MCCANN 3358

The Committee on Small Business, Entrepreneurship and Economic Development moves to amend the bill on page 1, by striking everything after the enacting clause, and inserting in lieu thereof the following:

ARTICLE 13DD. SMALL BUSINESS TAX CREDIT.

§11-13DD-1. Tax Credit for Small Businesses.

(a) Eligible Employer. — Employer with fewer than 25 full-time employees and produces or manufactures agricultural or manufactured products in West Virginia. The small business must be the same entity that produces the agriculture or manufactured product made in West Virginia.

(b) Credit allowance. — Each eligible employer is allowed a tax credit not more than 50 percent of the costs of branding, marketing and advertising of agricultural or manufactured products produced or manufactured in West Virginia.

(1) Tax credit is available for one time only and applied to the taxable year in which the investment was made.

(2) Tax credit is non-transferable and cannot be sold or assigned.

(3) No carryback is allowed.

(4) The tax credit allowed and applied under this article cannot exceed 4 years beginning with tax year after December 31, 2020.

(5) The Tax Department shall allocate the tax credits in the order the applications therefor are received.

(d) Application of tax credit:

(1) Not more than $100,000 shall be applied towards credit allowance, under subsection (b), for entire program per taxable year.

(A) When the total amount of tax credits under this article equals the maximum amount of tax credits allowed, as specified in subsection (d) of this section, in any taxable year, no further tax credit shall be allowed in that same taxable year.

(2) Not more than $10,000 for each eligible taxpayer

(A) Each eligible taxpayer may exercise the privilege to carry over unused tax credits as applied under subsection (k).

(B) The total amount of tax credit that may be applied in any taxable year by any eligible taxpayer in combination with the owners of the eligible taxpayer under subsections (f) and (h) of this section shall not exceed $10,000.

(e) Corporation net income taxes. — Tax credit is first applied to reduce the taxes imposed upon the eligible taxpayer by §11-24-1 et seq. of this code for the taxable year as determined before application of allowable credits against tax.

(f) If the eligible taxpayer is a limited liability company, an electing small business corporation, as defined in §1361 of the United States Internal Revenue Code of 1986, or a partnership, any unused tax credit remaining after application of subsection (e) of this section is allowed as a tax credit against the taxes imposed by §11-24-1 et seq. of this code on owners of the eligible taxpayer.

(1) Electing small business corporations, as defined in subsection (e) of this section, limited liability companies, and partnerships shall allocate the tax credit allowed by this article among their members in the same manner as profits and losses are allocated for the taxable year.

(2) No tax credit is allowed under this article against any withholding tax imposed by, or payable under, §11-21-1 et seq. of this code.

(g) Personal income tax taxes. — After application of subsections (e) and (f) 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.

(h) If the eligible taxpayer is an electing small business corporation (as defined in Section 1361 of the United States Internal Revenue Code of 1986, as amended), a partnership, a limited liability company that is treated as a partnership for federal income tax purposes or a sole proprietorship, then any unused credit, after application of subsection (c) of this subsection, is allowed as a credit against the taxes imposed by article twenty-one [§§ 11-21-1 et seq.] of this chapter on the income from business.

(1) Electing small business corporations, as defined in subsection (h) of this section, limited liability companies, and partnerships shall allocate the tax credit allowed by this article among their members in the same manner as profits and losses are allocated for the taxable year.

(2) No tax credit is allowed under this article against any withholding tax imposed by, or payable under, §11-21-1 et seq. of this code

(A) 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 (f) and (h) of this section shall not exceed $10,000.

(j) Aggregate Amount of Tax Credit:

(1) If the aggregate amount of tax credit claims for a calendar year exceeds the applicable maximum limit of $100,000, the Department of Tax and Revenue is required to reduce all tax credit claims for the tax credit in a prorated fashion until the aggregate tax credit claims equal the applicable amount of $100,000.

(2) Since the annual cost of the program could easily approach the aggregate statutory cap of $100,000 beginning in FY2021, the Department of Tax and Revenue shall provide an annual report to determine if the statutory cap may increase.

(k) Unused credit carry forward. — If the tax credit allowed under this article in any taxable year exceeds the sum of the taxes enumerated in subsections (e), (f) and (h) of this section for that taxable year, the eligible taxpayer and owners of eligible taxpayers described in subsections (f) and (h) of this section may apply the excess as a tax 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 tax credit is used; or

(2) The expiration of the third taxable year after the taxable year in which the investment was made. The tax credit remaining thereafter is forfeited.

Adopted

Rejected