WEST virginia
legislature
2017 regular session
By Delegate Miley
[
to the Committee on Finance.]
A BILL to amend and
reenact §11-13X-4 and §11-13X-13 of the Code of West Virginia, 1931, as
amended; to amend and reenact §11-15-3, §11-15-8 and §11-15-9 of said code; to
amend and reenact §11-15A-2 of said code;
to amend and reenact §11-16-13 of said code; to amend said code by adding
thereto a new section, designated §11-21-97; and to amend said code by adding
thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4,
§11-28-5, §11-28-6, §11-28-7, §11-28-8, §11-28-9, §11-28-10, §11-28-11,
§11-28-12, §11-28-13, §11-28-14 and §11-28-15, all relating to taxation,
generally; eliminating new film tax credits but preserving credit for taxpayers
authorized to claim credit prior to specified date; increasing rate of consumer
sales and service tax and use tax to 6.5% and providing for rate of tax to
revert to 6% on and after July 1, 2020 as long as certain parameters are met
with respect to the revenue shortfall reserve funds; limiting the exemption or
exception of certain professional services from consumers sales and service tax
and use tax; terminating exemption from consumers sales and service tax and use
tax for certain advertising services; eliminating exemption from consumers
sales and service tax for certain purchases of materials acquired for use in
state highway projects; increasing rate of barrel tax on nonintoxicating beer;
creating the West Virginia Personal Income Tax Study Commission to study the feasibility
of eliminating the West Virginia personal income tax; providing for the members
and operation of the commission; requiring the commission to submit a report by
specified date; permitting certain confidential information to be disclosed to
the commission and prohibiting further disclosure of confidential information
received by the commission; exempting certain information received by the commission
from the West Virginia Freedom of Information Act;
providing criminal and civil penalties for unauthorized disclosure; imposing
new tax on privilege of engaging in commercial activity in this state; defining
terms; specifying measure of commercial activity tax; providing for administration
of commercial activity tax; exempting certain entities from commercial activity
tax; providing credit against commercial activity tax for payment of certain
gross receipts taxes to state; imposing criminal penalties for noncompliance; providing
for severability; specifying effective date; and providing sunset date of July
1, 2020 for elimination of the commercial activity tax as long as certain
parameters are met with respect to the revenue shortfall reserve funds.
Be it enacted by the
Legislature of West Virginia:
That §11-13X-4 and
§11-13X-13 of the Code of West Virginia, 1931, as amended, be amended and
reenacted; that §11-15-3, §11-15-8 and §11-15-9 of said code be amended and
reenacted; that § 11-15A-2 of said code be
amended and reenacted; that §11-16-13 of said code be amended and reenacted;
that said code be amended by adding thereto a new section, designated
§11-21-97; and that said code be amended by adding thereto a new article,
designated §11-28-1, §11-28-2, §11-28-3, §11-28-4, §11-28-5, §11-28-6,
§11-28-7, §11-28-8, §11-28-9, §11-28-10, §11-28-11, §11-28-12, §11-28-13, §11-28-14
and §11-28-15, all to read as follows:
CHAPTER 11. TAXATION.
Article 13X. West
Virginia FIlm Industry Investment act.
§11-13X-4. Creation of the tax credit.
(a) An eligible company may apply for, and the Tax
Commissioner shall allow, a nonrefundable tax credit in an amount equal to the
percentage specified in section five of this article of:
(1) Direct production
expenditures incurred in West Virginia that are directly attributable to the
production in West Virginia of a qualified project and that occur in West
Virginia or with a West Virginia vendor; and
(2) Postproduction
expenditures incurred in West Virginia that are:
(A) Directly attributable to the production of a
qualified project;
(B) For services performed
in West Virginia.
(b) Expenditures utilized
by an eligible company for purposes of calculating the tax credit authorized by
this article shall in no event be utilized by the eligible company for the
purpose calculating or qualifying investment for claiming the economic
opportunity tax credit authorized by article thirteen-q of this chapter or the
manufacturing investment tax credit authorized by article thirteen-s of this
chapter.
(c) Elimination of the West
Virginia Film Industry Investment Act. – The tax credit allowed by this article shall be
eliminated on and after July 1, 2017: Provided,
That any taxpayer who was entitled to take the credit provided for by this
article prior to July 1, 2017, shall continue to be eligible to claim such
credit subject to the limitations set forth in section eight of this article.
§11-13X-13. Effective
date.
(a) The credit allowed by
this article shall be allowed upon eligible expenditures occurring after
December 31, 2007 but prior to July 1, 201,7 in accordance with the
termination of the West Virginia Film Industry Investment Act set forth in section four of this article.
(b) The amendments to this
article enacted in the year 2009 shall apply to all taxable years beginning after
December 31, 2007, and shall apply with retroactive effect with relation to
taxable years beginning prior to the date of passage of such amendments.
Article 15. CONSUMERS SALES AND SERVICE
TAX.
§11-15-3. Amount of tax; allocation of tax and transfers.
(a) Vendor to collect.
– For the privilege of selling tangible personal
property or custom software and for the privilege of furnishing certain
selected services defined in sections two and eight of this article, the vendor
shall collect from the purchaser the tax as provided under this article and
article fifteen-b of this chapter, and shall pay the amount of tax to the Tax
Commissioner in accordance with the provisions of this article or article
fifteen-b of this chapter.
(b) Amount of tax. ̶ The general
consumer sales and service tax imposed by this article shall be at the rate of six
cents on the dollar percent of the sales price of sales tangible
personal property, custom software or taxable services purchased,
excluding gasoline and special fuel
sales,
which remain taxable at the rate of five cents percent: on the
dollar of sales Provided, That
on
and after July 1, 2017, the tax imposed by this article shall be six and
one-half percent of the purchase price, excluding sales of motor fuels, which
remain taxable at the rate of five percent of the average wholesale selling
price of motor fuel: Provided, however,
That this increase in the rate of tax adopted pursuant to the reenactment of
this section during the 2017 Regular Session of the Legislature shall expire on
June 30, 2020, so long as the balance of funds as of June 30, 2019, in the
Revenue Shortfall Reserve Fund and the Revenue Shortfall Reserve Fund – Part B,
established in section twenty, article two, chapter eleven-b of this code
equals or exceeds fifteen percent of the general revenue fund budgeted for the
fiscal year commencing on July 1, 2019.
(c) Calculation tax
on fractional parts of a dollar until January 1, 2004. -B
There shall be no tax on sales where the monetary consideration is 54
or less. The amount of the tax shall be computed as follows:
(1) On each sale, where
the monetary consideration is from 64 to 164, both inclusive, 14.
(2) On each sale, where
the monetary consideration is from 174 to 334, both inclusive, 24.
(3) On each sale, where
the monetary consideration is from 344 to 504, both inclusive, 34.
(4) On each sale, where
the monetary consideration is from 514 to 674, both inclusive, 44.
(5) On each sale, where
the monetary consideration is from 684 to 844, both inclusive, 54.
(6) On each sale, where
the monetary consideration is from 854 to $1, both inclusive, 64.
(7) If the sale price is
in excess of $1, 64 on each whole dollar of sale price, and upon any
fractional part of a dollar in excess of whole dollars as follows: 14
on the fractional part of the dollar if less than 174;
24 on the fractional part of the dollar if in excess of
164 but less than 344; 34 on the fractional part of the dollar if in excess of
334 but less than 514; 44 on the fractional part of the dollar if in excess of
504 but less than 684; 54 on the fractional part of the dollar if in excess of
674 but less than 854; and 64 on the fractional part of the dollar if in excess of
844. For example,
the
tax on sales from $1.01 to $1.16, both inclusive, 74;
on sales from $1.17 to $1.33, both inclusive, 84;
on sales from $1.34 to $1.50, both inclusive, 94;
on sales from $1.51 to $1.67, both inclusive, 104;
on sales from $1.68 to $1.84, both inclusive, 114
and on sales from $1.85 to $2, both inclusive, 124:
Provided, That beginning January 1, 2004, tax due under this article
shall be calculated as provided in subsection (d) of this subsection and this
subsection (c) does not apply to sales made after December 31, 2003.
(d) (c) Calculation of tax on fractional parts
of a dollar after December 31, 2003. – Beginning
January 1, 2004, the tax computation under subsection (b) of this section
shall be carried to the third decimal place, and the tax rounded up to the next
whole cent whenever the third decimal place is greater than four and rounded
down to the lower whole cent whenever the third decimal place is four or less.
The vendor may elect to compute the tax due on a transaction on a per item basis
or on an invoice basis provided the method used is consistently used during the
reporting period.
(e) (d) No aggregation of separate sales
transactions, exception for coin-operated devices. ̶ Separate sales, such as daily or weekly
deliveries, shall not be aggregated for the purpose of computation of the tax
even though the sales are aggregated in the billing or payment therefor.
Notwithstanding any other provision of this article, coin-operated amusement
and vending machine sales shall be aggregated for the purpose of computation of
this tax.
(f) (e) Rate of tax on certain mobile homes.
– Notwithstanding any provision of this article to the
contrary, after December 31, 2003, the tax levied on sales of mobile homes to
be used by the owner thereof as his or her principal year-round residence and
dwelling shall be an amount equal to six percent of fifty percent of the sales
price: Provided, That on
and after July 1, 2017, notwithstanding any provision of this article to the
contrary, the tax levied on sales of mobile homes to be used by the owner
thereof as his or her principal year-round residence and dwelling
shall
be an amount equal to six and one-half percent of fifty percent of the sales
price: Provided, however, That should the rate of tax imposed in subsection (b) of
this section revert to six percent as of a specified date, the tax imposed on
sales of certain mobile homes shall similarly revert to six percent of fifty
percent of the sales price.
(g) (f) Construction; custom software. – After
December 31, 2003, whenever Whenever
the words "tangible personal
property" or "property"
appear in this article, the same shall also include the words "custom software".
(h) (g) Computation of tax on sales of gasoline
and special fuel. – The method of
computation of tax provided in this section does not apply to sales of gasoline
and special fuel.
(h) Notwithstanding any
provision of this code to the contrary, on and after July 1, 2017, when the
words “six percent” appear in this article or article fifteen of this chapter
they shall mean the rate of the tax specified in subsection (b) of this
section.
§11-15-8. Furnishing of
services included; exception.
The provisions of this
article apply not only to selling tangible personal property and custom
software, but also to the furnishing of all services, except professional and
personal services, and except those services furnished by businesses subject to
the control of the Public Service Commission when the service or the manner in
which it is delivered is subject to regulation by the Public Service Commission:
Provided, That on July 1,
2017, the furnishing of professional services are subject to the tax imposed
under this article, with the exception of professional services rendered by
acupuncturists, audiologists, certified registered nurse anesthetists,
chiropractors, dentists, licensed occupational therapists, licensed physical
therapists, ophthalmologists, optometrists, osteopathic physicians and
surgeons, pharmacists, physical therapists, physicians, physicians’ assistants,
podiatrists, psychiatrists, psychoanalysts, psychologists, registered
professional nurses, school psychologists, speech pathologists, and other
professional medical practitioners designated by the commissioner, with the
exception of veterinarians.
§11-15-9. Exemptions.
(a) Exemptions for which
exemption certificate may be issued. – A person having
a right or claim to any exemption set forth in this subsection may, in lieu of
paying the tax imposed by this article and filing a claim for refund, execute a
certificate of exemption, in the form required by the Tax Commissioner, and
deliver it to the vendor of the property or service in the manner required by
the Tax Commissioner. However, the Tax Commissioner may, by rule, specify those
exemptions authorized in this subsection for which exemption certificates are
not required. The following sales of tangible personal property and services
are exempt as provided in this subsection:
(1) Sales of gas, steam and water delivered to consumers through mains
or pipes and sales of electricity;
(2) Sales of textbooks required to be used in any of the schools of
this state or in any institution in this state which qualifies as a nonprofit
or educational institution subject to the West Virginia Department of Education
and the Arts, the Board of Trustees of the University System of West
Virginia or the board of directors for colleges located in this State Higher
Education Policy Commission or the Council for Community and Technical College
Education for universities and colleges located in this state;
(3) Sales of property or services to this State, its institutions or
subdivisions, governmental units, institutions or subdivisions of other states:
Provided, That the law of the other
state provides the same exemption to governmental units or subdivisions of this
State and to the United States, including agencies of federal, state or local
governments for distribution in public welfare or relief work;
(4) Sales of vehicles which are titled by the Division of Motor
Vehicles and which are subject to the tax imposed by section four, article
three, chapter seventeen-a of this code or like tax;
(5) Sales of property or services to churches which make no charge
whatsoever for the services they render: Provided, That the exemption granted
in this subdivision applies only to services, equipment, supplies, food for
meals and materials directly used or consumed by these organizations and does
not apply to purchases of gasoline or special fuel;
(6) Sales of tangible personal property or services to a corporation
or organization which has a current registration certificate issued under
article twelve of this chapter, which is exempt from federal income taxes under
Section 501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as amended,
and which is:
(A) A church or a convention or association of churches as defined in Section 170 of the Internal Revenue Code of
1986, as amended;
(B) An elementary or secondary school which maintains a regular
faculty and curriculum and has a regularly enrolled body of pupils or students
in attendance at the place in this State where its educational activities are
regularly carried on;
(C) A corporation or organization which annually receives more than
one half of its support from any combination of gifts, grants, direct or
indirect charitable contributions or membership fees;
(D) An organization which has no paid employees and its gross income
from fundraisers, less reasonable and necessary expenses incurred to raise the
gross income (or the tangible personal property or services purchased with the
net income), is donated to an organization which is exempt from income taxes
under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as
amended;
(E) A youth organization, such as the Girl Scouts of the United States
of America, the Boy Scouts of America or the YMCA Indian Guide/Princess Program
and the local affiliates thereof, which is organized and operated exclusively
for charitable purposes and has as its primary purpose the nonsectarian
character development and citizenship training of its members;
(F) For purposes of this subsection:
(i) The term "support" includes, but is not limited to:
(I) Gifts, grants, contributions or membership fees;
(II) Gross receipts from fundraisers which include receipts from
admissions, sales of merchandise, performance of services or furnishing of
facilities in any activity which is not an unrelated trade or business within
the meaning of Section 513 of the
Internal Revenue Code of 1986, as amended;
(III) Net income from unrelated business activities, whether or not the
activities are carried on regularly as a trade or business;
(IV) Gross investment income as defined in Section 509(e) of the Internal Revenue Code of 1986, as amended;
(V) Tax revenues levied for the benefit of a corporation or organization
either paid to or expended on behalf of the organization; and
(VI) The value of services or facilities (exclusive of services or
facilities generally furnished to the public without charge) furnished by a
governmental unit referred to in Section
170(c)(1) of the Internal Revenue Code of 1986, as amended, to an
organization without charge. This term does not include any gain from the sale
or other disposition of property which would be considered as gain from the
sale or exchange of a capital asset or the value of an exemption from any
federal, state or local tax or any similar benefit;
(ii) The term "charitable contribution" means a contribution
or gift to or for the use of a
corporation
or organization, described in Section
170(c)(2) of the Internal Revenue Code of 1986, as amended; and
(iii) The term "membership fee" does not include any amounts
paid for tangible personal property or specific services rendered to members by
the corporation or organization;
(G) The exemption allowed by this subdivision does not apply to sales
of gasoline or special fuel or to sales of tangible personal property or
services to be used or consumed in the generation of unrelated business income
as defined in Section 513 of the Internal
Revenue Code of 1986, as amended. The exemption granted in this
subdivision applies only to services, equipment, supplies and materials used or
consumed in the activities for which the organizations qualify as tax-exempt
organizations under the Internal Revenue Code and does not apply to purchases
of gasoline or special fuel which are taxable as provided in article
fourteen-c of this chapter;
(7) An isolated transaction in which any taxable service or any
tangible personal property is sold, transferred, offered for sale or delivered
by the owner of the property or by his or her representative for the owner's
account, the sale, transfer, offer for sale or delivery not being made in the
ordinary course of repeated and successive transactions of like character by
the owner or on his or her account by the representative: Provided, That nothing contained in this subdivision may be
construed to prevent an owner who sells, transfers or offers for sale tangible
personal property in an isolated transaction through an auctioneer from
availing himself or herself of the exemption provided in this subdivision,
regardless of where the isolated sale takes place. The Tax Commissioner may
propose a legislative rule for promulgation pursuant to article three, chapter twenty-nine-a
of this code which he or she considers necessary for the efficient
administration of this exemption;
(8) Sales of tangible personal property or of any taxable services
rendered for use or
consumption
in connection with the commercial production of an agricultural product the
ultimate sale of which is subject to the tax imposed by this article or which
would have been subject to tax under this article: Provided, That sales of tangible personal property and services to
be used or consumed in the construction of or permanent improvement to real
property and sales of gasoline and special fuel are not exempt: Provided, however, That nails and
fencing may not be considered as improvements to real property;
(9) Sales of tangible personal property to a person for the purpose of
resale in the form of tangible personal property: Provided, That sales of gasoline and special fuel by distributors
and importers is taxable except when the sale is to another distributor for
resale: Provided, however, That sales
of building materials or building supplies or other property to any person
engaging in the activity of contracting, as defined in this article, which is
to be installed in, affixed to or incorporated by that person or his or her
agent into any real property, building or structure is not exempt under this
subdivision;
(10) Sales of newspapers when delivered to consumers by route carriers;
(11) Sales of drugs,
durable medical goods, mobility-enhancing equipment and prosthetic devices
dispensed upon prescription and sales of insulin to consumers for medical
purposes. The amendment to this subdivision shall apply to sales made after December
31, 2003;
(12)
Sales of radio and television
broadcasting time, internet advertising, preprinted advertising circulars and
newspaper and outdoor advertising space for the advertisement of goods or
services: Provided, That on and after July 1, 2017,
advertising services, including, but not limited to, the sales of radio and
television broadcasting time, preprinted advertising circulars and newspaper
and outdoor advertising space for the advertisement of goods or services are
taxable for purposes of this article and for purposes of article fifteen-a of this
chapter.
(13)
Sales and services performed by day
care centers;
(14)
Casual and occasional sales of
property or services not conducted in a repeated manner or in the ordinary
course of repetitive and successive transactions of like character by a corporation
or organization which is exempt from tax under subdivision (6) of this
subsection on its purchases of tangible personal property or services. For
purposes of this subdivision, the term "casual and occasional sales not
conducted in a repeated manner or in the ordinary course of repetitive and
successive transactions of like character" means sales of tangible
personal property or services at fundraisers sponsored by a corporation or
organization which is exempt, under subdivision (6) of this subsection, from
payment of the tax imposed by this article on its purchases when the
fundraisers are of limited duration and are held no more than six times during
any twelve-month period and "limited duration" means no more than
eighty-four consecutive hours: Provided, That sales for volunteer fire
departments and volunteer school support groups, with duration of events being
no more than eighty-four consecutive hours at a time, which are held no more
than eighteen times in a twelve-month period for the purposes of this
subdivision are considered "casual and occasional sales not conducted in a
repeated manner or in the ordinary course of repetitive and successive
transactions of a like character";
(15)
Sales of property or services to a
school which has approval from the Board of Trustees of the University
System of West Virginia or the Board of Directors of the State College System
Higher Education Policy Commission or the Council for Community and
Technical College Education to award degrees, which has its principal
campus in this state and which is exempt from federal and state income taxes
under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended: Provided, That sales of gasoline and special fuel are taxable as
provided in sections eighteen and eighteen-b of this article and article
fourteen-c of this chapter;
(16) Sales of lottery tickets
and materials by licensed lottery sales agents and lottery retailers authorized
by the state Lottery Commission, under the provisions of article twenty-two], chapter
twenty-nine of this code;
(17) Leases
of motor vehicles titled pursuant to the provisions of article three, chapter seventeen-a of this code to lessees for a
period of thirty or more consecutive days;
(18)
Notwithstanding the provisions of
section eighteen or eighteen-b of this article or any other provision of this
article to the contrary, sales of propane to consumers for poultry house
heating purposes, with any seller to the consumer who may have prior paid the
tax in his or her price, to not pass on the same to the consumer, but to make
application and receive refund of the tax from the Tax Commissioner pursuant to
rules which are promulgated after being proposed for legislative approval in
accordance with chapter twenty-nine-a of this code by the Tax Commissioner;
(19)
Any sales of tangible personal
property or services purchased and lawfully paid for with food stamps pursuant
to the federal food stamp program codified in 7 U.S.C. § 2011, et
seq., as amended, or with drafts issued through the West Virginia special
supplement food program for women, infants and children codified in 42 U.S.C. § 1786;
(20)
Sales of tickets for activities
sponsored by elementary and secondary schools located within this State;
(21)
Sales of electronic data processing services
and related software: Provided, That,
for the purposes of this subdivision, "electronic data processing
services" means:
(A)
The processing of another's data,
including all processes incident to processing of data such as keypunching,
keystroke verification, rearranging or sorting of previously documented data
for the purpose of data entry or automatic processing and changing the medium
on which data is
sorted,
whether these processes are done by the same person or several persons; and
(B)
Providing access to computer
equipment for the purpose of processing data or examining or acquiring data
stored in or accessible to the computer equipment;
(22)
Tuition charged for attending
educational summer camps;
(23)
Dispensing of services performed by
one corporation, partnership or limited liability company for another
corporation, partnership or limited liability company when the entities are
members of the same controlled group or are related taxpayers as defined in Section 267 of the Internal Revenue Code.
"Control" means ownership, directly or indirectly, of stock, equity
interests or membership interests possessing fifty percent or more of the total
combined voting power of all classes of the stock of a corporation, equity
interests of a partnership or membership interests of a limited liability
company entitled to vote or ownership, directly or indirectly, of stock, equity
interests or membership interests possessing fifty percent or more of the value
of the corporation, partnership or limited liability company;
(24)
Food for the following are exempt:
(A)
Food purchased or sold by a public or
private school, school-sponsored student organizations or school-sponsored
parent-teacher associations to students enrolled in the school or to employees
of the school during normal school hours; but not those sales of food made to
the general public;
(B)
Food purchased or sold by a public or
private college or university or by a student organization officially
recognized by the college or university to students enrolled at the college or
university when the sales are made on a contract basis so that a fixed price is
paid for consumption of food products for a specific period of time without
respect to the amount of food product actually consumed by the particular
individual contracting for the sale and no money is paid at the time the food
product is served or consumed;
(C)
Food purchased or sold by a
charitable or private nonprofit organization, a nonprofit organization or a
governmental agency under a program to provide food to low-income persons at or
below cost;
(D)
Food sold by a charitable or private
nonprofit organization, a nonprofit organization or a governmental agency under
a program operating in West Virginia for a minimum of five years to provide
food at or below cost to individuals who perform a minimum of two hours of
community service for each unit of food purchased from the organization;
(E)
Food sold in an occasional sale by a
charitable or nonprofit organization, including volunteer fire departments and
rescue squads, if the purpose of the sale is to obtain revenue for the
functions and activities of the organization and the revenue obtained is
actually expended for that purpose;
(F)
Food sold by any religious
organization at a social or other gathering conducted by it or under its
auspices, if the purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenue obtained from
selling the food is actually used in carrying out those functions and
activities: Provided, That purchases
made by the organizations are not exempt as a purchase for resale; or
(G)
Food sold by volunteer fire departments
and rescue squads that are exempt from federal income taxes under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as amended, when the
purpose of the sale is to obtain revenue for the functions and activities of
the organization and the revenue obtained is exempt from federal income tax and
actually expended for that purpose;
(25)
Sales of food by little leagues,
midget football leagues, youth football or soccer leagues, band boosters or
other school or athletic booster organizations supporting activities for grades
kindergarten through twelve and similar types of organizations, including
scouting groups
and
church youth groups, if the purpose in selling the food is to obtain revenue
for the functions and activities of the organization and the revenues obtained
from selling the food is actually used in supporting or carrying on functions
and activities of the groups: Provided,
That the purchases made by the organizations are not exempt as a purchase for
resale;
(26)
Charges for room and meals by
fraternities and sororities to their members: Provided, That the purchases made by a fraternity or sorority are
not exempt as a purchase for resale;
(27)
Sales of or charges for the
transportation of passengers in interstate commerce;
(28)
Sales of tangible personal property
or services to any person which this State is prohibited from taxing under the
laws of the United States or under the constitution of this State;
(29)
Sales of tangible personal property
or services to any person who claims exemption from the tax imposed by this
article or article fifteen-a of this chapter pursuant to the provision of any
other chapter of this code;
(30)
Charges for the services of opening
and closing a burial lot;
(31)
Sales of livestock, poultry or other
farm products in their original state by the producer of the livestock, poultry
or other farm products or a member of the producer's immediate family who is
not otherwise engaged in making retail sales of tangible personal property; and
sales of livestock sold at public sales sponsored by breeders or registry
associations or livestock auction markets: Provided,
That the exemptions allowed by this subdivision may be claimed without
presenting or obtaining exemption certificates provided the farmer maintains
adequate records;
(32)
Sales of motion picture films to
motion picture exhibitors for exhibition if the sale of tickets or the charge
for admission to the exhibition of the film is subject to the tax imposed by
this article and sales of coin-operated video arcade machines or video arcade
games to a person engaged in the business of providing the machines to the
public for a charge upon which the tax imposed by this article is remitted to
the Tax Commissioner: Provided, That
the exemption provided in this subdivision may be claimed by presenting to the
seller a properly executed exemption certificate;
(33)
Sales of aircraft repair, remodeling
and maintenance services when the services are to an aircraft operated by a
certified or licensed carrier of persons or property, or by a governmental
entity, or to an engine or other component part of an aircraft operated by a
certificated or licensed carrier of persons or property, or by a governmental
entity and sales of tangible personal property that is permanently affixed or
permanently attached as a component part of an aircraft owned or operated by a
certificated or licensed carrier of persons or property, or by a governmental
entity, as part of the repair, remodeling or maintenance service and sales of
machinery, tools or equipment directly used or consumed exclusively in the
repair, remodeling or maintenance of aircraft, aircraft engines or aircraft
component parts for a certificated or licensed carrier of persons or property or
for a governmental entity;
(34)
Charges for memberships or services
provided by health and fitness organizations relating to personalized fitness
programs;
(35)
Sales of services by individuals who
babysit for a profit: Provided, That
the gross receipts of the individual from the performance of baby-sitting services
do not exceed $5,000 dollars in a
taxable year;
(36)
Sales of services by public libraries
or by libraries at academic institutions or by libraries at institutions of
higher learning;
(37)
Commissions received by a
manufacturer's representative;
(38)
Sales of primary opinion research
services when:
(A)
The services are provided to an
out-of-state client;
(B)
The results of the service
activities, including, but not limited to, reports, lists of focus group
recruits and compilation of data are transferred to the client across state
lines by mail, wire
or
other means of interstate commerce, for use by the client outside the State of
West Virginia; and
(C)
The transfer of the results of the
service activities is an indispensable part of the overall service.
For the purpose of this
subdivision, the term "primary opinion research" means original
research in the form of telephone surveys, mall intercept surveys, focus group
research, direct mail surveys, personal interviews and other data collection
methods commonly used for quantitative and qualitative opinion research
studies;
(39)
Sales of property or services to
persons within the State when those sales are for the purposes of the
production of value-added products: Provided,
That the exemption granted in this subdivision applies only to services,
equipment, supplies and materials directly used or consumed by those persons
engaged solely in the production of value-added products: Provided, however,
That this exemption may not be claimed by any one purchaser for more than five
consecutive years, except as otherwise permitted in this section.
For the purpose of this
subdivision, the term "value-added product" means the following
products derived from processing a raw agricultural product, whether for human
consumption or for other use. For purposes of this subdivision, the following
enterprises qualify as processing raw agricultural products into value-added
products: Those engaged in the conversion of:
(A)
Lumber into furniture, toys,
collectibles and home furnishings;
(B)
Fruits into wine;
(C)
Honey into wine;
(D)
Wool into fabric;
(E)
Raw hides into semifinished or
finished leather products;
(F)
Milk into cheese;
(G)
Fruits or vegetables into a dried,
canned or frozen product;
(H)
Feeder cattle into commonly accepted
slaughter weights;
(I)
Aquatic animals into a dried, canned,
cooked or frozen product; and
(J)
Poultry into a dried, canned, cooked
or frozen product;
(40)
Sales of music instructional services
by a music teacher and artistic services or artistic performances of an
entertainer or performing artist pursuant to a contract with the owner or
operator of a retail establishment, restaurant, inn, bar, tavern, sports or
other entertainment facility or any other business location in this State in
which the public or a limited portion of the public may assemble to hear or see
musical works or other artistic works be performed for the enjoyment of the
members of the public there assembled when the amount paid by the owner or
operator for the artistic service or artistic performance does not exceed $3,000
dollars: Provided, That nothing
contained herein may be construed to deprive private social gatherings,
weddings or other private parties from asserting the exemption set forth in
this subdivision. For the purposes of this exemption, artistic performance or
artistic service means and is limited to the conscious use of creative power,
imagination and skill in the creation of aesthetic experience for an audience
present and in attendance and includes, and is limited to, stage plays, musical
performances, poetry recitations and other readings, dance presentation,
circuses and similar presentations and does not include the showing of any film
or moving picture, gallery presentations of sculptural or pictorial art, nude
or strip show presentations, video games, video arcades, carnival rides, radio
or television shows or any video or audio taped presentations or the sale or
leasing of video or audio tapes, air shows or any other public meeting, display
or show other than those specified herein: Provided,
however, That nothing contained herein may be construed to exempt the sales
of tickets from the tax imposed in this article. The State Tax Commissioner shall
propose a legislative rule pursuant to article three, chapter twenty-nine-a of
this code establishing definitions
and
eligibility criteria for asserting this exemption which is not inconsistent
with the provisions set forth herein: Provided
further, That nude dancers or strippers may not be considered as
entertainers for the purposes of this exemption;
(41)
Charges to a member by a membership
association or organization which is exempt from paying federal income taxes
under Section 501(c)(3) or (c)(6) of the Internal Revenue Code of 1986, as
amended, for membership in the association or organization, including charges
to members for newsletters prepared by the association or organization for
distribution primarily to its members, charges to members for continuing
education seminars, workshops, conventions, lectures or courses put on or
sponsored by the association or organization, including charges for related
course materials prepared by the association or organization or by the speaker
or speakers for use during the continuing education seminar, workshop,
convention, lecture or course, but not including any separate charge or
separately stated charge for meals, lodging, entertainment or transportation
taxable under this article: Provided,
That the association or organization pays the tax imposed by this article on
its purchases of meals, lodging, entertainment or transportation taxable under
this article for which a separate or separately stated charge is not made. A
membership association or organization which is exempt from paying federal
income taxes under Section 501(c)(3) or (c)(6) of the Internal Revenue Code of
1986, as amended, may elect to pay the tax imposed under this article on the
purchases for which a separate charge or separately stated charge could apply
and not charge its members the tax imposed by this article or the association
or organization may avail itself of the exemption set forth in subdivision (9)
of this subsection relating to purchases of tangible personal property for
resale and then collect the tax imposed by this article on those items from its
member;
(42)
Sales of governmental services or
governmental materials by county assessors, county sheriffs, county clerks or
circuit clerks in the normal course of local government operations;
(43)
Direct or subscription sales by the
Division of Natural Resources of the magazine currently entitled Wonderful
West Virginia and by the Division of Culture and History of the magazine
currently entitled Goldenseal and the journal currently entitled West
Virginia History;
(44)
Sales of soap to be used at car wash
facilities;
(45)
Commissions received by a travel
agency from an out-of-state vendor;
(46)
The service of providing technical
evaluations for compliance with federal and state environmental standards
provided by environmental and industrial consultants who have formal
certification through the West Virginia Department of Environmental Protection
or the West Virginia Bureau for Public Health or both. For purposes of this
exemption, the service of providing technical evaluations for compliance with
federal and state environmental standards includes those costs of tangible
personal property directly used in providing such services that are separately
billed to the purchaser of such services and on which the tax imposed by this
article has previously been paid by the service provider;
(47)
Sales of tangible personal property
and services by volunteer fire departments and rescue squads that are exempt
from federal income taxes under Section 501(c)(3) or (c)(4) of the Internal
Revenue Code of 1986, as amended, if the sole purpose of the sale is to obtain
revenue for the functions and activities of the organization and the revenue
obtained is exempt from federal income tax and actually expended for that
purpose;
(48)
Lodging franchise fees, including
royalties, marketing fees, reservation system fees or other fees assessed after
December 1, 1997, that have been or may
be imposed by a lodging franchiser as a condition of the franchise agreement;
and
(49)
Sales of the regulation size United
States flag and the regulation size West Virginia flag for display.
(b) Refundable
exemptions. – Any
person having a right or claim to any exemption set
forth in this subsection shall first pay to the vendor
the tax imposed by this article and then apply to the Tax Commissioner for a
refund or credit, or as provided in section nine-d of this article, give to the
vendor his or her West Virginia direct pay permit number. The following sales
of tangible personal property and services are exempt from tax as provided in
this subsection:
(1)
Sales of property or services to bona
fide charitable organizations who make no charge whatsoever for the services
they render: Provided, That the exemption granted in this subdivision applies
only to services, equipment, supplies, food, meals and materials directly used
or consumed by these organizations and does not apply to purchases of gasoline
or special fuel;
(2)
Sales of services, machinery, supplies and materials directly used
or consumed in the activities of manufacturing, transportation, transmission,
communication, production of natural resources, gas storage, generation or
production or selling electric power, provision of a public utility service or
the operation of a utility service or the operation of a utility business, in
the businesses or organizations named in this subdivision and does not apply to
purchases of gasoline or special fuel;
(3)
Sales of property or services to
nationally chartered fraternal or social organizations for the sole purpose of
free distribution in public welfare or relief work: Provided, That sales of gasoline and special fuel are taxable;
(4)
Sales and services, fire-fighting or
station house equipment, including construction and automotive, made to any
volunteer fire department organized and incorporated under the laws of the
State of West Virginia: Provided,
That sales of gasoline and special fuel are taxable;
(5)
Sales of building materials or
building supplies or other property to an organization qualified under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as amended, which are
to be installed in, affixed to or incorporated by the organization or its agent
into real property or into a building or structure which is or will be used as
permanent low-income housing,
transitional
housing, an emergency homeless shelter, a domestic violence shelter or an
emergency children and youth shelter if the shelter is owned, managed,
developed or operated by an organization qualified under Section 501(c)(3) or
(c)(4) of the Internal Revenue Code of 1986, as amended; and
(6) Sales of
construction and maintenance materials acquired by a second party for use in the
construction or maintenance of a highway project: Provided, That in lieu of any
refund or credit to the person that paid the tax imposed by this article, the
Tax Commissioner shall pay to the Division of Highways for deposit into the
State Road Fund of the state reimbursement for the tax in the amount estimated
under the provisions of this subdivision: Provided, however, That by the
fifteenth day of June of each fiscal year, the division shall provide to the
Tax Department an itemized listing of highways projects with the amount of
funds expended for highway construction and maintenance. The Commissioner of
Highways shall request reimbursement of the tax based on an estimate that forty
percent of the total gross funds expended by the agency during the fiscal
period were for the acquisition of materials used for highway construction and
maintenance. The amount of the reimbursement shall be calculated at six percent
of the forty percent.
(c) Effective date. – The amendment to subsection (b) of this section enacted
in 2017 shall take effect May 1, 2017, and shall be construed to prohibit all
future transfers to the State Road Fund established in the State Treasury
pursuant to section fifty-two, article six of the Constitution, under this
section of taxes imposed by this article and article fifteen-a of this chapter.
ARTICLE 15A. USE TAX.
§11-15A-2. Imposition of
tax; six percent tax rate; inclusion of services as taxable; transition
rules; allocation of tax and transfers.
(a) An excise tax is hereby
levied and imposed on the use in this state of tangible personal property,
custom software or taxable services, to be collected and paid as provided in
this article
or
article fifteen-b of this chapter, at the rate of six percent of the purchase
price of the property or taxable services, except as otherwise provided in this
article: Provided, That on
and after July 1, 2017, the tax imposed by this article shall be collected and
paid, as provided in this article or article fifteen-b of this chapter, at the
rate of six and one-half percent of the purchase price of the tangible personal
property, custom software or taxable services, except as otherwise provided in
this article: Provided, however, That
the one-half percent increase in the tax on the purchase price adopted pursuant
to the reenactment of this section during the 2017 Regular Session of the
Legislature shall expire on June 30, 2020, so long as the balance of funds as
of June 30, 2019, in the Revenue Shortfall Reserve Fund and the Revenue
Shortfall Reserve Fund – Part B, established in section twenty, article two,
chapter eleven-b of this code equals or exceeds fifteen percent of the general
revenue fund budgeted for the fiscal year commencing on July 1, 2019.
(b) Calculation of tax
on fractional parts of a dollar. – The tax
computation under subsection (a) of this section shall be carried to the third
decimal place and the tax rounded up to the next whole cent whenever the third
decimal place is greater than four and rounded down to the lower whole cent
whenever the third decimal place is four or less. The vendor may elect to
compute the tax due on a transaction on a per item basis or on an invoice basis
provided the method used is consistently used during the reporting period.
(c) "Taxable
services," for the purposes of this article, means services of the nature
that are subject to the tax imposed by article fifteen of this chapter. In this
article, wherever the words "tangible personal property" or
"property" appear, the same shall include the words "or taxable
services," where the context so requires.
(d) Use tax is hereby
imposed upon every person using tangible personal property, custom software or
taxable service within this state. That person's liability is not extinguished
until the tax has been paid. A receipt with the tax separately stated thereon
issued by a retailer engaged in
business
in this state, or by a foreign retailer who is authorized by the Tax
Commissioner to collect the tax imposed by this article, relieves the purchaser
from further liability for the tax to which the receipt refers.
(e) Purchases of tangible
personal property or taxable services made for the government of the United
States or any of its agencies by ultimate consumers is subject to the tax
imposed by this section. Industrial materials and equipment owned by the
federal government within the State of West Virginia of a character not
ordinarily readily obtainable within the state, is not subject to use tax when
sold, if the industrial materials and equipment would not be subject to use
taxes if sold outside of the state for use in West Virginia.
(f) This article does not
apply to purchases made by counties or municipal corporations.
(g) Notwithstanding any
provisions of this code to the contrary, on and after July 1, 2017, when the
words “six percent” appear in subsection (c), section ten of this article,
those words shall mean “a percentage equal to the use tax rate” specified in
subsection (a) of this section.
Article 16.
NONINTOXICATING BEER.
§11-16-13.
Barrel tax on nonintoxicating beer.
(a) There is
hereby levied and imposed, in addition to the license taxes provided for in
this article, a tax of $5.50 on each barrel of thirty-one gallons and in like
ratio on each part barrel of nonintoxicating beer manufactured in this state
for sale within this state, whether contained or sold in barrels, bottles or
other containers, and a like tax is hereby levied and imposed upon all nonintoxicating
beer manufactured outside of this state and brought into this state for sale
within this state: Provided,
That on and after July 1, 2017, the tax imposed by this section shall be $8.00
on each barrel of thirty-one gallons and in like ratio on each part barrel of
nonintoxicating beer manufactured in this state for sale within this state,
whether contained or sold in barrels, bottles or other containers, and a like
tax is hereby levied and imposed upon all nonintoxicating beer manufactured outside
of this state and brought into this state for sale within this state; but no nonintoxicating beer manufactured, sold or
distributed in this state is subject to more than one barrel tax. The brewer
manufacturing or producing nonintoxicating beer within this state for sale
within this state shall pay the barrel tax on such nonintoxicating beer, and,
except as provided otherwise, the distributor who is the original consignee of
nonintoxicating beer manufactured or produced outside of this state, or who brings
such nonintoxicating beer into this state, shall pay the barrel tax on such
nonintoxicating beer manufactured or produced outside of this state: Provided,
That the barrel tax imposed by this section shall not apply to nonintoxicating
beer manufactured by a brewpub.
(b) On or before the tenth
day of each month during the license period, every brewer or operator of a
brewpub who manufactures or produces nonintoxicating beer within this state
shall file a report in writing, under oath, to the Tax Commissioner, in the
form prescribed by the Tax Commissioner, stating its total sales, or in the
case of a brewpub, its total estimated production of nonintoxicating beer
within this state during that month, and at the same time shall pay the tax
levied by this article on such production. On or before the tenth day of each
month during the license period, every distributor who is the original
consignee of nonintoxicating beer manufactured or produced outside this state
or who brings such beer into this state for sale shall file a report in
writing, under oath, to the Tax Commissioner, in the form prescribed by the Tax
Commissioner, stating its total estimated purchases of such nonintoxicating
beer during that month, and at the same time shall pay the tax thereon levied
by this article for such estimated monthly purchase: Provided, That the
Tax Commissioner may allow, or require, a brewer who manufactures or produces
nonintoxicating beer outside this state to file the required report and pay the
required tax on behalf of its distributor or distributors. Any brewer or
distributor or operator of a brewpub who files a report under this subsection
may adjust its monthly estimated sales or purchases or production report or
reports by filing amended reports by the twenty-fifth day of the reporting
month.
(c) Every brewer or
distributor or operator of a brewpub who files a report under subsection (b) of
this section shall file a final monthly report of said sales or purchases or
production, in a form and at a time prescribed by the Tax Commissioner, stating
actual nonintoxicating beer sales, purchases, or production and other
information which the Tax Commissioner may require, and shall include a
remittance for any barrel tax owed for actual sales or purchases or production
made in excess of the amount estimated for that month.
(d) Any brewer or
distributor or operator of a brewpub who files a report pursuant to subsection
(b) of this section reflecting an underestimation of twenty-five percent or
more of actual sales or purchases or production of nonintoxicating beer as
shown by the report filed pursuant to subsection (c) of this section shall be
assessed a penalty of one percent of the total taxes due in such prior month.
(e) Brewers and
distributors and operators of brewpubs shall keep all records which relate to
the sale or purchase in this state of nonintoxicating beer for a period of
three years unless written approval for earlier disposal is granted by the Tax
Commissioner.
(f) Brewpubs shall keep
such records as required by the federal government and may, in lieu of the
recordkeeping and reporting requirements contained in subsections (a) through
(e) of this section, file copies of the federal reports contemporaneously with
the Tax Commissioner at the time of such filings with the federal government.
The filing of duplicate copies of the federal reports with the State Tax
Commissioner shall be deemed as compliance with subsections (a) through (e) of
this section.
Article 21. PERSONAL
INCOME TAX
§11-21-97.
Personal income tax study.
(a)
Creation of West Virginia Personal Income
Tax Study Commission. – Effective July 1, 2017, there is hereby created a
commission to be known as the West Virginia Personal Income Tax Study
Commission (the “Commission”) consisting of the following members:
(1)
The Governor of the State of West Virginia, or his designee;
(2)
Three (3) nonvoting members of the State Senate, designated by the Senate
President;
(3)
Three (3) nonvoting members of the House of Delegates, designated by the
Speaker of the House of Delegates;
(4)
The Secretary of the West Virginia Department of Revenue (the “Secretary of
Revenue”), or a designee;
(5)
The Director of the West Virginia State Budget Office (the “Director of the
State Budget Office”);
(6)
The Commissioner of the West Virginia State Tax Department (the “Tax
Commissioner”), or a designee;
(7)
Two (2) representatives from the academic community who have extensive
experience in studying the state’s taxation system; and
(8)
Such other members as may hereafter be named by the Governor.
(b)
Personal income tax study. – The commission
shall study the feasibility of eliminating the
West Virginia personal income tax and shall file a report with the Governor and
the West Virginia State Legislature on or before December 1, 2018. The report
shall recommend proposed amendments to the tax imposed under this article and
shall include recommended legislation.
The commission in its report shall examine the feasibility and fiscal
implications eliminating the state personal income tax would have on affected
governmental entities.
(c) The commission shall hold
regular meetings, which meetings shall be scheduled and presided over by the
chairperson designated by the Governor among the members of the Commission.
(d) The Commission may establish
such subcommittees as it deems necessary and convenient to carry out the
provisions of this section no later than December 1, 2018.
(e) Disclosure and confidentiality. –
(1) Witnesses, experts, government
officials, consultants, and private or public sector representatives who
provide data, information or statistics to the Office of the Governor, the Secretary
of Revenue, the Director of the State Budget Office, or the Tax Commissioner or
others engaged in the study mandated by this section shall not be treated as
being subject to the confidentiality restrictions of section five-d, article
ten of this chapter and shall not be treated as subject to the confidentiality
requirements of subsection (e) of this section, solely by reason of having
provided information to the study.
(2) Notwithstanding any provision
of this code to the contrary, the Office of the Governor, the Secretary of
Revenue, the Director of the State Budget Office, the Tax Commissioner or
others engaged in the study mandated by this section, may share financial
information and other data disclosed under this section, with each other, and
with any employees of state agencies providing support services to the commission
in conducting the study. It is unlawful for the Office of the Governor, Secretary
of Revenue, the Director of the State Budget Office, the Tax Commissioner or
others engaged in the study mandated by this section, including employees of
the Office of the Governor, the Secretary of Revenue, employees of the Director
of the State Budget Office, and employees of the Tax Commissioner to disclose
to any person not conducting the study any financial information and other data
disclosed under this section.
(3) Notwithstanding any provision
of this code to the contrary, it is unlawful for the Office of the Governor,
the Secretary of Revenue, the Director of the State Budget Office, the Tax
Commissioner or others engaged in the study mandated by this section, including
employees of the Office of the Governor, employees of the Secretary of Revenue,
employees of the Director of the State Budget Office, and employees of the Tax
Commissioner to disclose to any person not conducting the study, any financial
information and other data disclosed under this section. Such disclosure shall
be a violation of the tax information confidentiality provisions of section
five-d, article ten of this chapter.
(4) Financial information and
other data disclosed to the Office of the Governor, the Secretary of Revenue,
the Director of the State Budget Office, the Tax Commissioner or others engaged
in the study mandated by this section, including employees of the Office of the
Governor, employees of the Secretary of Revenue, employees of the Director of
the State Budget Office, and employees of the Tax Commissioner shall have all
of the confidentiality protections given to a “return” under section five-d of
article ten of this chapter and any disclosure not authorized by that section,
or this section, shall be subject to all of the penalties provided for unlawful
disclosure of a “return.”
(5) Nothing in this section may be
construed as prohibiting the publication or release of statistics so classified
as to prevent the identification of a particular person or entity.
(6) Financial information and
other data disclosed to the members of the commission under the provisions of
this section shall be considered confidential and exempt from article one,
chapter twenty-nine-b of this code.
(e) All members of the commission
shall serve without salary.
(f) Staff support and facilitation
for the commission shall be provided by the West Virginia Department of Revenue.
(g) The commission shall report
the status of its efforts under this section and any proposed legislation to
the Governor no later than December 1, 2018.
Article 28.
commercial activity tax.
§11-28-1. Imposition of privilege tax.
There is hereby levied
and shall be collected
an annual privilege tax on persons
conducting any business or commercial
activities in this state, in the amount
of two tenths of one percent of the gross income of the business as defined by this article.
§11-28-2.
Definitions.
(a) General. – When used in this article,
words defined in subsection (b) of this section have the meanings ascribed to
them in this section, except in those instances where a different meaning is
provided in this article or the context in which the word is used clearly
indicates that a different meaning is intended by the Legislature.
(b) Definitions:
(1) "Banking business" or "financial organization" shall mean any bank,
banking association, trust company, industrial loan company, small loan
company or licensee, building and loan association, savings and loan association, finance company, investment company, investment broker
or dealer, and any other similar business organization whose assets consist primarily of intangible personal property
and whose gross income consists primarily of dividends, interest and other
charges derived from the use of money or credit.
(2) "Business" includes
all activities engaged in or caused to be engaged in
with the object of gain or economic
benefit, either direct or indirect. "Business"
does not include a casual sale by a person who is not engaged in the business of selling the type of property
involved in such casual sale. "Business" includes the production of natural resources or manufactured products
which are used or consumed by the producer
or manufacturer and includes the activities of a banking
business or financial
organization.
(3) (A) "Gross income" means the gross receipts of the taxpayer,
other than a banking
or financial business,
received as compensation for personal services and the gross receipts
of the taxpayer derived from trade, business, commerce or sales and the value proceeding or accruing from the sale of tangible
property (real or personal), or service, or both, all receipts from the investment of the capital
of the business, including rentals,
royalties, fees, reimbursed costs or expenses
or other emoluments however designated and including all interest, carrying charges, fees or other like income, however
denominated, derived by the taxpayer
from repetitive carrying
of accounts, in the
regular course and conduct of its business
, and extension of credit in
connection with the sale of any tangible
personal property or service, and without any deductions on account of the cost of property sold,
the cost of materials used, labor costs,
taxes, royalties paid in cash or in kind or otherwise, interest
or discount paid or any other expenses whatsoever: Provided, That gross income shall not include contributions to
capital.
(B) (i) "Gross
income of a banking or financial business”
means the gross income received from interest, premiums, discounts,
dividends, service fees or charges, commissions, fines, rents from real or
tangible personal property, however denominated, royalties, charges for
bookkeeping or data processing, receipts from check sales, charges or fees, and
receipts from the sale of tangible personal
property.
(ii) “Gross income of a
banking or financial business” does not include:
(I) Interest
received on the obligations of the United States, its agencies and instrumentalities,
(II) Interest
received on the obligations of this state, or any political subdivision of this state, or
(III) Interest received on investments or loans
primarily secured by first mortgages
or deeds of trust on residential property occupied by nontransients; however, all interest derived from
these activities shall be reported
on the return of a person taxable
under the provisions of this section.
(C) "Gross proceeds
of sales" means the value, whether in money or other property,
proceeding from the sale of tangible property, without any deduction
for the cost of property
sold or expenses of any kind: Provided,
That bad debts shall be allowed as a deduction except that the amount of any
bad debt recovery shall be included in gross proceeds of sale.
(D) The terms "gross income" and "gross proceeds
of sales" do not include:
(i) Cash discounts allowed and taken on sales;
(ii) The proceeds of sale
of goods, wares or merchandise returned
by customers when the sale price is refunded either in cash or by credit;
(iii) The amount allowed as "trade-in value" for any article
accepted as part payment for any article
sold;
(iv) Excise taxes
imposed by this state; or
(v) Money
or other property received
or held by a professional person for the sole
use and benefit of a client or another person or
money
received by the taxpayer on behalf of a bank or other financial institution for the repayment
of a debt of another.
(4) "Person" or "company,'' herein used interchangeably, includes any individual, firm, copartnership, partnership, limited
liability company, joint adventure, association, corporation, trust or any other group or combination
acting as a unit, and the plural as well as the singular
number, unless the intention to give a more
limited meaning is disclosed by the
context.
(5) "Sale," "sales" or "selling" means any transfer
of the ownership of or title
to property, whether for money or in exchange for other property.
(6) "Selling at wholesale" or "wholesale
sales" means and includes:
(A) Sales of any tangible personal
property for the purpose of resale
in the form of tangible personal
property;
(B) Sales of machinery, supplies
or materials which
are to be directly consumed
or used by the purchaser in the conduct of any business
or activity which is subject to the tax imposed
by this article;
and
(C) Sales of any tangible
personal property to the United States of America, its agencies and instrumentalities or to the State of West Virginia,
its institutions or political
subdivisions.
(7) "Service business
or calling" means all activities engaged in by a person for other persons for a consideration which involve the rendering of a
service as distinguished from the sale of tangible property,
but does not include the services rendered
by an employee to his or her employer. This term includes, but is
not limited to:
(A) Persons engaged
in manufacturing, compounding or preparing for sale,
profit or commercial use, articles, substances or commodities which are owned by another or others;
(B) Persons engaged as independent contractors in producing natural resource products which are
owned by another or others, as personal
property, immediately after the same are severed,
extracted, reduced to possession and produced;
(C) The repetitive carrying
of accounts, in the regular course
and conduct of business, and extension of credit in connection with the sale of any tangible
personal property or service.
(8) "Taxpayer"
means any person liable for the tax imposed by this article;
(9) "Tax year" or "taxable year" means the calendar
year, unless permission is obtained from the Tax Commissioner
to use the taxpayer's fiscal year as the tax period;
(10) "Electronic
filing" or "e-filing" means filing using electronic technology
such as computer modem, magnetic media, optical disk, facsimile machine,
telephone or other technology approved by the Tax Commissioner, in such manner
as he or she deems acceptable. Any return required to be filed electronically
under this article may contain an electronic signature, if a signature is
required.
§11-28-3. Rules for
determining measure of tax.
(a) If any person liable
for the tax ships or transports its products or any part thereof out of the
state without making sale of such products, the value of the products in the
condition or form in which they exist immediately before transportation out of
the state shall be the basis for the assessment of the tax. The tax
commissioner may prescribe rules for ascertaining such value.
(b) In determining
value, however, of sales between affiliated companies or persons, or under
other circumstances where the relation between the buyer and seller is such
that the gross proceeds from the sale do not reflect the true value of the
subject matter of the sale, the tax commissioner may prescribe rules for
determining the value on which the privilege tax shall be levied, corresponding
as nearly as possible to the gross proceeds from the sale of products where no
common interest exists between the buyer and seller but the circumstances and
conditions are otherwise similar.
(c) Upon every person
engaging or continuing within this state in the business of manufacturing,
compounding or preparing for sale, profit, or commercial use, either directly
or through the activity of others in whole or in part, any article or articles,
substance or substances, commodity or commodities, or newspaper publishing
(including all gross income or proceeds of sale from circulation and
advertising), the measure of this tax is the value of the entire product
manufactured, compounded or prepared in the state for sale, profit or commercial
use, regardless of the place of sale or the fact that deliveries may be made to
points outside the state.
(d) In those instances
in which the same person partially manufactures, compounds or prepares products
within this state and partially manufactures, compounds or prepares such
products outside of this state, the measure of the tax shall be that proportion
of the sale price of the product that the payroll cost of manufacturing within
this state bears to the entire payroll
cost of manufacturing the product; or, at the option of the taxpayer,
the measure of his or her tax under this section shall be the proportion of the
sales value of the articles that the cost of operations in West Virginia bears
to the full cost of manufacture of the articles.
§11-28-4. Exemptions.
The provisions of this
article do not apply to:
(a) Insurance companies
which pay the State of West Virginia a tax on premiums. However, this exemption
does not apply to portions of the gross income of insurance companies received
for the use of real property, other than property in this state in which the
insurance company maintains its office or offices, whether that income is in
the form of rentals or royalties;
(b) Nonprofit cemetery
companies organized and operated for the exclusive benefit of their members;
(c) Fraternal societies,
organizations and associations organized and operated for the exclusive benefit
of their members and not for profit. This exemption does not apply to gross
income arising from the sale of alcoholic liquor, food and related services of
such fraternal societies, organizations and associations which are licensed as
private clubs under the provisions of article seven, chapter sixty of this
code, except that funds derived from the licensed charitable gaming activities
of such organizations are exempt;
(d) Corporations,
associations and societies organized and operated exclusively for religious or
charitable purposes: Provided, That
this exemption does not apply to gross income derived from engaging in
unrelated business activity as defined for federal income tax purposes;
(e) Production credit
associations, organized under the provisions of the federal "Farm Credit
Act of 1933"; or
(f) Any credit union
organized under the provisions of chapter thirty-one or any other chapter of
this code: Except, that the exemptions of this section shall not apply to
corporations or cooperative associations organized under the provisions of
article four, chapter nineteen of this code.
§11-28-5. Computation
of tax; payment.
The tax imposed by this
article is due and payable as follows:
(a) For taxpayers whose
estimated tax under this article exceeds $1,000 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. Each such taxpayer shall, on or
before the last day of each month, make out an estimate of the tax for which it
is liable for the preceding month and submit it with a remittance in the form
prescribed by the Tax Commissioner, of the amount of tax to the office of the commissioner.
(b) For taxpayers whose
estimated tax under this article does not exceed $1,000 per month, the tax
shall be due and payable in quarterly installments within one month from the
expiration of each quarter in which the tax accrued. Each such taxpayer shall,
within one month from the expiration of each quarter, make out an estimate of
the tax for which he or she is liable for such quarter, sign the same and mail
it together with a remittance, in the form prescribed by the Tax Commissioner,
of the amount of tax to the office of the commissioner.
(c) When the total tax
for which any person is liable under this article does not exceed $200 in any
year, the taxpayer may pay the same quarterly as described in subsection (b) of
this section or, with the consent in writing of the Tax Commissioner, at the
end of the month next following the close of the tax year.
(d) The Tax Commissioner
may require the return and payment for periods of shorter duration than those
prescribed above if it is deemed necessary to ensure payment of the tax.
(e) The forms shall be
filed electronically, in accordance with the procedures set forth in the Tax Commissioner’s
rule on use and acceptance of electronic records. Any taxpayer required to file
and pay electronically who fails to do so, shall be required to pay a money
penalty in an amount equal to five percent of the tax due.
§11-28-6. Return and
remittance by taxpayer.
On or before the
expiration of one month after the end of the tax year, each taxpayer shall make
a return for the entire tax year showing the gross proceeds of sales or gross
income of business, trade or calling, and compute the amount of tax chargeable
in accordance with the provisions of this article and deduct the amount of
monthly or quarterly payments (as hereinbefore provided), if any, and transmit
with its report a remittance in the form prescribed by the Tax Commissioner
covering the residue of the tax chargeable against the taxpayer to the office
of the Tax Commissioner; such return shall be signed by the taxpayer if made by
an individual, or by the president, vice president, secretary or treasurer of a
corporation if made on behalf of a corporation. If made on behalf of a
partnership, joint adventure, association, trust, or any other group or
combination acting as a unit, any individual delegated by such firm,
copartnership, joint adventure, association, trust or any other group or
combination acting as a unit shall sign the return on behalf of the taxpayer.
The Tax Commissioner may extend the time for making the annual return on the
application of any taxpayer and grant such reasonable additional time within
which to make the same, for good cause shown. Annual returns must be filed, and
payments remitted, electronically, as provided in section four of this article,
unless the taxpayer first obtains a waiver in writing from the Tax Commissioner.
§11-28-7. Tax year.
The assessment of taxes
and the returns required under the provisions of this article shall be on a
calendar year basis, unless permission is obtained from the Tax Commissioner
to use the taxpayer's fiscal year as the tax period.
§11-28-8. Tax
cumulative.
The tax imposed by this
article is in addition to all other licenses and taxes levied by law as a
condition precedent to engaging in any business, trade or calling in this
state. A person exercising a privilege taxable under this article, subject to
the payment of all licenses and charges which are condition precedent to
exercising the privilege taxed, may exercise the privilege for the current tax
year upon the condition that he or she shall pay the tax accruing under this
article.
§11-28-9.
Receivership or insolvency proceedings.
In the event a business
subject to the tax imposed by this article is being operated in connection with
a receivership or insolvency proceeding, the court under whose direction the
business is operated shall, by the entry of a proper order in the cause, make
provision for the regular payment of the taxes imposed by this article as they
become due.
§11-28-10. Priority
in distribution in receivership, etc.; personal liability of administrator.
In the distribution,
voluntary or compulsory, in receivership, bankruptcy or otherwise, of the
estate of any person, firm or corporation, all taxes due and unpaid under this
article shall be paid from the first money available for distribution in
priority to all claims, except taxes and debts due the United States which
under federal law are given priority over the debts and liens created by this
article. Any person charged with the administration of an estate who shall
violate the provisions of this section shall be personally liable for any taxes
accrued and unpaid under this article, which are chargeable against the person,
firm or corporation whose estate is in administration.
§11-28-11. Credit for
taxes paid.
(a) A credit shall be
allowed against the tax imposed by this article for the following taxes paid to
the State of West Virginia:
(1) The severance and
business privilege tax imposed by article thirteen-a of this chapter.
(2) The health care
provider tax imposed by article twenty-seven of this chapter.
(3) The acute care
hospital tax imposed by article twenty-seven of this chapter.
(4) The business and
occupation tax imposed by article thirteen of this chapter.
(b) No credit may be
taken for the following taxes paid within this state:
(1) The municipal
business and occupation tax imposed by a municipality pursuant to article
thirteen, chapter eight of this code.
(2) The municipal public
utilities tax imposed by a municipality pursuant to article thirteen, chapter
eight of this code.
(c) In no case may the
credit allowed under this section reduce a taxpayer’s liability for the tax
imposed by this article below zero dollars.
(d) No unused credit
under this section may be carried forward or carried back to another tax year.
§11-28-12. Offenses;
penalties.
It shall be unlawful for
any person to refuse to make the return required by section six of this
article; or to make any false or fraudulent return or false statement in any
return, with intent to defraud the state or to evade the payment of the tax, or
any part thereof, imposed by this article; or for any person to aid or abet
another in any attempt to evade the payment of the tax, or any part thereof,
imposed by this article; or for the president, vice president, secretary or
treasurer of any corporation to make or permit to be made for any corporation
or association any false return, or any false statement in any return required
in this article, with the intent to evade the payment of any tax hereunder. Any
person violating any of the provisions of this section shall be guilty of a
misdemeanor and, on conviction thereof, shall be fined not more than $10,000 or
imprisoned not exceeding one year in the regional jail or punished by both fine
and imprisonment, at the discretion of the court, within the limitations
aforesaid. In addition to the foregoing penalties, any person who shall
knowingly swear to or verify any false or fraudulent return, or any return
containing any false or fraudulent statement with the intent aforesaid, shall
be guilty of the offense of false swearing, and, on conviction thereof, shall
be punished in the manner provided by law. Any corporation for which a false
return, or a return containing a false statement, as aforesaid, shall be made, shall
be guilty of a misdemeanor and shall be punished by a fine of not more than $10,000.
The circuit and criminal courts of the county in which the offender resides,
or, if a corporation, in which it carries on business, shall have concurrent
jurisdiction to enforce this section.
§11-28-13.
Severability; effective date.
(a) Severability – 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) Effective date – The provisions of this article take effect July 1,
2017 and shall apply to gross income from business activity engaged in, on or
after that date.
§11-28-14.
Termination date; short taxable years for taxpayers on calendar or fiscal year
and cash or accrual accounting methods.
(a) Each and every
provision of this article is repealed for all tax periods beginning on and
after July 1, 2020: Provided, That
the provisions of this article shall remain in effect on and after July 1, 2020,
so long as the combined balance of funds as of June 30, 2019, or any subsequent
June 30, in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund
Shortfall Reserve Fund - Part B established in section twenty, article two,
chapter eleven-b of this code is less than fifteen percent of the General Revenue
Fund budgeted for the fiscal year of the state commencing July 1, 2019 or any
fiscal year commencing thereafter. However, tax liabilities, if any, arising
for taxable years or portions thereof ending prior to a July 1 termination date
shall be determined, administered, assessed and collected as if the taxes
imposed by this article had terminated; and the rights and duties of the
taxpayer and the State of West Virginia shall be fully and completely preserved.
(b) Persons who are
calendar year taxpayers under this article shall file their annual return for the
calendar year of the termination date, on or before July 31 of that calendar
year, and remit the amount of any taxes shown thereon to be due, unless an
extension of time for filing is authorized by the Tax Commissioner.
(c) Persons who are
fiscal year taxpayers shall similarly file an annual return on or before July
31 of the termination year, for their short taxable year which ended June 30 of
that year, and remit the amount of any taxes shown thereon to be due, unless an
extension of time for filing is authorized by the Tax Commissioner.
(d) Persons who keep
their records using the accrual method of accounting shall file their annual
return for the full or short taxable year ending June 30 of the termination
year, computing their tax liability under that method of accounting. A taxpayer
shall file an amended return for the termination year and pay any additional
taxes due within thirty days after determining that gross income was
under-reported on the annual return.
(e) Persons who keep
their records using the cash method of accounting may file their annual return
for the full or short taxable year ending June 30 of the termination year, computing
their tax liability under the cash method of accounting: Provided, That the taxpayer shall file a supplemental return for the
termination year within one month after the close of each calendar quarter
during each ensuing year in which the taxpayer receives gross income for any
activity or portion thereof completed prior to July 1 of the termination year,
and pay any additional taxes shown on the supplemental return to be due. The
purpose of this requirement is to minimize the advantage or disadvantage
associated with the different methods of accounting when the commercial
activity tax is repealed.
§11-28-15. General
procedure and administration.
Each and every provision
of the "West Virginia Tax Procedure and Administration Act" set forth
in article ten of this chapter, and the “West Virginia Tax Crimes and Penalties
Act” set forth in article nine of this chapter shall apply to the tax imposed
by this article with like effect as if said acts were applicable only to the
tax imposed by this article and were set forth in extenso in this article.
NOTE: The purpose of this bill is
to solve the immediate fiscal crisis and stabilize the budget of the State of
West Virginia. This bill increases the sales and service tax and use tax rates
by one-half cent from 6% to 6.5%, with an expiration date of June 30, 2020, if
certain parameters are met with respect to the revenue shortfall reserve funds.
The bill also limits the exemption or exception of certain professional
services and advertising services from the sales and services tax and use tax,
and eliminates the exemption from sales tax for certain sales of materials
acquired for use in state highway projects. This bill creates and provides for the
operation of an annual privilege tax of two tenths of 1% on the gross income of
entities engaging in commercial activity in this state, exempting certain
entities from the tax, and providing for an expiration date of June 30, 2020 if
certain parameters are met with respect to revenue shortfall reserve funds. In
addition, this bill increases the rate of the barrel tax on nonintoxicating
beer and eliminates the film industry tax credit. Finally, this bill establishes a commission
to study feasibility of eliminating West Virginia personal income tax.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.