SB7 SUB1
COMMITTEE SUBSTITUTE
for
Senate Bill No. 7
(By Senators Anderson, Hunter, Sharpe, Sprouse, Minear,
Ross, Minard, McCabe, Unger, Ball and Mitchell)
__________
[Originating in the Committee on Small Business;
reported February 19, 1999.]
__________
A Bill to amend chapter eleven of the code of West Virginia, one
thousand nine-hundred thirty-one, as amended, by adding
thereto a new article, designated article thirteen-p,
generally relating to taxation; setting forth short title;
setting forth legislative findings; defining terms;
specifying method for determining tax attributable to
qualified investment; specifying eligibility for tax
credit, specifying procedures for application for
certification and for certification of project plans;
specifying limitations on certification and criteria for
certification; specifying applications for certification
are public information; specifying procedures and criteria for decertification of projects or withdrawal or suspension
of certification of projects or decrease of amounts of
credit or qualified investment for which a project is
certified; providing for audits and investigations;
specifying confidentiality of certain information;
providing for a project administration allowance to be
deposited in a revolving fund for use by the division of
tourism; establishing the small tourism business fund as a
revolving fund; providing for a tax administration
allowance to be deposited in a revolving fund for use by
the tax department; establishing the general tax
administration fund as a revolving fund; specifying method
for determining qualified investment; specifying amount of
tax credit allowed; setting forth application of credit;
specifying method for assertion of credit and filings;
specifying requirements for reporting of credit; setting
forth total maximum aggregate tax credit limitation;
specifying forfeiture of unused tax credits; specifying
redetermination of credit; specifying recapture of credit;
specifying treatment for premature disposition of qualified property; specifying treatment for premature cessation of
use of qualified property; specifying recapture tax,
specifying imposition of recapture tax; specifying
application of the West Virginia Tax Procedure and
Administration Act to the recapture tax; setting forth
rules for transfer of qualified property to successors,
specifying treatment of successor businesses where
predecessor is entitled to the credit; specifying treatment
of a mere change in the form of doing business; requiring
and specifying identification of qualified tourism
development property; specifying rules for failure to keep
adequate records; specifying certain credit information to
be published as public information; authorizing audits and
joint audits or examinations of taxpayers claiming the
credit and certain other persons; requiring program
evaluation; setting forth expiration date for the tax
credit program; specifying preservation of vested
entitlements; specifying general procedure and
administration and adoption of the West Virginia Tax
Procedure and Administration Act as applying to the tax
credit; authorizing promulgation of regulations; setting
forth severability clause.
Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended be amended,
by adding thereto a new article, designated article
thirteen-p, all to read as follows:
ARTICLE 13P.SMALL TOURISM BUSINESS DEVELOPMENT ACT.
§11-13P-1. Short title.
This article shall be known and cited as the "Small
Tourism Business Development Act."
§11-13P-2. Legislative Findings.
The Legislature finds and declares that the general
welfare and material well being of the people of West
Virginia will be improved and increased by the development
of tourism attractions and amenities in the less developed
counties of this state with high unemployment. It is in
the best interests of this state to induce the creation,
expansion and improvement of tourism attractions and
amenities within such counties of this state. Development
of tourism attractions and amenities serves the public
purposes of relieving unemployment, preserving and
creating jobs, and creating tax revenues for the support
of essential public services. The Legislature finds and declares that the purposes to be accomplished by this Act
are proper governmental and public services for which
public monies can be expended.
§11-13P-3. Definitions.
(a) General. -- When used in this article, or in the
administration of this article, terms defined in
subsection (b) of this section shall have the meanings
ascribed to them by this section, unless a different
meaning is clearly required by either the context in which
the term is used, or by specific definition in this
article.
(b) Terms defined.
(1) Affiliate. -- The terms "affiliate" or
"affiliates" include all concerns which are affiliates of
each other when either directly or indirectly:
(A) One concern controls or has the power to control
the other; or
(B) A third party or third parties control or have
the power to control both. In determining whether concerns
are independently owned and operated and whether or not
affiliation exists, consideration shall be given to all appropriate factors, including common ownership, common
management and contractual relationships.
(2) Bed and breakfast facility. -- Bed and breakfast
facility shall mean:
(A) An architecturally interesting or historic
structure, facility, complex, or set of facilities
consisting of one or more buildings, cottages, carriage
houses, cabins, homesteads or structures, operated as a
lodging facility or complex which contains not more than
eight bedrooms in total for the commercial accommodation
of paying overnight lodgers. In order to qualify as a bed
and breakfast facility under this article, the facility or
complex, if located in an area subject to zoning laws,
must be located in an area legally zoned for such
operation, and must comply with all applicable tax, fire,
building and health requirements applicable to the
property given its size and use.
(B) Exclusions. -- The term bed and breakfast
facility shall not include:
(i) Any facility or complex having more than eight
bedrooms for commercial accommodation of paying overnight lodgers,
(ii) Rental condominiums, time sharing housing units
and similar accommodations.
(iii) Any bed and breakfast facility which, even
though such facility may have once qualified as a bed and
breakfast facility under this section, is enlarged to the
point that the facility or complex includes more than
eight bedrooms for commercial accommodation of paying
overnight lodgers.
(iv) Hotels, motels, hostels, and resort lodging
facilities.
(3) Corporation. -- The term "corporation" means any
corporation, joint-stock company or association and any
business conducted by a trustee or trustees wherein
interest or ownership is evidenced by a certificate of
interest or ownership or similar written instrument, or
any entity treated as a corporation for federal income tax
purposes.
(4) Delegate. -- The term "delegate" in the phrase
"or his or her delegate," when used in reference to the
tax commissioner, means any officer or employee of the of the department of tax and revenue, tax department duly
authorized by the tax commissioner directly, or indirectly
by one or more redelegations of authority, to perform the
functions mentioned or described in this article.
(5) Eligible taxpayer.
(A) The term "eligible taxpayer" means any person
subject to the taxes imposed by article twenty-one,
twenty-three or twenty-four of this chapter that makes
qualified investment pursuant to the terms of a certified
project plan in qualified tourism development property.
(B) The term "Eligible taxpayer" also includes an
affiliated group of taxpayers if such group elects to file
a consolidated corporation net income tax return under
article twenty-four of this chapter and if one or more
affiliates included in such affiliated group would qualify
as an eligible taxpayer under paragraph (A) of this
subdivision.
(C) The term "Eligible taxpayer" does not include
this state, any state, territory or district of the United
States, the United States or, any agency, governmental
subdivision, authority, commission, department, division,
office, bureau, branch, board, district or other unit, or instrumentality of federal, state, county or local
government or any public corporation, or governmental
instrumentality or quasi-governmental instrumentality or
entity created by statute or ordinance.
(6) Includes and including. -- The terms "includes"
and "including", when used in a definition contained in
this article, shall not be deemed to exclude other things
otherwise within the meaning of the term defined.
(7) Natural person or individual. -- The term
"natural person" and the term "individual" mean a human
being. The terms "natural person" and "individual" do not
mean, and specifically exclude any corporation, limited
liability company, partnership, joint venture, trust,
organization, association, agency, governmental
subdivision, syndicate, affiliate or affiliation, group or
unit or any entity other than a human being.
(8) Partnership and partner. -- The term
"partnership" includes a syndicate, group, pool, joint
venture or other unincorporated organization through or by
means of which any business, financial operation or
venture is carried on, and which is not a trust or estate, a corporation or a sole proprietorship. The term "partner"
includes a member in such a syndicate, group, pool, joint
venture or organization.
(9) Person. -- The term "person" includes any natural
person, corporation, limited liability company or
partnership.
(10) Qualified investment. -- The term "qualified
investment" means qualified investment as determined under
section five of this article.
(11) Qualified tourism development area. -- The term
"qualified tourism development area" means any of those
counties of this state that have, for the calendar year
immediately preceding the calendar year when qualified
tourism investment property is to be placed in service or
use in the county, a county average annual unemployment
rate that is at least one percentage point greater than
the statewide unemployment average percentage, as
determined by the West Virginia Bureau of Employment
Programs:
Provided, That the commissioner of the division
of tourism may issue legislative regulations further
restricting inclusion of counties in any qualified tourism development area and describing those counties of this
state that qualify as qualified tourism development areas
or parts thereof, but in no case shall any county be
designated a qualified tourism development area that has
a county average annual unemployment rate that is less
than one percentage point greater than the statewide
unemployment average percentage, as determined under this
subdivision.
(12) Qualified tourism development property. --
(A) The term "qualified tourism development property"
means property purchased or leased pursuant to the terms
of a certified project plan for the purpose of expanding,
improving, enlarging, constructing or creating in a
qualified tourism development area:
(i) A site, area or facility which will constitute a
tourism attraction, as defined in this section, or part of
a tourism attraction, or
(ii) A bed and breakfast facility located in this
state, which primarily serves individuals who participate
in, patronize or attend a tour or trip constituting a
tourism attraction, or who visit an area, site or facility
constituting a tourism attraction, primarily for the purpose of personal entertainment, recreation or
amusement. The term "lodging facility" means a temporary
place to stay or a place where overnight accommodations
for sleeping and shelter are available.
For purposes of this section, the terms expanding,
improving and enlarging mean:
In the case of a bed and breakfast facility:
expansion, improvement or enlargement such as to create
additional lodging capacity at least ten percent greater
than such capacity, measured at the maximum, of the
lodging facility as it existed immediately prior to the
expansion, improvement or enlargement:
Provided, That any
bed and breakfast facility which is enlarged to the point
that the facility or complex includes more than eight
bedrooms for commercial accommodation of paying overnight
lodgers shall not constitute qualified tourism development
property, even though such facility may have once
qualified as a bed and breakfast facility under this
article prior to the expansion.
In the case of an area, site or facility constituting
a tourism attraction, expansion, improvement or
enlargement such as to create additional daily visitor or daily customer capacity at least ten percent greater than
such capacity, measured at the maximum, of the area, site
or facility as it existed immediately prior to the
expansion, improvement or enlargement:
Provided That, in
the case of replacement property, only betterments
resulting in expansions of fifty percent or more, as
specified in this section will constitute qualified
tourism development property.
(B) Excluded property. The term "qualified tourism
development property" shall not include:
(i) Property purchased or leased before the first day
of July, one thousand nine hundred ninety-nine.
(ii) Property owned or leased by the taxpayer,
investment in which will qualify for the business
investment and jobs expansion tax credit under article
thirteen-c of this chapter, without regard to whether the
taxpayer actually takes or applies the business investment
and jobs expansion tax credit against tax liabilities.
Investment for which the business investment and jobs
expansion tax credit is or would be allowed is not
eligible for the credit allowed under this article, and no credit shall be allowed or taken under this article for
any such investment.
(iii) Property owned or leased by the taxpayer and
for which the taxpayer was previously allowed tax credit
under article thirteen-d of this chapter or tax credit
under article thirteen-c of this chapter, the historic
buildings and structures preservation tax credit under
sections eight-a through eight-f, article twenty-one of
this chapter or sections twenty-three-a through twenty- three-f, article twenty-four of this chapter or the tax
credits allowed by this article.
(iv) Property owned or leased by the taxpayer and for
which the seller, lessor, or other transferor, was
previously allowed tax credit under article thirteen-d of
this chapter or tax credit under article thirteen-c of
this chapter, the historic buildings and structures
preservation tax credit under sections eight-a through
eight-f, article twenty-one of this chapter or sections
twenty-three-a through twenty-three-f, article twenty-four
of this chapter or the tax credits allowed by this
article. However, successors in business shall be allowed
entitlement to this credit to the extent of the predecessor's entitlement in accordance with section
twelve of this article.
(v) Repair costs, including materials used in the
repair.
(vi) Airplanes.
(vii) Property which is primarily used outside this
state, with use being determined based upon the amount of
time the property is actually used both within and without
this state.
(viii) Property which is acquired incident to the
purchase of the stock or capital assets of the seller,
unless for good cause shown, the tax commissioner consents
to waiving this requirement.
(ix) Natural resources in place.
(x) Property, either leased or purchased, the cost or
consideration for which cannot be quantified with any
reasonable degree of accuracy at the time such property is
placed in service or use:
Provided, That when the contract
of purchase or lease specifies a minimum purchase price or
minimum annual rent, the amount thereof shall be used to
determine the qualified investment in such property under
section five of this article if the property otherwise qualifies as qualified tourism development property.
(xi) Property purchased for ongoing maintenance and
upkeep, repairs, facility maintenance or other
maintenance, airplanes, motor vehicles licensed by the
division of motor vehicles, inventories, non-capitalized
property and property that does not create additional
lodging capacity or visitor or customer capacity. For
purposes of this section, the term "non-capitalized
property" means property, the cost of which is not
required to be capitalized for federal income tax purposes
under the Internal Revenue Code or the rules, regulations
or policies implemented or promulgated by the United
States Internal Revenue Service.
(xii) Property owned or leased (as lessee) by this
state, any state, territory or district of the United
States, the United States or, any agency, governmental
subdivision, authority, commission, department, division,
office, bureau, branch, board, district or other unit, or
instrumentality of federal, state, county or local
government or any public corporation, or governmental
instrumentality or quasi-governmental instrumentality or
entity created by statute or ordinance and located in a state park or elsewhere in this state. However, investment
made by a qualified taxpayer in a facility or property
located in a state park may constitute qualified tourism
development property if investment therein would otherwise
qualify for credit under this article.
(xiii) Replacement property, except certain
replacement property that will qualify as specified in
this article. For purposes of this section, the term
"replacement property" means property acquired by purchase
or lease for the purpose of replacing other property in a
facility, the investment in which replacement property
would not have been made but for the loss of service,
destruction, removal or other loss of the property which
the replacement property is intended to replace:
Provided
That, significant betterments will be recognized as
qualified tourism development property. The term
"betterment" means and is limited to :
(aa) replacement property which enlarges the lodging
capacity of a bed and breakfast facility in which the
replacement property is installed or placed by at least
fifty percent, and to
(bb) replacement property which enlarges the daily
visitor or customer capacity of an area, site or facility
that constitutes a tourism attraction by at least fifty
percent. A betterment will be treated as significant if it
enlarges capacity by at least fifty percent over such
capacity, measured at the maximum, of the bed and
breakfast facility or area, site or facility constituting
a tourism attraction at the time the property which the
replacement property is intended to replace was in
operation. Replacement property which is installed or
constructed to replace property that was destroyed by
flood, storm or other casualty will constitute qualified
tourism development property if such property would
otherwise qualify as such under this section if newly
constructed, but the measure of the cost of such
replacement property for purposes of this article will be
reduced by any insurance proceeds or other proceeds
received in compensation for the casualty loss.
(xiv) The term "qualified tourism development
property," does not mean or include investment (by
purchase or lease) in any property acquired from or
between related entities. The tax commissioner can waive this prohibition against related entity acquisitions if
the property was acquired from a related entity for its
the fair market value and there is no manipulation of the
cost of, or amount of, investment in property for the
purpose of gaining entitlement to the credit allowed under
this article.
(xv) Any hotel, motel, resort lodging facility, or
other lodging facility other than a bed and breakfast
facility.
(xvi) Any restaurant:
Provided, That a bed and
breakfast facility which offers only breakfast to its
guests will not constitute a restaurant for purposes of
this exclusion:
Provided further, That investment in a
tourism attraction facility which contains or incorporates
a restaurant into the otherwise qualified tourism
attraction constitutes qualified tourism development
property to the extent of investment in those parts or
portions of the facility other than the restaurant that
are not otherwise disqualified under this article.
(13) Related person. -- The term "related person" or
"person related to" a stated taxpayer means:
(A) An individual, corporation, partnership,
affiliate, association or trust or any combination or
group thereof controlled by the taxpayer; or
(B) An individual, corporation, partnership,
affiliate, association or trust or any combination or
group thereof that is in control of the taxpayer; or
(C) An individual, corporation, partnership,
affiliate, association or trust or any combination or
group thereof controlled by an individual, corporation,
partnership, affiliate, association or trust or any
combination or group thereof that is in control of the
taxpayer; or
(D) A member of the same controlled group as the
taxpayer.
For purposes of this article, "control", with respect
to a corporation 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 such
corporation which entitles its owner to vote. "Control",
with respect to a trust, means ownership, directly or
indirectly, of fifty percent or more of the beneficial
interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or
profits interest in a partnership or association or of a
beneficial interest in a trust shall be determined in
accordance with the rules for constructive ownership of
stock provided in Section 267(c), other than paragraph (3)
of such section, of the United States Internal Revenue
Code, as amended.
(14) State fiscal year. -- "State fiscal year" means
a twelve-month period beginning on the first day of July
and ending on the thirtieth day of June.
(15) Tax attributable to qualified investment. --
"Tax attributable to qualified investment" means that
amount of the consumers sales and service tax determined
under section three-a of this article as Tax attributable
to qualified investment.
(16) Taxpayer. -- The term "taxpayer" means any
person subject to the tax imposed by article twenty-one,
twenty-three or twenty-four of this chapter (or any one or
combination of such articles of this chapter).
(17) Tax year. -- "Tax year" means the tax year of a
taxpayer as determined for federal income tax purposes.
(18) Tourism attraction. -- "Tourism Attraction"
means:
(A) any of the following facilities, sites or areas
occurring or present in this state:
(i)A cultural or historical site certified as such
for purposes of this Act by the division of culture and
history of the Department of Education and the Arts;
(ii) A recreational or entertainment facility;
(iii) An area of scenic beauty or a phenomenon of
natural or scientific significance;
(iv) A theme park;
(v) An amusement park;
(vi) An indoor or outdoor theater or amphitheater for
the exhibition of plays or live shows, but not theaters
exclusively for the exhibition of moving pictures or video
presentations.
(vii) Botanical gardens;
(viii) Cultural or educational centers other than
primary and secondary schools and institutions of higher
education;
(ix) Whitewater rafting trips, tours, areas or
facilities or other water float trips, tours, areas or facilities;
(x) West Virginia state parks;
(xi) Rail excursion tours or facilities;
(xii) River boat tours or facilities;
(xiii) Excursions and tours over pathways, roads and
trails established pursuant to the West Virginia rails to
trails program.
(xv) Water sports facilities;
(xvi) Boating or canoeing trips, tours, areas or
facilities;
(xvii) Mountain biking trips, tours, areas and
facilities;
(xviii) Cycling trips, tours, areas and facilities;
(ixx) Hunting areas and facilities;
(xx) Snow skiing, snow boarding and snow sport or
snow recreation areas and facilities;
(xxi) Fishing areas and facilities;
(xxii) Golf courses;
(xxiii) Hiking trails, areas or facilities;
(xxiv) Bird watching areas or facilities;
(xxv) Camping areas or facilities;
(xxvi) Industrial tourism sites,
(xxvii) Sports arenas and sports centers;
(xxviii) Race tracks for automobile or motorcycle
racing;
(B) The term "tourism attraction" shall not mean or
include:
(i) Any facility, site or area not wholly occurring
in this state or not wholly located in this state;
(ii) Facilities, areas or sites that are primarily
devoted to the retail sale of goods, unless the goods are
created at the site of the tourism attraction or unless
the sale of the goods is incidental to the tourism
attraction;
(iii) Facilities, tours, trips, areas or sites that
are not open to the public;
(iv) Facilities, sites or areas established wholly or
in part for the purpose of conducting legalized or illegal
gambling, or facilities, sites or areas where gambling
occurs. For purposes of this definition the term
"gambling" shall not include charitable bingo gaming
sponsored and operated by an organization licensed by this
state to hold charitable bingo occasions. For purposes of
this definition the term "gambling" shall not include charitable raffle gaming sponsored and operated by an
organization licensed by this state to hold charitable
raffle occasions.
§11-13P-3a. Tax attributable to qualified investment.
(a)
Annual determination of tax attributable to
qualified investment.
(1) Tax attributable to qualified investment is the
excess of
(A) the allowable portion of the consumers sales and
service tax imposed by article fifteen of this chapter and
collected by the eligible taxpayer from its patrons and
vendees during the tax year over
(B) the amount of the consumers sales and service tax
imposed by article fifteen of this chapter and collected
by the eligible taxpayer from its patrons and vendees in
the base year.
(2) In any tax year when the amount described in
paragraph (A), subdivision (1), of this subsection exceeds
the amount described in paragraph (B), subdivision (1) of
this subsection of this section, tax attributable to
qualified investment is zero.
(c)
Allowable portion. The allowable portion of the consumers sales and service tax imposed by article fifteen
of this chapter and collected by the eligible taxpayer
from its patrons and vendees during the tax year is the
total amount of consumers sales and service tax imposed by
article fifteen of this chapter and collected by the
eligible taxpayer from its patrons and vendees during the
tax year less: consumers sales and service tax collected
as a result of the making of sales, or the providing of
taxable services by the eligible taxpayer or the operation
or use of any facility or business, or the result of any
other activity taxable under article fifteen of this
chapter which is pursued, undertaken, engaged in or
otherwise done subsequent to the placement of the
qualified investment into service or use, but which is not
(1) directly attributable to and the direct result of
the qualified investment or
(2) directly attributable to and the direct result of
investment in place and owned or leased by the eligible
taxpayer and in operation in the base year.
(3) directly attributable to or derived from the
operation of any restaurant, hotel, motel or other lodging
facility excluded from the definition of qualified tourism development property.
(d)
Base year. The base year is the eligible
taxpayer's tax year, for federal income tax purposes,
immediately preceding the tax year during which any
qualified investment is first placed into service or use.
(e)
Multiple entitlements to credit. In the case of
multiple entitlements to the credit allowed under this
article which arise under separate certified projects, the
tax attributable to qualified investment, the allowable
portion of the consumers sales and service tax imposed by
article fifteen of this chapter and collected by the
eligible taxpayer from its patrons and vendees during the
tax year, and the base year shall be determined separately
for each certified project.
(f)
Tax attributable to qualified investment for
purposes of the monthly or quarterly remittance of tax and
assertion of credit.
(1) For purposes of the monthly or quarterly filing
and remittance of the consumers sales and service tax and
the assertion of credit on the monthly or quarterly
consumers sales and service tax return against tax attributable to qualified investment, the monthly or
quarterly tax attributable to qualified investment is the
excess of
(A) the allowable portion, determined on a monthly or
quarterly basis, of the consumers sales and service tax
imposed by article fifteen of this chapter and collected
by the eligible taxpayer from its patrons and vendees
during the taxable month or taxable quarter over
(B) the amount of the consumers sales and service tax
imposed by article fifteen of this chapter and collected
by the eligible taxpayer from its patrons and vendees in
the corresponding taxable month or taxable quarter of the
base year.
(2) In any taxable month or taxable quarter when the
amount described in paragraph (B), subdivision (1) of this
subsection exceeds the amount described in paragraph (A),
subdivision (1) of this subsection, tax attributable to
qualified investment for that taxable month or taxable
quarter is zero.
(g)
Annual reconciliation.
(1) Eligible taxpayers which apply the credit allowed
under this article on a monthly or quarterly basis shall make a reconciliation at the end of each tax year to
determine the amount of annual tax credit allowable under
this article for the tax year, based on annual tax
attributable to qualified investment, and on the
limitations set forth in section seven of this article.
(2) Within thirty days of the close of the tax year,
the eligible taxpayer shall file an annual credit
reconciliation statement on such form as the tax
commissioner may prescribe, and for those eligible
taxpayers who have underpayments of tax or overpayments of
tax shown on such reconciliation,
(A) shall pay to the tax commissioner the amount of
any credit taken in excess of the annual limitations, as
shown of the annual credit reconciliation statement, or
(B) shall apply to the tax commissioner for a refund
of any tax overpayment resulting from the eligible
taxpayer's failure to apply annual credit to which the
eligible taxpayer was entitled.
§11-13P-4. Eligibility for tax credits; certification of
project plans by the division of tourism.
(a) A taxpayer which seeks to have a project
certified pursuant to this article shall submit to the commissioner of the division of tourism an application for
certification of a project plan, in such form as the
commissioner of the division of tourism shall prescribe,
setting forth the project to be implemented, the amount of
projected qualified investment to be made, the nature and
location of the proposed project, the amount of total tax
credits to be created by the proposed project under this
article, an estimate of the number of new jobs to be
created by the project and the schedule for implementing
the project.
(1) Every applicant for certification shall pay to
the division of tourism an application fee with each
application for project certification filed with the
division of tourism. The application fee shall be an
amount to be set by the division of tourism by legislative
regulation, but shall in no case to exceed the amount of
fifty dollars per project application. The application fee
shall be deposited by the division of tourism in the small
tourism business development fund created under this
article, and shall be nonrefundable to the applicant. The
division shall not certify or consider for certification
any project until the application fee for that project has been paid.
(b)
Receipt of applications for certification in the
first and third quarters. -- The commissioner of the
division of tourism shall receive applications for
certification of proposed projects during the first
quarter and the third quarter of each state fiscal year.
Such quarters being held open for receipt of applications,
the commissioner of the division of tourism shall not
issue certification of any project during the first and
third quarters of each state fiscal year.
(c)
Issuance of certification in the second and
fourth quarters. -- The commissioner of the division of
tourism shall, in the second quarter of the state fiscal
year, certify, or deny certification of, those proposed
projects for which applications for certification have
been filed during the first quarter of the state fiscal
year. The commissioner of the division of tourism shall,
in the fourth quarter of the state fiscal year certify, or
deny certification of, those proposed projects for which
applications for certification have been filed during the
third quarter of the state fiscal year. No applications for certification may be accepted by the commissioner of
the division of tourism during the second and fourth
quarters of the state fiscal year:
Provided, That the
commissioner of the division of tourism may during any
quarter accept information, documents or other material
necessary to complete an application lawfully filed in a
prior quarter, but found to be incomplete by the
commissioner of the division of tourism.
(d) No certification shall be issued for any proposed
project that is not in conformance with the requirements
of this article.
(e) Applications for which the commissioner of the
division of tourism requires additional information shall
not constitute completed applications until such
information has been received by the commissioner of the
division of tourism.
(f) Those projects for which certification is not
issued by the commissioner of the division of tourism
within in the next succeeding second or fourth quarter
subsequent to the quarter during which the completed
application for certification was received by the division
of tourism shall be deemed disapproved by operation of law.
(g) The division of tourism shall promptly notify an
applicant as to whether an application for certification
of a project plan has been approved or disapproved.
(h) Those applicants which receive certification of
a project plan, and which otherwise comply with the
requirements of this article, may place qualified tourism
development property into service or use. Eligible
taxpayers may begin taking the credit allowed under this
article in the tax year when qualified investment is
placed in service or use.
(i) Eligible taxpayers which make qualified
investment in qualified tourism development property in a
project certified under this article shall receive a tax
credit as provided in section six of this article.
(1) No tax credit may be granted under this article
for any investment except qualified investment in
qualified tourism development property, as defined in this
article, placed in service in a project which has been
certified in accordance with the requirements of this
article prior to the placement of the qualified investment
into service or use.
(2) No tax credit may be granted under this article
for any investment which, if allowed, would cause the
amount of tax credit generated by the project to exceed
the maximum amount of tax credit for which the project was
certified as stated in the application for project
certification filed with the division of tourism.
(3) No project shall be certified in whole or in part
for which the amount of the proposed investment exceeds
four million dollars. However, certification shall not be
negated or withdrawn for a project having a legitimate
projected cost at the time of certification of four
million dollars or less, solely by reason of cost overruns
or unforseen circumstances which cause the ultimate cost
of the certified project to exceed four million dollars:
Provided,
That no tax credit shall be allowed or taken for
that portion of such investment which exceeds the amount
for which the project was originally certified.
(j) All applications for certification of a project
filed with the division of tourism, whether such project
is certified or denied certification, are public
information which may be viewed and copied by the public
and, at the discretion of the division of tourism, published by the division of tourism.
(i)
Decertification, withdrawal of certification
suspension of certification.
(1) The commissioner of the division of tourism may,
at the discretion of the commissioner of the division of
tourism may impose sanctions in circumstances where:
(A) the taxpayer has failed in whole or in part to
place qualified investment into service or use as
delineated in the application for project certification,
(B) the taxpayer has obtained certification of a
project under this article fraudulently or
(C) a taxpayer has failed to remit to the tax
department that portion of the consumers sales and service
tax attributable to qualified investment, after
withholding by the taxpayer of the credit allowed under
this article.
(2)
Sanctions. -- Upon determining the existence of
one or more of the conditions set forth in subdivision (1)
of this subsection, the commissioner of the division of
tourism may impose the following sanctions:
(A)
Prospective revocation of the project certification. -- No tax credit shall be allowed for any
project for which certification has been revoked for
periods subsequent to the effective date of revocation.
Tax credit taken by any taxpayer or person in accordance
with this article pursuant to the making of qualified
investment in a certified project prior to the effective
date of revocation of project certification shall not be
subject to recapture by reason of revocation of the
certification. However, such credit shall otherwise be
subject to audit and adjustment or recapture in accordance
with the requirements of this article and article ten of
this chapter.
(B)
Retroactive withdrawal of the project
certification. -- No tax credit shall be allowed for any
project for which certification has been withdrawn. Tax
credit taken by any taxpayer or person in accordance with
this article pursuant to the making of qualified
investment in a certified project for which certification
is later withdrawn pursuant to the provisions of this
section shall be subject to recapture upon withdrawal of
the certification.
(C)
Suspension of the project certification for a
stated period of time. -- No tax credit shall be allowed
for investment made during the suspension period for a
project. Tax credit taken by any taxpayer or person in
accordance with this article pursuant to the making of a
qualified investment in a certified project prior to or
subsequent to the suspension period shall not be subject
to recapture by reason of the suspension. However, such
credit shall otherwise be subject to audit and adjustment
or recapture in accordance with the requirements of this
article and article ten of this chapter.
(D)
Decreasing the amount of tax credit or qualified
investment for which the taxpayer or person is
certified. -- The commissioner of the division of tourism
may decrease the amount of qualified investment or the
amount of tax credit for which a given project is
certified, so that the eligible taxpayer may continue to
take the credit, but the amounts of total credit and
annual tax credit allowed to be taken by the eligible
taxpayer are decreased.
(E) Any combination of the aforementioned sanctions may be imposed at the discretion of the commissioner of
the division of tourism.
(j)
Audits and investigations. --
(1) The division of tourism or the tax department, or
both, may initiate and carry out investigations or audits
of any taxpayer or person or eligible taxpayer, applicant
for project certification or recipient of project
certification to determine whether:
(A) the taxpayer or person has failed in whole or in
part to place qualified investment into service or use as
delineated in the application for project certification,
(B) the taxpayer or person has obtained certification
of a project under this article fraudulently or
(C) a taxpayer or person has failed to remit to the
tax department that portion of the consumers sales and
service tax attributable to qualified investment, after
withholding by the taxpayer or person of the credit
allowed under this article.
(2) No provision of this article shall be construed
to limit, impede or abrogate the powers of the tax
commissioner to initiate and carry out investigations or
audits of any taxpayer or person for the purpose of determining any amount of tax due, the correctness of any
remittance of tax or withholding of tax, entitlement to
any tax credit, and the amount of tax credit asserted or
allowed, or any other matter relating to the
administration and enforcement of the tax laws of this
state.
(k)
Procedures. --
(1)
Notice of pending sanctions. -- Upon the making
of a determination by the commissioner of the division of
tourism that sanctions shall be applied under this
section, the commissioner of the division of tourism shall
serve upon the taxpayer or person against whom sanctions
are to be applied a notice of pending sanctions.
(2)
Service of notice, content of notice. -- The
notice of pending sanctions shall be served upon the
taxpayer or person in the same manner as an assessment of
tax in accordance with article ten of this chapter. Such
notice of pending sanctions shall state the sanctions to
be applied in accordance with this section, the effective
date or dates of such sanctions, with specific statements
of whether any sanction is to be applied retroactively or in part retroactively, and the commencement and
termination dates for any suspensions of certification or
temporary disqualifications of any taxpayer or person to
be disqualified under this section from participation in
certified projects. The notice of pending sanctions shall
state that sanctions shall be imposed sixty days after
service of the notice of pending sanctions upon the
taxpayer or person, unless the taxpayer or person effects
a remedy of the cause for the sanction, satisfactory to
the commissioner of the division of tourism such as to
allow the commissioner of the division of tourism to
waive, withdraw, modify or not impose the sanction.
(3)
Appeals. The taxpayer or person may file an
appeal of pending sanctions as if the notice of pending
sanctions were an assessment of tax under article ten of
this chapter, and the matter on appeal shall be subject to
the procedures set forth in article ten of this chapter.
On appeal, the burden of proof shall be on the taxpayer or
person against whom sanctions are to be imposed to prove
that the conditions for applying sanctions have not been
met.
(l)
Statutory confidentiality. Any proceeding
relating to any amount of tax due or the recapture of tax
credit taken under this article or any adjustment of the
amount of tax credit taken under this article is subject
to the provisions of article ten of this chapter,
including all statutory confidentiality provisions, and
shall be subject to all other applicable statutory tax
confidentiality provisions of this code.
(m)
Effect of a final determination, waiver of
penalties or sanctions. -- The notice of pending sanctions
shall become final sixty days after service unless an
appeal is filed under this section, and shall not be
subject to further appeal by the recipient thereof. When
a determination has become final that a taxpayer or person
is subject to sanctions under this section, the sanctions
described in the notice of pending sanctions shall apply,
effective as of the date set forth in that notice, unless
the taxpayer or person effects a remedy of the cause for
the sanction, satisfactory to the commissioner of the
division of tourism such as to allow the commissioner of
the division of tourism to waive, withdraw, modify or not impose the sanction. The sanctions authorized under this
section may be imposed, adjusted, withdrawn or waived, in
whole or in part, at the discretion of the commissioner of
the division of tourism.
§11-13P-4a. Allowances and deposits; revolving funds.
(a)
Project administration allowance. -- Out of
consumers sales and service tax attributable to qualified
investment remitted to the tax commissioner, the tax
commissioner shall deposit in the small tourism
development fund created under this article the lesser of:
(1) two percent of the amount of the remaining tax
attributable to qualified investment that is remitted to
the Tax Department, after withholding by the eligible
taxpayer of the credit allowed under this article, or
(2) four tenths of one percent of total tax
attributable to qualified investment.
(b)
Small tourism business development fund. --
(1) For the purpose of permitting payments to be made
and costs to be met for operation of the program
established by this article, there is hereby created a
revolving fund for the division of tourism, which shall be known as the small business tourism development fund.
Monies in the small tourism business development fund
shall be expended by the division of tourism for purposes
of defraying the costs incurred by the division of tourism
in administering the program established pursuant to this
article, and for general administrative costs of the
division of tourism.
(2) The small tourism business development fund shall
be accumulated and administered as follows:
(A) Portions of the consumers sales and service tax
attributable to qualified investment remitted to the tax
commissioner shall be deposited into the small tourism
business development fund by the tax commissioner as
specified in this article.
(B) Any appropriations made to the small tourism
business development fund and all monies therein shall not
be deemed to have expired at the end of any fiscal period.
(c)
Tax administration allowance. -- Out of consumers
sales and service tax attributable to qualified investment
remitted to the tax commissioner, the tax commissioner
shall deposit in the general tax administration fund
created under this article the lesser of:
(1) two percent of the remaining tax attributable to
qualified investment that is remitted to the tax
commissioner after withholding by the eligible taxpayer of
the credit allowed under this article, or
(2) four tenths of one percent of total tax
attributable to qualified investment.
(d)
General tax administration fund. --
(1) There is hereby created a revolving fund for the
tax department which shall be known as the general tax
administration fund. The tax department administration fee
paid under this article shall be paid by the tax
commissioner into the state treasury and deposited to the
credit of the tax department general tax administration
fund. Monies in the tax department general tax
administration fund shall be expended by the tax
department for the purpose of defraying costs incurred by
the tax department for handling remittances and deposits
for the program established pursuant to this article and
for costs of general tax administration.
(2) The tax department general tax administration
fund shall be accumulated and administered as follows:
(A) Portions of the consumers sales and service tax attributable to qualified investment shall be deposited
into the small tourism business development fund by the
tax commissioner as specified in this article.
(B) Any appropriations made to the tax department
general tax administration fund and all monies therein
shall not be deemed to have expired at the end of any
fiscal period.
§11-13P-5. Qualified investment.
(a)
General. -- Qualified investment in qualified
tourism development property is the applicable percentage
of the cost of property purchased or leased and
constituting qualified tourism development property as
defined in this article which is placed in service or use
in this state by the taxpayer during the taxable year.
(b)
Applicable percentage. -- For the purpose of
subsection (a) of this section, the applicable percentage
of any property shall be determined under the following
table:
If useful life is: The applicable percentage is:
4 years or more but less than 6 years ......33-%
6 years or more but less than 8 years ......66|%
8 years or more ............................100%
The useful life of any property, for purposes of this
section, shall be determined as of the date such property
is first placed in service or use in this state by the
taxpayer, determined in accordance with federal income tax
law.
(c)
Cost. -- For purposes of subsection (a) of this
section, the cost of each property purchased for business
expansion shall be determined under the following rules:
(1)
Trade-ins. -- Cost shall not include the value of
property given in trade or exchange for the property
purchased for business expansion.
(2)
Damaged destroyed or stolen property. -- If
property is damaged or destroyed by fire, flood, storm or
other casualty, or is stolen, then the cost of replacement
property shall not include any insurance proceeds received
in compensation for the loss.
(3)
Rental property. --
(A) The cost of real property acquired by written
lease for a primary term of ten years or longer shall be
one hundred percent of the rent reserved for the primary
term of the lease, not to exceed twenty years. Real property leased for a primary term of less than ten years
shall not constitute qualified tourism development
property.
(B) The cost of tangible personal property acquired
by written lease for a primary term of:
(i) Four years, or longer, shall be one third of the
rent reserved for the primary term of the lease;
(ii) Six years, or longer, shall be two thirds of the
rent reserved for the primary term of the lease; or
(iii) Eight years, or longer, shall be one hundred
percent of the rent reserved for the primary term of the
lease, not to exceed twenty years:
Provided, That in no
event shall rent reserved include rent for any year
subsequent to expiration of the book life of the
equipment, determined using the straight-line method of
depreciation.
(4)
Self-constructed property. -- In the case of
self-constructed property, the cost thereof shall be the
amount properly charged to the capital account for
depreciation in accordance with federal income tax law.
(5)
Transferred property. -- The cost of property used by the taxpayer out-of-state and then brought into
this state, shall be determined based on the remaining
useful life of the property at the time it is placed in
service or use in this state, and the cost shall be the
original cost of the property to the taxpayer less
straight line depreciation allowable for the tax years or
portions thereof taxpayer used the property outside this
state. In the case of leased tangible personal property,
cost shall be based on the period remaining in the primary
term of the lease after the property is brought into this
state for use in a new or expanded business facility of
the taxpayer, and shall be the rent reserved for the
remaining period of the primary term of the lease, not to
exceed twenty years, or the remaining useful life of the
property (determined as aforesaid), whichever is less.
§11-13P-6. Amount of credit allowed.
(a)
Credit allowed.
Eligible taxpayers shall be allowed a credit, the
application of which and the amount of which shall be
determined as provided in this article.
(b)
Amount of credit. -- The amount of credit
allowable is twenty-five percent of the amount of the taxpayer's qualified investment, as defined in this
article:
Provided,
That, in the case of qualified
investment in a bed and breakfast facility, as defined in
this article, the amount of credit allowable is fifty
percent of the amount of the taxpayer's qualified
investment, as defined in this article.
(c)
Application of credit over either five years or
ten years at the election of the taxpayer,
limitations.
At the election of the taxpayer, the amount of credit
allowable under this article must be taken over either a
five year period or over a ten-year period. The election
to take the credit over a ten year period or a five year
period shall be made in the application for certification
of the project filed with the commissioner of the division
of tourism under this article. Such election shall be
irrevocable for the life of the credit.
The amount of credit allowed under this article shall be
taken as follows:
(1) If over a ten year period, at the rate of one
tenth of the amount thereof per tax year, beginning with
the tax year in which the taxpayer places the qualified tourism development property into service or use, unless
the taxpayer elected to delay the beginning of the ten- year period until the next succeeding tax year. This
election shall be made in the annual income tax return
filed for the tax year in which credit is first taken on
the qualified investment placed into service or use by the
taxpayer. Once made, the election cannot be revoked. A tax
credit shall be allowable under this article only for the
tax year of the eligible taxpayer in which the qualified
tourism development property is placed in service or use
(or at the election of the eligible taxpayer, the next
succeeding tax year), and for the next succeeding nine tax
years.
(2) If over a five year period, at the rate of one
fifth of the amount thereof per tax year, beginning with
the tax year in which the taxpayer places the qualified
tourism development property into service or use, unless
the taxpayer elected to delay the beginning of the five- year period until the next succeeding tax year. This
election shall be made in the annual income tax return
filed for the tax year in which credit is first taken on
the qualified investment placed into service or use by the taxpayer. Once made, the election cannot be revoked. A tax
credit shall be allowable under this article only for the
tax year of the eligible taxpayer in which the qualified
tourism development property is placed in service or use
(or at the election of the eligible taxpayer, the next
succeeding tax year), and for the next succeeding four tax
years.
(d)
Placed in service or use. -- For purposes of the
credit allowed by this article, property shall be
considered placed in service or use in the earlier of the
following taxable years:
(1) the taxable year in which, under the taxpayer's
depreciation practice, the period for depreciation with
respect to such property begins; or
(2) the taxable year in which the property is placed
in a condition or state of readiness and availability for
a specifically assigned function.
§11-13P-7. Application of annual credit allowance.
(a)
In general. -- The aggregate annual credit
allowance for a current tax year is an amount equal to the
sum of the following:
(1) If taken over a ten year period,
(A) the one-tenth part allowed under section six of
this article for qualified tourism development property
placed into service or use during a prior tax year; plus
(B) The one-tenth part allowed under section six of
this article for qualified tourism development property
placed into service or use during the current tax year. (2) If taken over a five year period,
(A) the one-fifth part allowed under section six of
this article for qualified tourism development property
placed into service or use during a prior tax year; plus
(B) The one-fifth part allowed under section six of
this article for qualified tourism development property
placed into service or use during the current tax year.
(b)
Application of current year annual credit
allowance. -- The amount determined under subsection (a)
of this section shall be allowed as a credit as follows:
(1) Out of the consumers sales and service tax
imposed by article fifteen of this chapter and collected
by the vendor from its patrons and vendees on and after
the date qualified investment is placed in service or use,
which amount would otherwise be remitted periodically by the eligible taxpayer to the tax commissioner, the
eligible taxpayer shall withhold the lesser of:
(A) the annual credit determined under subsection (a)
of this section, or
(B) up to eighty percent of tax attributable to
qualified investment.
(C) The amount so withheld by the eligible taxpayer
out of each monthly or quarterly periodic remittance shall
not exceed eighty percent of the total periodic remittance
of tax attributable to qualified investment which would
otherwise be forwarded to the tax commissioner.
(D) Amounts of consumers sales and service tax
withheld by the eligible taxpayer in accordance with this
subsection shall become the property of the eligible
taxpayer in satisfaction of the credit allowed under this
article.
(d) The credit allowed under this article shall not
apply against any other tax remittance or against any tax
other than as specified in this section.
(e)
Unused credit forfeited. -- If any annual credit
allowable for the taxable year, as determined under
subsection (a) of this section, remains after application of subsection (b) of this section, the amount thereof
shall be forfeited. No carryover to a subsequent taxable
year or carry back to a prior taxable year shall be
allowed for the amount of any unused portion of any annual
credit allowance.
§11-13P-8. Assertion of the tax credit, reporting.
(a) Any eligible taxpayer that claims a tax credit as
provided in this article shall file with the monthly or
quarterly periodic remittance to the tax commissioner of
the consumers sales and service tax collected, a
statement, in such form as the tax commissioner may
prescribe, of the amount of the consumers sales and
service tax withheld by the eligible taxpayer out of the
periodic remittance, along with such other information as
the tax commissioner shall require.
(b) Any eligible taxpayer that claims a tax credit as
provided in this article shall file with the West Virginia
tax commissioner, in such form as the tax commissioner may
prescribe, an annual tax credit reporting schedule stating
the amount of the qualified tourism development property
which the taxpayer has placed into service or use. The
eligible taxpayer shall file with the tax credit reporting schedule a certificate, issued by the commissioner of the
division of tourism, evidencing certification of the
project plan by the commissioner of the division of
tourism, pursuant to which the qualified tourism
development property was placed into service or use.
(c) In the tax credit reporting schedule required
under this section, the taxpayer shall provide all
information required by the tax commissioner's prescribed
form.
(d) The tax credit reporting schedule shall be filed
with the annual return for the taxes imposed by article
twenty-four of this chapter for the tax year in which the
qualified investment was first placed into service or use
pursuant to a certified project plan:
Provided,
That, if
the eligible taxpayer is not required to file a tax return
under article twenty-four of this chapter, then such tax
credit reporting schedule shall be filed with the annual
return for the taxes imposed by article twenty-three of
this chapter for such year:
Provided, however, That, if
the eligible taxpayer is not required to file a tax return
under article twenty-three or twenty-four of this chapter, then such tax credit reporting schedule shall be filed
with the annual return for the taxes imposed by article
twenty-one of this chapter for such year.
(e) The tax commissioner may disallow any credit
claimed under this article for which a properly completed
tax credit reporting schedule or other required
documentation, statements or proofs are not timely filed.
§11-13P-9. Total maximum aggregate tax credit amount;
certification of projects.
(a) The total amount of tax credits allowed under
this article may not exceed ten million dollars in any
state fiscal year.
(b) Applications for project certification shall be
filed with the division of tourism. The division of
tourism shall record the date each application is filed.
All complete and valid applications shall be considered
for approval or disapproval in a timely manner by the
division of tourism.
(c) When the total amount of tax credits certified
under this article equals the maximum amount of tax
credits allowed, as specified in subsection (a) of this
section, in any state fiscal year, no further certifications shall be issued in that same fiscal year.
(d) All applications filed in any state fiscal year
and not certified during the state fiscal year in which
they are filed shall be null and void by operation of law
on the last day of the state fiscal year in which they are
filed, and all applicants which elect to seek
certification of a project plan shall file anew on and
after the first day of the succeeding state fiscal year.
(e) No project shall be certified under this article
whereby the amount of qualified investment exceeds four
million dollars.
(f) No series of projects or group or number of
projects shall be certified under this article for any
person or group of related persons whereby the amount of
aggregate qualified investment exceeds four million
dollars.
§11-13P-10. Forfeiture of unused tax credits;
redetermination of credit allowed; credit recapture.
(a)
Disposition of property or cessation of use. --
If during any taxable year, property with respect to which
a tax credit has been allowed under this article:
(1) Is disposed of prior to the end of its useful life; or
(2) Ceases to be used in an eligible business of the
taxpayer in this state prior to the end of its useful
life, then the unused portion of the credit allowed for
such property shall be forfeited for the taxable year and
all ensuing years. Additionally, except when the property
is damaged or destroyed by fire, flood, storm or other
casualty, or is stolen, the taxpayer shall redetermine the
amount of credit allowed in all earlier years by reducing
the applicable percentage of cost of such property allowed
under section five of this article, to correspond with the
percentage of cost allowable for the period of time that
the property was actually used in this state in the new or
expanded business of the taxpayer. Taxpayer shall then
file a reconciliation statement with the tax credit
reporting schedule filed under section eight of this
article, for the year in which the forfeiture occurs. If
the amount of credit taken exceeds the amount of credit
allowed as redetermined, the taxpayer shall pay the
recapture tax as specified in this article.
(b)
Cessation of operation of business facility. --
If during any taxable year the taxpayer ceases operation of qualified tourism development property in this state
for which credit was allowed under this article, before
expiration of the useful life of the property with respect
to which tax credit has been allowed under this article,
then the unused portion of the allowed credit shall be
forfeited for the taxable year and all ensuing years.
Additionally, except when the cessation is due to fire,
flood, storm or other casualty, the taxpayer shall
redetermine the amount of credit allowed in earlier years
by reducing the applicable percentage of cost of such
property allowed under section five, to correspond with
the percentage of cost allowable for the period of time
that the qualified tourism development property was
actually used in this state in the business of the
taxpayer. The taxpayer shall then file a reconciliation
statement with the annual tax credit reporting schedule
filed under section eight of this article, for the year in
which the forfeiture occurs. If the amount of credit taken
exceeds the amount of credit allowed as redetermined, the
taxpayer shall pay the recapture tax as specified in this
article.
§11-13P-11. Recapture of credit; recapture tax imposed.
(a)
When recapture tax applies. --
(1) If it appears upon audit or otherwise that a
taxpayer has not placed qualified tourism development
property into service or use as represented but has
nevertheless taken the credit allowed by this article, the
taxpayer shall pay the recapture tax as specified in this
section.
(2) Any person who places qualified tourism
development property in service or use in this state, and
who fails to use such qualified tourism development
property for at least the period of its useful life
(determined as of the time the property was placed in
service or use under section five of this article), or the
period of time over which tax credits allowed under this
article with respect to such property are applied under
this article, whichever period is less; such person shall
pay the recapture tax imposed by subsection (b) of this
section.
(3) This section shall not apply when section twelve
of this article applies. However, the successor, or the
successors, and the person, or persons, who previously
claimed credit under this article with respect to such qualified tourism development property and the new jobs
attributable thereto, shall be jointly and severally
liable for payment of any recapture tax subsequently
imposed under this section with respect to such qualified
tourism development property and new jobs.
(b)
Recapture tax imposed. -- The recapture tax
imposed by this section shall be the amount determined as
follows:
The taxpayer shall recapture an amount of credit
equal to the difference between:
(1) the amount of credit claimed under section seven
of this article for the taxable year, and all preceding
taxable years, and
(2) the amount of credit:
(A) that would have been claimed in such years if the
amount of credit allowable under section five of this
article had been determined based on the qualified tourism
development property which remains in service, plus
(B) an amount equal to the amount of interest that
would have been imposed on the difference between the
amount that was claimed and the amount that should have
been claimed over the period of time outstanding, in accordance with the interest provisions of article ten of
this chapter, as if that amount were tax underpaid. In
addition, the recapture tax may, at the discretion of the
tax commissioner include an amount equal to the statutory
penalties that can be imposed under article ten of this
chapter should it appear that the taxpayer has engaged in
conduct that would have resulted in the imposition of such
penalties in accordance with article ten of this chapter.
(d)
Payment of recapture tax. -- The recapture tax
imposed under this section shall be due and payable on the
day such person's annual return is due for the taxable
year in which this section applies, under article
twenty-one, or twenty-four, of this chapter. When the
employer is a partnership, or S corporation, for federal
income tax purposes, the recapture tax shall be a joint
and several liability of and shall be paid by those
persons who are partners in such partnership, or
shareholders in such S corporation, in the taxable year in
which recapture occurs under this section.
(e) Imposition of the recapture tax under this
article shall not be interpreted as limiting or abrogating
the authority of the tax commissioner to audit and assess tax and to administer and audit the application and
entitlement to, and calculation of, the credit allowed
under this article in accordance with the provisions of
article ten of this chapter.
(f) The provisions of the "West Virginia Tax
Procedure and Administration Act" set forth in article ten
of this chapter, shall apply to the recapture tax imposed
by this article with like effect as if said act were set
forth in extenso in this article, except where it is
expressly and specifically provided in this article that
a particular provision of this article shall govern and
control.
§11-13P-12. Transfer of qualified investment to
successors.
(a)
Mere change in form of business. -- Qualified
tourism development property shall not be treated as
disposed of under section ten of this article by reason of
a mere change in the form of conducting the business as
long as the qualified investment property is retained in
a business in this state, and the eligible taxpayer
retains a controlling interest in the successor business.
In this event, the successor business shall be allowed to claim the amount of credit still available with respect to
the business facility or facilities transferred, and the
taxpayer (transferor) shall not be required to redetermine
the amount of credit allowed in earlier years.
(b)
Transfer or sale to successor. -- Qualified
tourism development property shall not be treated as
disposed of under section ten by reason of any transfer or
sale to a successor business which continues to operate
the business facility in this state. Upon transfer or
sale, the successor (transferee) shall acquire the amount
of credit that remains available under this article for
each subsequent taxable year for which the credit would
have been available to the transferor, and the transferor
shall not be required to redetermine the amount of credit
allowed in earlier years.
§11-13P-13. Identification of qualified tourism
development property.
Every taxpayer who claims credit under this article
shall maintain sufficient records to establish the
following facts for each item of qualified tourism
development property:
(1) Its identity;
(2) Its actual or reasonably determined cost;
(3) Its straight-line depreciation life;
(4) The month and taxable year in which it was placed
in service;
(5) The amount of credit taken; and
(6) The date it was disposed of or otherwise ceased
to be qualified property.
§11-13P-14. Failure to keep records of qualified tourism
development property.
A taxpayer who does not keep the records required for
identification of qualified tourism development property
is subject to the following rules:
(1) A taxpayer shall be treated as having disposed
of, during the taxable year, any qualified tourism
development property which the taxpayer cannot establish
was still on hand, in this state, at the end of that
taxable year.
(2) If a taxpayer cannot establish when qualified
tourism development property reported during the taxable
year for purposes of claiming this credit was placed in
service, the taxpayer shall be treated as having placed it
in service in the most recent prior year in which similar property was placed in service, unless the taxpayer can
establish that the property placed in service in the most
recent year is still on hand. In that event, the taxpayer
will be treated as having placed the returned property in
service in the next most recent year.
§11-13P-15. Public information relating to tax credit.
The tax commissioner shall annually publish in the
state register the name and address of every taxpayer
asserting this credit, and the amount of any credit
asserted under this article by each such taxpayer; and the
confidentiality provisions of section four-a, article one,
or section five-d, article ten of this chapter, or of any
other provision of this code, do not apply to such
information.
§11-13P-16. Audits and examinations; information sharing.
(a) The tax commissioner may, at his or her
discretion, perform joint audits or examinations with the
division of tourism or independently audit or examine the
books, records and other information, as appropriate, of
any taxpayer or of any person, organization or entity
which has filed an application for certification of a
project plan under this article, or of any taxpayer which has asserted this credit, or of any person, organization
or entity believed to have relevant information relating
to this credit, its application, or the taxes against
which the credit may apply.
(b) For purposes of joint audits, or any
administrative or judicial proceeding or procedure
relating to any tax credit taken, asserted or sought under
this article, the tax commissioner may share such tax
information as the tax commissioner may deem appropriate
with the division of tourism, notwithstanding the
provisions of section four-a, article one of this chapter
or section five-d, article ten of said chapter, or any
other provision of this code to the contrary.
§11-13P-17. Program evaluation; expiration of credit;
preservation of entitlements.
(a) On or before the thirtieth day of September, two- thousand three, the division of tourism shall secure an
independent review of the Small Business Tourism
Development Act program as created by this article and
present the findings to the Legislature. Such review shall
focus upon:
(1) the cost effectiveness of the program;
(2) a calculation of the cost of the program per net
job created (net of any jobs lost due to the non-retention
of businesses competing with businesses entitled to the
credit allowed under this article);
(3) the jobs creation effectiveness of the program;
(4) the value of the program with regard to fostering
economic development, particularly showing any increases
in out of state money flowing into West Virginia through
tourism and resulting from the program;
(5) the effect of the program on the retention of
businesses that existed in West Virginia prior to the
implementation of the program, and the competitive effect
of the credit upon those businesses.
(b) Pursuant to this report, and any independent
evaluation that the Legislature or the joint committee on
government operations may wish to initiate, the joint
committee on government operations shall issue a
recommendation to the Legislature, not later than the
first day of February, two-thousand four, as to whether
the program should continue.
(c) Except if continued by Act of the Legislature,
the Small Business Tourism Development Act shall terminate on the first day of July, two-thousand four unless sooner
terminated by law.
(d) Except if continued by Act of the Legislature, no
entitlement to the tax credit under this article shall
result from any investment in qualified tourism
development property placed in service or use after the
first day of July, two-thousand four, and no credit shall
be available to any taxpayer for any property placed into
service or use after that date. Taxpayers which have
gained entitlement to the credit pursuant to qualified
investment in qualified tourism development property
placed in service or use in certified projects prior to
the first day of July, two-thousand four, may retain that
entitlement and apply the credit in due course, provided
the requirements and limitations of this article are
otherwise met.
§11-13P-18. General procedure and administration.
Except for the specific exceptions set forth in this
article, from the tax information and tax return
information confidentiality provisions of article ten of
this chapter, each and every provision of the "West
Virginia Tax Procedure and Administration Act" set forth in article ten of this chapter shall apply to the credit
allowed by this article with like effect as if said act
were applicable only to such credit and were set forth
with respect thereto in extenso in this article.
§ 11-13P-19. Regulations. -- The tax commissioner shall
promulgate such legislative regulations as may be
necessary to carry out the purpose of this article and to
implement the intent of the Legislature. Such regulations
shall be promulgated in accordance with the provisions of
article three, chapter twenty-nine-a of this code.
§11-13P-20. Severability.
(a) If any provision of this article or the
application thereof shall for any reason be adjudged by
any court of competent jurisdiction to be invalid, such
judgment shall not affect, impair or invalidate the
remainder of said article, but shall be confined in its
operation to the provision thereof directly involved in
the controversy in which such judgment shall have been
rendered, and the applicability of such provision to other
persons or circumstances shall not be affected thereby.
(b) If any provision of this article or the
application thereof shall be made invalid or inapplicable by reason of the failure of the Legislature to enact any
statute therein addressed or referred to, or by reason of
the repeal or any other invalidation of any statute
therein addressed or referred to, such failure to reenact
or such repeal or invalidation of any such statute shall
not affect, impair or invalidate the remainder of the said
article, but shall be confined in its operation to the
provision thereof directly involved with, pertaining to,
addressing or referring to the said statute, and the
application of such provision with regard to other
statutes or in other instances not affected by any such
invalid or repealed statute shall not be abrogated or
diminished in any way.
Note: The purpose of this bill is to create a
tax incentive for the creation, construction or
enlargement of tourism attractions or amenities. The
credit operates to allow the taxpayer to recover up
to 25% (or, in the case of bed and breakfast
facilities, 50%) of qualified investment in a tourism
attraction or amenity by offsetting up to 80% of
consumers sales and service tax collected by the
Taxpayer from customers over a period of either five
or ten years at the election of the Taxpayer.
Article thirteen-p is new; therefore, strike-throughs and underscoring have been omitted.