff) Sales of or charges for the transportation of
passengers in interstate commerce;
(gg) 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;
(hh) 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 provisions
of any other chapter of this code;
(ii) Charges for the services of opening and closing a
burial lot;
(jj) Sales of livestock, poultry or other farm products in
their original state by the producer thereof 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 shall apply to sales made
on or after the first day of July, one thousand nine hundred ninety, and may be claimed without presenting or obtaining
exemption certificates:
Provided, however, That the farmer shall
maintain adequate records;
(kk) 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
such 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 subsection shall apply to sales made on or after the first
day of July, one thousand nine hundred ninety, and may be claimed
by presenting to the seller a properly executed exemption
certificate;
(ll) Sales of aircraft repair, remodeling and maintenance
services when
such 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;
(mm) Sales of tangible personal property and services to a
person entitled to claim the tax credit for investment in certain
management information services facilities allowed under section
three-c, article thirteen-d of this chapter, pursuant to the
issuance of a management information services tax credit
certification by the tax commissioner in accordance with
subsection (e) of said section, when
such the property or
services are directly used or consumed by the purchaser in the
operation of the management information services facility, as
defined in section two of this article for which credit is
allowed under section three-c, article thirteen-d of this
chapter. Tangible personal property, or services, directly used or consumed in the operation of a management information services
facility includes only: (1) Computer processing and
telecommunications equipment; (2) data storage and input/output
devices; (3) disaster recovery services; (4) supplies; (5)
application, telecommunication and operating system software; (6)
repair and maintenance of any of the aforesaid items; and (7)
other tangible personal property or services directly used or
consumed in the operation of a management information services
facility:
Provided, That the property is purchased or leased
after the thirty-first day of March, one thousand nine hundred
ninety-one. This exemption
shall may not apply to tangible
personal property, or services, that are not directly used or
consumed in the operation of a management information services
facility, or to gasoline or special fuel:
Provided, however,
That nothing in this paragraph may be construed to limit, exclude
or preclude the application or availability of any other
exemption set forth in this section, or elsewhere in this code,
which might otherwise apply to any sale of tangible personal
property or services;
(nn) Charges for memberships or services provided by health
and fitness organizations relating to personalized fitness programs;
(oo) 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;
and
(pp) A corporation or organization which is a not-for-profit
entity which charges membership dues utilized for and
contributing significantly to traffic and pedestrian safety and
education programs whether or not the corporation or organization
is exempt from income tax under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended;
(qq) Sales of tangible personal property or services by any
member of the music teacher's national association; and
(rr) Commissions received by a manufacturer's
representative.
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