WEST virginia Legislature

2017 regular session

Introduced

Senate Bill 683

By Senators Jeffries, Miller, Beach, Facemire, Ojeda, Plymale and Romano

[Introduced March 20, 2017; Referred
to the Committee on Finance]

A BILL to amend and reenact §11-12-75 of the Code of West Virginia, 1931, as amended; to amend and reenact §11-15-3 and §11-15-8 of said code; to amend said code by adding thereto two new sections, designated §11-15-3d and §11-15-3e; to amend and reenact §11-15A-2 of said code; to amend and reenact §11-21-4e, §11-21-12 and §11-21-16 of said code; to amend said code by adding thereto a new section, designated §11-21-22d; and to amend and reenact §11-24-4 of said code, all relating to taxation to enact a fiscally responsible state budget; increasing the tax on corporations holding more than ten thousand acres of land and making it an annual assessment; increasing the rate of the consumers sales and service tax; increasing the rate of the use tax; providing effective dates for those rate changes; changing the words “six percent” to the current consumers sales and service tax rate or use tax rate where those terms are used under certain sections of chapter eleven of the code; imposing the consumers sales tax on telecommunications service and ancillary services; imposing the consumers sales and service tax on the sale of certain digital goods; imposing the consumer sales and service tax on personal services; adjusting the personal income tax rates to lower rates on taxable income between $10,000 and $150,000 for joint filers and between $5,000 and $75,000 for individuals filing separate returns; creating new personal income tax rates for higher earners; exempting Social Security benefits from the personal income tax if the taxpayer’s total taxable income is below $50,000; amending the West Virginia exemption for residents such that it is reduced for residents with more than $100,000 in West Virginia taxable income; exempting all monetary benefits derived from military retirement from personal income tax obligations; creating West Virginia Earned Income Tax Credit; authorizing a refundable tax credit based upon the federal Earned Income Tax Credit; determining eligibility for the credit; determining amount of the credit; authorizing rule-making authority; replacing the flat corporate net income tax rate with a tiered rate that is consistent with the personal income tax rates, thereby reducing the tax rate for businesses with lower annual income and increasing the tax rate for higher earning businesses; and setting forth effective dates.

Be it enacted by the Legislature of West Virginia:

That §11-12-75 of the Code of West Virginia, 1931, as amended, be amended and reenacted; that §11-15-3 and §11-15-8 of said code be amended and reenacted; that said code be amended by adding thereto two new sections, designated §11-15-3d and §11-15-3e; that §11-15A-2 of said code be amended and reenacted; that §11-21-4e, §11-21-12 and §11-21-16 of said code be amended and reenacted; that said code be amended by adding thereto a new section, designated §11-21-22d; and that §11-24-4 of said code be amended and reenacted, all to read as follows:

ARTICLE 12. BUSINESS REGISTRATION TAX.

§11-12-75. Tax on corporations holding more than ten thousand acres of land.

Every corporation, including railroad and other corporations, holding more than ten thousand acres of land in this state shall pay to the state a tax of 5¢ 50¢ per acre for the privilege of acquiring and holding of land so acquired and held by it in addition to ten thousand acres. Such The corporations shall, under the hand of the president and seal of the corporation, and attested by the secretary, apply to the Secretary of State for a certificate authorizing the holding of the number of acres stated in such application, and pay the tax thereon; and it shall be the duty of the Secretary of State to shall issue to such the corporation a certificate stating the amount of tax paid and the number of acres on which paid, and the number of acres the corporation is thereby entitled to hold. Hereafter a domestic corporation shall state in its agreement for incorporation and a foreign corporation shall state in its application for authority to hold property and transact business in this state, the number of acres it desires to hold, and pay the taxes thereon to the Secretary of State before the certificate of incorporation or of authority is issued. If any corporation desires to increase the number of acres it may hold, it shall make application therefor to the Secretary of State. Such The application shall be signed by the president of the corporation, sealed with its corporate seal, and attested by the secretary, and shall state the number of acres it then holds and the number of acres it desires to hold. The Secretary of State shall collect the proper amount of tax and shall issue to the corporation a certificate reciting the number of acres the corporation may hold and the amount of tax paid to him or her. If any corporation shall fails to comply with the provisions of this section it shall be is liable to a fine of not less than $25 nor more than $500, and be liable to pay such the tax due to the state with a penalty of ten percent on the total amount due, and be liable to all the provisions of sections eighty-six and eighty-seven of this article so far as they are applicable. All moneys received by the Secretary of State under the provisions of this section shall be reported to the Auditor, and paid into the State Treasury in the manner prescribed for the payment of other moneys received by him the Secretary of State. No corporation shall be required to pay the said tax of 5¢ per acre for license to hold any land in this state in excess of ten thousand acres for which such corporation shall have already paid a license tax at the time this law takes effect

A corporation which has paid said tax may assign, without further payment by the assignee of the tax required hereunder, its license or authority to hold lands in excess of ten thousand acres provided the assignee shall be a corporation organized solely to conduct the same general business and with the same stock ownership as the original licensee and such assignment be accompanied by a conveyance and transfer to such assignee corporation of all the lands and other assets of the original licensee. Such assignment shall be filed with the Secretary of State who, upon being satisfied that the assignee corporation has conformed to the foregoing requirements, shall issue a certificate authorizing such assignee corporation to hold the same number of acres the original licensee was authorized to hold

ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.

§11-15-3. Amount of tax; allocation of tax and transfers.

(a) Vendor to collect. -- For the privilege of selling tangible personal property or custom software and for the privilege of furnishing certain selected services defined in sections two and eight of this article, the vendor shall collect from the purchaser the tax as provided under this article and article fifteen-b of this chapter, and shall pay the amount of tax to the Tax Commissioner in accordance with the provisions of this article or article fifteen-b of this chapter.

(b) Amount of tax. -- The general consumer sales and service tax imposed by this article shall be at the rate of 6¢ on the dollar of sales or services, excluding gasoline and special fuel sales, which remain taxable at the rate of 5¢ on the dollar of sales: Provided, That on and after July 1, 2017, the tax imposed by this article shall be 74 on the dollar of sales or services, excluding gasoline and special fuel sales, which remain taxable at the rate of 54 on the dollar of sale.

(c) Calculation tax on fractional parts of a dollar until January 1, 2004. -- There shall be no tax on sales where the monetary consideration is 5¢ or less. The amount of the tax shall be computed as follows:

(1) On each sale, where the monetary consideration is from 6¢ to 16¢, both inclusive, 1¢.

(2) On each sale, where the monetary consideration is from 17¢ to 33¢, both inclusive, 2¢.

(3) On each sale, where the monetary consideration is from 34¢ to 50¢, both inclusive, 3¢.

(4) On each sale, where the monetary consideration is from 51¢ to 67¢, both inclusive, 4¢.

(5) On each sale, where the monetary consideration is from 68¢ to 84¢, both inclusive, 5¢.

(6) On each sale, where the monetary consideration is from 85¢ to $1, both inclusive, 6¢.

(7) If the sale price is in excess of $1, 6¢ on each whole dollar of sale price, and upon any fractional part of a dollar in excess of whole dollars as follows: 1¢ on the fractional part of the dollar if less than 17¢; 2¢ on the fractional part of the dollar if in excess of 16¢ but less than 34¢; 3¢ on the fractional part of the dollar if in excess of 33¢ but less than 51¢; 4¢ on the fractional part of the dollar if in excess of 50¢ but less than 68¢; 5¢ on the fractional part of the dollar if in excess of 67¢ but less than 85¢; and 6¢ on the fractional part of the dollar if in excess of 84¢. For example, the tax on sales from $1.01 to $1.16, both inclusive, 7¢; on sales from $1.17 to $1.33, both inclusive, 8¢; on sales from $1.34 to $1.50, both inclusive, 9¢; on sales from $1.51 to $1.67, both inclusive, 10¢; on sales from $1.68 to $1.84, both inclusive, 11¢ and on sales from $1.85 to $2, both inclusive, 12¢: Provided, That beginning January 1, 2004, tax due under this article shall be calculated as provided in subsection (d) of this subsection and this subsection (c) does not apply to sales made after December 31, 2003.

(d) Calculation of tax on fractional parts of a dollar after December 31, 2003. -- Beginning January 1, 2004, the tax computation under subsection (b) of this section shall be carried to the third decimal place, and the tax rounded up to the next whole cent whenever the third decimal place is greater than four and rounded down to the lower whole cent whenever the third decimal place is four or less. The vendor may elect to compute the tax due on a transaction on a per item basis or on an invoice basis provided the method used is consistently used during the reporting period.

(e) No aggregation of separate sales transactions, exception for coin-operated devices. -- Separate sales, such as daily or weekly deliveries, shall may not be aggregated for the purpose of computation of the tax even though the sales are aggregated in the billing or payment therefor. Notwithstanding any other provision of this article, coin-operated amusement and vending machine sales shall be aggregated for the purpose of computation of this tax.

(f) Rate of tax on certain mobile homes. -- Notwithstanding any provision of this article to the contrary, after December 31, 2003, the tax levied on sales of mobile homes to be used by the owner thereof as his or her principal year-round residence and dwelling shall be an amount equal to six percent of fifty percent of the sales price: Provided, That on and after July 1, 2017, notwithstanding any provision of this article to the contrary, the tax levied on sales of mobile homes to be used by the owner thereof as his or her principal year-round residence and dwelling shall be an amount equal to seven percent of fifty percent of the sales price.

(g) Construction; custom software. -- After December 31, 2003, whenever the words "tangible personal property" or "property" appear in this article, the same shall also include the words "custom software".

(h) Computation of tax on sales of gasoline and special fuel. -- The method of computation of tax provided in this section does not apply to sales of gasoline and special fuel

(i)  Notwithstanding any provision of this code to the contrary, on and after July 1, 2017, when the words “six percent” appear in the following subsections, sections or articles of this code, those words shall mean “a percentage equal to the consumers sales and service tax rate”: Section eight-b, article fifteen, chapter eleven; subdivision (6), subsection (b), section nine, article fifteen, chapter eleven; and subsection (b), section eleven, article ten, chapter eleven: Provided, That notwithstanding any provisions of this code to the contrary, on and after July 1, 2017, when the words “six percent” appear in subsection (c), section ten, article fifteen-a, chapter eleven, those words shall mean “a percentage equal to the use tax rate.”

§11-15-3d. Imposition of consumers sales tax on telecommunications service and ancillary services.

(a) Notwithstanding the provisions of section eight of this article or any other provision of this code, on and after July 1, 2017, telecommunications service and ancillary services, as defined in article fifteen-b of this chapter, are subject to the consumer sales and service tax imposed by this article, and the use tax imposed by article fifteen-a of this chapter: Provided, That payment of the tax imposed under this article or under article fifteen-a of this chapter on prepaid wireless services is sufficient to fulfill the mandate of this section, and prepaid wireless services are not subjected to double taxation under this article: Provided, however, That this section does not prevent imposition of any other lawfully imposed tax or fee under any state or federal law, or the laws of any subdivision thereof on such prepaid wireless services.

(b) The tax imposed by this section is in addition to any municipal utilities tax, municipal consumers sales and service tax and use tax, or other tax lawfully imposed on telephone service, telecommunications service and ancillary services.

(c) The sale of telecommunications service and ancillary services on which tax is imposed by this section are subject to sourcing rules of the Streamlined Sales Tax Agreement as defined in article fifteen-b of this chapter.

(d) Notwithstanding the fact that a service provider did not meet the threshold amount for the previous calendar year that would cause accelerated payment to be made in the current year, the accelerated payment rule imposed under subsection (g), section sixteen of this article applies to the tax imposed by this section, if the service provider’s total combined monthly remittance of the taxes levied by this article and article fifteen-a of this chapter for any calendar month beginning on and after July 1, 2017, exceeds, or can reasonably be expected to exceed, $100,000.

§11-15-3e. Sales tax applies to digital goods.

Notwithstanding any other provision of this code to the contrary, the general consumer sales and service tax imposed by this article includes and applies to the following, whether electronically or digitally delivered, streamed or accessed and whether purchased singly, by subscription or in any other manner, including maintenance, updates and support:

(1) Video;

(2) Photographs;

(3) Books;

(4) Any other taxable printed matter;

(5) Applications, commonly known as apps;

(6) Games;

(7) Music;

(8) Any other audio, including satellite radio service;

(9) Canned software, notwithstanding the function performed; or

(10) Any other taxable tangible personal property electronically or digitally delivered, streamed or accessed.

§11-15-8. Furnishing of services included; exceptions.

The provisions of this article apply not only to selling tangible personal property and custom software, but also to the furnishing of all services, except professional and personal services, and except those services furnished by businesses subject to the control of the Public Service Commission when the service or the manner in which it is delivered is subject to regulation by the Public Service Commission.  Effective July 1, 2017, this article applies to personal services unless explicitly excepted by the provisions of this section or other provision of this code.

ARTICLE 15A. USE TAX.

§11-15A-2. Imposition of tax; six percent tax rate; inclusion of services as taxable; transition rules; allocation of tax and transfers.

(a) An excise A tax is hereby levied and imposed on the use in this state of tangible personal property, custom software or taxable services, to be collected and paid as provided in this article or article fifteen-b of this chapter, at the rate of six percent of the purchase price of the property or taxable services, except as otherwise provided in this article: Provided, That on and after July 1, 2017, the tax imposed by this article shall be collected and paid, as provided in this article or article fifteen-b of this chapter, at the rate of seven percent of the purchase price of the property or taxable services, except as otherwise provided in this article.

(b) Calculation of tax on fractional parts of a dollar. -– The tax computation under subsection (a) of this section shall be carried to the third decimal place and the tax rounded up to the next whole cent whenever the third decimal place is greater than four and rounded down to the lower whole cent whenever the third decimal place is four or less. The vendor may elect to compute the tax due on a transaction on a per item basis or on an invoice basis provided the method used is consistently used during the reporting period.

(c) "Taxable services," for the purposes of this article, means services of the nature that are subject to the tax imposed by article fifteen of this chapter. In this article, wherever the words "tangible personal property" or "property" appear, the same shall include the words "or taxable services," where the context so requires.

(d) Use tax is hereby imposed upon every person using tangible personal property, custom software or taxable service within this state. That person's liability is not extinguished until the tax has been paid. A receipt with the tax separately stated thereon issued by a retailer engaged in business in this state, or by a foreign retailer who is authorized by the Tax Commissioner to collect the tax imposed by this article, relieves the purchaser from further liability for the tax to which the receipt refers.

(e) Purchases of tangible personal property or taxable services made for the government of the United States or any of its agencies by ultimate consumers is subject to the tax imposed by this section. Industrial materials and equipment owned by the federal government within the State of West Virginia of a character not ordinarily readily obtainable within the state, is not subject to use tax when sold, if the industrial materials and equipment would not be subject to use taxes if sold outside of the state for use in West Virginia.

(f) This article does not apply to purchases made by counties or municipal corporations.

ARTICLE 21. PERSONAL INCOME TAX.

§11-21-4e. Rate of tax -- Taxable years beginning on or after January 1, 1987.

(a) Rate of tax on individuals (except married individuals filing separate returns), individuals filing joint returns, heads of households, estates and trusts. -- The tax imposed by section three of this article on the West Virginia taxable income of every individual (except married individuals filing separate returns); every individual who is a head of a household in the determination of his or her federal income tax for the taxable year; every husband and wife who file a joint return under this article; every individual who is entitled to file his or her federal income tax return for the taxable year as a surviving spouse; and every estate and trust shall be determined in accordance with the following table:

If the West Virginia

taxable income is:                                                                The tax is:

 

Not over $10,000                                                                 3% of the taxable income

 

Over $l0,000 but not                                                            $300.00 plus 4% 3.75% of

      over $25,000                                                                              excess over $10,000

 

Over $25,000 but not                                                           $900.00 plus 4.5% $862.50

      over $40,000                                                                              plus 4.25% of excess

                                                                                                         over $25,000

Over $40,000 but not                                                           $1,575.00 plus 6% $1,500.00

      over $60,000                                                                              plus 5.75% of excess

                                                                                                         over $40,000

 

Over $60,000, but not                                                          $2,775.00 plus 6.5% $2,650.00

      over $150,000                                                                            plus 6.25% of excess

                                                                                                         over $60,000

 

Over $150,000, but not                                                        $8,275.00 plus 8% of excess

      over $250,000                                                                               over $150,000

 

Over $250,000                                                                     $16,275 plus 9% of excess

                                                                                                         over $250,000

 

(b) Rate of tax on married individuals filing separate returns. -- In the case of husband and wife filing separate returns under this article for the taxable year, the tax imposed by section three of this article on the West Virginia taxable income of each spouse shall be determined in accordance with the following table:

If the West Virginia

taxable income is:                                                                   The tax is:

 

Not over $5,000                                                                      3% of the taxable income

 

Over $5,000 but not                                                                $l50.00 plus 4% 3.75% of

            over $l2,500                                                                            excess over $5,000

 

Over $l2,500 but not                                                               $450.00 plus 4.5% $431.25

            over $20,000                                                                           plus 4.25% of excess

                                                                                                            over $l2,500

 

Over $20,000 but not                                                              $787.50 plus 6% $750.00

            over $30,000                                                                           plus 5.75% of excess

                                                                                                            over $20,000

 

Over $30,000, but not                                                             $l,387.50 plus 6.5% $1,325

                         over $75,000                                                                          plus 6.25% of excess

                                                                                                                        over $30,000

 

Over $75,000, but not                                                                         $4,137.50 plus 8% of

             over $125,000                                                                        excess over $75,000

 

Over $125,000                                                                        $8,137.50 plus 9% of excess

                                                                                                            over $125,000

 

(c) Applicability of this section. -- The provisions of this section, as amended by this act, shall be applicable in determining the rate of tax imposed by this article for all taxable years beginning after December 31, 1986, and shall be in lieu of the rates of tax specified in section four-d of this article. Amendments made to this section during the regular session of the Legislature in 2017, shall be applicable in determining the rate of tax imposed by this article for all taxable years beginning after December 31, 2016.

§11-21-12. West Virginia adjusted gross income of resident individual.

(a) General. -- The West Virginia adjusted gross income of a resident individual means his or her federal adjusted gross income as defined in the laws of the United States for the taxable year with the modifications specified in this section.

(b) Modifications increasing federal adjusted gross income. -- There shall be added to federal adjusted gross income unless already included therein the following items:

(1) Interest income on obligations of any state other than this state or of a political subdivision of any other state unless created by compact or agreement to which this state is a party;

(2) Interest or dividend income on obligations or securities of any authority, commission or instrumentality of the United States, which the laws of the United States exempt from federal income tax but not from state income taxes;

(3) Any deduction allowed when determining federal adjusted gross income for federal income tax purposes for the taxable year that is not allowed as a deduction under this article for the taxable year;

(4) Interest on indebtedness incurred or continued to purchase or carry obligations or securities the income from which is exempt from tax under this article, to the extent deductible in determining federal adjusted gross income;

(5) Interest on a depository institution tax-exempt savings certificate which is allowed as an exclusion from federal gross income under Section 128 of the Internal Revenue Code, for the federal taxable year;

(6) The amount of a lump sum distribution for which the taxpayer has elected under Section 402(e) of the Internal Revenue Code of 1986, as amended, to be separately taxed for federal income tax purposes; and

(7) Amounts withdrawn from a medical savings account established by or for an individual under section twenty, article fifteen, chapter thirty-three of this code or section fifteen, article sixteen of said chapter that are used for a purpose other than payment of medical expenses, as defined in those sections.

(c) Modifications reducing federal adjusted gross income. -- There shall be subtracted from federal adjusted gross income to the extent included therein:

(1) Interest income on obligations of the United States and its possessions to the extent includable in gross income for federal income tax purposes;

(2) Interest or dividend income on obligations or securities of any authority, commission or instrumentality of the United States or of the State of West Virginia to the extent includable in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States or of the State of West Virginia, including federal interest or dividends paid to shareholders of a regulated investment company, under Section 852 of the Internal Revenue Code for taxable years ending after June 30, 1987;

(3) Any amount included in federal adjusted gross income for federal income tax purposes for the taxable year that is not included in federal adjusted gross income under this article for the taxable year;

(4) The amount of any refund or credit for overpayment of income taxes imposed by this state, or any other taxing jurisdiction, to the extent properly included in gross income for federal income tax purposes;

(5) Annuities, retirement allowances, returns of contributions and any other benefit received under the West Virginia Public Employees Retirement System, the West Virginia State Teachers Retirement System, and all forms of military retirement, including regular Armed Forces, Reserves and National Guard, including any survivorship annuities derived therefrom, to the extent includable in gross income for federal income tax purposes: Provided, That notwithstanding any provisions in this code to the contrary this modification shall be limited to the first $2,000 of benefits received under the West Virginia Public Employees Retirement System, the West Virginia State Teachers Retirement System and, including any survivorship annuities derived therefrom, to the extent includable in gross income for federal income tax purposes for taxable years beginning after December 31, 1986; and the first $2,000 of benefits received under any federal retirement system to which Title 4 U.S.C. §111 applies: Provided, however, That the total modification under this paragraph shall may not exceed $2,000 per person receiving retirement benefits and this limitation shall apply to all returns or amended returns filed after December 31, 1988;

(6) Retirement income received in the form of pensions and annuities after December 31, 1979, under any West Virginia police, West Virginia Firemen's Retirement System or the West Virginia State Police Death, Disability and Retirement Fund, the West Virginia State Police Retirement System or the West Virginia Deputy Sheriff Retirement System, including any survivorship annuities derived from any of these programs, to the extent includable in gross income for federal income tax purposes;

(7) (A) For taxable years beginning after December 31, 2000, and ending prior to January 1, 2003, an amount equal to two percent multiplied by the number of years of active duty in the Armed Forces of the United States of America with the product thereof multiplied by the first $30,000 of military retirement income, including In recognition of the distinct and sacrificial nature of a career in military service, involving repetitive periods of hazardous duty assignments, enduring numerous family separations and being subjected to extreme personal hardships, all forms of military retirement income from the regular Armed Forces, Reserves and National Guard paid by the United States or by this state after December 31, 2000 December 31, 2017, including any survivorship annuities derived therefrom, to the extent included in gross income for federal income tax purposes for the taxable year.

(B) For taxable years beginning after December 31, 2002, the first $20,000 of military retirement income, including retirement income from the regular Armed Forces, Reserves and National Guard paid by the United States or by this state after December 31, 2002, including any survivorship annuities, to the extent included in gross income for federal income tax purposes for the taxable year.

(C) In the event that any of the provisions of this subdivision are found by a court of competent jurisdiction to violate either the Constitution of this state or of the United States, or is held to be extended to persons other than specified in this subdivision, this subdivision shall become null and void by operation of law.

(8) For taxable years beginning after December 31, 2016, any social security benefits received pursuant to Title 42, U.S.C., Chapter 7, if the taxpayer’s total taxable income is below $50,000.

(8) (9) Federal adjusted gross income in the amount of $8,000 received from any source after December 31, 1986, by any person who has attained the age of sixty-five on or before the last day of the taxable year, or by any person certified by proper authority as permanently and totally disabled, regardless of age, on or before the last day of the taxable year, to the extent includable in federal adjusted gross income for federal tax purposes: Provided, That if a person has a medical certification from a prior year and he or she is still permanently and totally disabled, a copy of the original certificate is acceptable as proof of disability. A copy of the form filed for the federal disability income tax exclusion is acceptable: Provided, however, That:

(i) Where the total modification under subdivisions (1), (2), (5), (6) and (7) of this subsection is $8,000 per person or more, no deduction shall may be allowed under this subdivision; and

(ii) Where the total modification under subdivisions (1), (2), (5), (6) and (7) of this subsection is less than $8,000 per person, the total modification allowed under this subdivision for all gross income received by that person shall be limited to the difference between $8,000 and the sum of modifications under subdivisions (1), (2), (5), (6) and (7) of this subsection;

(9) (10) Federal adjusted gross income in the amount of $8,000 received from any source after December 31, 1986, by the surviving spouse of any person who had attained the age of sixty-five or who had been certified as permanently and totally disabled, to the extent includable in federal adjusted gross income for federal tax purposes: Provided, That:

(i) Where the total modification under subdivisions (1), (2), (5), (6), (7) and (8) (9) of this subsection is $8,000 or more, no deduction shall be allowed under this subdivision; and

(ii) Where the total modification under subdivisions (1), (2), (5), (6), (7) and (8) (9) of this subsection is less than $8,000 per person, the total modification allowed under this subdivision for all gross income received by that person shall be limited to the difference between $8,000 and the sum of subdivisions (1), (2), (5), (6), (7) and (8) (9) of this subsection;

(10) (11) Contributions from any source to a medical savings account established by or for the individual pursuant to section twenty, article fifteen, chapter thirty-three of this code or section fifteen, article sixteen of said chapter, plus interest earned on the account, to the extent includable in federal adjusted gross income for federal tax purposes: Provided, That the amount subtracted pursuant to this subdivision for any one taxable year may not exceed $2,000 plus interest earned on the account. For married individuals filing a joint return, the maximum deduction is computed separately for each individual;

(11) (12) For the 2006 taxable year only, severance wages received by a taxpayer from an employer as the result of the taxpayer's permanent termination from employment through a reduction in force and through no fault of the employee, not to exceed $30,000. For purposes of this subdivision:

(i) The term "severance wages" means any monetary compensation paid by the employer in the taxable year as a result of permanent termination from employment in excess of regular annual wages or regular annual salary;

(ii) The term "reduction in force" means a net reduction in the number of employees employed by the employer in West Virginia, determined based on total West Virginia employment of the employer's controlled group;

(iii) The term "controlled group" means one or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least fifty percent of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations and the common parent owns directly stock possessing at least fifty percent of the voting power of all classes of stock of at least one of the other corporations;

(iv) The term "corporation" means any corporation, joint-stock company or association and any business conducted by a trustee or trustees wherein interest or ownership is evidenced by a certificate of interest or ownership or similar written instrument; and

(12) (13) Any other income which this state is prohibited from taxing under the laws of the United States.

(d) Modification for West Virginia fiduciary adjustment. -- There shall be added to or subtracted from federal adjusted gross income, as the case may be, the taxpayer's share, as beneficiary of an estate or trust, of the West Virginia fiduciary adjustment determined under section nineteen of this article.

(e) Partners and S corporation shareholders. -- The amounts of modifications required to be made under this section by a partner or an S corporation shareholder, which relate to items of income, gain, loss or deduction of a partnership or an S corporation, shall be determined under section seventeen of this article.

(f) Husband and wife. -- If husband and wife determine their federal income tax on a joint return but determine their West Virginia income taxes separately, they shall determine their West Virginia adjusted gross incomes separately as if their federal adjusted gross incomes had been determined separately.

(g) Effective date. -- (1) Changes in the language of this section enacted in the year 2000 shall apply to taxable years beginning after December 31, 2000.

(2) Changes in the language of this section enacted in the year 2002 shall apply to taxable years beginning after December 31, 2002.

(3) Changes in the language of this section enacted in the year 2017 apply to taxable years beginning after December 31, 2017.

§11-21-16. West Virginia personal exemptions of resident individual.

(a) General. -- For any tax imposed under the provisions of this article with respect to any taxable year prior to January 1, 1983, a resident individual shall be allowed a West Virginia exemption of $600 for each exemption for which he or she is entitled to a deduction for the taxable year for federal income tax purposes. With respect to any taxable year beginning on or after January 1, 1983, and prior to January 1, 1984, said exemption shall be $700; with respect to any taxable year beginning on or after January 1, 1984, said exemption shall be $800; and with respect to any taxable year beginning on or after January 1, 1987, said exemption shall be $2,000.

(b) Husband and wife. -- If the West Virginia income taxes of a husband and wife are separately determined but their federal income tax is determined on a joint return, each of them shall be separately entitled, with respect to any taxable year prior to January 1, 1983, to a West Virginia exemption of $600 for each federal exemption to which he or she would be separately entitled for the taxable year if their federal income taxes had been determined on separate returns. With respect to any taxable year beginning on or after January 1, 1983, and prior to January 1, 1984, said exemption shall be $700; with respect to any taxable year beginning on or after January 1, 1984, said exemption shall be $800; and with respect to any taxable year beginning on or after January 1, 1987, said exemption shall be $2,000.

(c) Surviving spouse. -- For taxable years beginning after December 31, 1986, a surviving spouse shall be allowed one additional exemption of $2,000 for the two taxable years beginning after the year of death of the deceased spouse.

For purposes of this section and section twelve of this article, a surviving spouse means a taxpayer whose spouse died during the taxable year prior to the taxable year for which the annual return is being filed and who has not remarried at any time before the end of the taxable year for which the annual return is being filed.

(d) Certain dependents. -- Notwithstanding any provisions in this section, for taxable years beginning after December 31, 1986, a resident individual whose exemption amount for federal tax purposes is zero by virtue of section 151(d)(2) of the Internal Revenue Code of 1986, shall be allowed a single West Virginia exemption in the amount of $500.

General. -- For any tax imposed under the provisions of this article with respect to any taxable year prior to January 1, 2017, a resident individual shall be allowed a West Virginia exemption, the amount of which shall be determined in accordance with the following table, for which he or she is entitled to a deduction for the taxable year for federal income tax purposes:

If the West Virginia

taxable income is:                                                       The exemption is:

Not over $100,000                                                      $2,000

Over $100,000 but not

            over $200,000                                                 $1,000

Over $200,000 but not

            over $250,000                                                 $500

Over $250,000                                                            $0

§11-21-22d. West Virginia Earned Income Tax Credit.

(a) For each taxable year beginning after December 31, 2016, a West Virginia resident who is eligible for the federal earned income tax credit under Section 32 of the Internal Revenue Code is eligible for a credit under this article equal to fifteen percent of the amount of the federal earned income tax credit that the individual:

(1) Is eligible to receive in the taxable year; and

(2) Claimed for the taxable year under Section 32 of the Internal Revenue Code.

(b) If other credits allowed are used by the taxpayer for the taxable year, the West Virginia Earned Income Tax Credit shall be applied last.

(c) If the amount of the credit allowed exceeds the taxpayer's West Virginia personal income tax liability, the commissioner shall treat the excess as an overpayment and shall pay the taxpayer the amount of the excess, without interest.

(d) The commissioner shall try every year to inform taxpayers who may be eligible to receive the credit provided under this section.

(e) The commissioner may propose legislative rules for legislative approval in accordance with article three, chapter twenty-nine-a of this code for the administration of the provisions of this section, file administrative notices in the State Register in accordance with section three, article two, chapter twenty-nine-a of this code, and develop and publish any instructions, any or all of which as may be determined to be necessary to provide to taxpayers guidance and assistance when claiming the West Virginia Earned Income Tax Credit.

ARTICLE 24. CORPORATION NET INCOME TAX.

§11-24-4. Imposition of primary tax and rate thereof; effective and termination dates.

Primary tax. -- (1) In the case of taxable periods beginning after June 30, 1967, and ending prior to January 1, 1983, a tax is hereby imposed for each taxable year at the rate of six percent per annum on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five.

(2) In the case of taxable periods beginning on or after January 1, 1983, and ending prior to July 1, 1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, and any banks, banking associations or corporations, trust companies, building and loan associations and savings and loan associations, at the rates which follow:

(A) On taxable income not in excess of $50,000, the rate of six percent; and

(B) On taxable income in excess of $50,000, the rate of seven percent.

(3) In the case of taxable periods beginning on or after July 1, 1987, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of nine and three-quarters percent. Beginning July 1, 1988, and on each July 1 thereafter for four successive calendar years, the rate shall be reduced by fifteen one hundredths of one percent per year, with such rate to be nine percent on and after July 1, 1992.

(4) In the case of taxable periods beginning on or after January 1, 2007, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and three-quarters percent.

(5) In the case of taxable periods beginning on or after January 1, 2009, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of eight and one-half percent.

(6) In the case of taxable periods beginning on or after January 1, 2012, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven and three-quarters percent: Provided, That the reduction in tax authorized by this subsection shall be suspended if the combined balance of funds as of June 30, 2011, in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, 2011: Provided, however, That the rate reduction schedule will resume in the calendar year immediately following any subsequent fiscal year when the combined balance of funds as of June 30 of that fiscal year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B next equals or exceeds ten percent of the General Revenue Fund budgeted for the immediately succeeding fiscal year.

(7) In the case of taxable periods beginning on or after January 1, 2013, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of seven percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (6) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, of the preceding year.

(8) In the case of taxable periods beginning on or after January 1, 2014, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, at the rate of six and one-half percent: Provided, That the reduction in tax authorized by this subsection shall be suspended for one calendar year subsequent to the occurrence of the suspension of the reduction in tax authorized by subdivision (7) of this section: Provided, however, That the reduction in tax on the first day of any calendar year authorized by this subsection shall be suspended if the combined balance of funds as of June 30 of the preceding year in the Revenue Fund Shortfall Reserve Fund and the Revenue Fund Shortfall Reserve Fund - Part B established in section twenty, article two, chapter eleven-b of this code does not equal or exceed ten percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, of the preceding year.

(9) In the case of taxable periods beginning on or after January 1, 2017, a tax is hereby imposed for each taxable year on the West Virginia taxable income of every domestic or foreign corporation engaging in business in this state or deriving income from property, activity or other sources in this state, except corporations exempt under section five of this article, in accordance with the following table:

If the West Virginia

taxable income is:                                                                The tax is:

 

Not over $10,000                                                                 3% of the taxable income

 

Over $l0,000 but not                                                            $300.00 plus 3.75% of

      over $25,000                                                                              excess over $10,000

 

Over $25,000 but not                                                           $862.50 plus 4.25% of

      over $40,000                                                                              excess over $25,000

 

Over $40,000 but not                                                           $1,500.00 plus 5.75% of

      over $60,000                                                                              excess over $40,000

 

Over $60,000, but not                                                          $2,650.00 plus 6.25% of

      over $150,000                                                                            excess over $60,000

 

Over $150,000, but not                                                        $8,275.00 plus 8% of excess

      over $250,000                                                                               over $150,000

 

Over $250,000            $16,275 plus 9% of excess

                                                                                                                        over $250,000

 

NOTE: The purpose of this bill is to provide for a fiscally responsible budget through fair tax adjustments.  The bill increases the tax on corporations holding more than 10,000 acres of land; increases the rate of the consumers sales and service tax; and increases the rate of the use tax. The bill provides effective dates for those rate changes and changes the words “six percent” to “the current consumers sales and service tax rate or use tax rate” where those terms are used. The bill imposes the consumers sales tax on telecommunications service and ancillary services and imposes the consumer sales and service tax on the sale of certain digital goods.  The bill imposes the consumer sales and service tax on personal services.  It adjusts the personal income tax rates to lower rates on taxable income between $10,000 and $150,000 for joint filers and between $5,000 and $75,000 for individuals filing separate returns.  The bill creates new personal income tax rates for higher earners; exempting social security benefits from the personal income tax if the taxpayer’s total taxable income is below $50,000; amending the West Virginia exemption for residents such that it is reduced for residents with more than $100,000 in West Virginia taxable income.  The bill exempts monetary benefits derived from military retirement from personal income tax obligations. The bill creates the West Virginia Earned Income Tax Credit and authorizes a refundable tax credit based upon the federal Earned Income Tax Credit.  It determines eligibility for the credit the amount of the credit. It authorizes rule-making authority.  The bill replaces the flat corporate net income tax rate with a tiered rate that is consistent with the personal income tax rates, thereby reducing the tax rate for businesses with lower annual income and increasing the tax rate for higher earning businesses and sets forth effective dates.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.