ENROLLED
Senate Bill No. 37
(By Senators Craigo and Scott)
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[Passed March 9, 1996; in effect ninety days from passage.]
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AN ACT to repeal sections nine-c and nine-d, article fifteen,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended; and to amend and
reenact section nine of said article, all relating to sales
tax; exemptions from sales tax; specifying effective dates;
creating exemptions from the sales tax for dispensing of
services performed by a partnership or limited liability
company for another corporation, partnership or limited
liability company; exempting sales by public and academic
libraries; exempting sales of primary opinion research
services performed for out-of-state clients; creating an
exemption for value added products and specifying
definitions of value added products; creating an exemption
for sales of musical instructional services by music
teachers; creating an exemption for charges to members for
membership, newsletters, seminars and instructional materials related thereto for members of certain
organizations which are tax exempt under specified sections
of the Internal Revenue Code; repealing the sections related
to exemption certificates and direct pay permits; and
exempting commissions received by manufacturers'
representatives and numbering the exemptions from sales tax.
Be it enacted by the Legislature of West Virginia:
That sections nine-c and nine-d, article fifteen, chapter
eleven of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be repealed; and that section nine of
said article 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 such form as the tax commissioner
may require, and deliver it to the vendor of the property or
service, in such manner as the tax commissioner may require.
However, the tax commissioner may, by regulation, specify those
exemptions authorized in this subsection for which exemptions
certificates are not required. The following sales of tangible
personal property and/or 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, 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 such
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 tangible personal property or services to
churches who make no charge whatsoever for the services they
render:
Provided, That the exemption herein granted shall apply
only to services, equipment, supplies, food, meals and materials
directly used or consumed by these organizations, and shall 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 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:
(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 such gross income (or the tangible
personal property or services purchased with such 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 such 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
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;
(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; or
(G) The exemption allowed by subdivision (6) of this
subsection 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 organizations qualify as tax exempt organizations
under the Internal Revenue Code by these organizations and shall
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 thereof or by his 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 owner or on his
account by such 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
isolated sale takes place. The tax commissioner may adopt such
legislative rule pursuant to chapter twenty-nine-a of this code
as he deems 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 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 not be exempt:
Provided, however, That nails and
fencing shall 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 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 person or his agent into any real property,
building or structure shall not be exempt under this subsection,
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 property in such
building, structure or improvement shall, with respect to such
tangible personal property, nevertheless be deemed to be the
vendor of such property to the governmental entity and any person
seeking to qualify for and assert this exception must do so
pursuant to such 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 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;
(10) Sales of newspapers when delivered to consumers by
route carriers;
(11) Sales of drugs dispensed upon prescription and sales of
insulin to consumers for medical purposes;
(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:
(A) 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 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 such
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;
(B) 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;
(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 shall
be taxable;
(16) Sales of mobile homes to be utilized by the purchaser
as their principal year-round residence and dwelling:
Provided,
That these mobile homes shall be subject to tax at the three-
percent rate;
(17) Sales of lottery tickets and materials by licensed lottery agents and lottery retailers authorized by the state
lottery commission, under provisions of article twenty-two,
chapter twenty-nine of this code;
(18) 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 date, for
months thereof beginning on or after such date;
(19) Sales of propane to consumers for poultry house heating
purposes, with any seller to such consumer who may have prior
paid such tax in his price, to not pass on to the consumer, but
to make application and receive a refund of such tax from the tax
commissioner; notwithstanding the provisions of section eighteen
of this article or any other provision of this article to the
contrary;
(20) 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 supplement food program for women, infants and
children codified in 42 U. S. C. §1786;
(21) Sales of tickets for activities sponsored by elementary and secondary schools located within this state;
(22) Sales of electronic data processing services and
related software:
Provided, That for the purposes of this
subsection "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 such
computer equipment;
(23) Tuition charged for attending educational summer camps;
(24) 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;
(25) Food for the following shall be exempt:
(A) Food purchased or sold by public or private schools,
school sponsored student organizations or school sponsored
parent-teacher associations to students enrolled in such school
or to employees of such 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
such college or university to students enrolled at such college
or university when such 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 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;
(E) 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 functions and activities:
Provided, That purchases made by
such organizations shall not be exempt as a purchase for resale;
(26) 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 purchases made by such organizations shall not be
exempt as a purchase for resale;
(27) Charges for room and meals by fraternities and
sororities to their members:
Provided, That such purchases made
by the fraternity or sorority shall not be exempt as a purchase
for resale;
(28) Sales of or charges for transportation of passengers in
interstate commerce;
(29) 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;
(30) 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;
(31) Charges for the services of opening and closing a
burial lot;
(32) 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 subsection 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;
(33) 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 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;
(34) Sales of aircraft repair, remodeling and maintenance
services when such 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;
(35) Charges for memberships or services provided by health
and fitness organizations relating to personalized physical
fitness programs; and
(36) 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;
(37) Sales of services after the thirtieth day of June, one
thousand nine hundred ninety-seven, by public libraries or by
libraries at academic institutions or by libraries at
institutions of higher learning;
(38) Commissions received after the thirtieth day of June,
one thousand nine hundred ninety-seven, by a manufacturer's
representative;
(39) Sales of primary opinion research services after the
thirtieth day of June, one thousand nine hundred ninety-seven,
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 utilized for quantitative and
qualitative opinion research studies;
(40) Sales of property or services after the thirtieth day
of June, one thousand nine hundred ninety-seven, to persons
within the state when those sales are for the purposes of the
production of value-added products:
Provided, That the exemption
herein granted shall apply only to services, equipment, supplies
and materials directly used or consumed by such 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 article, 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 semi-finished 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;
(41) Sales of music instructional services after the
thirtieth day of June, one thousand nine hundred ninety-seven, by
a music teacher;
(42) After the thirtieth day of June, one thousand nine
hundred ninety-seven, 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 nine of this article relating to purchases of
tangible personal property for resale and then collect the tax
imposed by this article on those items from its member.
(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, as provided in section nine-b of this
article, for a refund or credit, or as provided in section nine-d
of this article, give to the vendor such person's West Virginia
direct pay permit number. The following sales of tangible
personal property and/or services are exempt from tax as provided
in this subsection:
(1) Sales of tangible personal property or services to 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,
meals and materials directly used or consumed by these
organizations, and shall 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 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 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 shall be 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 shall be 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 such 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 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.