Senate Bill No. 466
(By Senators Helmick, Barnes and Kessler)
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[Introduced February 6, 2007; referred to the Committee on
Finance.]
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A BILL to amend and reenact §11-10E-6, §11-10E-8 and §11-10E-9 of
the Code of West Virginia, 1931, as amended, all relating to
certain tax shelters used to avoid paying state income taxes;
clarifying when certain penalties are imposed; determining
when the tax shelter registration number is to be filed with
the Tax Commissioner; and determining when tax shelter
investor lists are to be filed with the Tax Commissioner.
Be it enacted by the Legislature of West Virginia:
That §11-10E-6, §11-10E-8 and §11-10E-9 of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read
as follows:
ARTICLE 10E. TAX SHELTER VOLUNTARY COMPLIANCE PROGRAM.
§11-10E-6. Failure to register tax shelter or maintain list.
(a)
Penalty imposed. -- Any person that fails to comply with
the requirements of section eight or section nine of this article shall incur a penalty as provided in subsection (b). A person
shall not be in compliance with the requirements of section eight
unless and until the required registration has been filed and
contains all of the information required to be included with such
registration under such section eight or Section 6111 of the
Internal Revenue Code. A person shall not be in compliance with
the requirements of section nine unless, at the time the required
list is made available to the Tax Commissioner, such list contains
all of the information required to be maintained under such section
nine or Section 6112 of the Internal Revenue Code.
(b)
Amount of penalty. -- The following penalties apply:
(1) In the case of each failure to comply with the
requirements of subsection (a), subsection (b) or subsection (d) of
section eight, the penalty shall be ten thousand dollars;
(2) If the failure
to comply with the requirements of
subsection (a), subsection (b) or subsection (d) of section eight
is with respect to a listed transaction
under described in
subsection (c) of section eight, the penalty shall be one hundred
thousand dollars;
(3) In the case of each failure to comply with the
requirements of subsection (a) or subsection (b) of section nine,
the penalty shall be ten thousand dollars; and
(4) If the failure
to comply with the requirements of
subsection (a) or subsection (b) of section nine is with respect to a listed transaction
under described in subsection (c) of section
nine, the penalty shall be one hundred thousand dollars.
(c)
Authority to rescind penalty. -- The office of tax
appeals, with the written approval of the Tax Commissioner, may
rescind all or any portion of any penalty imposed by this section
with respect to any violation only if one or more of the following
apply: (1) It is determined that failure to comply did not
jeopardize the best interests of the state and is not due to any
willful neglect or any intent not to comply; (2) it is shown that
the violation is due to an unintentional mistake of fact; (3)
rescinding the penalty would promote compliance with the
requirements of this article and effective tax administration; or
(4) the taxpayer can show that there was reasonable cause for the
failure to disclose and that the taxpayer acted in good faith.
(d)
Coordination with other penalties. -- The penalty imposed
by this section is in addition to any penalty imposed by this
article or article ten of this chapter.
§11-10E-8. Registration of tax shelters.
(a)
Federal tax shelter. -- Any tax shelter organizer
or
material advisor required to register a tax shelter under Section
6111 of the Internal Revenue Code shall send a duplicate of the
federal registration information to the Tax Commissioner not later
than the day on which registration is required under federal law.
Any person required to register under Section 6111 of the Internal Revenue Code who receives a tax registration number from the
Secretary of the Treasury shall, within thirty days after request
by the Tax Commissioner, file a statement of that registration
number with the Tax Commissioner.
(b)
Additional requirements for listed transactions. -- In
addition to the requirements of subsection (a), for any
transactions entered into on or after the twenty-eighth day of
February, two thousand, that become listed transactions (as defined
under Treasury Regulations Section 1.6011-4) at any time, those
transactions shall be registered with the Tax Commissioner (in the
form and manner prescribed by the Tax Commissioner) by the later
of: (i) Sixty days after entering into the transaction; (ii) sixty
days after the transaction becomes a listed transaction; or (iii)
the first day of July, two thousand six.
(c)
Tax shelters subject to this section. -- The provisions of
this section apply to any tax shelter herein described in which a
person:
(1) Organizes or participates in the sale of an interest in a
partnership, entity or other plan or arrangement; and
(2) Makes or causes another person to make a false or
fraudulent statement with respect to securing a tax benefit or a
gross valuation as to any material matter, and which is or was one
or more of the following: (A) Organized in this state; (B) doing
business in this state; or (C) deriving income from sources in this state:
Provided, That for taxable years commencing on or after the
first day of January, two thousand seven, the provisions of this
section apply to any tax shelter herein described in which a person
organizes or participates in the sale of an interest in a
partnership, entity or other plan or arrangement that is or was one
or more of the following: (A) Organized in this state; (B) doing
business in this state; or (C) deriving income from sources in this
state.
(d)
Tax shelter identification number. -- Any person required
to file a return under this article and required to include on the
person's federal income tax return a tax shelter identification
number pursuant to Section 6111 of the Internal Revenue Code shall
furnish such number when filing the person's West Virginia return.
§11-10E-9. Investor lists.
(a)
Federal abusive tax shelter. -- Any person required to
maintain a list under Section 6112 of the Internal Revenue Code and
Treasury Regulations Section 301.6112-1 with respect to a
potentially abusive tax shelter shall furnish such list to the Tax
Commissioner not later than the time such list is required to be
furnished to the Internal Revenue Service under federal income tax
law. The list required under this section shall include the same
information required with respect to a potentially abusive tax
shelter under Treasury Regulations Section 301.6112-1 and any other
information that the Tax Commissioner may require.
(b)
Additional requirements for listed transactions. -- For
transactions entered into on or after the twenty-eighth day of
February, two thousand, that become listed transactions (as defined
under Treasury Regulations Section 1.6011-4) at any time
thereafter, the list shall be furnished to the Tax Commissioner by
the later of sixty days after entering into the transaction or
sixty days after the transaction becomes a listed transaction.
(c)
Tax shelters subject to this section. -- The provisions of
this section apply to any tax shelter herein described in which a
person:
(1) Organizes or participates in the sale of an interest in a
partnership, entity or other plan or arrangement; and
(2) Makes or causes another person to make a false or
fraudulent statement with respect to securing a tax benefit or a
gross valuation as to any material matter; and which is or was one
or more of the following: (A) Organized in this state; (B) doing
business in this state; or (C) deriving income from sources in this
state:
Provided, That for taxable years commencing on or after the
first day of January, two thousand seven, the provisions of this
section apply to any tax shelter herein described in which a person
organizes or participates in the sale of an interest in a
partnership, entity or other plan or arrangement that is or was one
or more of the following: (A) Organized in this state; (B) doing business in this state; or (C) deriving income from sources in this
state.
NOTE: The purpose of this bill is to clarify when certain
penalties are to be imposed, and to further define when the
registration of tax shelters and tax shelter investor lists are to
be filed with the Tax Commissioner.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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