Senate Bill No. 2007
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
____________
[Introduced June 9, 2002; referred to the Committee
on Finance.]
____________
A BILL to amend and reenact section sixteen, article thirteen-c,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to amend and reenact sections
nine, eighteen and twenty-one, article thirteen-q of said
chapter; to amend and reenact sections six, nine and eleven,
article thirteen-r of said chapter; and to amend and reenact
sections four, eight and ten, article thirteen-s of said
chapter, all relating generally to tax credits for particular
business activity; providing five percentage point increase
over allowable new jobs percentage under economic opportunity
credit when new business facility or expansion of existing
facility is constructed under specified circumstances;
requiring persons who claim economic opportunity credit,
strategic research and development credit or manufacturing investment credit to report additional information pertaining
to new jobs created, including types of jobs created, duration
of jobs created, average wages and benefits paid to person
filling new jobs; specifying transition rules for certain
multiple-year business investment and jobs expansion tax
credit projects; specifying notice requirements relating to
claim of transition rule status; requiring that application
for economic opportunity tax credit be filed with tax
commissioner by prescribed date and specifying records'
maintenance and retention requirements; requiring that
application for strategic research and development tax credit
be filed with tax commissioner by prescribed date and
specifying records' maintenance and retention requirements;
requiring that application for manufacturing investment tax
credit be filed with tax commissioner by prescribed date; and
specifying records' maintenance and retention requirements.
Be it enacted by the Legislature of West Virginia:
That section sixteen, article thirteen-c, chapter eleven of
the code of West Virginia, one thousand nine hundred thirty-one, as
amended be amended and reenacted; that sections nine, eighteen and
twenty-one, article thirteen-q of said chapter be amended and
reenacted; that sections six, nine and eleven, article thirteen-r
of said chapter be amended and reenacted; and that sections four, eight and ten, article thirteen-s of said chapter be amended and
reenacted, all to read as follows:
ARTICLE 13C. BUSINESS INVESTMENT AND JOBS EXPANSION TAX CREDIT.
§11-13C-16. Termination of credit; effective date.
(a) Notwithstanding any other provision of this article to the
contrary, no entitlement to any tax credit under this article may
result from, and no credit is available to any taxpayer for,
investment placed in service or use after the thirty-first day of
December, two thousand two.
(b) Notwithstanding the provisions of subsection (a) of this
section, the provisions of sections one through fifteen of this
article continue to apply to taxpayers that have gained entitlement
to the credit pursuant to the placement of qualified investment
into service or use prior to the first day of January, two thousand
three.
(c)
Transition rules. -- The general rule stated in subsection
(a) of this section does not apply:
(1) To qualified investment property placed in service or use
prior to the first day of January, two thousand three.
(2) To property purchased or leased for business expansion
that is placed in service or use on or after the first day of
January, two thousand three, if at least one of the following
clauses applies to the property:
(A) The new or expanded business facility was constructed,
reconstructed or erected, pursuant to a written construction
contract executed prior to the first day of January, two thousand
three, as limited to the provisions of the contract as of that date
then binding on the taxpayer, but only to the extent the new or
expanded business facility is placed in service or use prior to the
first day of January, two thousand four;
(B) The new or expanded business facility
that is part of a
project described in subdivision (1), subsection (a), section four-
b of this article,
was constructed, reconstructed or erected,
pursuant to a written construction contract executed prior to for
which the multiple year project investment period had commenced,
but had not yet closed on or before the first day of January, two
thousand three,
as limited to the provisions of the contract as of
that date then binding on the taxpayer and the new or expanded
business facility constitutes or includes property placed in
service or use prior to closure of the multiple year project
investment period allowed for the project that is:
(i) Property constructed for a multiple year project certified
before the first day of January, two thousand three in accordance
with section four-b of this article: Provided, That only that
portion of the contract price attributable to that percentage of
the construction contract completed prior to
the first day of January, two thousand four the last day of the multiple year
project investment period, (determined under principles set forth
in section 460(b) of the Internal Revenue Code of 1986, as in
effect before the first day of January, two thousand three), which
is placed in service or use prior to the
first day of January, two
thousand four, last day of the multiple year project investment
period allowed pursuant to subdivision (1), subsection (a), section
four-b of this article, may be treated as property purchased for
business expansion under section six of this article;
(ii) A new or expanded business facility purchased or leased
for a multiple year project certified before the first day of
January, two thousand three in accordance with section four-b of
this article; or
(iii) Machinery or equipment or other tangible personal
purchased or leased for a multiple year project certified before
the first day of January, two thousand three in accordance with
section four-b of this article.
For purposes of this paragraph (B), the multiple year project
investment period will be treated as having commenced if the
taxpayer has placed qualified investment into service or use in
accordance with section four of this article. A multiple year
project period will not be treated as having commenced merely as a
result of the issuance of certification of a project under section four-b of this article. No entitlement to any tax credit under this
paragraph (B) may result from, and no credit is available to any
taxpayer for, investment placed in service or use after closure of
the multiple year project investment period for which certification
has been issued.
(C) The new or expanded business facility was purchased or
leased pursuant to a written contract executed prior to the first
day of January, two thousand three, as limited to the provisions
then binding on the taxpayer as of that date, but only to the
extent the new or expanded business facility is placed in service
or use prior to the first day of January, two thousand four; or
(D) The machinery or equipment or other tangible personal
property purchased or leased for business expansion at a new or
expanded business facility was purchased or leased by the taxpayer
pursuant to a written contract to purchase or lease identifiable
tangible personal property executed before the first day of
January, two thousand three, as limited to the provisions of the
written contract then binding on the taxpayer, but only to the
extent the tangible personal property purchased or leased under the
contract is placed in service or use before the first day of
January, two thousand four.
(d)
Notice of election required. - Any person intending to
claim credit under one or more of the transition rules provided in subsection (c) of this section shall file written notice of his or
her intention with the tax commissioner on or before the thirty-
first day of December, two thousand two. In the case of a
multiparticipant project, this notice may be filed by the managing
project participant on behalf of all participants in the project.
Notice is to be in a form prescribed by the tax commissioner and
all information required by the form is to be provided.
(e)
Failure to file notice. -- If any person fails to timely
file the notice required by subsection (d) of this section, that
person is precluded from claiming credit under article thirteen-c
for investment property placed in service or use after the thirty-
first day of December, two thousand two, and may claim credit under
article thirteen-q of this chapter to the extent credit is
allowable under that article.
For purposes of this section, notice,
in proper and complete form, timely filed under section twenty-one,
article thirteen-q of this chapter fulfills the filing requirement
of this section if that filing addresses the same qualified
investment for which notice would be required under this section.
ARTICLE 13Q. ECONOMIC OPPORTUNITY TAX CREDIT.
§11-13Q-9. New jobs percentage.
(a)
In general. -- The new jobs percentage is based on the
number of new jobs created in this state directly attributable to
the qualified investment of the taxpayer.
(b)
When a job is attributable. -- An employee's position is
directly attributable to the qualified investment if:
(1) The employee's service is performed or his or her base of
operations is at the new or expanded business facility;
(2) The position did not exist prior to the construction,
renovation, expansion or acquisition of the business facility and
the making of the qualified investment; and
(3) But for the qualified investment, the position would not
have existed.
(c)
Applicable percentage. - For the purpose of subsection (a)
of this section, the applicable new jobs percentage is determined
under the following table:
If number of The applicable
new jobs is at least: percentage is:
2020%
28025%
52030%
(d)
Certification of new jobs. -- With the annual return for
the applicable taxes filed for the taxable year in which the
qualified investment is first placed in service or use in this
state, the taxpayer shall estimate and certify the number of new
jobs reasonably projected to be created by it in this state within
the period prescribed in subsection (f), that are, or will be, directly attributable to the qualified investment of the taxpayer.
For purposes of this section, "applicable taxes" means the taxes
imposed by articles thirteen, twenty-one, twenty-three and twenty-
four of this chapter against which this credit is applied.
(e)
Equivalency of permanent employees. -- The hours of part-
time employees shall be aggregated to determine the number of
equivalent full-time employees for the purpose of this section.
(f)
Redetermination of new jobs percentage. -- With the annual
return for the applicable taxes imposed, filed for the third
taxable year in which the qualified investment is in service or
use, the taxpayer shall certify the actual number of new jobs
created by it in this state, that are directly attributable to the
qualified investment of the taxpayer.
(1) If the actual number of jobs created would result in a
higher new jobs percentage, the credit allowed under this article
shall be redetermined and amended returns filed for the first and
second taxable years that the qualified investment was in service
or use in this state.
(2) If the actual number of jobs created would result in a
lower new jobs percentage, the credit previously allowed under this
article shall be redetermined and amended returns filed for the
first and second taxable years. In applying the amount of
redetermined credit allowable for the two preceding taxable years, the redetermined credit shall first be applied to the extent it was
originally applied in the prior two years to personal income taxes,
then to corporation net income taxes, then to business franchise
taxes, and lastly to business and occupation taxes. Any additional
taxes due under this chapter shall be remitted with the amended
returns filed with the commissioner, along with interest, as
provided in section seventeen, article ten of this chapter, and a
ten percent penalty determined on the amount of taxes due with the
amended return, which may be waived by the commissioner if the
taxpayer shows that the overclaimed amount of the new jobs
percentage was due to reasonable cause and not due to willful
neglect.
(g) Additional new jobs percentage. - When the qualified
investment is twenty million dollars or more and the new or
expanded business facility is constructed using construction
laborers and mechanics who are paid an average wage equal to or
greater than the prevailing wage for their respective classes of
work determined under chapter twenty-one of this code, then, if the
number of full-time construction laborers and mechanics working at
the job site of the new or expanded business facility is seventy-
five or more, or if the number of hours of all construction
laborers and mechanics working at the job site is equal to or
greater than the number of hours seventy-five full-time construction laborers and mechanics would have worked at the job
site during a twelve consecutive month period, a taxpayer that is
allowed a new jobs percentage determined under subsection (a) of
this section shall be allowed a new jobs percentage that is five
percentage points higher than the new jobs percentage allowed under
subsection (a) of this section. In no event may construction
laborers and mechanics be used to attain or retain a subsection (a)
new jobs percentage. The number of full-time construction laborers
and mechanics working at the job site shall be determined by
dividing the total number of hours worked by all construction
laborers and mechanics on a new or expanded business facility
during a twelve consecutive month period by two thousand eighty
hours per year. A taxpayer may not claim the additional new jobs
percentage allowed by this section unless the taxpayer includes
with the certification filed under subsection (d) of this section
a certification signed by the general contractor or the
construction manager certifying that construction laborers
employed at the job site during a consecutive twelve month period
aggregated the equivalent of at least seventy-five full-time
employees, and the taxpayer has received from the general
contractor or construction manager records substantiating the
certification, which records shall be retained by the taxpayer for
thirteen years after the day the expansion to an existing business facility, or the new business facility, is first placed in service
or use by the taxpayer. For purposes of subsection (g) of this
section:
(
1) The term "construction laborers and mechanics" means those
workers, utilized by a contractor or subcontractor at any tier,
whose duties are manual or physical in nature, including those
workers who use tools or are performing the work of a trade, as
distinguished from mental or managerial and working foremen who
devote more than twenty percent of their time during a workweek
performing the duties of a laborer or mechanic; and
(2) The term "job site" is limited to the physical place or
places where the construction called for in the contract will
remain when the work on it is completed, and nearby property, as
describe in subdivision (3) used by the contractor or subcontractor
during construction that, because of proximity, can reasonably be
included in the "site."
(3) Except as provided in subdivision (4), fabrication plants,
mobile factories, batch plants, borrow pits, job headquarters, and
tool yards are part of the "job site" provided they are dedicated
exclusively, or nearly so, to performance of the contract or
project, and are located in proximity to the actual construction
location so that it would be reasonable to include them.
(4) The "job site" does not include permanent home offices,
branch offices, branch plant establishments, fabrication yards, or
tool yards of a contractor or subcontractor whose locations and
continuance in operation are determined without regard to the
contract or subcontract for construction of a new or expanded
business facility.
§11-13Q-18. Burden of proof; application required; failure to make
timely application.
(a) The burden of proof is on the taxpayer to establish by
clear and convincing evidence that the taxpayer is entitled to the
benefits allowed by this article.
(b)
Application for credit required.
(1)
Application required. -- Notwithstanding any provision of
this article to the contrary, no credit is allowed or
may be
applied under this article for any qualified investment property
placed in service or use until the person asserting a claim for the
allowance of credit under this article makes written application to
the commissioner for allowance of credit as provided in this
subsection. An application for credit shall be filed
, in the form
prescribed by the tax commissioner, no later than the last day
of
the due date for filing the tax returns
, determined by including
any authorized extension of time for filing the return, required
under article twenty-one or twenty-four of this chapter for the taxable year in which the property to which the credit relates is
placed in service or use, and all information required by the form
is shall be provided.
(2)
Failure to make timely application. -- The failure to
timely apply for the credit results in the forfeiture of fifty
percent of the annual credit allowance otherwise allowable under
this article. This penalty applies annually until the application
is filed.
§11-13Q-21. Effective date; election; notice of claim or election
under transition rules.
(a) The credit allowed by this article is allowed for
qualified investment placed in service or use on or after the first
day of January, two thousand three, subject to the rules contained
in this section.
(b)
Election. -- Notwithstanding the general rule stated in
subsection (a), the taxpayer may elect to apply the credit allowed
under article thirteen-c of this chapter in lieu of the credit
allowed by this article to property purchased or leased for
business expansion that is placed in service or use on or after the
first day of January, two thousand three, if
at least one of the
following subdivisions applies to the property: the property
qualifies for credit under the transition rules set forth in subdivision (2), subsection (c), section sixteen, article thirteen-
c of this chapter.
(1) The new or expanded business facility was constructed,
reconstructed or erected, pursuant to a written construction
contract executed prior to the first day of January, two thousand
three, as limited to the provisions of the contract as of that date
then binding on the taxpayer, but only to the extent the new or
expanded business facility is placed in service or use prior to the
first day of January, two thousand four;
(2) The new or expanded business facility that is part of a
project described in subsection (a), section six of this article,
was constructed, reconstructed or erected, pursuant to a written
construction contract executed prior to the first day of January,
two thousand three, as limited to the provisions of such contract
as of such date then binding on the taxpayer;
(3) The new or expanded business facility was purchased or
leased pursuant to a written contract executed prior to the first
day of January, two thousand three, as limited to the provisions
then binding on the taxpayer as of that date, but only to the
extent the new or expanded business facility is placed in service
or use prior to the first day of January, two thousand four; or
(4) The machinery or equipment or other tangible personal
property purchased or leased for business expansion at a new or expanded business facility was purchased or leased by the taxpayer
pursuant to a written contract to purchase or lease identifiable
tangible personal property executed before the first day of
January, two thousand three, as limited to the provisions of the
written contract then binding on the taxpayer, but only to the
extent the tangible personal property purchased or leased under the
contract is placed in service or use before the first day of
January, two thousand four.
(c)
Notice of election required. - Any person intending to
make the election allowed in subsection (b) of this section shall
file written notice of his or her intention with the tax
commissioner on or before the thirty-first day of December, two
thousand two. In the case of a multiparticipant project, this
notice may be filed by the managing project participant on behalf
of all participants in the project. The notice shall be in a form
prescribed by the tax commissioner and all information required by
the form shall be provided.
(d)
Failure to file notice. -- If any person fails to timely
file the notice required by subsection (c) of this section, that
person is precluded from claiming credit under article thirteen-c
of this chapter for property placed in service or use after the
thirty-first day of December, two thousand two, and may claim
credit under this article to the extent the credit is allowable under this article.
For purposes of this section, notice, in proper
and complete form, timely filed under section sixteen, article
thirteen-c of this chapter fulfills the filing requirement of this
section if that filing addresses the same qualified investment for
which notice would be required under this section.
ARTICLE 13R. STRATEGIC RESEARCH AND DEVELOPMENT TAX CREDIT.
§11-13R-6. Application of credit.
(a)
Credit allowed. -- Beginning in the year that the annual
combined qualified research and development expenditure is paid or
incurred, eligible taxpayers and owners of eligible taxpayers
described in subsections (d) and (f) of this section are allowed a
credit against the taxes imposed by articles twenty-three, twenty-
four and twenty-one of this chapter, in that order, as specified in
this section.
(b)
Business franchise tax. -- The credit is first applied to
reduce the taxes imposed by article twenty-three of this chapter
for the taxable year (determined after application of the credits
against tax provided in section seventeen of said article, but
before application of any other allowable credits against tax).
(c)
Corporation net income taxes. -- After application of
subsection (b) of this section, any unused credit is next applied
to reduce the taxes imposed by article twenty-four of this chapter for the taxable year (determined before application of allowable
credits against tax).
(d) If the eligible taxpayer is a limited liability company,
small business corporation, or a partnership, then any unused
credit (after application of subsections (b) and (c) of this
section) is allowed as a credit against the taxes imposed by
article twenty-four of this chapter on owners of the eligible
taxpayer on the conduit income directly derived from the eligible
taxpayer by its owners. Only those portions of the tax imposed by
article twenty-four of this chapter that are imposed on income
directly derived by the owner from the eligible taxpayer are
subject to offset by this credit.
(1) Small business corporations, limited liability companies,
partnerships and other unincorporated organizations shall allocate
the credit allowed by this article among their members in the same
manner as profits and losses are allocated for the taxable year.
(2) No credit is allowed under this article against any
withholding tax imposed by, or payable under, article twenty-one of
this chapter.
(e)
Personal income tax taxes. -- After application of
subsections (b), (c) and (d) of this section, any unused credit is
next applied to reduce the taxes imposed by article twenty-one of this chapter for the taxable year (determined before application of
allowable credits against tax) of the eligible taxpayer.
(f) If the eligible taxpayer is a limited liability company,
small business corporation, or a partnership, then any unused
credit (after application of subsections (b), (c), (d) and (e) of
this section) is allowed as a credit against the taxes imposed by
article twenty-one of this chapter on owners of the eligible
taxpayer on the conduit income directly derived from the eligible
taxpayer by its owners. Only those portions of the tax imposed by
article twenty-one of this chapter that are imposed on income
directly derived by the owner from the eligible taxpayer are
subject to offset by this credit.
(1) Small business corporations, limited liability companies,
partnerships and other unincorporated organizations shall allocate
the credit allowed by this article among their members in the same
manner as profits and losses are allocated for the taxable year.
(2) No credit is allowed under this article against any
withholding tax imposed by, or payable under, article twenty-one of
this chapter.
(g) The total amount of tax credit that may be used in any
taxable year by any eligible taxpayer in combination with the
owners of the eligible taxpayer under subsections (d) and (f) of
this section may not exceed two million dollars.
(h)
Unused credit carry forward. -- If the credit allowed
under this article in any taxable year exceeds the sum of the taxes
enumerated in subsections (b), (c), (d), (e) and (f) of this
section for that taxable year, the eligible taxpayer and owners of
eligible taxpayers described in subsections (d) and (f) of this
section may apply the excess as a credit against those taxes, in
the order and manner stated in this section, for succeeding taxable
years until the earlier of the following:
(1) The full amount of the excess credit is used; or
(2) The expiration of the tenth taxable year after the taxable
year in which the annual combined qualified research and
development expenditure was paid or incurred. Credit remaining
thereafter is forfeited.
(i)
Application for certification. -- No credit is allowed or
may be applied under this article until the person seeking to claim
the credit has filed a written application for certification of the
proposed research and development program or project with the tax
commissioner, and has received certification of the research and
development program or project from the tax commissioner pursuant
to that written application. The certification of the program or
project must be received by the eligible taxpayer from the tax
commissioner prior to any credit being claimed or allowed for any
annual combined qualified research and development expenditure for any research activity or project.
This application shall be filed,
in the form prescribed by the tax commissioner, no later than the
last day for filing the tax returns, determined by including any
authorized extension of time for filing the return, required under
article twenty-one or twenty-four of this chapter for the taxable
year in which the property to which the credit relates is placed in
service or use, or the qualified research and development expenses
to which the credit relates are incurred by the taxpayer, and all
information required by the form shall be provided by the taxpayer.
(1) In the case of owners of eligible taxpayers described in
subsections (d) or (f) of this section, the application for
certification filed under this section by the limited liability
company, small business corporation or partnership owned by the
person is considered to be filed on behalf of the owner, and no
separate filing of the application is required of the owner.
(2)
Form of application. -- The application for certification
must be filed in the form as the tax commissioner may prescribe,
and shall contain the information as the tax commissioner may
require, to determine whether the project should be certified as
eligible for credit under this article.
(3)
Time period covered by certification. -- The application
may request certification of the research and development program
for one taxable year or multiple taxable years, as applicable, based on the nature and character of the program or project plan
for the particular research and development project or activity.
(4)
Requirements for application. -- The application shall
specifically set forth a written research and development program
plan generally describing the nature of the research and
development to be undertaken,
the number and types of jobs, if any,
created by the applicant as a direct result of the research and
development program and the average wages and benefits paid to
those employees, the projected time period over which the research
and development shall be carried out, the period of time for which
the applicant seeks certification of the program or project, and
such other information as the tax commissioner may require.
(5)
Certification. -- The tax commissioner may issue
certification of a research and development program or project if
it appears to the tax commissioner that the applicant intends to
engage in a bona fide research and development activity, as
described in this article, and will otherwise comply with the
requirements of this article and all rules and requirements
applicable thereto.
(6)
Time period covered by certification. -- The tax
commissioner may issue certification for the period of time for
which the eligible taxpayer seeks certification, or a different
period of time, within the discretion of the tax commissioner. In his or her discretion, the tax commissioner may require that a
separate application be filed for each tax year in which qualified
research and development activity is to be undertaken or in which
qualified research and development property is to be placed in
service or use.
(7)
Failure to file. -- The failure to timely file the
application for certification of a research and development program
or project under this section results in forfeiture of one hundred
percent of the annual credit otherwise allowable under this
article. This penalty applies annually until such application is
filed.
(8)
Research and development undertaken without certification.
-- If a person has filed an application for certification of a
research and development program or project, and has failed to
receive certification of the plan or program from the tax
commissioner, no credit is allowed under this article for the
research and development activity or investment relating thereto.
(9)
Failure to comply with terms of certification. -- If a
person has filed an application for certification of a research and
development program or project, and has received certification of
the plan or program from the tax commissioner, but fails to conform
to the terms of the certification, no credit is allowed under this
article for the research and development activity or for investment in the research and development activity by the eligible taxpayer.
This restriction may be waived by the tax commissioner upon a
finding that the research and development undertaken was within the
requirements of this article, and that there was no intent to
defraud the state or willful neglect in the applicant's failure to
conform to the terms of the certification.
(10)
Failure to comply with certification time restrictions.
-- If a person has filed an application for certification of a
research and development program or project, and has received
certification of the plan or program from the tax commissioner, but
fails to conform to the time periods specified therein for the
certified research and development program or project, or fails to
renew the certification so as to cover ongoing or subsequent
research and development activity, the research and development
activity is out of compliance with the terms of the certification,
and no credit is allowed under this article for, or relating to,
the research and development activity by any person or taxpayer.
This restriction may be waived by the tax commissioner upon a
finding that the research and development thus undertaken was
within the requirements of this article, and that there was no
intent to defraud the state or willful neglect in the applicant's
failure to conform to the terms of the certification.
§11-13R-9. Identification of investment credit property.
(a) Every taxpayer who claims credit under this article shall
maintain sufficient records to establish the following facts for
each item of qualified research and development property:
(1) Its identity;
(2) Its actual or reasonably determined cost;
(3) Its straight-line depreciation life;
(4) The month and taxable year in which it was placed in
service;
(5) The amount of credit taken; and
(6) The date it was disposed of or otherwise ceased to be
qualified research and development property.
(b) Every taxpayer who claims credit under this article shall
also maintain sufficient records to establish the number and types
of new jobs, if any, created, the wages and benefits paid to
employees filling the new jobs, and the duration of each job.
§11-13R-11. Tax credit review and accountability.
(a) Beginning on the first day of February, two thousand six
and on the first day of February every third year thereafter, the
commissioner shall submit to the governor, the president of the
Senate and the speaker of the House of Delegates a tax credit
review and accountability report evaluating the cost effectiveness
of the credit allowed under this article during the most recent
three-year period for which information is available. The criteria to be evaluated includes, but is not limited to, for each year of
the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The net number
, type and duration of new jobs created by
all taxpayers claiming the credit
and wages and benefits paid;
(3) The cost of the credit;
(4) The cost of the credit per new job created; and
(5) Comparison of employment trends for the industry and for
taxpayers within the industry that claim the credit.
(b) Taxpayers claiming the credit shall provide such
information as the tax commissioner may require to prepare the
report:
Provided, That such information shall be subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter of this code.
ARTICLE 13S. MANUFACTURING INVESTMENT TAX CREDIT.
§11-13S-4. Amount of credit allowed for manufacturing investment.
(a)
Credit allowed. -- There is allowed to eligible taxpayers
and to persons described in subdivision (5), subsection (b) of this
section, a credit against the taxes imposed by articles thirteen-a,
twenty-three and twenty-four of this chapter. The amount of credit
shall be determined as hereinafter provided in this section.
(b)
Amount of credit allowable. -- The amount of allowable
credit under this article is equal to five percent of the qualified manufacturing investment (as determined in section five of this
article), and shall reduce the severance tax, imposed under article
thirteen-a of this chapter, the business franchise tax imposed
under article twenty-three of this chapter and the corporation net
income tax imposed under article twenty-four of this chapter, in
that order, subject to the following conditions and limitations:
(1) The amount of credit allowable is applied over a ten-year
period, at the rate of one-tenth thereof per taxable year,
beginning with the taxable year in which the property purchased for
manufacturing investment is first placed in service or use in this
state;
(2)
Severance tax. -- The credit is applied to reduce the
severance tax, imposed under article thirteen-a of this chapter
(determined before application of the credit allowed by section
three, article twelve-b of this chapter and before any other
allowable credits against tax and before application of the annual
exemption allowed by section ten, article thirteen-a of this
chapter). The amount of annual credit allowed may not reduce the
severance tax, imposed under article thirteen-a of this chapter,
below fifty percent of the amount which would be imposed for such
taxable year in the absence of this credit against tax. When in
any taxable year the taxpayer is entitled to claim credit under
this article and article thirteen-d of this chapter, the total amount of all credits allowable for the taxable year may not reduce
the amount of the severance tax, imposed under article thirteen-a
of this chapter, below fifty percent of the amount which would be
imposed for such taxable year (determined before application of the
credit allowed by section three, article twelve-b of this chapter
and before any other allowable credits against tax and before
application of the annual exemption allowed by section ten, article
thirteen-a of this chapter);
(3)
Business franchise tax. -- After application of
subdivision (2) of this subsection, any unused credit is next
applied to reduce the business franchise tax, imposed under article
twenty-three of this chapter (determined after application of the
credits against tax provided in section seventeen of article
twenty-three of this chapter, but before application of any other
allowable credits against tax). The amount of annual credit
allowed will not reduce the business franchise tax imposed under
article twenty-three of this chapter, below fifty percent of the
amount which would be imposed for such taxable year in the absence
of this credit against tax. When in any taxable year the taxpayer
is entitled to claim credit under this article and article
thirteen-d of this chapter, the total amount of all credits
allowable for the taxable year will not reduce the amount of the
business franchise tax, imposed under article twenty-three of this chapter, below fifty percent of the amount which would be imposed
for the taxable year (determined after application of the credits
against tax provided in section seventeen of article twenty-three
of this chapter, but before application of any other allowable
credits against tax);
(4)
Corporation net income tax. -- After application of
subdivision (3) of this subsection, any unused credit is next
applied to reduce the corporation net income tax, imposed under
article twenty-four of this chapter (determined before application
of any other allowable credits against tax). The amount of annual
credit allowed will not reduce corporation net income tax imposed
under article twenty-four of this chapter, below fifty percent of
the amount which would be imposed for such taxable year in the
absence of this credit against tax. When in any taxable year the
taxpayer is entitled to claim credit under this article and article
thirteen-d of this chapter, the total amount of all credits
allowable for the taxable year may not reduce the amount of the
corporation net income tax, imposed under article twenty-four of
this chapter, below fifty percent of the amount which would be
imposed for the taxable year (determined before application of any
other allowable credits against tax);
(5)
Pass-through entities. --
(A) If the eligible taxpayer is a limited liability company,
small business corporation, or a partnership, then any unused
credit (after application of subdivisions (2), (3) and (4) of this
subsection) is allowed as a credit against the taxes imposed by
article twenty-four of this chapter on owners of the eligible
taxpayer on the conduit income directly derived from the eligible
taxpayer by its owners. Only those portions of the tax imposed by
article twenty-four of this chapter that are imposed on income
directly derived by the owner from the eligible taxpayer are
subject to offset by this credit.
(B) The amount of annual credit allowed will not reduce
corporation net income tax imposed under article twenty-four of
this chapter, below fifty percent of the amount which would be
imposed on the conduit income directly derived from the eligible
taxpayer by each owner for such taxable year in the absence of this
credit against the taxes (determined before application of any
other allowable credits against tax).
(C) When in any taxable year the taxpayer is entitled to claim
credit under this article and article thirteen-d of this chapter,
the total amount of all credits allowable for the taxable year will
not reduce the corporation net income tax imposed on the conduit
income directly derived from the eligible taxpayer by each owner,
below fifty percent of the amount that would be imposed for such taxable year on the conduit income (determined before application
of any other allowable credits against tax);
(6) Small business corporations, limited liability companies,
partnerships and other unincorporated organizations shall allocate
any unused credit (after application of subdivisions (2), (3) and
(4) of this subsection) among their members in the same manner as
profits and losses are allocated for the taxable year; and
(7) No credit is allowed under this article against any tax
imposed by article twenty-one of this chapter.
(c) No carryover to a subsequent taxable year or carryback to
a prior taxable year is allowed for the amount of any unused
portion of any annual credit allowance. Such unused credit is
forfeited.
(d)
Application for credit required.
(1)
Application required. --
No Notwithstanding any provision
of this article to the contrary, no credit is allowed or
may be
applied under this article for any
qualified investment property
manufacturing investment until the eligible taxpayer placed in
service or use until the person claiming the credit makes written
application to the tax commissioner for allowance of credit as
provided in this section.
This application shall be in the form
prescribed by the tax commissioner and shall provide the number and
type of jobs created, if any, by the manufacturing investment, the average wage rates and benefits paid to employees filling the new
jobs, and any other information the tax commissioner may require.
An application for credit shall be filed, in the form the tax
commissioner shall prescribe, prior to the first date when
qualified investment property is first placed in service or use.
All information required by the form is provided. A separate
application shall be filed for each tax year in which property
purchased for manufacturing investment This application shall be
filed with the tax commissioner no later than the last day for
filing the annual return, determined by including any authorized
extension of time for filing the return, required under article
twenty-one or twenty-four of this chapter for the taxable year in
which the property to which the credit relates is placed in service
or use.
(2)
Failure to file. -- The failure to timely apply the
application for credit under this section results in forfeiture of
fifty percent of the annual credit allowance otherwise allowable
under this article. This penalty applies annually until such
application is filed.
§11-13S-8. Identification of investment credit property.
(a) Every taxpayer who claims credit under this article shall
maintain sufficient records to establish the following facts for
each item of property purchased for manufacturing investment:
(1) Its identity;
(2) Its actual or reasonably determined cost;
(3) Its straight-line depreciation life;
(4) The month and taxable year in which it was placed in
service;
(5) The amount of credit taken; and
(6) The date it was disposed of or otherwise ceased to be
property purchased for manufacturing investment.
(b) Every taxpayer who claims credit under this article shall
also maintain sufficient records to establish the number and types
of new jobs, if any, created, the wages and benefits paid to
employees filling the new jobs, and the duration of each job.
§11-13S-10. Tax credit review and accountability.
(a) Beginning on the first day of February, two thousand six,
and on the first day of February every third year thereafter, the
commissioner shall submit to the governor, the president of the
Senate and the speaker of the House of Delegates a tax credit
review and accountability report evaluating the cost effectiveness
of the credit allowed under this article during the most recent
three-year period for which information is available. The criteria
to be evaluated includes, but is not limited to, for each year of
the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The net number
, type and duration of new jobs created by
all taxpayers claiming the credit
and the wages and benefits paid;
(3) The cost of the credit;
(4) The cost of the credit per new job created; and
(5) Comparison of employment trends for the industry and for
taxpayers within the industry that claim the credit.
(b) Taxpayers claiming the credit shall provide the
information as the tax commissioner may require to prepare the
report:
Provided, That the information is subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter of the code.
NOTE: The purpose of this bill is:
(1) To amend the economic opportunity tax to permit the
allowable new jobs percentage to be increased 5
percentage points when the construction of a new business
facility or expansion of an existing business facility is
done using construction laborers and mechanics who are
paid at least prevailing wage for their work and the
total hours worked at the job site by all such laborers
and mechanics in a year equals or exceeds 156,000 hours;
and to require persons claiming the strategic research
and development tax credit or the manufacturing
investment tax credit to report to the Tax Commissioner
information about the number of new jobs created, type of
jobs created and average wages and benefits paid to
persons filling new jobs.
(2) To clarify application of transition rules for
business investment and jobs expansion tax credit
multiple year project Taxpayers that have a project
period that includes periods before and after the
transition date between the business investment and jobs expansion tax credit and the Economic Opportunity Tax
Credit.
(3) To clarify that applications for the Economic
Opportunity Tax Credit the Strategic Research and
Development Tax Credit and the Manufacturing Investment
Tax Credit must be filed not later than the due date,
determined by including any authorized extension of time
for filing the income tax return for the applicable year.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
Email
Webmaster | © 2024 West Virginia Legislature **
