ENGROSSED
COMMITTEE SUBSTITUTE
FOR
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 701
(By Senators Plymale and Jenkins)
____________
[Originating in the Committee on Finance;
reported March 1, 2004.]
____________
A BILL to amend the code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §8-13C-1, §8-13C-2,
§8-13C-3, §8-13C-4, §8-13C-5, §8-13C-6, §8-13C-7, §8-13C-8,
§8-13C-9 and §8-13C-10; to amend and reenact §11-9-2, §11-9-3,
§11-9-4, §11-9-5, §11-9-6, §11-9-8 and §11-9-10 of said code;
and to amend and reenact §11-10-3 of said code, all relating
to authorizing a qualifying municipality to impose municipal
occupational tax, municipal sales and service tax and use tax;
establishing responsibilities of tax commissioner relating to
municipal sales and service tax and municipal use tax;
clarifying application of other state tax laws; creating
qualifying municipal sales and service tax and use tax fund;
providing tax rate apply to purchasers from printed catalogs; limiting use of the proceeds of the taxes to application
toward the unfunded liability of certain pensions; citing
instances where qualifying municipality loses certain taxing
authority; addressing conflicts and unconstitutionality; and
imposing criminal penalties for certain violations relating to
municipal sales and service tax and use tax.
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §8-13C-1, §8-13C-2,
§8-13C-3, §8-13C-4, §8-13C-5, §8-13C-6, §8-13C-7, §8-13C-8,
§8-13C-9 and §8-13C-10; that §11-9-2, §11-9-3, §11-9-4, §11-9-5,
§11-9-6, §11-9-8 and §11-9-10 of said code be amended and
reenacted; and that §11-10-3 of said code be amended and reenacted,
all to read as follows:
CHAPTER 8. MUNICIPAL CORPORATIONS.
ARTICLE 13C. MUNICIPAL TAXES APPLICABLE TO PENSION FUNDS.
§8-13C-1. Findings.
The Legislature finds that:
(a) Imposing additional taxes creates an extra burden on the
citizens of the state;
(b) Imposing additional taxes can be detrimental to the
economy of the state;
(c) Imposing additional taxes is only proper under the most
rare of circumstances;
(d) For many municipalities with severe unfunded liabilities
of the police and fire pension funds, all available sources of
local revenue have been exhausted. Property taxes are at the
maximum allowed by the state constitution and local business and
occupation taxes and utility taxes are at the maximum rates allowed
by state law. Other fees have reached the economic maximum and are
causing relocation of business outside the municipal boundaries;
(e) For many municipalities with severe unfunded police and
fire pension fund liabilities, revenue from existing sources has
become stagnant over the past few years with no expectation of
significant future growth;
(f) For many municipalities with severe unfunded police and
fire pension fund liabilities, payments required under state law to
fund fire and police pension funds are now close to equaling the
city payrolls for police and fire protection and will rise to
exceed those payrolls within a ten-year period;
(g) For many municipalities with severe unfunded police and
fire pension fund liabilities, payments required under state law to
fund fire and police pension funds now constitute a large
percentage of those municipalities total budget and will rise to an
even larger percentage of the available revenues in the next ten
years. Payment and benefit levels are dictated to the
municipalities by state law;
(h) As the required pension payments rise, many of the municipalities with severe unfunded police and fire pension fund
liabilities will find it impossible to maintain at minimum levels
necessary and proper, city services including, but not limited to,
police and fire protection, street maintenance and repair and
sanitary services;
(i) For some of the municipalities with severe unfunded
liabilities of the police and fire pension funds, the combination
of the steeply rising pension obligations and the stagnant revenue
sources raise the real possibility of municipal bankruptcy in the
near and predictable future. If this happens, pensioners would
either not receive the full benefits which they have been promised
or pressure would be placed on the state to fund these programs;
(j) For a municipality that has the most severe unfunded
liability in its pension funds, paying off the unfunded liability
in a timely manner would cause tremendous financial hardship and
the loss of many services that would otherwise be provided to the
municipality's citizens; and
(k) Only for a municipality that has the most severe unfunded
liability in its pension funds would the imposition of any of the
taxes authorized by this article be an appropriate method of
addressing the unfunded liability.
§8-13C-2. Definitions.
For the purposes of this article:
(a) "Qualifying municipality" means any municipality, as defined in section two, article one of this chapter, in which the
weighted average of the percentages to which its policemens' and
firemens' pension and relief funds are fully funded is three
percent or less on the date of adoption of the ordinance imposing
the tax; and
(b) "Taxable employee" means any individual:
(1) Who holds employment with an employer with a place of
business located within the qualifying municipality electing to
impose the municipal payroll tax pursuant to this article; and
(2) Whose salaries, wages, commissions and other earned income
that would be included in federal adjusted gross income for the
year is more than ten thousand dollars per year.
§8-13C-3. Municipal occupational tax.
(a) Each qualifying municipality has the plenary power and
authority to impose, by ordinance, a municipal occupational tax on
taxable employees. Any municipal occupational tax imposed pursuant
to this section shall meet the following requirements:
(1) The tax shall be imposed at a rate of one percent or less;
(2) The tax shall be imposed at a uniform rate; and
(3) The tax rate shall be applied only to salaries, wages,
commissions and other earned income of taxable employees that would
be included in federal adjusted gross income for the year. The tax
rate may not be applied to other forms of income including, but not
limited to, intangible income and net profit from a business.
(b) Each employer with a taxable employee, during each pay
period, shall withhold from the taxable employee's salary the
amount of the tax as computed by applying the appropriate tax rate
to the taxable employee's salary during that pay period and pay
over the withholdings to the appropriate municipal taxing
authority.
§8-13C-4. Municipal sales and service tax.
Each qualifying municipality has the plenary power and
authority to impose, by ordinance, municipal sales and service tax
at a rate not to exceed one percent. Any municipal sales and
service tax imposed shall be subject to the following:
(a) The base of municipal sales and service tax imposed
pursuant to this section shall be identical to the base of
consumers sales and service tax imposed pursuant to article
fifteen, chapter eleven of this code on sales made and services
rendered within the boundaries of the qualifying municipality,
subject to the following:
(1) Except for the exemption provided in section nine-f,
article fifteen, chapter eleven of this code, all exemptions and
exceptions from consumers sales and service tax apply to municipal
sales and service tax imposed pursuant to this section; and
(2) Sales of gasoline and special fuel is not subject to
municipal sales and service tax imposed pursuant to this section
but remain subject to the tax levied by article fifteen, chapter eleven of this code;
(b) Any municipal sales and service tax imposed pursuant to
this section applies solely to tangible personal property, custom
software and services that are sourced to the municipality. The
sourcing rules set forth in article fifteen-b, chapter eleven of
this code, including any amendments thereto, apply to municipal
sales and use taxes levied pursuant to this article;
(c) Any municipality that imposes municipal sales and service
tax pursuant to this section or changes the rate of municipal sales
and service tax imposed pursuant to this section shall notify the
tax commissioner pursuant to section six of this article; and
(d) Any municipality that imposes municipal sales and service
tax pursuant to this section may not administer or collect the tax,
but use the services of the tax commissioner to administer, enforce
and collect the tax.
§8-13C-5. Municipal use tax.
(a) Each qualifying municipality that imposes municipal sales
and service tax pursuant to this article shall impose, by
ordinance, municipal use tax at the same rate that is set for
municipal sales and service tax.
(b) The base of municipal use tax imposed pursuant to this
section shall be identical to the base of use tax imposed pursuant
to article fifteen-a, chapter eleven of this code on the use of
tangible personal property, custom software and taxable services within the boundaries of the qualifying municipality, subject to
the following:
(1) Except for the exemption provided in section nine-f,
article fifteen, chapter eleven of this code, all exemptions and
exceptions from use tax apply to municipal use tax imposed pursuant
to this section; and
(2) Sales of gasoline and special fuel are not be subject to
municipal use tax imposed pursuant to this section, but remain
subject to the tax levied by article fifteen-a, chapter eleven of
this code.
(c) A person is entitled to a credit against a tax imposed
pursuant to this section on the use of a particular item of
tangible personal property, custom software or service equal to the
amount, if any, of sales tax lawfully paid to another municipality
for the acquisition of that property or service:
Provided, That
the amount of credit allowed does not exceed the amount of use tax
imposed on the use of the property in the qualifying municipality
of use. For purposes of this subsection, "sales tax" includes
sales tax or compensating use tax imposed on the use of tangible
personal property, custom software or a service by the municipality
in which the sale occurred.
(d) Any municipality that imposes municipal use tax pursuant
to this section or changes the rate of municipal use tax imposed
pursuant to this section shall notify the tax commissioner pursuant to section six of this article.
(e) Any municipality that imposes a municipal use tax pursuant
to this section may not administer or collect the tax, but use the
services of the tax commissioner to administer, enforce and collect
the taxes.
§8-13C-6. Notification to tax commissioner; responsibilities of
tax commissioner; application of state tax law.
(a) Any qualifying municipality that imposes a municipal sales
and service tax and a municipal use tax pursuant to this article or
changes the rate of the taxes, shall notify the tax commissioner of
the imposition of the taxes or the change in the rate of the taxes
within thirty days of enacting the ordinance imposing the taxes or
changing the rate of the taxes. A municipal sales and service tax
and a municipal use tax imposed pursuant to this article or a
change in the rate of the taxes is not effective until at least
ninety days after the ordinance imposing the taxes is enacted.
(b) The tax commissioner is responsible for collecting,
enforcing and administering any municipal sales and service tax and
the municipal use tax imposed pursuant to this article in the same
manner as the state sales and service tax imposed pursuant to
article fifteen, chapter eleven of this code and the state use tax
imposed pursuant to article fifteen-a of this code. Additionally,
the tax commissioner may charge a fee not to exceed the lesser of
the cost of the service provided or one percent of the proceeds from the municipal sales and service tax.
(c) The state consumer sales and service tax law, set forth in
article fifteen, chapter eleven of this code, and the amendments to
that article and the rules of the tax commissioner relating to the
laws shall apply to the municipal sales and service tax to the
extent the rules and laws are applicable.
(d) The state use tax law, set forth in article fifteen-a,
chapter eleven of this code, and the amendments to that article and
the rules of the tax commissioner relating to the laws shall apply
to the municipal use tax to the extent the rules and laws are
applicable.
(e) Any term used in this article or in an ordinance adopted
pursuant to this article that is defined in articles fifteen,
fifteen-a and fifteen-b, chapter eleven of this code, as amended,
shall have the same meaning when used in this article or in an
ordinance adopted pursuant to this article, unless the context in
which the term is used clearly requires a different result.
(f) Any amendments to articles nine, ten, fifteen, fifteen-a
and fifteen-b, chapter eleven of this code, shall automatically
apply to a sales or use tax imposed pursuant to this article, to
the extent applicable.
(g) Each and every provision of the "West Virginia Tax
Procedure and Administration Act" set forth in article ten, chapter
eleven of this code, applies to the taxes imposed pursuant to this article, except as otherwise expressly provided in this article,
with like effect as if that act were applicable only to the taxes
imposed by this article and were set forth in extenso in this
article.
(h) Each and every provision of the "West Virginia Tax Crimes
and Penalties Act" set forth in article nine of this chapter
applies to the taxes imposed pursuant to this article with like
effect as if that act were applicable only to the taxes imposed
pursuant to this article and were set forth in extenso in this
article.
§8-13C-7. Qualifying municipal sales and service tax and use tax
fund; deposit and remittance of collections.
(a) There is created a special revenue account in the state
treasury designated the "qualifying municipal sales and service tax
and use tax fund" which is an interest-bearing account and shall be
invested in the manner described in section nine-c, article six,
chapter twelve of this code with the interest and other return
earned a proper credit to the fund. A separate subaccount within
the fund shall be established for each qualifying municipality that
imposes municipal sales and service tax and use tax pursuant to
this article.
(b) The tax commissioner shall deposit all the proceeds from
municipal sales and service tax and municipal use tax collected for
each municipality minus any fee for collecting, enforcing and administering taxes in the appropriate subaccount. All moneys
collected and deposited in the fund shall be remitted at least
quarterly by the state treasurer to the treasurer of the
appropriate municipality.
§8-13C-8. Printed catalogs.
Local tax rate changes made pursuant to sections four and five
of this article apply to purchases from printed catalogs where the
purchaser computed the tax based upon the local tax rate published
in the catalog only on and after the first day of a calendar
quarter after a minimum of one hundred twenty days' notice to the
sellers.
§8-13C-9. Restriction on use of revenues.
(a) All proceeds from any of the taxes imposed pursuant to
this article shall be used solely for the purpose of reducing the
unfunded actuarial accrued liability of policemen's and firemen's
pension and relief funds of the qualifying municipality imposing
the tax. The proceeds used for this purpose shall be in addition
to the minimum annual contribution required by section twenty,
article twenty-two of this chapter.
(b) A qualifying municipality loses its authority to impose a
tax pursuant to this article after:
(1) The unfunded actuarial accrued liability of the qualifying
municipality's policemens' and firemens' pension and relief funds
is eliminated; or
(2) Sufficient moneys accrue from the proceeds of any of the
taxes imposed pursuant to this article to eliminate the unfunded
actuarial accrued liability of the qualifying municipality's
policemens' and firemens' pension and relief funds.
§8-13C-10. Conflict; partial unconstitutionality.
(a) If a court of competent jurisdiction finds that the
provisions of this article and the provisions of articles fifteen,
fifteen-a and fifteen-b, chapter eleven of this code conflict and
cannot be harmonized, then the provisions of articles fifteen,
fifteen-a and fifteen-b, chapter eleven of this code shall control.
(b) If any section, subsection, subdivision, paragraph,
sentence, clause or phrase of this article is for any reason held
to be invalid, unlawful or unconstitutional, that decision does not
affect the validity of the remaining portions of this article or
any part thereof:
Provided, That if this article is held to be
unconstitutional under section thirty-nine, article VI of the
constitution of West Virginia, this severability clause shall not
apply.
CHAPTER 11. TAXATION.
ARTICLE 9. CRIMES AND PENALTIES.
§11-9-2. Application of this article.
(a) The provisions of this article apply to the following
taxes imposed by this chapter: (1) Inheritance and transfer taxes
and estate taxes imposed by article eleven of this chapter; (2) business registration tax imposed by article twelve of this
chapter; (3) minimum severance tax on coal imposed by article
twelve-b of this chapter; (4) corporate license tax imposed by
article twelve-c of this chapter; (5) business and occupation tax
imposed by article thirteen of this chapter; (6) severance tax
imposed by article thirteen-a of this chapter; (7)
telecommunications tax imposed by article thirteen-b of this
chapter; (8) gasoline and special fuels excise tax imposed by
article fourteen of this chapter; (9) motor fuels excise tax
imposed by article fourteen-c of this chapter; (10) motor carrier
road tax imposed by article fourteen-a of this chapter; (11)
interstate fuel tax agreement authorized by article fourteen-b of
this chapter; (12) consumers sales and service tax imposed by
article fifteen of this chapter; (13) use tax imposed by article
fifteen-a of this chapter; (14) tobacco products excise tax imposed
by article seventeen of this chapter; (15) soft drinks tax imposed
by article nineteen of this chapter; (16) personal income tax
imposed by article twenty-one of this chapter; (17) business
franchise tax imposed by article twenty-three of this chapter; (18)
corporation net income tax imposed by article twenty-four of this
chapter; and (19) health care provider tax imposed by article
twenty-seven of this chapter.
(b) The provisions of this article also apply to the West
Virginia tax procedure and administration act in article ten of this chapter and to any other articles of this chapter when
application is expressly provided for by the Legislature.
(c) The provisions of this article also apply to
municipal
sales and use taxes imposed pursuant to article thirteen-c, chapter
eight of this code; the charitable bingo fee imposed by sections
six and six-a, article twenty, chapter forty-seven of this code;
the charitable raffle fee imposed by section seven, article
twenty-one of said chapter; and the charitable raffle boards and
games fees imposed by section three, article twenty-three of said
chapter.
(d) Each and every provision of this article applies to the
articles of this chapter listed in subsections (a), (b) and (c) of
this section, with like effect, as if the provisions of this
article were applicable only to the tax and were set forth in
extenso in this article.
§11-9-3. Definitions.
For the purposes of this article, the term:
(1) "Person" means any individual, firm, partnership, limited
partnership, copartnership, joint venture, association,
corporation, municipal corporation, organization, receiver, estate,
trust, guardian, executor, administrator and any officer, employee
or member of any of the foregoing who, as
such an officer, employee
or member, is under a duty to perform or is responsible for the
performance or nonperformance of the act in respect of which a violation occurs under this article.
(2) "Return or report" means any return or report required to
be filed by any article of this chapter imposing any tax to which
this article applies as specified in section two of this article,
or by any other article of this code pursuant to which a tax or fee
is imposed that is collected by the tax commissioner as specified
in section two of this article.
(3) "Tax" or "taxes" means any tax to which this article
applies, as specified in section two of this article, and includes
additions to tax, penalties and interest unless the intention to
give it a more limited meaning is disclosed by the context in which
the term "tax" or "taxes" is used.
(4) "Tax commissioner" or "commissioner" means the tax
commissioner of the state of West Virginia or his
or her delegate.
(5) "This chapter" means chapter eleven of the code of West
Virginia, 1931, as amended, and shall include only those articles
of chapter eleven of this code listed in section two of this
article.
(6) "Willfully" means the intentional violation of a known
legal duty to perform any act, required to be performed by any
provision of this chapter,
or article thirteen-c, chapter eight of
this code, in respect of which the violation occurs:
Provided,
That the mere failure to perform any act shall not be a willful
violation under this article. A willful violation of this article requires that the defendant had knowledge of or notice of a duty to
perform such act and that the defendant, with knowledge of or
notice of such duty, intentionally failed to perform such act.
(7) "Evade" means to willfully and fraudulently commit any act
with the intent of depriving the state of payment of any tax which
there is a known legal duty to pay under this chapter.
(8) "Fraud" means any false representation or concealment as
to any material fact made by any person with the knowledge that it
is not true and correct, with the intent that
such the
representation or concealment be relied upon by the state.
§11-9-4. Failure to pay tax or file return or report.
Any person required by any provision of this chapter,
or
article thirteen-c, chapter eight of this code to pay any tax, or
to file any return or report, who willfully fails to pay
such the
tax, or willfully fails to file
such the return or report, more
than thirty days after the date
such the tax is required to be paid
by law, is guilty of a misdemeanor and, upon conviction thereof,
shall be fined not less than one hundred dollars nor more than one
thousand dollars, or imprisoned in
the county jail not more than
six months, or both fined and imprisoned. Each failure to pay tax,
or file a return or report, more than thirty days after its due
date for any tax period is a separate offense under this section
and punishable accordingly:
Provided, That thirty days prior to
instituting criminal proceedings under this section, the tax commissioner shall give the person written notice of any failure to
pay a tax or to file a return or report.
Such notice Notice shall
be served on the person by certified mail or by personal service.
The provisions of this section shall not apply to the business
franchise registration tax imposed by article twelve of chapter
eleven.
§11-9-5. Failure to account for and pay over another's tax.
Any person required by any provision of this chapter
or
article thirteen-c, chapter eight of this code to collect, or
withhold, account for and pay over any tax, who willfully fails to
truthfully account for and pay over
such the tax in the manner
required by law, more than thirty days after the date
such the tax
is required to be accounted for and paid over by law, is guilty of
a felony if the amount of tax not paid over is one thousand dollars
or more and, upon conviction thereof, shall be fined not less than
five thousand dollars nor more than twenty-five thousand dollars or
imprisoned in
the penitentiary a correctional facility not less
than one nor more than three years, or, in the discretion of the
court be confined in
the county jail not more than one year, or
both fined and imprisoned; or is guilty of a misdemeanor, if the
amount of tax not paid over is less than one thousand dollars, and,
upon conviction thereof, shall be fined not less than five hundred
dollars nor more than five thousand dollars or imprisoned in
the
county jail not more than six months, or both fined and imprisoned. Each failure to account for and pay over tax for any tax period
under this section is a separate offense and punishable
accordingly:
Provided, That thirty days prior to instituting a
criminal proceeding under this section, the tax commissioner shall
give the person written notice of the failure to truthfully account
for and pay over tax.
Such notice Notice shall be served on the
person by certified mail or personal service.
§11-9-6. Failure to collect or withhold tax.
Any person required by any provision of this chapter
or
article thirteen-c, chapter eight of this code to collect or
withhold any tax, who willfully fails to collect or withhold
such
the tax in the manner required by law, is guilty of a misdemeanor
and, upon conviction thereof, shall be fined not less than one
hundred dollars nor more than five hundred dollars or imprisoned in
the county jail not more than six months, or both fined and
imprisoned. Each month or fraction thereof during which
such the
failure continues is a separate offense under this section and
punishable accordingly.
§11-9-8. Willful failure to maintain records or supply information;
misuse of exemption certificate.
If any person: (1) Willfully fails to maintain any records,
or supply any information, in the manner required by this chapter
or article thirteen-c, chapter eight of this code or regulations
therefor promulgated in accordance with law, to compute, assess, withhold or collect any tax imposed by this chapter; or (2)
presents to any vendor a certificate for the purpose of obtaining
an exemption from the tax imposed by article fifteen or fifteen-a
of this chapter
or article thirteen-c, chapter eight of this code
and then knowingly uses the item or service purchased in a manner
that is not exempt from
such the tax without remitting
such the tax
in the manner required by law,
such that person is guilty of a
misdemeanor and, upon conviction thereof, shall be fined not less
than one hundred dollars nor more than one thousand dollars or
imprisoned in
the county jail not more than six months, or both
fined and imprisoned.
§11-9-10. Attempt to evade tax.
If any person: (1) Knowingly files a false or fraudulent
return, report or other document under any provision of this
chapter
or article thirteen-c, chapter eight of this code; or (2)
willfully delivers or discloses to the tax commissioner any list,
return, account, statement, record or other document known by him
or her to be fraudulent or false as to any material matter with the
intent of obtaining or assisting another person in obtaining any
credit, refund, deduction, exemption or reduction in tax not
otherwise permitted by this chapter
or article thirteen-c, chapter
eight of this code; or (3) willfully attempts in any other manner
to evade any tax imposed by this chapter
or article thirteen-c,
chapter eight of this code or the payment thereof, is guilty of a felony and, notwithstanding any other provision of the code, upon
conviction thereof, shall be fined not less than one thousand
dollars nor more than ten thousand dollars or imprisoned in
the
penitentiary a correctional facility not less than one nor more
than three years or, in the discretion of the court, be confined in
the county jail not more than one year, or both fined and
imprisoned.
ARTICLE 10. PROCEDURE AND ADMINISTRATION.
§11-10-3. Application of this article.
(a) The provisions of this article apply to inheritance and
transfer taxes, estate tax and interstate compromise and
arbitration of inheritance and death taxes, business registration
tax, annual tax on incomes of certain carriers, minimum severance
tax on coal, corporate license tax, business and occupation tax,
severance tax, telecommunications tax, interstate fuel tax,
consumers sales and service tax, use tax, tobacco products excise
tax, soft drinks tax, personal income tax, business franchise tax,
corporation net income tax, gasoline and special fuel excise tax,
motor fuels excise tax, motor carrier road tax, health care
provider tax and tax relief for elderly homeowners and renters
administered by the state tax commissioner. This article shall not
apply to ad valorem taxes on real and personal property or any
other tax not listed in this section, except that in the case of ad
valorem taxes on real and personal property, when any return, claim, statement or other document is required to be filed, or any
payment is required to be made within a prescribed period or before
a prescribed date, and the applicable law requires delivery to the
office of the sheriff of a county of this state, the methods
prescribed in section five-f of this article for timely filing and
payment to the tax commissioner or state tax department are the
same methods utilized for timely filing and payment with the
sheriff.
(b) The provisions of this article apply to beer barrel tax
levied by article sixteen of this chapter and to wine liter tax
levied by section four, article eight, chapter sixty of this code.
(c) The provisions of this article also apply to any other
article of this chapter when the application is expressly provided
for by the Legislature.
(d) The provisions of this article apply to municipal sales
and use taxes imposed under article thirteen-c, chapter eight of
this code and collected by the tax commissioner.
(e) The authority to levy the taxes provided in this article
is not effective until a municipality wishing to impose the taxes
presents to the joint committee on government and finance a plan to
remove the unfunded liabilities of its police and fire pension
funds, that plan is approved by the joint committee on government
and finance and the necessary changes in West Virginia law have
been enacted to allow for implementation of the municipal plan.
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