ENROLLED
Senate Bill No. 623
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
____________
[Passed April 4, 2005; in effect ninety days from passage.]
____________
AN ACT to amend and reenact §11-21-9 of the Code of West Virginia,
1931, as amended; and to amend said code by adding thereto a
new section, designated §11-21-12g, all relating to updating
meaning of federal adjusted gross income and certain other
terms used in West Virginia Personal Income Tax Act; providing
new increasing modification to federal adjusted gross income
for amount deducted under Section 199 of Internal Revenue
Code; requiring filing of certain schedules to support
deduction and increasing modification; providing Tax
Commissioner with additional remedies for noncompliance and
for errors in computing federal adjusted gross income; and
specifying effective dates.
Be it enacted by the Legislature of West Virginia:
That §11-21-9 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that said code be amended by adding
thereto a new section, designated §11-21-12g, all to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-9. Meaning of terms.
(a) Any term used in this article has the same meaning as when
used in a comparable context in the laws of the United States
relating to income taxes, unless a different meaning is clearly
required. Any reference in this article to the laws of the United
States means the provisions of the Internal Revenue Code of 1986,
as amended, and any other provisions of the laws of the United
States that relate to the determination of income for federal
income tax purposes. All amendments made to the laws of the United
States after the thirty-first day of December, two thousand four,
but prior to the first day of January, two thousand five, shall be
given effect in determining the taxes imposed by this article to
the same extent those changes are allowed for federal income tax
purposes, whether the changes are retroactive or prospective, but
no amendment to the laws of the United States made on or after the
first day of January, two thousand five, shall be given any effect.
(b)
Medical savings accounts. -- The term "taxable trust"
does not include a medical savings account established pursuant to
section twenty, article fifteen, chapter thirty-three of this code
or section fifteen, article sixteen of said chapter. Employer
contributions to a medical savings account established pursuant to
said sections are not "wages" for purposes of withholding under
section seventy-one of this article.
(c)
Surtax. -- The term "surtax" means the twenty percent
additional tax imposed on taxable withdrawals from a medical
savings account under section twenty, article fifteen, chapter
thirty-three of this code and the twenty percent additional tax
imposed on taxable withdrawals from a medical savings account under
section fifteen, article sixteen of said chapter which are
collected by the Tax Commissioner as tax collected under this
article.
(d)
Effective date. -- The amendments to this section enacted
in the year two thousand five are retroactive to the extent
allowable under federal income tax law. With respect to taxable
years that began prior to the first day of January, two thousand
five, the law in effect for each of those years shall be fully
preserved as to that year, except as provided in this section.
(e) For purposes of the refundable credit allowed to a low
income senior citizen for property tax paid on his or her homestead
in this state, the term "laws of the United States" as used in
subsection (a) of this section means and includes the term "low
income" as defined in subsection (b), section twenty-one of this
article and as reflected in the poverty guidelines updated
periodically in the federal register by the U. S. Department of
Health and Human Services under the authority of 42 U. S. C.
§9902(2).
§11-21-12g. Additional modification increasing federal adjusted
gross income; disallowance of deduction taken under Internal Revenue Code Section 199.
(a) In addition to amounts added to federal taxable income
pursuant to subsection (b), section twelve of this article, unless
already included therein, there shall be added to federal taxable
income the amount deducted under Section 199 of the Internal
Revenue Code of 1986, as amended, when determining federal adjusted
gross income for the taxable year for federal income tax purposes.
(b) When taxpayer's federal adjusted gross income includes
distributive share of income, gain or loss of a partnership,
limited liability company, electing small business corporation, or
other entity treated as a partnership for federal income tax
purposes, and when taxpayer's distributive share for the taxable
year includes a deduction, or portion of a deduction computed under
Section 199 of the Internal Revenue Code, as amended, for the
taxable year, then in addition to amounts added to federal taxable
income pursuant to subsection (b), section twelve of this article,
unless already included therein, taxpayer shall add the amount
computed under Section 199 of the Internal Revenue Code of 1986, as
amended, that flows through to the taxpayer for federal income tax
purposes for the taxable year. Taxpayer shall file with its annual
return under this article a copy of all schedules K-1 it received
showing allocation of a Section 199 deduction and such other
information as the Tax Commissioner may require.
(c)
Failure to attach required schedules. -- When taxpayer
fails to include with the annual return due under this article the schedule or schedules required by this section, the return shall be
treated as an incomplete return until the day the required schedule
or schedules are filed with the Tax Commissioner. An incomplete
return showing an overpayment of tax may not be treated as a claim
for refund until the day the defect is cured. The filing of an
incomplete return shall not start the running of the period of time
during which the Tax Commissioner may issue an assessment or take
other action to enforce compliance of this article for the taxable
year.
(d)
Audit adjustment to federal taxable income. -- When
auditing for compliance with this article, the Tax Commissioner may
change a taxpayer's computation of federal taxable income or pro
forma taxable income to comply with the laws of the United States
as in effect for the taxable year and incorporated by reference
into this article.