Senate Bill No. 716
(By Senators Plymale, Helmick, Ross, Minear and Anderson)
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[Introduced February 23, 1998; referred to
the Committee on Natural Resources;
and then to the Committee on Finance.]
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A BILL to amend and reenact sections nine and eighteen, article
thirteen-a, chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; to further amend
said article by adding thereto a new section, designated
section sixteen-a, all relating to the severance and business
privilege taxes; requiring every nonresident person or company
who at time of severance owns West Virginia timber to have a
business registration certificate, give tax commissioner
written notice before severance of intention to sever West
Virginia timber and to prepay estimated timber severance tax
or post a corporate surety bond; setting forth certain
reporting requirements; defining nonresident person; imposing
sanctions and money penalties for noncompliance; and
specifying effective date.
Be it enacted by the Legislature of West Virginia:
That sections nine and eighteen, article thirteen-a, chapter eleven of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended; and that article thirteen-a be
further amended by adding thereto a new section, designated section
sixteen-a, to read as follows:
ARTICLE 13A.SEVERANCE TAX.
§11-13A-9. Periodic installment payments of taxes imposed by
sections three-a, three-b and three-c of this article;
exceptions.
(a)
General rule. --
Except as provided in subsection (b) of
this section, taxes levied under section three-a, three-b or three-
c of this article shall be due and payable in periodic installments
as follows:
(1) If a person's annual tax liability under this article is
reasonably expected to be fifty dollars or less per month, no
installment payments of tax are required under this section during
that taxable year.
(2) Tax of more than one thousand dollars per month.-- For
taxpayers whose estimated tax liability under this article exceeds
one thousand dollars per month, the tax shall be due and payable in
monthly installments on or before the last day of the month
following the month in which the tax accrued:
Provided, That the
installment payment otherwise due under this subdivision on or
before the thirtieth day of June each year shall be remitted to the
tax commissioner on or before the fifteenth day of June each year,
beginning the fifteenth day of June, one thousand nine hundred eighty-eight;
(A) Each such taxpayer shall, on or before the last day of
each month, make out an estimate of the tax for which the taxpayer
is liable for the preceding month, sign the same and mail it
together with a remittance, in the form prescribed by the tax
commissioner, of the amount of tax due to the office of the tax
commissioner:
Provided, That the installment payment otherwise due
under this paragraph on or before the thirtieth day of June each
year shall be remitted to the tax commissioner on or before the
fifteenth day of June, beginning the fifteenth day of June, one
thousand nine hundred eighty-eight.
(B) In estimating the amount of tax due for each month, the
taxpayer may deduct one twelfth of any applicable tax credits
allowable for the taxable year, and one twelfth of any annual
exemption allowed for such year.
(3)
Tax of one thousand dollars per month or less. -- For
taxpayers whose estimated tax liability under this article is one
thousand dollars per month or less, the tax shall be due and
payable in quarterly installments on or before the last day of the
month following the quarter in which the tax accrued:
(A) Each such taxpayer shall, on or before the last day of the
fourth, seventh and tenth months of the taxable year, make out an
estimate of the tax for which the taxpayer is liable for the
preceding quarter, sign the same and mail it together with a
remittance, in the form prescribed by the tax commissioner, of the amount of tax due to the office of the tax commissioner.
(B) In estimating the amount of tax due for each quarter, the
taxpayer may deduct one fourth of any applicable tax credits
allowable for the taxable year, and one fourth of any annual
exemption allowed for such year.
(b)
Exceptions. --
(1) Notwithstanding the provisions of
subsection (a) of this section, the tax commissioner, if he
or she
deems it necessary to ensure payment of the tax, may require the
return and payment under this section for periods of shorter
duration than those prescribed in
said subsection
(a) of this
section.
(2) Notwithstanding the provisions of subsection (a) of this
section, taxpayers remitting tax on the privilege of severing
timber may deduct the annual tax credit allowed in section ten of
this article only on the annual return filed for any taxable year
beginning on or after the first day of July, one thousand nine
hundred ninety-seven. These taxpayers may not deduct any portion
of the annual tax credit when they determine the amount of periodic
installment payments of timber severance tax due during their
taxable year.
§11-13A-16a. Nonresident person severing West Virginia timber
owned by the person at time of severance required to notify
tax commissioner prior to severance and prepay severance tax
or post bond.
(a)
Business registration certificate required. -- Every nonresident person who owns or purchases standing West Virginia
timber who either directly, or indirectly through the activities of
others, severs that timber shall apply to the tax commissioner for
a business registration certificate as provided in article twelve
of this chapter, before beginning to do business in this state,
whether or not the person has a permanent place of business in this
state.
(b)
"Nonresident person or company" defined. -- The term
"nonresident person or company" means a "person" or "company" as
defined in section three of this article that, if an individual, is
a nonresident of this state for purposes of the tax imposed by
article twenty-one of this chapter and, if any other person, does
not have its commercial domicile in this state, or during the three
months preceding the date the application for business registration
certificate is filed with the tax commissioner did not have a
permanent office in this state for the conduct of timbering
operations in this state or any other permanent place of business
in this state for the conduct of timbering operations as that term
is defined in section three, article one-b, chapter nineteen of
this code.
(c)
Notice of contract. -- Every nonresident person who severs
West Virginia timber, either directly or through the activity of
others, which such person owns, in whole or in part at the time
that it is severed, shall give the tax commissioner written notice
of the nonresident person's intent to sever the West Virginia timber identified in the notice. This notice shall be given no
earlier than ninety days before the timbering operation begins and
no later than thirty days before the timbering operation begins.
The notification shall include all of the information required by
section six, article one-b, chapter nineteen of this code, the
estimated gross value of the timber described in the notice that
will be severed and such other information as the tax commissioner
may require:
Provided, That the tax commissioner may accept as the
notification required by this section, a true copy of the notice
the nonresident person gave under section six, article eleven-b,
chapter nineteen of this code to the director of forestry, the
estimated gross value of the timber described in the notice that
will be severed and such additional information as the tax
commissioner may require.
(d)
Prepayment of severance tax. -- If the nonresident person
owns, in whole or in part, the timber at the time that it is
severed, the nonresident person shall, at the time the notice
required by subsection (c) of this section is given to the tax
commissioner, pay to the tax commissioner four percent of the
estimated gross value of the timber to be severed that is described
in the notice:
Provided, That the estimated gross value shall not
be less than the actual price paid or to be paid for the stumpage.
The tax commissioner shall deposit this amount in a revolving
account in the treasurer's office to be known as the "Forestry Tax
Fund" pending completion of severance of the timber identified in the notice given under subsection (c) of this section, the filing
of all required tax returns and payment of all timber severance
taxes due under this article attributable to severance of the
timber described in the notice given under subsection (c) of this
section, including any additions to tax, penalties and interest
imposed for failure to timely pay the severance taxes. Within
thirty days after the timber identified in the notice is severed,
the nonresident person shall file with the tax commissioner a
report reconciling the amount of prepaid severance tax with the
amount of severance taxes actually due on the gross value of the
timber at the point where the privilege of severing timber ends.
If this report shows that additional timber severance taxes are
due, that amount shall be paid when the report is filed with the
tax commissioner. If the report shows that the amount of timber
severance taxes prepaid exceeded the amount actually due, the tax
commissioner shall refund the difference.
(e)
Surety bond. -- In lieu of the prepayment of timber
severance tax required by subsection (d) of this section, the
nonresident person may furnish to the tax commissioner a corporate
surety bond in an amount equal to four percent of the estimated
gross value of the timber to be severed that is described in the
notice:
Provided, That the estimated gross value shall not be less
than the actual price paid or to be paid for the stumpage, to
guarantee timely payment of the taxes due under this article that
may be attributable to the timber described in the notice given under subsection (c) of this section. The form of the bond must be
approved by the tax commissioner. The surety must be qualified to
do business in this state. The bond must be conditioned that the
nonresident person shall pay all timber severance taxes due under
this article attributable to severance of the timber described in
the notice given under subsection (c) of this section, including
any additions to tax, penalties or interest that may be imposed due
to any failure of the nonresident person to pay those taxes as they
become due.
(f)
Conditions for surety. -- Any surety on a bond furnished
under subsection (e) of this section must be qualified to do
business in this state. The surety shall be relieved, released and
discharged from all liability accruing on such bond after the
expiration of sixty days from the date the tax commissioner
receives the written request of the surety to be discharged. The
written request for discharge may be filed with the tax
commissioner by personal service or by certified mail, postage
prepaid, addressed to the tax commissioner at his or her office in
Charleston, West Virginia. A request for discharge shall not
relieve, release or discharge the surety from liability already
accrued, or which shall accrue before expiration of the sixty day
period. Whenever any surety shall seek discharge as provided in
this subsection (f) of this section, it shall be the duty of the
principal of such bond to supply the tax commissioner with another
corporate surety bond.
(g)
Penalty for noncompliance. -- (1) A nonresident person who
fails to comply, in whole or in part, with the requirements of this
section shall forfeit the license issued to such person under
section four, article one-b, chapter nineteen of this code for a
period of one year for the first offense and for a period of two
years for each subsequent violation of this section. When the tax
commissioner determines that a nonresident person is failing to
comply, in whole or in part, with the requirements of this section,
the commissioner shall certify those facts to the director of
forestry. Upon the facts certified by the tax commissioner, or
upon facts gathered by the director, demonstrating failure of the
nonresident person to comply, in whole or in part, with the
requirements of this section the director shall then issue an order
notifying the nonresident person that the license issued under
section four, article one-b, chapter nineteen of this code has been
forfeited. A forfeiture order may be appealed as provided in
article one-b, chapter nineteen of this code. In addition, the
nonresident person shall pay a money penalty equal to fifty percent
of the timber severance tax that should have been paid that was not
timely paid. This amount shall be in addition to the amount of
timber severance taxes not timely paid plus interest and applicable
additions to tax. This penalty shall be collected by the tax
commissioner in the same manner as taxes are collected under this
article.
(2) If a nonresident person underestimates the amount of timber severance taxes that must be prepaid under subsection (d) of
this section by more than twenty-five percent, the nonresident
person shall pay a money penalty equal to fifty percent of the
timber severance tax that should have been prepaid that was not
prepaid or guaranteed by the surety bond given under subsection (e)
of this section. This amount shall be in addition to the amount of
timber severance taxes not timely paid plus interest and applicable
additions to tax. This penalty shall be collected by the tax
commissioner in the same manner as taxes are collected under this
article.
(h)
Effective date. -- The provisions of this section shall
apply to timber severed by a nonresident person on or after the
first day of July, one thousand nine hundred ninety-seven.
§11-13A-18. Records.
(a)
General. -- Every taxpayer liable for reporting or paying
tax under this article shall keep such records, receipts, invoices
and other pertinent papers in such form as the tax commissioner may
require.
(b)
Period of retention. -- Every taxpayer shall keep such
records for not less than three years after the annual return is
filed under this article, unless the tax commissioner in writing
authorizes their earlier destruction. An extension of time for
making an assessment shall automatically extend the time period for
keeping the records for all years subject to audit covered in the
agreement for extension of time.
(c)
Special rule for purchasers of standing timber or of logs.
-- In addition to the records required by subsection (a) of this
section, every person purchasing standing timber, logs or wood
products sawn or chipped in conjunction with a timber harvesting
operation in this state delivered after the thirtieth day of June,
one thousand nine hundred ninety-seven, shall obtain from the
person from whom the standing timber, logs or wood products sawn or
chipped in conjunction with a timbering harvest operation are
purchased a true copy of the seller's then current business
registration certificate issued under article twelve of this
chapter or a copy of federal form 1099 for the year of the
purchase. When the seller is a person not required by this chapter
to have a business registration certificate, the purchaser shall
obtain an affidavit from the seller: (1) Stating that the seller
does not have a business registration certificate and that the
seller is not required by this chapter to have a business
registration certificate; (2) listing the seller's social security
number or federal employer identification number; and (3) listing
the seller's current mailing address. The tax commissioner may
develop a form for this affidavit.
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(NOTE: The purpose of this bill is to require nonresidents
severing West Virginia timber to notify the Tax Commissioner prior
to severance and to prepay the severance tax or post a bond. The
bill also requires certain record keeping requirements by
purchasers of standing timber, logs or wood products and permits
taxpayers subject to the severance tax on timber to take the annual exemption of $500 only on the annual return.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added. Section 11-13A-16a is new; therefore, strike-throughs
and underscoring have been omitted.
This bill is recommended for passage during the Regular 1998
Legislative Session by the Forest Management Review Commission.)
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NATURAL RESOURCES COMMITTEE AMENDMENTS
On page __, section nine, line __, by striking out the word
"ninety-seven" and inserting in lieu thereof the word "ninety- eight";
On page __, section sixteen-a, line __, by striking out the
words "or company";
On page __, section sixteen-a, line __, after the words
"'nonresident person" by striking out the words "or company";
And,
On page __, section eighteen, line __, by striking out the
word "ninety-seven" and inserting in lieu thereof the word "ninety- eight".
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