COMMITTEE SUBSTITUTE
FOR
H. B. 4501
(By Delegates Campbell, Boggs, Staton,
Cann
and Canterbury)
(Originating in the Committee on Finance)
[February 25, 2004]
A BILL to amend the code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-15-9h, relating
to creating exemptions from the consumers sales and services
tax for sales of computer hardware and software directly
incorporated into manufactured products; creating exemptions
for payment of certain licensing fees, for sales of computer
hardware and software directly used in communication, for
sales of electronic data processing services, for sales of
certain educational software to be used in certain educational
or nonprofit institutions, for sales of internet advertising
of goods and services, and for certain sales of high
technology business services; and providing definitions.
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §11-15-9h, to read as
follows:
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-9h. Exemptions for sales of computer hardware and software
directly incorporated into manufactured products;
certain leases; sales of electronic data processing
service; sales of computer hardware and software
directly used in communication; sales of educational
software; sales of internet advertising; sales of
high technology business services directly used in
fulfillment of a government contract; definitions.
(a) In order to modernize the exemptions from tax contained in
this article as a result of technological advances in computers and
the expanded role of computers, the internet and global instant
communications in business, and to encourage computer software
developers, computer hardware designers, systems engineering firms,
electronic data processing companies and other high technology
companies to locate and expand their businesses in West Virginia
the following sales of tangible personal property and software are
exempt:
(1) Sales of computer hardware or software (including custom
designed software) to be directly incorporated by a manufacturer
into a manufactured product. For purposes of this subsection, the
payment of licensing fees for the right to incorporate hardware or
software developed by persons other than the manufacturer into a
manufactured product is exempt from the tax imposed by this
article;
(2) Sales of computer hardware or software (including custom designed software) directly used in communication as defined in
this article;
(3) Sales of electronic data processing services;
(4) Sales of educational software required to be used in any
of the public schools of this state or in any institution in this
state which qualifies as a nonprofit or educational institution
subject to administration, regulation, certification or approval of
the department of education, the department of education and the
arts or the higher education policy commission;
(5) Sales of internet advertising of goods and services; and
(6) Sales of high technology business services to high
technology businesses which enter into contracts with this state,
its institutions and subdivisions, governmental units, institutions
or subdivisions of other states, or with the United States,
including agencies of federal, state or local governments for
direct use in fulfilling the government contract.
(b)
Definitions. -- As used in this article, the following
terms have the following meanings:
(1) "Computer hardware" means a computer, as defined in
article fifteen-b of this chapter, and the directly and immediately
connected physical equipment involved in the performance of data
processing or communications functions, including data input, data
output, data processing, data storage, and data communication
apparatus that is directly and immediately connected to the
computer. The term "computer hardware" does not include computer
software.
(2)"High technology business" means and is limited to
businesses primarily engaged in the following activities: Computer
hardware design and development; computer software design,
development, customization and upgrade; computer systems design and
development; website design and development; network design and
development; design and development of new manufactured products
which incorporate computer hardware and software; electronic data
processing; network management, maintenance, engineering,
administration and security services; website management,
maintenance, engineering, administration and security services and
computer systems management, maintenance, engineering,
administration and security services:
Provided, That high
technology business as defined herein is intended to include
businesses which engage in the activities enumerated in this
definition as their primary business activity, and not as a
secondary or incidental activity and not as an activity in support
of or incidental to business activity not specifically enumerated
in this definition.
(3) "High technology business services" means and is limited
to computer hardware design and development; computer software
design, development, customization and upgrade; computer systems
design and development; website design and development; network
design and development; electronic data processing; computer
systems management; computer systems maintenance; computer systems
engineering; computer systems administration; and computer systems
security services.