H. B. 2881
(By Delegates Cann, Frederick, Coleman,
Perry, Martin, Webb and Caputo)
[Introduced March 16, 2001; referred to the
Committee on Industry and Labor, Economic Development and
Small Business then Finance.]
A BILL to amend and reenact sections six, eight and ten, article
one, chapter five-e of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, all relating to the West
Virginia Capital Company Act; requiring reports on the use of
funds and the economic effect of their use; providing that a
West Virginia capital company will not qualify for
certification unless it is licensed under the Federal Small
Business Investment Act by the 110th day of the fiscal year;
lowering the total available credits per year from ten to two
million dollars; and allowing that tax credits may be divided
between pass-through entities.
Be it enacted by the Legislature of West Virginia:
That sections six, eight and ten, article one, chapter five-e
of the code of West Virginia, one thousand nine hundred thirty-one,
as amended, be amended and reenacted, all to read as follows:
ARTICLE 1. WEST VIRGINIA CAPITAL COMPANY ACT.
§5E-1-6. Qualification of West Virginia capital companies.
(a) The authority shall qualify West Virginia capital
companies commencing after the effective date of this article. A
company seeking to be qualified as a West Virginia capital company
shall make written application to the authority on forms provided
by the authority. The application shall contain the information
required by section ten of this article. Further, the application
shall specify the level of capitalization of the company.
(b) The application shall set forth the applicant's purpose.
(c) The authority may certify West Virginia capital companies
in existence after the first day of July, one thousand nine hundred
eighty-six.
(d) An applicant shall establish an escrow account located in
West Virginia, into which funds invested in the applicant shall be
deposited and held for the period of time between their receipt by
the applicant and the designation of the applicant as a qualified
company. The funds shall may not be invested by the applicant
until it is designated by the authority as a qualified company.
Provided, That, in addition to the minimum standards set forth in
section seven of this article, no applicant may be designated a
qualified company without providing sufficient proof to the
authority that the proposed project will sufficiently promote the
purpose of providing employment in accordance with the provisions
of section three, article fifteen, chapter thirty-one of this code. In the event the authority does not designate the applicant a
qualified company, such the funds shall be returned to the
investors, if requested by the investors.
(e) A West Virginia capital company may not qualify or be
issued a certification under this article unless the company holds
a valid business registration certificate issued pursuant to
article twelve, chapter eleven of this code. A company exempt from
registration under article twelve may qualify and be certified
under this article upon proof of its exemption.
(f) Beginning on the first day of July, two thousand one, a
West Virginia capital company may not qualify or be issued a
certification under this article unless the company, on or before
the two hundred tenth day of the fiscal year, is licensed by the
Federal Small Business Investment Act of 15 U.S.C. §§661 et seq.,
as amended, and provides sufficient evidence of licensure to the
authority.
(g) The West Virginia economic development authority shall
report annually to the Legislature concerning the applications made
to the fund and the payments made from the fund and the impact of
the payments on job creation in the state. The authority shall also
report quarterly to the joint committee on government and finance
and the legislative auditor on the use of the moneys in the fund,
including information regarding to whom payments were made, in what
amounts, and for what purposes.
§5E-1-8. Tax credits.
(a) The total amount of tax credits authorized for a single
qualified company may not exceed two million dollars.
Capitalization of the company may be increased pursuant to rule of
the authority.
(b) (1) The total credits authorized by the authority for all
companies may not exceed a total of ten two million dollars each
fiscal year: Provided, That for the fiscal year beginning on the
first day of July, one thousand nine hundred ninety-nine, the total
credits authorized for all companies may not exceed a total of six
million dollars: Provided, however, That for the fiscal year
beginning on the first day of July, two thousand, the total credits
authorized for all companies may not exceed a total of four million
dollars: Provided further, That the capital base of any such
qualified company shall be invested in accordance with the
provisions of this article. The authority shall allocate these
credits to qualified companies in the order that the companies are
qualified.
(2) Not more than one million seven hundred fifty thousand
dollars of the credits allowed under subdivision (1) of this
subsection may be allocated by the authority during each fiscal
year to one or more small business investment companies described
in this subdivision: Provided, That for the fiscal year beginning
on the first day of July, two thousand, two million dollars of the credits allowed under subdivision (1) of this subsection shall be
allocated by the authority during that fiscal year to one or more
small business investment companies described in this subdivision.
The remainder of the tax credits allowed during the fiscal year
shall be allocated to qualified companies other than those small
business investment companies. The portion of the tax credits
allowed for small business investment companies described in this
subdivision shall be allowed only if allocated by the authority
during the first ninety days of the fiscal year, and may only be
allocated to companies that: (A) Were organized on or after the
first day of January, one thousand nine hundred ninety-nine; (B)
have registered for licensure by the small business administration
as a small business investment company under the small business
investment act; and (C) have certified in writing to the authority
on the application for credits under this act that the company will
diligently seek to obtain and thereafter diligently seek to invest
leverage available to such small business investment companies
under the small business investment act. These credits shall be
allocated by the authority in the order that the companies are
qualified. Any credits which have not been allocated to qualified
companies meeting the requirements of section six, article one
chapter five-e, this subdivision relating to small business
investment companies during the first ninety two hundred forty days
of the fiscal year shall be made available and allocated to other qualified companies in the manner prescribed in this section for
qualified companies generally for allocation in accordance with
article two of this chapter.
(c) Any investor, including an individual, partnership,
limited liability company, or corporation or other entity who makes
a capital investment in a qualified West Virginia capital company,
is entitled to a tax credit equal to fifty percent of the
investment, except as otherwise provided in this section or in this
article. The credit allowed by this article shall be taken after
all other credits allowed by chapter eleven of this code. It shall
be taken against the same taxes and in the same order as set forth
in subsections (c) through (i), inclusive, section five, article
thirteen-c, chapter eleven of this code. The credit for
investments by a partnership, a limited liability company, or by a
corporation electing to be treated as a Subchapter S corporation or
any other entity which is treated as a pass through entity under
federal and state income tax laws may be divided pursuant to
election of partners, members, or shareholders or owners.
(d) The tax credit allowed under this section is to be
credited against the taxpayer's tax liability for the taxable year
in which the investment in a qualified West Virginia capital
company is made. If the amount of the tax credit exceeds the
taxpayer's tax liability for the taxable year, the amount of the
credit which exceeds the tax liability for the taxable year may be carried to succeeding taxable years until used in full, or until
forfeited: Provided, That: (i) Tax credits may not be carried
forward beyond fifteen years; and (ii) tax credits may not be
carried back to prior taxable years. Any tax credit remaining
after the fifteenth taxable year is forfeited.
(e) The tax credit provided for in this section is available
only to those taxpayers whose investment in a qualified West
Virginia capital company occurs after the first day of July, one
thousand nine hundred eighty-six.
(f) The tax credit allowed under this section may not be used
against any liability the taxpayer may have for interest, penalties
or additions to tax.
(g) Notwithstanding any provision in this code to the
contrary, the tax commissioner shall publish in the state register
the name and address of every taxpayer, and the amount, by
category, of any credit asserted under this article. The
categories by dollar amount of credit received are as follows:
(1) More than $1.00, but not more than $50,000;
(2) More than $50,000, but not more than $100,000;
(3) More than $100,000, but not more than $250,000;
(4) More than $250,000, but not more than $500,000;
(5) More than $500,000, but not more than $1,000,000;
(6) More than $1,000,000.
§5E-1-10. Application requirements.
(a) Each company shall make application to the authority on
forms provided therefor, which shall set forth:
(1) Capitalization level of capital company;
(2) Purpose of the company;
(3) Names of investors;
(4) A process for disclosing to investors the tax credit
available pursuant to this article. Such disclosure shall clearly
set forth that no tax credit will be available until the
qualification of said company shall be granted by the authority and
the disclosure of immunity of the state for damages is provided to
said investors; and
(5) The location of the escrow account which has been
established for investors for the period of time between the
investment and the qualification of the capital company by the
authority;
(6) Evidence that the capital company has applied for
licensure by the United States small business administration under
the Federal Small Business Investment Act of 1958, 15 U.S.C. §§661,
et seq., as amended; and
(7) That the capital company shall diligently seek to obtain
and thereafter diligently seek to invest leverage available to
small business investment companies licensed as such by the United
States small business administration under the Federal Small
Business Investment Act of 1958, U.S.C. §§661, et seq., as amended.
(b) An application submitted pursuant to this section shall be
continually supplemented by the applicant if any material fact
contained in the application changes, and whether the change
constitutes an amendment requiring the consent of the authority
pursuant to subsection (c) of this section shall be determined by
the authority.
(c) An application submitted pursuant to this section may not
be amended without the written consent of the authority on good
cause shown.
NOTE: The purpose of this bill is to reformulate what capital
companies are and how they can best be utilized to aid the West
Virginia economy.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
Email
Webmaster | © 2024 West Virginia Legislature **
