SB 148 Text

ENROLLED
Senate Bill No. 148
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
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[Passed March 13, 2004; in effect ninety days from passage.]
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AN ACT to amend the code of West Virginia, 1931, as amended, by adding thereto a new article, designated §11-10D-1, §11-10D-2, §11-10D-3, §11-10D-4, §11-10D-5, §11-10D-6, §11-10D-7, §11- 10D-8, §11-10D-9, §11-10D-10, §11-10D-11, §11-10D-12 and §11- 10D-13; to amend and reenact §11-12-5 of said code; to amend and reenact §11A-1-7 of said code; and to amend and reenact §11A-2-11 of said code, all relating generally to the collection of delinquent taxes; granting persons who owe but have not paid one or more taxes administered under West Virginia tax procedure and administration act an amnesty period during which past-due taxes may be paid or payment agreements acceptable to tax commissioner executed; providing for waiver of additions to tax, money penalties and fifty percent of accrued interest on past-due taxes; prohibiting criminal prosecution for default for which tax amnesty is granted; providing a penalty of ten percent for failure to take advantage of this amnesty program; setting forth legislative findings and declarations; establishing requirements of and exceptions and limitations to tax amnesty program; defining certain terms; authorizing tax commissioner to do all things necessary to implement two-month tax amnesty program during current calendar year; requiring tax commissioner to report certain information to Legislature and governor after conclusion of tax amnesty program; authorizing tax commissioner to suspend a business registration certificate for failure to pay delinquent personal property taxes; requiring the tax commissioner to refuse to issue or renew a business registration certificate upon certain notice from the sheriff that the registrant has not paid delinquent personal property taxes; requiring tax commissioner to propose legislative rules establishing ancillary procedures for the tax commissioner's suspension of business registration certificates; requiring sheriff to decline to receive current taxes due on any personal property where a prior year's taxes are unpaid; and providing language for inclusion in publication giving notice of that license to do business in state will be suspended for failure to pay delinquent personal property taxes.

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 article, designated §11-10D-1, §11-10D-2, §11-10D-3, §11-10D-4, §11-10D-5, §11-10D-6, §11-10D-7, §11-10D-8, §11-10D-9, §11-10D-10, §11-10D-11, §11-10D-12 and §11-10D-13; that §11-12-5 of said code be amended and reenacted; that §11A-1-7 of said code be amended and reenacted; and that §11A-2-11 of said code be amended and reenacted, all to read as follows:

CHAPTER 11. TAXATION.

ARTICLE 10D. TAX AMNESTY PROGRAM.
§11-10D-1. Short title.
This article may be cited as the "West Virginia Tax Amnesty Program of 2004".
§11-10D-2. Legislative intent and findings.
(a) Intent. -- It is the intent of the Legislature in enacting the tax amnesty program provided by this article to improve compliance with this state's tax laws and to accelerate and increase collections of certain taxes currently owed to this state.
(b) Findings. -- The Legislature finds and declares that a public purpose is served by the waiver of tax penalties, additions to tax, a portion of accrued interest, and criminal prosecution in return for the immediate reporting and payment of previously underreported, unreported, unpaid or underpaid tax liabilities that are due and owing and are delinquent as of the first day of January, two thousand four. Benefits gained by this program include, among other things, accelerated receipt of certain currently owed taxes, permanently bringing into the tax system taxpayers who have been evading tax and providing an opportunity for taxpayers to clear their records and satisfy tax obligations. It is further the intent of the Legislature in enacting this article that the tax amnesty program be a one-time occurrence which shall not be repeated in the future, since taxpayers' expectations of future amnesty programs could have a counterproductive effect on compliance today.
§11-10D-3. Definitions.
(a) General rule. -- Terms used in this article shall have the meaning ascribed to them in section four, article ten of this chapter, unless the context in which the term is used in this article clearly requires a different meaning, or the term is defined in subsection (b) of this section.
(b) Terms defined. -- For purposes of this article, the term: (1) "Additions to tax" means that amount imposed by section eighteen or eighteen-a, article ten of this chapter, for failure to file a return or pay tax due, or for negligence or intentional disregard of rules and regulations of the tax commissioner, for filing a false or fraudulent return, or for failure to pay estimated tax, and includes "additions to tax" imposed by any other article of chapter eleven of the code administered under article ten of this chapter;(2) "Applicant" means any person who timely files an application for amnesty under this article;
(3) "Interest" means interest imposed pursuant to sections seventeen and seventeen-a, article ten of this chapter; (4) "Penalty" means civil money penalties imposed by section nineteen, article ten of this chapter and any other civil money penalty imposed by any article of this chapter administered under article ten; (5) "Specified tax" shall mean the tax or taxes and the periods thereof for which the taxpayer applies for amnesty under this article.

§11-10D-4. Development and administration of tax amnesty program, implementation of article.

(a) General. -- The tax commissioner shall develop and administer the tax amnesty program provided in this article, notwithstanding any provision of this article to the contrary. The tax commissioner shall develop and issue the forms, instructions and guidelines as the commissioner believes to be necessary, and take any other action needed to implement this article.
(b) Rules. - The tax commissioner may promulgate rules, including emergency rules, that implement, clarify or explain the tax amnesty program, in the manner provided in article three, chapter twenty-nine-a of this code.
§11-10D-5. Duration and application of program.
The tax commissioner shall establish a two-month tax amnesty program to be conducted during the calendar year, two thousand four. The program shall apply to payments and returns required pursuant to any tax administered under article ten of this chapter, but only if the obligation for payment or filing of a return, or both, arose after the first day of January, one thousand nine hundred eighty-six, and prior to the first day of January, two thousand four, provided: (1) The tax return was due before the first day of January, two thousand four; (2) the amount of tax shown to be due on the tax return was due and payable to the tax commissioner before the first day of January, two thousand four; or (3) if no tax return was required by law to be filed, the tax was due and payable to the tax commissioner before the first day of January, two thousand four.
§11-10D-6. Waiver of penalties; criminal immunity; exceptions and limitations.

(a) Waiver of penalty, addition to tax and interest. -- For any taxpayer who meets the requirements of section seven of this article and except as otherwise specifically provided in this article:
(1) Waiver. -- The tax commissioner shall waive all penalties and additions to tax and fifty percent of the interest imposed on the late filing of a return or the late payment of any tax for which tax amnesty is granted, which is owed as a result of nonpayment, underpayment, nonreporting or underreporting of tax liabilities; and
(2) Criminal penalties. -- No criminal action may be brought against the taxpayer for the default for which tax amnesty is granted under this article.
(b) Exceptions. -- This section does not apply to nonpayment or underpayment of tax liabilities, or to nonreported, misreported or underreported tax liabilities for which amnesty is sought if, as of the date the taxpayer's application for amnesty is filed:
(1) The taxpayer is the subject of a criminal investigation by any agency of this state; or
(2) An administrative proceeding or a civil or criminal court proceeding has been initiated or is pending in any administrative agency or court of this state or of the United States for nonpayment, delinquency, fraud or other event of noncompliance in relation to any of the taxes administered under article ten of this chapter. An administrative or civil proceeding shall not be deemed to be pending if the taxpayer withdraws with prejudice from the proceeding prior to the granting of amnesty, pays in full the outstanding tax liability plus fifty percent of the accrued interest thereon and otherwise cures any default which is the subject of the proceeding.
(c) No refund or credit. -- No refund or credit may be granted for any penalty, addition to tax or interest paid prior to the date the taxpayer files his or her application for tax amnesty pursuant to section seven of this article. Additionally, no refund or credit shall be granted for any tax or interest paid under this program unless the tax commissioner, on his or her own motion, redetermines the amount of tax or accrued interest thereon.
(d) Bar to amnesty. -- A taxpayer shall not be eligible for amnesty for any tax liability if the taxpayer has other liabilities outstanding for any tax administered under article ten of this chapter, for which the taxpayer has not applied for amnesty. This includes tax deficiencies pending before the office of tax appeals or a court in this state.

§11-10D-7. Application for amnesty; requirements; deficiency assessment.

(a) Timely application required. -- The provisions of this article apply to any taxpayer who, on or after the date of commencement of the tax amnesty program and on or before the termination date of the program designated by the tax commissioner, files an application for tax amnesty on or before the last day of the second calendar month of the amnesty program and does the following:
(1) Voluntarily completes, signs and files amended tax returns to report transactions and other material matters not included on original returns and pays in full all additional taxes shown to be due on the amended return or returns and fifty percent of the interest imposed on the additional taxes by article ten of this chapter;
(2) Voluntarily completes, signs and files all delinquent tax returns and pays in full all taxes shown to be due on the return or returns and fifty percent of the interest imposed on the taxes by article ten of this chapter;
(3) Voluntarily completes, signs and files amended tax returns to correct all incorrect, deficient or incomplete original returns and pays in full all taxes shown to be due on the amended return or returns and fifty percent of the interest imposed on the tax or taxes by article ten of this chapter; and
(4) Voluntarily pays in full all previously assessed tax liabilities and other taxes legally collectible under section eleven, article ten of this chapter and fifty percent of the interest due thereon imposed by article ten of this chapter.
(b) Due date of tax for which amnesty granted. -- Except as provided in subsection (d) of this section, all taxes for which tax amnesty is sought plus fifty percent of interest accrued to the date of payment shall be paid not later than the last day of the month next succeeding the termination of the amnesty program. Interest on the amount of tax due shall be calculated as prescribed in article ten of this chapter and shall continue to accrue until the tax liability is paid.
(c) Payments. -- Payments made by the taxpayer under this tax amnesty program shall be in United States currency or by certified check, cashier's check or post office money order, payable to the tax commissioner of this state.
(d) Installment payment agreements. -- The tax commissioner may, at his or her discretion and upon such terms and conditions as the commissioner may prescribe, enter into an installment payment agreement with the taxpayer, which installment payment agreement shall be in lieu of the full immediate payment required by subsection (b) of this section: Provided, That the length of the installment payment may not exceed twelve months.
(1) Each installment payment agreement shall provide for payment of the tax due and fifty percent of the statutory interest on the outstanding amount of tax due, computed to the date the installment payment agreement is executed by the taxpayer. The amount of tax and interest due from the taxpayer shall be stated in the installment payment agreement and constitute the installment payment agreement amount.
(2) Down payment. -- The installment payment agreement shall require payment of twenty-five percent of the installment payment agreement amount or one thousand dollars, whichever amount is the greater, at the time the installment payment agreement is submitted to the tax commissioner for acceptance and signature.
(3) Interest. -- Interest on the installment payment agreement amount shall be calculated at the rates determined under sections seventeen and seventeen-a, article ten of this chapter, as applicable to the installment payment period, and shall accrue on the declining balance of the installment payment agreement amount from the date the installment payment agreement is signed by the taxpayer to the date the last installment payment is made by the taxpayer.
(4) Lien securing payment. -- When payments are made under an installment payment agreement, the amount due shall be secured by recordation of a tax lien against the property of the taxpayer and recordation of a tax lien against the property of any person guaranteeing payment of the installment payment agreement amount, should there be a guarantor, unless the tax commissioner determines that existing recorded tax liens are adequate to secure the payment. Liens required by this subdivision shall be recorded in each county of this state in which the taxpayer and the guarantor, if any, owns an interest in property and shall be released by the tax commissioner upon full payment of the amount stated in the installment payment agreement plus applicable interest.
(5) Failure to comply with installment payment agreement. -- Failure of the taxpayer to fully comply with the terms of the installment payment agreement shall render the waiver of penalties, additions to tax and interest under this amnesty program null and void, unless the tax commissioner determines that the failure was due to reasonable cause. In the event of an unexcused noncompliance with the terms of the installment payment agreement, the taxpayer shall immediately pay the unpaid balance of the installment payment agreement amount plus the interest and all additions to tax and penalties waived under section six of this article.
(6) Late payment of installment payment. -- Notwithstanding the provisions of subdivision (5) of this subsection, payment of an installment payment after the date the installment payment is due under the installment payment agreement shall not void the agreement provided the amount of the installment payment, plus a late payment fee of ten dollars or one half of one percent of the amount of the late installment payment, whichever is the greater amount, is paid within twenty days after the installment payment was due under the installment payment agreement.
(7) Failure to timely pay current taxes. -- If a taxpayer with an installment payment agreement fails to timely file returns and remit current tax liabilities by their statutory due date or dates, the installment payment agreement shall be rendered null and void, unless the tax commissioner determines that the failure was due to reasonable cause. In the event an installment payment agreement becomes null and void, taxpayer shall immediately pay the unpaid balance of the installment payment agreement plus interest and all additions to tax and penalties waived when the tax commissioner accepted the installment payment agreement.
(e) Understatement of tax due. -- If, subsequent to termination of this tax amnesty program, the tax commissioner determines there was a defect in the amnesty application or in the materials submitted in support of the amnesty application and subsequently issues a deficiency assessment upon the application or a return or amended return filed pursuant to this article, the tax commissioner has the authority to collect the additional tax due, impose applicable penalties, additions to tax and interest and to pursue any criminal prosecution as may ordinarily be brought with respect to the defect as if no amnesty had been granted the taxpayer.
(f) Mistake or misrepresentation of material fact. -- The tax commissioner may review all cases in which amnesty has been granted and may on the basis of a mistake or misrepresentation of a material fact, rescind the grant of amnesty, or in lieu thereof, appropriate review of the grant of amnesty may be obtained by proceeding under article nine or ten, or both, of this chapter. The taxpayer may appeal the tax commissioner's order rescinding the grant of amnesty by filing a petition for appeal with the office of tax appeals, established in article ten-a of this chapter, within thirty days after receipt of the tax commissioner's order, which shall be served by personal service or by certified mail.
(g) False or fraudulent amnesty return. -- Any taxpayer who files an amnesty tax return or amended return that is false or fraudulent shall be subject to applicable civil penalties and be referred for criminal prosecution.
(h) Attempt to evade or defeat tax. -- Any taxpayer who files a false amnesty application or attempts in any manner to defeat or evade payment of tax or interest under this amnesty program, shall be subject to applicable civil penalties and be referred for criminal prosecution. §11-10D-8. Publicity efforts.
The tax commissioner shall cause the tax amnesty program to be adequately publicized so as to maximize public awareness of and participation in the program.

§11-10D-9. Examination of amnesty returns and taxpayer books and records.

Nothing in this article shall prevent the tax commissioner or any authorized employee or agent of the commissioner from examining the books, paper, records and equipment of any taxpayer or other person in order to verify the accuracy and completeness of the application for amnesty or of any tax return filed or payment made under this article, as provided in article ten of this chapter, and to ascertain and assess any tax or other liability owed to the state for any tax administered under article ten of this chapter. §11-10D-10. Disposition of revenue collected.
There is hereby created in the state treasury a special fund to be known as the "tax amnesty fund" into which shall be deposited all payments received under the tax amnesty program. On a monthly basis, the tax amnesty fund shall be distributed as follows:
(1) Dedicated taxes. -- A dedicated tax and applicable interest collected under the tax amnesty program shall be deposited in the fund or account in which the tax would have been deposited had the tax been timely paid; and
(2) Other taxes. -- After complying with subdivision (1) of this section, all other funds collected under the tax amnesty program shall be deposited into the general revenue fund.

§11-10D-11. Penalty on liabilities eligible for amnesty for which taxpayer did not apply for amnesty.

(a) If a taxpayer has a liability that would be eligible for amnesty under this article but the taxpayer fails to apply for amnesty within the designated amnesty period as determined in this article, or, after applying for amnesty, fails to satisfy all of the requirements for amnesty, then a penalty in the amount of ten percent of the unpaid liability shall be added to the amount of any unpaid taxes eligible for amnesty.
(b) The tax commissioner shall assess the penalty provided in subsection (a) of this section unless:
(1) Taxpayer provides evidence satisfactory to the commissioner which demonstrates that taxpayer's failure to apply for amnesty or his or her failure to satisfy all of the requirements for amnesty was not an intentional attempt to avoid the payment of taxes and was based on the taxpayer's mistaken belief that he or she did not have any liability eligible for amnesty; or
(2) Taxpayer's failure to apply for amnesty, in the case of an assessment issued before the start of or during the amnesty period, is due to taxpayer contesting in an administrative or judicial forum the disputed liability.
§11-10D-12. Report to Legislature and governor.
On or before the first day of July, two thousand five, the tax commissioner shall issue a report to the Legislature and the governor detailing the implementation and results of the tax amnesty program provided in this article. This report shall include, but not be limited to, the following information:
(1) A detailed breakdown of the tax commissioner's administrative costs in implementing the program;
(2) The total number of tax amnesty returns filed, by tax and by whether the returns are new returns or amended returns;
(3) The gross tax amnesty revenues collected by tax, which shall also be broken down into the following categories:
(A) Amounts represented by assessments made, but not finalized, and by liens filed by the tax commissioner before the first day of the amnesty period; and
(B) All other amounts;
(4) The total dollar amount of revenue collected by the program to a date no earlier than thirty days before the date of the report required by this section, which shall be further allocated by type of tax, interest on the tax to which the payment relates;
(5) The total amount of interest forgiven under the program;
(6) The total amount of additions to tax forgiven under the program;
(7) The total amount of penalties (not including additions to tax or interest) collected under the program; and
(8) Any other statistical information that the tax commissioner determines to be necessary to measure the net impact of this tax amnesty program.
§11-10D-13. Suspension of inconsistent code provisions.
All provisions of article ten, chapter eleven of this code and all provisions of tax statutes administered under article ten of this chapter that are inconsistent with the provisions of this article are suspended to the extent necessary to carry out the provisions of this article.
ARTICLE 12. BUSINESS REGISTRATION TAX.

§11-12-5. Time for which registration certificate granted; power of tax commissioner to suspend or cancel certificate; refusal to renew.

(a) Registration period. -- All business registration certificates issued under the provisions of section four of this article are for the period of one year beginning the first day of July and ending the thirtieth day of the following June: Provided, That beginning on or after the first day of July, one thousand nine hundred ninety-nine, all business registration certificates issued under the provisions of section four of this article shall be issued for two fiscal years of this state, subject to the following transition rule. If the first year for which a business was issued a business registration certificate under this article began on the first day of July of an even-numbered calendar year, then the tax commissioner may issue a renewal certificate to that business for the period beginning the first day of July, one thousand nine hundred ninety-nine, and ending the thirtieth day of June, two thousand, upon receipt of fifteen dollars for each such one-year certificate. Thereafter, only certificates covering two fiscal years of this state shall be issued.
(b) Revocation or suspension of certificate. --
(1) The tax commissioner may cancel or suspend a business registration certificate at any time during a registration period if:
(A) The registrant filed an application for a business registration certificate, or an application for renewal thereof, for the registration period that was false or fraudulent.
(B) The registrant willfully refused or neglected to file a tax return or to report information required by the tax commissioner for any tax imposed by or pursuant to this chapter.
(C) The registrant willfully refused or neglected to pay any tax, additions to tax, penalties or interest, or any part thereof, when they became due and payable under this chapter, determined with regard to any authorized extension of time for payment.
(D) The registrant neglected to pay over to the tax commissioner on or before its due date, determined with regard to any authorized extension of time for payment, any tax imposed by this chapter which the registrant collects from any person and holds in trust for this state.
(E) The registrant abused the privilege afforded to it by article fifteen or fifteen-a of this chapter to be exempt from payment of the taxes imposed by such articles on some or all of the registrant's purchases for use in business upon issuing to the vendor a properly executed exemption certificate, by failing to timely pay use tax on taxable purchase for use in business, or by failing to either pay the tax or give a properly executed exemption certificate to the vendor.
(F) The registrant has failed to pay in full delinquent personal property taxes owing for the calendar year immediately preceding the calendar year in which the application is made.
(2) Before canceling or suspending any business registration certificate, the tax commissioner shall give written notice of his or her intent to suspend or cancel the business registration certificate of the taxpayer, the reason for the suspension or cancellation, the effective date of the cancellation or suspension and the date, time and place where the taxpayer may appear and show cause why such business registration certificate should not be canceled or suspended. This written notice shall be served on the taxpayer in the same manner as a notice of assessment is served under article ten of this chapter, not less than twenty days prior to the date of the show cause informal hearing. The taxpayer may appeal cancellation or suspension of its business registration certificate in the same manner as a notice of assessment is appealed under article ten-a of this chapter: Provided, That the filing of a petition for appeal does not stay the effective date of the suspension or cancellation. A stay may be granted only after a hearing is held on a motion to stay filed by the registrant, upon finding that state revenues will not be jeopardized by the granting of the stay. The tax commissioner may, in his or her discretion and upon such terms as he or she may specify, agree to stay the effective date of the cancellation or suspension until another date certain.
(3) On or before the first day of July, two thousand five, the tax commissioner shall propose for promulgation legislative rules establishing ancillary procedures for the tax commissioner's suspension of business registration certificates for failure to pay delinquent personal property taxes pursuant to paragraph (F), subdivision (1) of this section. The rules shall at a minimum establish any additional requirements for the provision of notice deemed necessary by the tax commissioner to meet requirements of law; establish protocols for the communication and verification of information exchanged between the tax commissioner, sheriffs and others; and establish fees to be assessed against delinquent taxpayers that shall be deposited into a special fund which is hereby created and expended for general tax administration by the tax division of the department of tax and revenue and for operation of the tax division. Upon authorization of the Legislature, the rules shall have the same force and effect as if set forth herein. No provision of this subdivision may be construed to restrict in any manner the authority of the tax commissioner to suspend such certificates for failure to pay delinquent personal property taxes under paragraph (C) or (F), subdivision (1) of this section or under any other provision of this code prior to the authorization of the rules.
(c) Refusal to renew. -- The tax commissioner may refuse to issue or renew a business registration certificate if the registrant is delinquent in the payment of any tax administered by the tax commissioner under article ten of this chapter or the corporate license tax imposed by article twelve-c of this chapter, until the registrant pays in full all the delinquent taxes including interest and applicable additions to tax and penalties. In his or her discretion and upon such terms as he or she may specify, the tax commissioner may enter into an installment payment agreement with the taxpayer in lieu of the complete payment. Failure of the taxpayer to fully comply with the terms of the installment payment agreement shall render the amount remaining due thereunder immediately due and payable and the tax commissioner may suspend or cancel the business registration certificate in the manner provided in this section.
(d) Refusal to renew due to delinquent personal property tax. -- The tax commissioner shall refuse to issue or renew a business registration certificate when informed in writing, signed by the county sheriff, that personal property owned by the applicant and used in conjunction with the business activity of the applicant is subject to delinquent property taxes. The tax commissioner shall forthwith notify the applicant that the commissioner will not act upon the application until information is provided evidencing that the taxes due are either exonerated or paid.
CHAPTER 11A. COLLECTION AND ENFORCEMENT OF PROPERTY TAXES.

ARTICLE 1. ACCRUAL AND COLLECTION OF TAXES.

§11A-1-7. No collection of current taxes until delinquent taxes are paid.

The sheriff, in preparing his or her tax receipts for any current year shall examine and compare them with the delinquent list for the preceding year in his or her hands, and if any tract or personal property is found to be delinquent for the preceding year, he or she shall note the fact on his or her current receipts and shall decline to receive current taxes on any land or personal property where it appears to his or her office that a prior year's taxes are unpaid. Acceptance of current taxes through oversight shall not relieve the owner of any land or personal property, of the liability to pay prior taxes and penalties imposed for nonpayment.

ARTICLE 2. DELINQUENCY AND METHODS OF ENFORCING PAYMENT.

§11A-2-11. Delinquent lists; oath.

The sheriff, after ascertaining which of the taxes assessed in his or her county are delinquent, shall, on or before the first day of May next succeeding the year for which the taxes were assessed, prepare the following delinquent lists, arranged by districts and alphabetically by name of the person charged, and showing in respect to each the amount of taxes remaining delinquent on April thirtieth: (1) A list of property in the landbook improperly entered or not ascertainable; (2) a list of other delinquent real estate; and (3) a list of all other delinquent taxes: Provided, That the list shall conclude with a notice, substantially as follows: "Any person holding a West Virginia business registration certificate under the authority of article twelve, chapter eleven of this code who does not pay all delinquent personal property taxes shall have his or her license to do business in this state suspended until the delinquency is cured."
The sheriff on returning each list shall, at the foot thereof, subscribe an oath, which shall be subscribed before and certified by some person duly authorized to administer oaths, in form or effect as follows:
I, ........, sheriff (or deputy sheriff or collector) of the County of ........., do swear that the foregoing list is, to the best of my knowledge and belief, complete and accurate, and that I have received none of the taxes listed therein.
Except for the oath, the auditor shall prescribe the form of the delinquent lists.

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