H. B. 4816
(By Delegate Doyle)
[Introduced February 24, 2006; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-15-9d and §11-15-20 of the Code of
West Virginia, 1931, as amended; to amend and reenact
§11-15A-3d of said code; to amend and reenact §11-15B-2,
§11-15B-2a, §11-15B-13, §11-15B-14a, §11-15B-15, §11-15B-18,
§11-15B-19, §11-15B-20, §11-15B-23, §11-15B-24, §11-15B-35 and
§11-15B-36 of said code; and to amend said code by adding
thereto two new sections, designated §11-15B-2b and
§11-15B-37, all relating generally to conforming West
Virginia's consumers sales and use tax law to requirements of
Streamlined Sales and Use Tax Agreement as amended;
incorporating in this state's sales and use tax laws certain
substantive provisions of agreement pertaining to definitions,
administration, collection and enforcement of sales and use
taxes; deleting obsolete language; making other technical
changes; and, specifying effective dates.
Be it enacted by the Legislature of West Virginia:
That §11-15-9d and §11-15-20 of the Code of West Virginia,
1931, as amended; be amended and reenacted; that §11-15A-3d be
amended and reenacted; that §11-15B-2, §11-15B-2a, §11-15B-13,
§11-15B-14a, §11-15B-15, §11-15B-18, §11-15B-19, §11-15B-20,
§11-15B-23, §11-15B-24, §11-15B-35 and §11-15B-36 of said code be
amended and reenacted; and that said article be further amended by
adding thereto two new sections, designated §11-15B-2b and
§11-15B-37, all to read as follows:
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-9d. Direct pay permits.
(a) Notwithstanding any other provision of this article, the
Tax Commissioner may, pursuant to rules promulgated by him or her
in accordance with article three, chapter twenty-nine-a of this
code, authorize a person that is a user, consumer, distributor or
lessee to which sales or leases of tangible personal property are
made or services provided, to pay any tax levied by this article or
article fifteen-a of this chapter directly to the Tax Commissioner
and waive the collection of the tax by that person's vendor. No
such authority shall be granted or exercised except upon
application to the Tax Commissioner and after issuance by the Tax
Commissioner of a direct pay permit. Each direct pay permit
granted pursuant to this section is valid until surrendered by the
holder or canceled for cause by the commissioner. The commissioner shall prescribe by rules promulgated in accordance with article
three, chapter twenty-nine-a of this code, those activities which
will cause cancellation of a direct pay permit issued pursuant to
this section. Upon issuance of a direct pay permit, payment of the
tax imposed or assertion of the exemptions allowed by this article
or article fifteen-a of this chapter on sales and leases of
tangible personal property and sales of taxable services from the
vendors of the personal property or services shall be made directly
to the Tax Commissioner by the permit holder.
(b) On or before the
fifteenth twentieth day of each month,
every permit holder shall make and file with the Tax Commissioner
a consumers sales and use tax direct pay permit return for the
preceding month in the form prescribed by the Tax Commissioner
showing the total value of the tangible personal property used, the
amount of taxable services purchased, the amount of consumers sales
and use taxes due from the permit holder, which shall be paid to
the Tax Commissioner with the return, and any other information as
the Tax Commissioner considers necessary:
Provided, That if the
amount of consumers sales and use taxes due averages less than two
hundred fifty dollars per month, the Tax Commissioner may permit
the filing of quarterly returns in lieu of monthly returns and the
amount of tax shown on the returns to be due shall be remitted on
or before the fifteenth day following the close of the calendar
quarter; and if the amount due averages less than one hundred fifty dollars per calendar quarter, the Tax Commissioner may permit the
filing of an annual direct pay permit return and the amount of tax
shown on the return to be due shall be remitted on or before
the
last day of January each thirty days after the end of the permit
holder tax year for federal and state income tax purposes:
Provided, however, That the Tax Commissioner may, by nonemergency
legislative rules promulgated pursuant to article three, chapter
twenty-nine-a of this code, change the minimum amounts established
in this subsection. The Tax Commissioner, upon written request by
the permit holder, may grant a reasonable extension of time, upon
such terms as the Tax Commissioner may require, for the making and
filing of direct pay permit returns and paying the tax due.
Interest on the tax shall be chargeable on every extended payment
at the rate specified in section seventeen, article ten of this
chapter.
(c) A permit issued pursuant to this section is valid until
expiration of the taxpayers registration year under article twelve
of this chapter. This permit is automatically renewed when the
taxpayers business registration certificate is issued for the next
succeeding fiscal year, unless the permit is surrendered by the
holder or canceled for cause by the Tax Commissioner.
(d) Persons who hold a direct payment permit which has not
been canceled are not required to pay the tax to the vendor as
otherwise provided in this article or article fifteen-a of this chapter. They shall notify each vendor from whom tangible personal
property is purchased or leased or from whom services are purchased
of their direct payment permit number and that the tax is being
paid directly to the Tax Commissioner. Upon receipt of the notice,
the vendor is absolved from all duties and liabilities imposed by
this chapter for the collection and remittance of the tax with
respect to sales of tangible personal property and sales of
services to the permit holder. Vendors who make sales upon which
the tax is not collected by reason of the provisions of this
section shall maintain records in such manner that the amount
involved and identity of each purchaser may be ascertained.
(e) Upon the expiration, cancellation or surrender of a direct
payment permit, the provisions of this chapter, without regard to
this section, will thereafter apply to the person who previously
held the permit, and that person shall promptly notify in writing
vendors from whom tangible personal property or services are
purchased or leased of the cancellation or surrender. Upon receipt
of the notice, the vendor is subject to the provisions of this
chapter, without regard to this section, with respect to all sales,
distributions, leases or storage of tangible personal property,
thereafter made to or for that person.
(f) The amendments to this section enacted in the year two
thousand
six are effective for tax years beginning on or after the
first day of January, two thousand
one six.
§11-15-20. Quarterly and annual returns.
(a) When the total consumers sales and use tax remittance for
which a person is liable does not exceed an average monthly amount
over the taxable year of two hundred fifty dollars, he
or she may
pay the tax and make a quarterly return on or before the
fifteenth
twentieth day of the first month in the next succeeding quarter in
lieu of monthly returns:
Provided, That the Tax Commissioner may,
by nonemergency legislative rules promulgated pursuant to article
three, chapter twenty-nine-a of this code, change the minimum
amount established in this subsection.
(b) When the total consumers sales and use tax remittance for
which a person is liable does not in the aggregate exceed six
hundred dollars for the taxable year, he or she may pay the tax and
make an annual return on or before
the fifteenth day of the first
month next succeeding thirty days after the end of his
or her
taxable year
for federal and state income tax purposes: Provided,
That the Tax Commissioner may, by nonemergency legislative rules
promulgated pursuant to article three, chapter twenty-nine-a of
this code, change the minimum amount established in this
subsection.
(c) The amendments to this section enacted in the year two
thousand
six are effective for tax years beginning on or after the
first day of January, two thousand
one six.
ARTICLE 15A. USE TAX.
§11-15A-3d. Direct pay permits.
(a) Notwithstanding any other provision of this article, the
Tax Commissioner may, pursuant to rules promulgated by him or her
in accordance with article three, chapter twenty-nine-a of this
code, authorize a person (as defined in section two of article
fifteen) that is a user, consumer, distributor or lessee to which
sales or leases of tangible personal property are made or services
provided to pay any tax levied by this article or article fifteen
of this chapter directly to the Tax Commissioner and waive the
collection of the tax by that person's vendor. This authority is
not to be granted or exercised except upon application to the Tax
Commissioner and after issuance by the Tax Commissioner of a direct
pay permit. Each direct pay permit granted pursuant to this
section shall continue to be valid until surrendered by the holder
or canceled for cause by the commissioner. The commissioner shall
prescribe by rules promulgated in accordance with article three,
chapter twenty-nine-a of this code, those activities which will
cause cancellation of a direct pay permit issued pursuant to this
section. Upon issuance of the direct pay permit, payment of the
tax imposed or assertion of the exemptions allowed by this article
or article fifteen of this chapter on sales and leases of tangible
personal property and sales of taxable services from the vendors
thereof shall be made directly to the Tax Commissioner by the
permit holder.
(b) On or before the
fifteenth twentieth day of each month,
every permit holder shall make and file with the Tax Commissioner
a consumers sales and use tax direct pay permit return for the
preceding month in the form prescribed by the Tax Commissioner
showing the total value of the tangible personal property so used,
the amount of taxable services purchased, the amount of tax due
from the permit holder, which amount shall be paid to the Tax
Commissioner with the return, and any other information the Tax
Commissioner deems necessary:
Provided, That if the amount of
consumers sales and use taxes due averages less than two hundred
fifty dollars per month, the Tax Commissioner may permit the filing
of quarterly returns in lieu of monthly returns and the amount of
tax shown thereon to be due shall be remitted on or before the
fifteenth twentieth day following the close of the calendar
quarter; and if the amount due averages less than one hundred fifty
dollars per calendar quarter, the Tax Commissioner may permit the
filing of an annual direct pay permit return and the amount of tax
shown thereon to be due are to be remitted on or before the
last
thirtieth day
of January each after the close of permit holder's
taxable year:
Provided, however, That the Tax Commissioner may, by
nonemergency legislative rules promulgated pursuant to article
three, chapter twenty-nine-a of this code, change the minimum
amounts established in this subsection. The Tax Commissioner, upon
written request filed by the permit holder before the due date of the return, may grant a reasonable extension of time, upon the
terms the Tax Commissioner may require, for the making and filing
of direct pay permit returns and paying the tax due. Interest on
the tax shall be chargeable on every extended payment at the rate
specified in section seventeen, article ten of this chapter.
(c) A permit issued pursuant to this section is to be valid
until expiration of the taxpayer's registration year under article
twelve of this chapter. This permit is automatically renewed when
the taxpayer's business registration certificate is issued for the
next succeeding fiscal year, unless the permit is surrendered by
the holder or canceled for cause by the Tax Commissioner.
(d) Persons who hold a direct payment permit which has not
been canceled are not required to pay the tax to the vendor as
otherwise provided in this article or article fifteen of this
chapter. These persons shall notify each vendor from whom tangible
personal property is purchased or leased or from whom services are
purchased of their direct payment permit number and that the tax is
being paid directly to the Tax Commissioner. Upon receipt of the
notice, the vendor is absolved from all duties and liabilities
imposed by this chapter for the collection and remittance of the
tax with respect to sales, distributions, leases or storage of
tangible personal property and sales of services to the permit
holder. Vendors who make sales upon which the tax is not collected
by reason of the provisions of this section shall maintain records in a manner by which the amount involved and identity of each
purchaser may be ascertained.
(e) Upon the expiration, cancellation or surrender of a direct
payment permit, the provisions of this chapter, without regard to
this section, shall thereafter apply to the person who previously
held the permit, and the person shall promptly notify in writing
vendors from whom tangible personal property or services are
purchased of the cancellation or surrender. Upon receipt of the
notice, the vendor is subject to the provisions of this chapter,
without regard to this section, with respect to all sales of
tangible personal property or taxable services, thereafter made to
or for the person.
(f) The amendments to this section enacted in the year two
thousand
six are effective for tax years beginning on or after the
first day of January, two thousand
one six.
ARTICLE 15B. STREAMLINED SALES AND USE TAX ADMINISTRATION ACT.
§11-15B-2. Definitions.
(a)
General. -- When used in this article and articles fifteen
and fifteen-a of this chapter, words defined in subsection (b) of
this section shall have the meanings ascribed to them in this
section, except in those instances where a different meaning is
distinctly expressed or the context in which the term is used
clearly indicates that a different meaning is intended by the
Legislature.
(b)
Terms defined. --
(1) "Agent" means a person appointed by a seller to represent
the seller before the member states.
(2) "Agreement" means the streamlined sales and use tax
agreement as defined in section two-a of this article.
(3) "Alcoholic beverages" means beverages that are suitable
for human consumption and contain one half of one percent or more
of alcohol by volume.
(4) "Bundled transaction" means the retail sale of two or more
products, except real property and services to real property,
where: (i) The products are otherwise distinct and identifiable;
and (ii) the products are sold for one nonitemized price. A
"bundled transaction" does not include the sale of any products in
which the "sales price" varies, or is negotiable, based on the
selection by the purchaser of the products included in the
transaction.
(A) "Distinct and identifiable products" does not include:
(i)
Packaging. -such as containers, boxes, sacks, bags, and
bottles--or other materials--such as wrapping, labels, tags, and
instruction guides--that accompany the "retail sale" of the
products and are incidental or immaterial to the "retail sale"
thereof. Examples of packaging that are incidental or immaterial
include grocery sacks, shoeboxes, dry cleaning garment bags and
express delivery envelopes and boxes;
(ii) A product provided free of charge with the required
purchase of another product. A product is "provided free of
charge" if the "sales price" of the product purchased does not vary
depending on the inclusion of the product "provided free of
charge"; or
(iii) Items included in the member state's definition of
"sales price," as defined in this section.
(B) The term "one nonitemized price" does not include a price
that is separately identified by product on binding sales or other
supporting sales-related documentation made available to the
customer in paper or electronic form including, but not limited to,
an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card,
or price list.
(C) A transaction that otherwise meets the definition of a
"bundled transaction," as defined in this subdivision, is not a
"bundled transaction" if it is:
(i) The "retail sale" of tangible personal property and a
service where the tangible personal property is essential to the
use of the service, and is provided exclusively in connection with
the service, and the true object of the transaction is the service;
or
(ii) The "retail sale" of services where one service is
provided that is essential to the use or receipt of a second service and the first service is provided exclusively in connection
with the second service and the true object of the transaction is
the second service; or
(iii) A transaction that includes taxable products and
nontaxable products and the "purchase price" or "sales price" of
the taxable products is de minimis.
(I) "De minimis" means the seller's "purchase price" or "sales
price" of the taxable products is ten percent or less of the total
"purchase price" or "sales price" of the bundled products.
(II) Sellers shall use either the "purchase price" or the
"sales price" of the products to determine if the taxable products
are de minimis. Sellers may not use a combination of the "purchase
price" and "sales price" of the products to determine if the
taxable products are de minimis.
(III) Sellers shall use the full term of a service contract to
determine if the taxable products are de minimis; or
(iv) A transaction that includes products taxable at the
general rate of tax and food or food ingredients taxable at a lower
rate of tax and the "purchase price" or "sales price" of the
products taxable at the general sales tax rate is de minimis.
(I) "De minimis" means the seller's "purchase price" or "sales
price" of the products taxable at the general sales tax rate is ten
percent or less of the total "purchase price" or "sales price" of
the bundled products.
(II) Sellers shall use either the "purchase price" or the
"sales price" of the products to determine if the products taxable
at the general rate of tax are de minimis. Sellers may not use a
combination of the "purchase price" and "sales price" of the
products to determine if the products taxable at the general rate
of tax are de minimis.
(III) Sellers shall use the full term of a service contract to
determine if the products taxable at the general rate of tax are de
minimis; or
(v) The "retail sale" of exempt tangible personal property, or
food and food ingredients taxable at a lower rate of tax, and
tangible personal property taxable at the general rate of tax
where:
(I) The transaction includes "food and food ingredients",
"drugs", "durable medical equipment", "mobility enhancing
equipment", "prosthetic devices" all as defined in article fifteen-
b of this chapter; and
(II) Where the seller's "purchase price" or "sales price" of
the taxable tangible personal property taxable at the general rate
of tax is fifty percent or less of the total "purchase price" or
"sales price" of the bundled tangible personal property. Sellers
may not use a combination of the "purchase price" and "sales price"
of the tangible personal property when making the fifty percent
determination for a transaction.
(5) "Candy" means a preparation of sugar, honey or other
natural or artificial sweeteners in combination with chocolate,
fruits, nuts or other ingredients or flavorings in the form of
bars, drops or pieces. "Candy" shall not include any preparation
containing flour and shall require no refrigeration.
(6) "Certified automated system" or "CAS" means software
certified under the agreement to calculate the tax imposed by each
jurisdiction on a transaction, determine the amount of tax to remit
to the appropriate state, and maintain a record of the transaction.
(7) "Certified service provider" or "CSP" means an agent
certified under the agreement to perform all of the seller's sales
tax functions.
(8) "Computer" means an electronic device that accepts
information in digital or similar form and manipulates the
information for a result based on a sequence of instructions.
(9) "Computer software" means a set of coded instructions
designed to cause a "computer" or automatic data processing
equipment to perform a task.
(10) "Delivered electronically" means delivered to the
purchaser by means other than tangible storage media.
(11) "Delivery charges" means charges by the seller of
personal property or services for preparation and delivery to a
location designated by the purchaser of personal property or
services including, but not limited to, transportation, shipping, postage, handling, crating, and packing.
(12) "Dietary supplement" means any product, other than
"tobacco", intended to supplement the diet that:
(A) Contains one or more of the following dietary ingredients:
(i) A vitamin;
(ii) A mineral;
(iii) A herb or other botanical;
(iv) An amino acid;
(v) A dietary substance for use by humans to supplement the
diet by increasing the total dietary intake; or
(vi) A concentrate, metabolite, constituent, extract or
combination of any ingredient described in subparagraph (i) through
(v) of this subdivision;
(B) Is intended for ingestion in tablet, capsule, powder,
softgel, gelcap, or liquid form, or if not intended for ingestion
in such a form, is not represented as conventional food and is not
represented for use as a sole item of a meal or of the diet; and
(C) Is required to be labeled as a dietary supplement,
identifiable by the "Supplemental Facts" box found on the label as
required pursuant to 21 CFR §101.36, or in any successor section of
the code of federal regulations.
(13) "Direct mail" means printed material delivered or
distributed by United States mail or other delivery service to a
mass audience or to addressees on a mailing list provided by the purchaser or at the direction of the purchaser when the cost of the
items are not billed directly to the recipients. "Direct mail"
includes tangible personal property supplied directly or indirectly
by the purchaser to the direct mail seller for inclusion in the
package containing the printed material." "Direct mail" does not
include multiple items of printed material delivered to a single
address.
(14) "Drug" means a compound, substance or preparation, and
any component of a compound, substance or preparation, other than
food and food ingredients, dietary supplements or alcoholic
beverages:
(A) Recognized in the official United States pharmacopoeia,
official homeopathic pharmacopoeia of the United States, or
official national formulary, and supplement to any of them;
(B) Intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease in humans; or
(C) Intended to affect the structure or any function of the
human body.
(15) "Durable medical equipment" means equipment including
repair and replacement parts for the equipment, but does not
include "mobility-enhancing equipment", which:
(A) Can withstand repeated use;
(B) Is primarily and customarily used to serve a medical
purpose;
(C) Generally is not useful to a person in the absence of
illness or injury; and
(D) Is not worn in or on the body.
(16) "Electronic" means relating to technology having
electrical, digital, magnetic, wireless, optical, electromagnetic,
or similar capabilities.
(17) "Entity-based exemption" means an exemption based on who
purchases the product or service or who sells the product or
service.
An exemption that is available to all individuals shall
not be considered an entity based exemption.
(18) "Food and food ingredients" means substances, whether in
liquid, concentrated, solid, frozen, dried or dehydrated form, that
are sold for ingestion or chewing by humans and are consumed for
their taste or nutritional value. "Food and food ingredients" does
not include alcoholic beverages, prepared food, or tobacco.
(19) "Food sold through vending machines" means food dispensed
from a machine or other mechanical device that accepts payment.
(20) "Governing board" means the governing board of the
Streamlined Sales and Use Tax Agreement.
(20) (21) "Includes" and "including" when used in a definition
contained in this article is not considered to exclude other things
otherwise within the meaning of the term being defined.
(21) (22) "Lease" includes rental, hire and license. "Lease"
means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A
lease or rental may include future options to purchase or extend.
(A) "Lease" does not include:
(i) A transfer of possession or control of property under a
security agreement or deferred payment plan that requires the
transfer of title upon completion of the required payments;
(ii) A transfer or possession or control of property under an
agreement that requires the transfer of title upon completion of
required payments and payment of an option price does not exceed
the greater of one hundred dollars or one percent of the total
required payments; or
(iii) Providing tangible personal property along with an
operator for a fixed or indeterminate period of time. A condition
of this exclusion is that the operator is necessary for the
equipment to perform as designed. For the purpose of this
subparagraph, an operator must do more than maintain, inspect, or
set-up the tangible personal property.
(B) This definition shall be used for sales and use tax
purposes regardless if a transaction is characterized as a lease or
rental under generally accepted accounting principles, the Internal
Revenue Code, the Uniform Commercial Code, or other provisions of
federal, state or local law.
(22) (23) "Load and leave" means delivery to the purchaser by
use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser.
(23) (24) "Mobility enhancing equipment" means equipment,
including repair and replacement parts to the equipment, but does
not include "durable medical equipment", which:
(A) Is primarily and customarily used to provide or increase
the ability to move from one place to another and which is
appropriate for use either in a home or a motor vehicle;
(B) Is not generally used by persons with normal mobility; and
(C) Does not include any motor vehicle or equipment on a motor
vehicle normally provided by a motor vehicle manufacturer.
(24) (25) "Model I seller" means a seller that has selected a
certified service provider as its agent to perform all the seller's
sales and use tax functions, other than the seller's obligation to
remit tax on its own purchases.
(25) (26) "Model II seller" means a seller that has selected
a certified automated system to perform part of its sales and use
tax functions, but retains responsibility for remitting the tax.
(26) (27) "Model III seller" means a seller that has sales in
at least five member states, has total annual sales revenue of at
least five hundred million dollars, has a proprietary system that
calculates the amount of tax due each jurisdiction, and has entered
into a performance agreement with the member states that
establishes a tax performance standard for the seller. As used in
this definition, a seller includes an affiliated group of sellers using the same proprietary system.
(27) (28) "Person" means an individual, trust, estate,
fiduciary, partnership, limited liability company, limited
liability partnership, corporation or any other legal entity.
(28) (29) "Personal service" includes those:
(A) Compensated by the payment of wages in the ordinary course
of employment; and
(B) Rendered to the person of an individual without, at the
same time, selling tangible personal property, such as nursing,
barbering, manicuring and similar services.
(29) (30) (A) "Prepared food" means:
(i) Food sold in a heated state or heated by the seller;
(ii) Two or more food ingredients mixed or combined by the
seller for sale as a single item; or
(iii) Food sold with eating utensils provided by the seller,
including plates, knives, forks, spoons, glasses, cups, napkins, or
straws. A plate does not include a container or packaging used to
transport the food.
(B) "Prepared food" in subparagraph (ii), paragraph (A) of
this subdivision (29) does not include food that is only cut,
repackaged, or pasteurized by the seller, and eggs, fish, meat,
poultry, and foods containing these raw animal foods requiring
cooking by the consumer as recommended by the Food and Drug
Administration in chapter 3, part 401.11 of its Food Code of 2001 so as to prevent food borne illnesses.
(C) Additionally, "prepared food," as defined in this
subdivision does not include:
(i) Food sold by a seller whose proper primary NAICS
classification is manufacturing in sector 311, except subsection
3118 (bakeries);
(ii) Food sold in an unheated state by weight or volume as a
single item; or
(iii) Bakery items, including bread, rolls, buns, biscuits,
bagels, croissants, pastries, donuts, danish, cakes, tortes, pies,
tarts, muffins, bars, cookies, tortillas.
(30) (31) "Prescription" means an order, formula or recipe
issued in any form of oral, written, electronic or other means of
transmission by a duly licensed practitioner authorized by the laws
of this state to issue prescriptions.
(31) (32) "Prewritten computer software" means "computer
software", including prewritten upgrades, which is not designed and
developed by the author or other creator to the specifications of
a specific purchaser.
(A) The combining of two or more prewritten computer software
programs or prewritten portions thereof does not cause the
combination to be other than prewritten computer software.
(B) "Prewritten computer software" includes software designed
and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than the
purchaser. Where a person modifies or enhances computer software
of which the person is not the author or creator, the person is
considered to be the author or creator only of the person's
modifications or enhancements.
(C) "Prewritten computer software" or a prewritten portion
thereof that is modified or enhanced to any degree, where the
modification or enhancement is designed and developed to the
specifications of a specific purchaser, remains prewritten computer
software:
Provided, That where there is a reasonable, separately
stated charge or an invoice or other statement of the price given
to the purchaser for the modification or enhancement, the
modification or enhancement does not constitute prewritten computer
software.
(32) (33) "Product-based exemption" means an exemption based
on the description of the product or service and not based on who
purchases the product or service or how the purchaser intends to
use the product or service.
(33) (34) "Prosthetic device" means a replacement, corrective,
or supportive device, including repair and replacement parts for
the device worn on or in the body, to:
(A) Artificially replace a missing portion of the body;
(B) Prevent or correct physical deformity or malfunction of
the body; or
(C) Support a weak or deformed portion of the body.
(34) (35) "Protective equipment" means items for human wear
and designed as protection of the wearer against injury or disease
or as protections against damage or injury of other persons or
property but not suitable for general use.
(35) (36) "Purchase price" means the measure subject to the
tax imposed by article fifteen or article fifteen-a of this chapter
and has the same meaning as sales price.
(36) (37) "Purchaser" means a person to whom a sale of
personal property is made or to whom a service is furnished.
(37) (38) "Registered under this agreement" means registration
by a seller with the member states under the central registration
system provided in article four of the agreement.
(38) (39) "Retail sale" or "sale at retail" means:
(A) Any sale or lease for any purpose other than for resale as
tangible personal property, sublease or subrent; and
(B) Any sale of a service other than a service purchased for
resale.
(39) (40) (A) "Sales price" means the measure subject to the
tax levied by this article and includes the total amount of
consideration, including cash, credit, property and services, for
which personal property or services are sold, leased or rented,
valued in money, whether received in money or otherwise, without
any deduction for the following:
(i) The seller's cost of the property sold;
(ii) The cost of materials used, labor or service cost,
interest, losses, all costs of transportation to the seller, all
taxes imposed on the seller, and any other expense of the seller;
(iii) Charges by the seller for any services necessary to
complete the sale, other than delivery and installation charges;
(iv) Delivery charges;
and
(v) Installation charges.
(vi) The value of exempt personal property given to the
purchaser where taxable and exempt personal property have been
bundled together and sold by the seller as a single product or
piece of merchandise; and
(vii) Credit for the fair market value of any trade-in
(B) "Sales price" does not include:
(i) Discounts, including cash, term, or coupons that are not
reimbursed by a third party that are allowed by a seller and taken
by a purchaser on a sale;
(ii) Interest, financing and carrying charges from credit
extended on the sale of personal property, goods or services, if
the amount is separately stated on the invoice, bill of sale or
similar document given to the purchaser; and
(iii) Any taxes legally imposed directly on the consumer that
are separately stated on the invoice, bill of sale or similar
document given to the purchaser.
(C) "Sales price" shall include consideration received by the
seller from third parties if:
(i) The seller actually receives consideration from a party
other than the purchaser and the consideration is directly related
to a price reduction or discount on the sale;
(ii) The seller has an obligation to pass the price reduction
or discount through to the purchaser;
(iii) The amount of the consideration attributable to the sale
is fixed and determinable by the seller at the time of the sale of
the item to the purchaser; and
(iv) One of the following criteria is met:
(I) The purchaser presents a coupon, certificate or other
documentation to the seller to claim a price reduction or discount
where the coupon, certificate or documentation is authorized,
distributed or granted by a third party with the understanding that
the third party will reimburse any seller to whom the coupon,
certificate or documentation is presented;
(II) The purchaser identifies himself or herself to the seller
as a member of a group or organization entitled to a price
reduction or discount (a "preferred customer" card that is
available to any patron does not constitute membership in such a
group); or
(III) The price reduction or discount is identified as a third
party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate or other documentation
presented by the purchaser.
(40) (41) "Sales tax" means the tax levied under article
fifteen of this chapter.
(41) (42) "Seller" means any person making sales, leases or
rentals of personal property or services.
(42) (43) "Service" or "selected service" includes all
nonprofessional activities engaged in for other persons for a
consideration, which involve the rendering of a service as
distinguished from the sale of tangible personal property, but does
not include contracting, personal services, services rendered by an
employee to his or her employer, any service rendered for resale,
or any service furnished by a business that is 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 of this state. The term "service" or
"selected service" does not include payments received by a vendor
of tangible personal property as an incentive to sell a greater
volume of such tangible personal property under a manufacturer's,
distributor's or other third-party's marketing support program,
sales incentive program, cooperative advertising agreement or
similar type of program or agreement, and these payments are not
considered to be payments for a "service" or "selected service"
rendered, even though the vendor may engage in attendant or ancillary activities associated with the sales of tangible personal
property as required under the programs or agreements.
(43) (44) "Soft drink" means nonalcoholic beverages that
contain natural or artificial sweeteners. "Soft drinks" do not
include beverages that contain milk or milk products, soy, rice or
similar milk substitutes or greater than fifty percent of vegetable
or fruit juice by volume.
(44) (45) "State" means any state of the United States and the
District of Columbia.
(45) (46) "Tangible personal property" means personal property
that can be seen, weighed, measured, felt or touched, or that is in
any manner perceptible to the senses. "Tangible personal property"
includes, but is not limited to, electricity, steam, water, gas and
prewritten computer software.
(46) (47) "Tax" includes all taxes levied under articles
fifteen and fifteen-a of this chapter, and additions to tax,
interest and penalties levied under article ten of this chapter.
(47) (48) "Tax Commissioner" means the State Tax Commissioner
or his or her delegate. The term "delegate" in the phrase "or his
or her delegate", when used in reference to the Tax Commissioner,
means any officer or employee of the State Tax Division duly
authorized by the Tax Commissioner directly, or indirectly by one
or more redelegations of authority, to perform the functions
mentioned or described in this article or rules promulgated for this article.
(48) (49) "Taxpayer" means any person liable for the taxes
levied by articles fifteen and fifteen-a of this chapter or any
additions to tax, penalties imposed by article ten of this chapter.
(50) "Telecommunications service." See section two-b of this
article.
(49) (51) "Tobacco" means cigarettes, cigars, chewing or pipe
tobacco or any other item that contains tobacco.
(50) (52) "Use tax" means the tax levied under article
fifteen-a of this chapter.
(51) (53) "Use-based exemption" means an exemption based on
a
specific use of the product or service by the
purchaser's use of
the product or service purchaser.
(52) (54) "Vendor" means any person furnishing services taxed
by article fifteen or fifteen-a of this chapter, or making sales of
tangible personal property or custom software. "Vendor" and
"seller" are used interchangeably in this article and in article
fifteen and fifteen-a of this chapter.
(c)
Additional definitions. -- Other terms used in this
article are defined in articles fifteen and fifteen-a of this
chapter, which definitions are incorporated by reference into this
article. Additionally, other sections of this article may define
terms primarily used in the section in which the term is defined.
§11-15B-2a. Streamlined sales and use tax agreement defined.
As used in this article and articles fifteen and fifteen-a of
this chapter, the term "streamlined sales and use tax agreement" or
"agreement" means the agreement adopted the twelfth day of
November, two thousand two, by states that enacted authority to
engage in multistate discussions similar to that provided in
section four of this article, except when the context in which the
term is used clearly indicates that a different meaning is intended
by the Legislature. "Agreement" includes amendments to the
agreement adopted by the implementing states in calendar years two
thousand three, two thousand four, and two thousand five,
and
amendments adopted by the governing board on or before the
thirty-first day of January, two thousand six, but does not include
any substantive changes in the agreement adopted after the
sixteenth thirty-first day of
April January, two thousand
five six.
§11-15B-2b. Telecommunications definitions.
(a)
General. -- When used in this article and articles
fifteen and fifteen-a of this chapter, words defined in subsection
(b) of this section shall have the meanings ascribed to them in
this section, except in those instances where a different meaning
is distinctly expressed or the context in which the term is used
clearly indicates that a different meaning is intended by the
Legislature.
(b)
Terms defined. --
(1)"Telecommunications service" means the electronic transmission, conveyance, or routing of voice, data, audio, video
or any other information or signals to a point, or between or among
points.
(A) The term "telecommunications service" includes such
transmission, conveyance, or routing in which computer processing
applications are used to act on the form, code or protocol of the
content for purposes of transmission, conveyance or routing without
regard to whether such service is referred to as voice over
Internet protocol services or is classified by the Federal
Communications Commission as enhanced or value added.
(B) "Telecommunications service" does not include:
(i) Advertising, including, but not limited to, directory
advertising.
(ii) "Ancillary services";
(iii) Billing and collection services provided to third
parties;
(iv) Data processing and information services that allow data
to be generated, acquired, stored, processed or retrieved and
delivered by an electronic transmission to a purchaser where such
purchaser's primary purpose for the underlying transaction is the
processed data or information;
(v) Digital products "delivered electronically", including,
but not limited to, software, music, video, reading materials or
ring tones.
(vi) Installation or maintenance of wiring or equipment on a
customer's premises;
(vii) Internet access service;
(viii) Radio and television audio and video programming
services, regardless of the medium, including the furnishing of
transmission, conveyance and routing of such services by the
programming service provider. Radio and television audio and video
programming services shall include, but not be limited to, cable
service as defined in 47 U.S.C. 522(6) and audio and video
programming services delivered by commercial mobile radio service
providers, as defined in 47 CFR 20.3; or
(ix) Tangible personal property.
(2)
Related or ancillary terms. -- The following terms are
either used in subsection (a) of this section or are commonly
associated with terms used in that subsection.
(A) "800 service" means a "telecommunications service" that
allows a caller to dial a toll-free number without incurring a
charge for the call. The service is typically marketed under the
name "800", "855", "866", "877" and "888" toll-free calling, and
any subsequent numbers designated by the Federal Communications
Commission.
(B) "900 service" means an inbound toll "telecommunications
service" purchased by a subscriber that allows the subscriber's
customers to call in to the subscriber's prerecorded announcement or live service. "900 service" does not include the charge for:
Collection services provided by the seller of the
"telecommunications services" to the subscriber, or service or
product sold by the subscriber to the subscriber's customer. The
service is typically marketed under the name "900" service, and any
subsequent numbers designated by the Federal Communications
Commission.
(C) "Ancillary services" means services that are associated
with or incidental to the provision of "telecommunications
services" including, but not limited to, "detailed
telecommunications billing," "directory assistance," "vertical
service," and "voice mail services."
(D) "Coin-operated telephone service" means a
"telecommunications service" paid for by inserting money into a
telephone accepting direct deposits of money to operate.
(E) "Conference bridging service" means an "ancillary service"
that links two or more participants of an audio or video conference
call and may include the provision of a telephone number.
"Conference bridging service" does not include the
"telecommunications services" used to reach the conference bridge.
(F) "Detailed telecommunications billing service" means an
"ancillary service" of separately stating information pertaining to
individual calls on a customer's billing statement.
(G) "Directory assistance" means an "ancillary service" of providing telephone number information, and/or address information.
(H) "Fixed wireless service" means a "telecommunications
service" that provides radio communication between fixed points.
(I) "International" means a "telecommunications service" that
originates or terminates in the United States and terminates or
originates outside the United States, respectively. United States
includes the District of Columbia or a United States territory or
possession.
(J) "Interstate" means a "telecommunications service" that
originates in one United States state, or a United States territory
or possession, and terminates in a different United States state or
a United States territory or possession.
(K) "Intrastate" means a "telecommunications service" that
originates in one United States state or a United States territory
or possession, and terminates in the same United States state or a
United States territory or possession.
(L) "Mobile wireless service" means a "telecommunications
service" that is transmitted, conveyed or routed regardless of the
technology used, whereby the origination and/or termination points
of the transmission, conveyance or routing are not fixed,
including, by way of example only, "telecommunications services"
that are provided by a commercial mobile radio service provider.
(M) "Paging service" means a "telecommunications service" that
provides transmission of coded radio signals for the purpose of activating specific pagers; such transmissions may include messages
and/or sounds.
(N) "Pay telephone service" means a "telecommunications
service" provided through any pay telephone.
(O) "Prepaid calling service" means the right to access
exclusively "telecommunications services", which must be paid for
in advance and which enables the origination of calls using an
access number or authorization code, whether manually or
electronically dialed, and that is sold in predetermined units or
dollars of which the number declines with use in a known amount.
(P) "Prepaid wireless calling service" means a
"telecommunications service" that provides the right to utilize
"mobile wireless service" as well as other nontelecommunications
services including the download of digital products "delivered
electronically", content and "ancillary services", which must be
paid for in advance that is sold in predetermined units of dollars
of which the number declines with use in a known amount.
(Q) "Private communications service" means a
"telecommunications service" that entitles the customer to
exclusive or priority use of a communications channel or group of
channels between or among termination points, regardless of the
manner in which such channel or channels are connected, and
includes switching capacity, extension lines, stations, and any
other associated services that are provided in connection with the use of such channel or channels.
(R) "Residential telecommunications service" means a
"telecommunications service" or "ancillary services" provided to an
individual for personal use at a residential address, including an
individual dwelling unit such as an apartment. In the case of
institutions where individuals reside, such as schools or nursing
homes, "telecommunications service" is considered residential if it
is provided to and paid for by an individual resident rather than
the institution.
(S) "Value-added nonvoice data service" means a service that
otherwise meets the definition of "telecommunications services" in
which computer processing applications are used to act on the form,
content, code, or protocol of the information or data primarily for
a purpose other than transmission, conveyance or routing.
(T) "Vertical service" means an "ancillary service" that is
offered in connection with one or more "telecommunications
services", which offers advanced calling features that allow
customers to identify callers and to manage multiple calls and call
connections, including "conference bridging services".
(U) "Voice mail service" means an "ancillary service" that
enables the customer to store, send or receive recorded messages.
"Voice mail service" does not include any "vertical services" that
the customer may be required to have in order to utilize the "voice
mail service".
(c)
Effective date. -- This section enacted in the year two
thousand six, shall apply to purchases made on or after the first
day of July, two thousand six.
§11-15B-13. Amnesty for registration.
(a) Subject to the limitations in this section:
(1) The Tax Commissioner shall provide amnesty for uncollected
or unpaid sales or use tax to a seller who registers to pay or to
collect and remit applicable sales or use tax on sales made to
purchasers in this state in accordance with the terms of the
streamlined sales and use tax agreement:
Provided, That the seller
was not registered in this state in the twelve-month period
preceding the
first day of October, two thousand five, the
effective date of this state's participation in the streamlined
sales and use tax agreement.
(2) The amnesty precludes assessment for uncollected or unpaid
sales or use tax together with additions to tax, penalty or
interest for sales made during the period the seller was not
registered in this state:
Provided, That registration under the
agreement occurs within twelve months after the
effective date of
this state's participation in the streamlined sales and use tax
agreement date on which the governing board determines that an
adequate number of certified service providers have been certified
by the governing board to collect taxes under the agreement.
(b)
Exceptions. -- The amnesty is not available:
(1) To a seller with respect to any matter or matters for
which the seller received notice of the commencement of an audit
and which audit is not yet finally resolved including any related
administrative and judicial processes; or
(2) For sales or use taxes already paid or remitted to the
state or to taxes collected by the seller for this state.
(c)
Period of amnesty. -- The amnesty is fully effective,
absent the seller's fraud or intentional misrepresentation of a
material fact, as long as the seller continues registration under
the agreement and continues payment or collection and remittance of
applicable sales or use taxes for a period of at least thirty-six
months. The statute of limitations applicable to asserting a tax
liability during this thirty-six month period is tolled.
(d)
Effect of amnesty. -- The amnesty is applicable only to
sales or use taxes due from a seller in its capacity as a seller
and not to sales or use taxes due from a seller in its capacity as
a buyer.
§11-15B-14a. Application of general sourcing rules and exclusion
from the rules
.
(a) Sellers shall source the sale of a product in accordance
with section fifteen of this article. The provisions of
said that
section apply regardless of the characterization of the product as
tangible personal property, custom software, or a service. The
provisions of
said section
fifteen only apply to determine a seller's obligation to pay or collect and remit a sales or use tax
with respect to the seller's sale of a product. These provisions
do not affect the obligation of a purchaser or lessee to remit tax
on the use of the product to the taxing jurisdiction of that use.
(b) Section fifteen of this article does not apply to sales or
use tax levied on telecommunication services as defined in section
twenty of this article. Telecommunication services shall be
sourced in accordance with section nineteen of this article.
§11-15B-15. General transaction sourcing rules.
(a)
General rule. -- For purposes of articles fifteen and
fifteen-a of this chapter, the retail sale, excluding lease or
rental, of a product shall be sourced as follows:
(1) When the product is received by the purchaser at a
business location of the seller, the sale is sourced to that
business location.
(2) When the product is not received by the purchaser at a
business location of the seller, the sale is sourced to the
location where receipt by the purchaser or the purchaser's
designated donee occurs, including the location indicated by
instructions for delivery to the purchaser or donee, known to the
seller.
(3) When subdivisions (1) and (2) of this subsection do not
apply, the sale is sourced to the location indicated by an address
for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the
seller's business when use of this address does not constitute bad
faith.
(4) When subdivisions (1), (2) and (3) of this subsection do
not apply, the sale is sourced to the location indicated by an
address for the purchaser obtained during the consummation of the
sale, including the address of a purchaser's payment instrument, if
no other address is available, provided use of this address does
not constitute bad faith.
(5) When none of the previous subdivisions of this subsection
apply, including the circumstance in which the seller is without
sufficient information to apply the previous rules, then the
location will be determined by the address from which tangible
personal property was shipped, or computer software delivered
electronically was first available for transmission by the seller,
or from which the service was provided:
Provided, That any
location that merely provided the digital transfer of the product
sold is disregarded for these purposes.
(b)
Lease or rental. -- The lease or rental of tangible
personal property or custom software, other than property
identified in subsection (c) or (d) of this section, shall be
sourced as follows:
(1) For a lease or rental that requires recurring periodic
payments, the first periodic payment is sourced the same as a retail sale in accordance with the provisions of subsection (a) of
this section. Periodic payments made subsequent to the first
payment are sourced to the primary property location for each
period covered by the payment. The primary property location is as
indicated by an address for the property provided by the lessee
that is available to the lessor from its records maintained in the
ordinary course of business, when use of this address does not
constitute bad faith. The property location may not be altered by
intermittent use at different locations, such as use of business
property that accompanies employees on business trips and service
calls.
(2) For a lease or rental that does not require recurring
periodic payments, the payment is sourced the same as a retail sale
in accordance with the provisions of subsection (a) of this
section.
(3) This subsection does not affect the imposition or
computation of sales or use tax on leases or rentals based on a
lump sum or accelerated basis, or on the acquisition of property
for lease.
(c)
Vehicles. -- The lease or rental of motor vehicles,
trailers, semi-trailers, or aircraft that do not qualify as
transportation equipment, as defined in subsection (d) of this
section, shall be sourced as follows:
(1) For a lease or rental that requires recurring periodic payments, each periodic payment is sourced to the primary property
location. The primary property location is indicated by an address
for the property provided by the lessee that is available to the
lessor from its records maintained in the ordinary course of
business, when use of this address does not constitute bad faith.
This location shall not be altered by intermittent use at different
locations.
(2) For a lease or rental that does not require recurring
periodic payments, the payment is sourced the same as a retail sale
in accordance with the provisions of subsection (a) of this
section.
(3) This subsection does not affect the imposition or
computation of sales or use tax on leases or rentals based on a
lump sum or accelerated basis, or on the acquisition of property
for lease.
(d)
Sale or lease or rental of transportation equipment. --
The retail sale, including lease or rental, of transportation
equipment is sourced the same as a retail sale in accordance with
the provisions of subsection (a) of this section, notwithstanding
the exclusion of lease or rental in said subsection.
"Transportation equipment" means any of the following:
(1) Locomotives and railcars that are utilized for the
carriage of persons or property in interstate commerce.
(2) Trucks and truck-tractors with a gross vehicle weight rating of ten thousand pounds or greater, trailers, semitrailers,
or passenger buses that are:
(A) Registered through the international registration plan;
and
(B) Operated under authority of a carrier authorized and
certificated by the United States Department of Transportation or
another federal authority to engage in the carriage of persons or
property in interstate commerce.
(3) Aircraft that are operated by air carriers authorized and
certificated by the United States Department of Transportation or
another federal or foreign authority to engage in the carriage of
persons or property in interstate or foreign commerce.
(4) Containers designed for use on and component parts
attached or secured on the items set forth in subdivisions (1)
through (3), inclusive, of this subsection.
(e)
Exceptions. -- Subsections (a) and (b) of this section
shall not apply to the following goods or services:
(1) Telecommunications services, as set out in section twenty
of this article, shall be sourced in accordance with section
nineteen of this article; and
(2) Until the first day of January, two thousand
six eight, a
seller who is primarily engaged in the retail sale of cut flowers
and flower arrangements taking the original order to sell tangible
personal property shall source the sale to the place where order was taken. For purposes of this exception, "primarily" means more
than fifty percent of the seller's total gross sales or receipts
are derived from that activity. In determining if a seller is
primarily a florist, the total sales price of cut flowers and
floral arrangements includes separately stated delivery or service
charges. After the thirty-first day of December, two thousand
five
seven, sales by florists shall be subject to the general sourcing
rules stated in subsection (a) of this section.
(f)
Product defined. -- As used in subsection (a) of this
section, "product" includes tangible personal property, custom
software or a service, or any combination thereof.
§11-15B-18. Multiple points of use of certain products and
service
.
(a)
General. -- Notwithstanding the provisions of section
fifteen of this article, a business purchaser that is not a holder
of a direct pay permit that knows at the time of the business
purchase of a digital good, computer software,
delivered
electronically or
a service that the digital good, computer
software,
delivered electronically or service will be concurrently
available for use in more than one jurisdiction shall deliver to
the seller in conjunction with the purchase
a an exemption
certificate claiming "multiple points of use"
or "MPU exemption"
form disclosing this fact or meet the requirements of subsection
(b) or (c) of this section.
(1) Upon receipt of
the MPU an exemption
form certificate
claiming multiple points of use, the seller is relieved of all
obligation to collect, pay, or remit the applicable tax and the
purchaser shall be obligated to collect, pay, or remit the
applicable tax on a direct pay basis.
(2) A purchaser delivering
the MPU an exemption
form
certificate claiming multiple points of use may use any reasonable,
but consistent and uniform, method of apportionment that is
supported by the purchaser's business records as they exist at the
time of the
consummation of the sale transaction is reported for
sales or use tax purposes.
(3)
A purchaser delivering an exemption certificate claiming
multiple points of use shall report and pay the appropriate tax to
each jurisdiction where concurrent use occurs. The tax due shall
be calculated as if the apportioned amount of the digital good,
computer software or service had been delivered to each
jurisdiction to which the sale is apportioned pursuant to
subdivision (2) of this subsection.
(4) The
MPU exemption
form remains certificate claiming
multiple points of use shall remain in effect for all future sales
by the seller to the purchaser, except as to the subsequent sale's
specific apportionment that is governed by the principle
s of
subdivision subdivisions (2)
and (3) of this subsection
and the
facts existing at the time of the sale, until revoked in writing.
(b) Notwithstanding subsection (a) of this section, when the
seller knows that the product will be concurrently available for
use in more than one jurisdiction, but the purchaser does not
provide an exemption certificate claiming multiple points of use as
required in subsection (a), the seller may work with the purchaser
to produce the correct apportionment. The purchaser and seller may
use any reasonable, but consistent and uniform, method of
apportionment that is supported by the seller's and purchaser's
business records as they exist at the time the transaction is
reported for sales or use tax purposes. If the purchaser certifies
to the accuracy of the apportionment and the seller accepts the
certification, the seller shall collect and remit the tax pursuant
to subdivision (3), subsection (a) of this section. In the absence
of bad faith on the part of the seller, the seller is relieved of
any further obligation to collect tax on any transaction where the
seller has collected tax pursuant to the information certified by
the purchaser.
(c) When the seller knows that the product will be
concurrently available for use in more than one jurisdiction and
the purchaser does not have a direct pay permit and does not
provide the seller with an exemption certificate claiming multiple
points of use exemption as required in subsection (a) of this
section, or certification pursuant to subsection (b) of this
section, the seller shall collect and remit the tax based on the provisions of section fifteen of this article.
(b) (d) Holders of direct pay permits. -- A holder of a direct
pay permit may not be required to deliver
a MPU an exemption
form
certificate claiming multiple points of use to the seller. A
direct pay permit holder shall follow the provisions of subdivision
(2), subsection (a) of this section in apportioning the tax due on
a digital good, computer software,
delivered electronically, or a
service that will be concurrently available for use in more than
one jurisdiction.
§11-15B-19. Telecommunications sourcing rule.
(a) Except for the defined telecommunication services in
subsection (c) of this section, the sale of telecommunication
service sold on a call-by-call basis shall be sourced to: (1) Each
level of taxing jurisdiction where the call originates and
terminates in that jurisdiction; or (2) each level of taxing
jurisdiction where the call either originates or terminates and in
which the service address is also located.
(b) Except for the defined telecommunication services in
subsection (c) of this section, a sale of telecommunication service
sold on a basis other than a call-by-call basis is sourced to the
customer's place of primary use.
(c) The sale of the following telecommunication services shall
be sourced to each level of taxing jurisdiction as follows:
(1) A sale of mobile telecommunication service, other than air-to-ground radiotelephone service and prepaid calling service,
is sourced to the customer's place of primary use, as required by
the Mobile Telecommunications Sourcing Act.
(2) A sale of post-paid calling service is sourced to the
origination point of the telecommunications signal as first
identified by either: The seller's telecommunications system, or
information received by the seller from its service provider, where
the system used to transport the signal is not that of the seller.
(3) A sale of prepaid calling service
or a sale of a prepaid
wireless calling service is sourced in accordance with section
fifteen of this article:
Provided, That in the case of a sale of
mobile telecommunication service that is a prepaid
telecommunication wireless calling service, the rule provided in
subdivision (5), subsection (a), section fifteen of this article
shall include, as an option, the location associated with the
mobile telephone number.
(4) A sale of a private communication service is sourced as
follows:
(A) Service for a separate charge related to a customer
channel termination point is sourced to each level of jurisdiction
in which the customer channel termination point is located.
(B) Service where all customer termination points are located
entirely within one jurisdiction or levels of jurisdiction is
sourced in the jurisdiction in which the customer channel termination points are located.
(C) Service for segments of a channel between two customer
channel termination points located in different jurisdictions and
which segment of channel are separately charged is sourced fifty
percent in each level of jurisdiction in which the customer channel
termination points are located.
(D) Service for segments of a channel located in more than one
jurisdiction or levels of jurisdiction and which segments are not
separately billed is sourced in each jurisdiction based on the
percentage determined by dividing the number of customer channel
termination points in the jurisdiction by the total number of
customer channel termination points.
§11-15B-20. Telecommunication sourcing definitions.
For the purpose of section nineteen of this article, the
following definitions apply:
(1) "Air-to-ground radiotelephone service" means a radio
service, as that term is defined in 47 CFR 22.99, in which common
carriers are authorized to offer and provide radio
telecommunications service for hire to subscribers in aircraft.
(2) "Call-by-call basis" means any method of charging for
telecommunications services where the price is measured by
individual calls.
(3) "Communications channel" means a physical or virtual path
of communications over which signals are transmitted between or among customer channel termination points.
(4) "Customer" means the person or entity that contracts with
the seller of telecommunications services. If the end user of
telecommunications services is not the contracting party, the end
user of the telecommunications service is the customer of the
telecommunication service, but this sentence only applies for the
purpose of sourcing sales of telecommunications services under
section nineteen of this article. "Customer" does not include a
reseller of telecommunications service or for mobile
telecommunications service of a serving carrier under an agreement
to serve the customer outside the home service provider's licensed
service area.
(5) "Customer channel termination point" means the location
where the customer either inputs or receives the communications.
(6) "End user" means the person who utilizes the
telecommunication service. In the case of an entity, "end user"
means the individual who utilizes the service on behalf of the
entity.
(7) "Home service provider" means the same as that term is
defined in Section 124(5) of Public Law 106-252 (Mobile
Telecommunications Sourcing Act).
(8) "Mobile telecommunications service" means the same as that
term is defined in Section 124(5) of Public Law 106-252 (Mobile
Telecommunications Sourcing Act).
(9) "Place of primary use" means the street address
representative where the customer's use of the telecommunication
service primarily occurs, which must be the residential street
address or the primary business street address of the customer. In
the case of mobile telecommunications services, "place of primary
use" must be within the licensed service area of the home service
provider.
(10) "Post-paid calling service" means the telecommunication
service obtained by making a payment on a call-by-call basis,
either through the use of a credit card or payment mechanism such
as a bank card, travel card, credit card or debit card, or by
charge made to a telephone number which is not associated with the
origination or termination of the telecommunication service. A
post-paid calling service includes a telecommunication service,
except a prepaid wireless calling service, that would be a prepaid
calling service except it is not exclusively a telecommunication
service.
(11) "Prepaid calling service" means the right to access
exclusively telecommunications services, which must be paid for in
advance and which enables the origination of calls using an access
number or authorization code, whether manually or electronically
dialed, and that is sold in predetermined units or dollars of which
the number declines with use in a known amount.
(12) "Prepaid wireless calling service" means a telecommunications service that provides the right to utilize
mobile wireless service as well as other nontelecommunications
services, including the download of digital products delivered
electronically, content and ancillary services, which must be paid
for in advance that is sold in predetermined units or dollars of
which the number declines with use in a known amount.
(12) (13) "Private communication service" means a
telecommunication service that entitles the customer to exclusive
or priority use of a communications channel or group of channels
between or among termination points, regardless of the manner in
which the channel or channels are connected, and includes switching
capacity, extension lines, stations and any other associated
services that are provided in connection with the use of the
channel or channels.
(13) (14) "Service address" means:
(A) The location of the telecommunications equipment to which
a customer's call is charged and from which the call originates or
terminates, regardless of where the call is billed or paid;
(B) If the location in paragraph (A) of this subdivision is
not known, service address means the origination point of the
signal of the telecommunications services first identified by
either the seller's telecommunications system or in information
received by the seller from its service provider, where the system
used to transport the signals is not that of the seller; or
(C) If the location in paragraphs (A) and (B) of this
subdivision are not known, then "service address" means the
location of the customer's place of primary use.
§11-15B-23. Enactment of exemptions.
(a) Product-based exemptions. -- The Legislature may enact a
product-based exemption from the taxes levied by article fifteen
and fifteen-a of this chapter without restriction if the
streamlined sales and use tax agreement does not have a definition
for the product or for a term that includes the product. If the
agreement has a definition for the product or for a term that
includes the product, the Legislature may exempt all items included
within the definition but may not exempt only part of the items
included within the definition, unless the streamlined sales and
use tax agreement sets out the exemption for part of the items as
an acceptable variation.
(b) Entity-based or use-based exemption. -- The Legislature
may enact an entity-based or use-based exemption from a tax levied
by article fifteen or fifteen-a of this chapter without restriction
if the streamlined sales and use tax agreement does not have a
definition for the product whose use or purchase by a specific
entity is exempt or for a term that includes the product. If the
agreement has a definition for the product whose use or specific
purchase is exempt, the Legislature may enact an entity-based or
use-based exemption that applies to that product, as long as the exemption utilizes the streamline sales and use tax agreement
definition of the product. If the agreement does not have a
definition for the product whose use or specific purchase is exempt
but has a definition for a term that includes the product, the
Legislature may enact an entity-based or use-based exemption for
the product without restriction.
(a) General rule. -- The Legislature may only enact entity-
based, use-based and product-based exemptions, from the taxes
levied by articles fifteen and fifteen-a of this chapter, in
accordance with the provisions of this section and streamlined
sales and use tax agreement.
(b) Specific rules for product-based exemptions. --
(1) A product-based exemption may be enacted without
restriction if Part II of the Library of Definitions in Appendix C
of the Streamlined Sales and Use Tax Agreement does not have a
definition for the product.
(2) If Part II of the Library of Definitions in Appendix C of
the Streamlined Sales and Use Tax Agreement has a definition for
the product, a product-based exemption may be enacted for the
product only if: (A) The exemption utilizes the product definition
in a manner consistent with Part II of the Library of Definitions
in Appendix C of the Agreement and Section 327 of the Agreement;
and (B) the product-based exemption exempts all items included
within a definition in Part II of the Library of Definitions unless the product definition in the Library of Definitions sets out an
exclusion for such item or items from the definition.
(c) Specific rules of entity-based and use-based exemptions.
--
(1) An entity-based or use-based exemption for a product may
be enacted without restriction if Part II of the Library of
Definitions in Appendix C of the Streamlined Sales and Use Tax
Agreement does not have a definition for the product.
(2) If Part II of the Library of Definitions in Appendix C of
the Streamlined Sales and Use Tax Agreement has a definition for
the product, the entity-based or use-based exemption for the
product must utilize the product definition in a manner consistent
with Part II of the Library of Definitions and Section 327 of the
Streamlined Sales and Use Tax Agreement.
(3) An entity-based exemption for an item may be enacted if
Part II of the Library of Definitions in Appendix C of the
Streamlined Sales and Use Tax Agreement does not have a definition
for the item but does have a definition for a product that includes
the item.
(4) A use-based exemption for an item may not be enacted that
effectively constitutes a product-based exemption if Part II of the
Library of Definitions in Appendix C of the Streamlined Sales and
Use Tax Agreement has a definition for a product that includes the
item.
(5) A use-based exemption for an item may be enacted if Part
II of the Library of Definitions in Appendix C of the Streamlined
Sales and Use Tax Agreement has a definition for a product that
includes the item, if the exemption is not prohibited in
subdivision (4) of this subsection (c), and if the exemption is
consistent with the definition in Part II of the Library of
Definitions.
(c) (d) Construction. -- For purposes of complying with the
requirements in this section, the inclusion of a product within the
definition of tangible personal property is disregarded.
§11-15B-24. Administration of exemptions.
(a)
General rules. -- When a purchaser claims an exemption
from paying tax under article fifteen or fifteen-a of this chapter:
(1) A seller registered under the streamlined sales and use
tax agreement shall obtain identifying information of the purchaser
and the reason for claiming a tax exemption at the time of the
purchase, as determined by the governing board established pursuant
to the agreement. A seller not registered under the agreement
shall obtain identifying information of the purchaser and the
reason for claiming a tax exemption at the time of purchase, as
determined by the Tax Commissioner.
(2) A purchaser is not required to provide a signature to
claim an exemption from tax unless a paper exemption certificate is
used.
(3) The seller shall use the standard form for claiming an
exemption electronically that is adopted by the governing board
administering the streamlined sales and use tax agreement.
(4) The seller shall obtain the same information for proof of
a claimed exemption regardless of the medium in which the
transaction occurred.
(5) The Tax Commissioner may utilize a system wherein the
purchaser exempt from the payment of the tax is issued an
identification number that is presented to the seller at the time
of the sale.
(6) The seller shall maintain proper records of exempt
transactions and provide the records to the Tax Commissioner or the
Tax Commissioner's designee.
(7) The Tax Commissioner shall administer use-based and
entity-based exemptions when practicable through a direct pay
permit, an exemption certificate or another means that does not
burden sellers.
(8) After the thirty-first day of December, two thousand
seven, in the case of drop shipments, a third party vendor (e.g.
drop shipper) may claim a resale exemption based on an exemption
certificate provided by its customer/re-seller or any other
acceptable information available to the third party vendor
evidencing qualification for a resale exemption, regardless of
whether the customer/re-seller is registered to collect and remit sales and use taxes in this state, when the sale is sourced to this
state.
(b) The Tax Commissioner shall relieve sellers registered
under the streamlined sales and use tax agreement that follow the
requirements of this section from any tax otherwise applicable if
it is determined that the purchaser improperly claimed an exemption
and shall hold the purchaser liable for the nonpayment of tax.
This relief from liability does not apply:
(A) To a seller who fraudulently fails to collect the tax;
or
(B) To a seller who solicits purchasers to participate in the
unlawful claim of an exemption;
(C) To a seller who accepts an exemption certificate when the
purchaser claims an entity-based exemption when: (i) The subject
of the transaction sought to be covered by the exemption
certificate is actually received by the purchaser at a location
operated by the seller; and (ii) the state in which that location
resides provides an exemption certificate that clearly and
affirmatively indicates (graying out exemption reason types on
uniform form and posting it on a state's web site is an indicator)
that the claimed exemption is not available in that state; or
(D) To a seller who accepts an exemption certificate claiming
multiple points of use for tangible personal property other than
computer software for which exemption claiming multiple points of
use is acceptable under section eighteen of this article.
(c) Time within which seller must obtain exemption
certificates. -- A seller is relieved from paying tax otherwise
applicable under article fifteen or fifteen-a of this chapter if
the seller obtains a fully completed exemption certificate or
captures the relevant data elements required under the streamlined
sales and use tax agreement within ninety days subsequent to the
date of sale.
(1) If the seller has not obtained an exemption certificate or
all relevant data elements, the seller may, within one hundred
twenty days subsequent to a request for substantiation by the Tax
Commissioner, either prove that the transaction was not subject to
tax by other means or obtain a fully completed exemption
certificate from the purchaser, taken in good faith. For purposes
of this section, the Tax Commissioner may continue to apply this
state's standards of good faith until such time as a uniform
standard for good faith is defined in the streamlined sales and use
tax agreement.
(2) Nothing in this section shall affect the ability of the
Tax Commissioner to require purchasers to update exemption
certificate information or to reapply with the state to claim
certain exemptions.
(3) Notwithstanding the preceding provisions of this section,
when an exemption may be claimed by exemption certificate, a seller
is relieved from paying the tax otherwise applicable if the seller obtains a blanket exemption certificate from a purchaser with which
the seller has a recurring business relationship. The Tax
Commissioner may not request from the seller renewal of blanket
certificates or updates of exemption certificate information or
data elements when there is a recurring business relationship
between the buyer and seller. For purposes of this subdivision
(3), a recurring business relationship exists when a period of no
more than twelve months elapses between sales transactions.
(d) Exception. -- No exemption certificate or direct pay
permit number is required when the sale is exempt per se from the
taxes imposed by articles fifteen and fifteen-a of this chapter.
§11-15B-35. Local rate and boundary changes.
(a)
General. -- Local tax rate changes shall be effective only
on the first day of a calendar quarter after a minimum of sixty
days' notice to seller, except as provided in subsection (b) of
this section.
(b)
Printed catalogs. -- Local tax rate changes shall apply to
purchases from printed catalogs where the purchaser computed the
tax based upon the local tax rate published in the catalog only on
and after the first day of a calendar quarter after a minimum of
one hundred twenty days' notice to the sellers.
(c)
Local boundary changes. -- A local jurisdiction boundary
change shall first apply for purposes of computation of a local
sales and use tax on the first day of a calendar quarter after a minimum of sixty days' notice to sellers.
(d)
Database of local jurisdiction boundaries. --
(1) The state shall provide and maintain a database that
describes boundary changes for all taxing jurisdictions. This
database shall include a description of the change and the
effective date of the change for sales and use tax purposes.
(2) The state shall provide and maintain a database of all
sales and use tax rates for all of the jurisdictions levying taxes
within the state. For the identification of states, counties and
cities, codes corresponding to the rates must be provided according
to federal information processing standards (FIPS) as developed by
the national institute of standards and technology. For the
identification of all other jurisdictions, codes corresponding to
the rates must be in the format determined by the
members of the
streamlined sales and use tax agreement governing board.
(3) The state shall provide and maintain a database that
assigns each five-digit and nine-digit zip codes within
a member
the state to the proper tax rates and jurisdictions. The state
must apply the lowest combined tax rate imposed in the zip code
area if the area includes more than one tax rate in any level of
taxing jurisdictions. If a nine-digit zip code designation is not
available for a street address or if a seller
or certified service
provider is unable to determine the nine-digit zip code designation
of a purchaser applicable to a purchase after exercising due diligence to determine the designation, the seller
or certified
service provider may apply the rate for the five-digit zip code
area. For the purposes of this section, there is a rebuttable
presumption that a seller
or certified service provider has
exercised due diligence if the seller has attempted to determine
the nine-digit zip code designation by utilizing software approved
by the
members of the streamlined sales and use tax agreement
governing board that makes this designation from the street address
and the five-digit zip code
of the purchaser applicable to a
purchase.
(4) This state shall
participate with other member states in
the development of an have the option of providing address-based
system boundary database records for assigning taxing jurisdictions
and their associated rates which shall be in addition to the
requirements of subdivision (3) of this subsection. The
system
database records must be in the same approved format as the
database records pursuant to subdivision (3) of this subsection and
shall meet the requirements developed pursuant to the federal
Mobile Telecommunications Sourcing Act (4 U.S.C. §119
(a)). The
governing board
of the streamlined sales and use tax agreement may
allow
a member the state to require sellers that register under
this the agreement to use an address-based
system database provided
by
that member the state. If
any member the state develops
an
address-based assignment
system database records pursuant to the
Mobile Telecommunications Sourcing Act agreement, a seller
or
certified service provider may use
that system those database
records in place of the
system five and nine-digit zip code
database records provided in subdivision (3) of this subsection.
If a seller or certified service provider is unable to determine
the applicable rate and jurisdiction using an address-based
database record after exercising due diligence, the seller or
certified service provider may apply the nine-digit zip code
designation applicable to a purchase. If a nine-digit zip code
designation is not available for a street address or if a seller or
certified service provider is unable to determine the nine-digit
zip code designation applicable to a purchase after exercising due
diligence to determine the designation, the seller or certified
service provider may apply the rate for the five-digit zip code
area. For the purposes of this subsection, there is a rebuttable
presumption that a seller or certified service provider has
exercised due diligence if the seller or certified service provider
has attempted to determine the tax rate and jurisdiction by
utilizing software approved by the governing board that makes this
assignment from the address and zip code information applicable to
the purchase.
(5) The Tax Commissioner, after meeting the requirements of
subdivision (3) of this subsection, may certify vendor provided
address-based databases for assigning tax rates and jurisdictions. The databases must be in the same approved format as the database
records pursuant to subdivision (4) of this subsection and must
meet the requirements developed pursuant to the federal Mobil
Telecommunications Sourcing Act (4 U.S.C. §119(a)). If the state
certifies a vendor address-based database, a seller or certified
service provider may use that database in place of the database
provided in subdivision (3) or (4) of this subsection. Vendors
providing address-based databases may request certification of
their databases from the governing board. Certification by the
governing board does not replace the requirement that the databases
be certified by the state.
§11-15B-36. Relief from certain liability for state and local
taxes
.
(a)
General. -- Sellers and certified service providers
registered under the streamlined sales and use tax agreement to
collect sales and use taxes imposed by this state or
the economic
opportunity development district excise tax imposed by a local
jurisdiction a political subdivision of this state who charged and
collected the incorrect amount of sales or use taxes
or district
excise taxes resulting from the seller or the certified service
provider relying on erroneous data provided by this state on tax
rates, boundaries or taxing jurisdiction assignments shall be held
harmless by the Tax Commissioner and the local taxing jurisdiction.
(b)
Exception. --
A After providing adequate notice as determined by the governing board, if the state
that is a member of
the streamlined sales and use tax agreement and provides an
address-based
system database for assigning taxing jurisdictions
pursuant to subdivision (4)
or (5), subsection (d), section
thirty-five of this article,
or pursuant to the federal Mobile
Telecommunications Sourcing Act, is not required to provide the
state may cease providing liability relief for errors resulting
from reliance on
information the database provided by the
member
state Tax Commissioner under subdivision (3), subsection (d),
section thirty-five of this article.
If a seller demonstrates that
requiring the use of the address-based database would create an
undue hardship, the Tax Commissioner and the governing board may
extend the relief from liability to that seller for a designated
period of time.
§11-15B-37. State review and approval of certified automated
system software and certain liability relief.
(a) The Tax Commissioner shall review software submitted to
the governing board for certification as a Certified Automated
System under the Agreement. The Tax Commissioner's review shall
include a review to determine that the program adequately
classifies the State of West Virginia's product-based exemptions.
Upon completion of the review, the Tax Commissioner shall certify
to the governing board its acceptance of the classifications made
by the system.
(b) Certified service providers and Model 2 Sellers shall be
relieved of liability for not collecting sales or use taxes
resulting from the certified service provider or Model 2 Seller
relying on the certification provided by the Tax Commissioner.
(c) Certified service providers shall be relieved of
liability for not collecting sales and use taxes in the same manner
as provided to sellers under the provisions of section twenty-four
of this article.
(d) The governing board and the State of West Virginia shall
not be responsible for classification of an item or transaction
within the product-based exemptions certified and the relief from
liability provided in this section shall not be available for a
certified service provider or a Model 2 Seller that has incorrectly
classified an item or transaction into a product-based exemption
certified by the Tax Commissioner:
Provided, That the provisions
of this subsection shall not apply to the individual listing of
items or transactions within a product definition approved by the
governing board or the Tax Commissioner.
(e) If the Tax Commissioner determines that an item or
transaction is incorrectly classified as to its taxability, the Tax
Commissioner shall notify the certified service provider or Model
2 Seller of the incorrect classification. The certified service
provider or Model 2 Seller shall have ten days to revise the
classification after receipt of notice from the Tax Commissioner of the determination. Upon expiration of the ten days, the certified
service provider or Model 2 Seller shall be liable for the failure
to collect the correct amount of sales or use taxes due and owing
to the state.
NOTE: The purpose of this bill is to conform West Virginia's
consumers sales and use tax laws to requirements of the Streamlined
Sales and Use Tax Agreement as amended during calendar year two
thousand five and January of 2006.
Strike-throughs indicate language that would be stricken from
present law, and underscoring indicates new language that would be
added.
§11-15B-2b and §11-15B-37 are new; therefore, strike-throughs
and underscoring have been omitted.