H. B. 2421
(By Delegates Michael, Given, Martin and Mezzatesta)
[Introduced March 5, 1997; referred to the
Committee on Finance.]
A BILL to amend chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article thirteen-l,
relating to providing for a credit for ad valorem property
taxes paid during the taxable year for inventory; providing
for a credit carry-over; and providing for the use of the
credit by a shareholder or partner.
Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article thirteen-l, to
read as follows:
ARTICLE 13L. BUSINESS INVENTORY CREDIT.
§11-13L-1. Definitions.
As used in this article:
(a) "Assessed value" means the average fair market value of
all inventory owned throughout the tax year;
(b) "Inventory" means items of property held for resale or
raw materials, ingredients or components used to produce a
product for the sale of the product;
(c) "Pass through entity" means: (1) A corporation that is
exempt from the adjusted gross income tax by reason of electing
to be taxed under subchapter S of the Internal Revenue Code of
1986, as amended; or (2) a partnership;
(d) "State tax liability" means a taxpayer's tax liability
that is incurred under:
(1) Articles twenty-one and twenty-four of chapter eleven
(personal and corporate net income tax);
(2) Article twenty-three, chapter eleven (business franchise
tax);
(3) Article twelve, chapter eleven (business registration
tax); and
(4) Article thirteen, chapter eleven (business and
occupation tax).
(e) "Taxpayer" means an individual or entity that has a
state tax liability.
§11-13L-2. Tax credit for tax on inventory; amount of credit.
(a) A taxpayer is entitled to a credit against the taxpayer's state tax liability for a taxable year for the ad
valorem property taxes paid in the taxable year on inventory.
(b) The amount of the credit is equal to the lesser of:
(1) The ad valorem property taxes paid on inventory in the
taxable year; or
(2) An amount equal to the ad valorem property taxes paid on
inventory, as identified by the taxpayer, with an assessed value
not exceeding the following:
(A) For the taxable year beginning in one thousand nine
hundred ninety-six, twenty thousand dollars;
(B) For the taxable year beginning in one thousand nine
hundred ninety-seven, thirty thousand dollars;
(C) For the taxable year beginning in one thousand nine
hundred ninety-eight, forty-five thousand dollars;
(D) For the taxable year beginning in one thousand nine
hundred ninety-nine, seventy thousand dollars;
(E) For the taxable year beginning in two thousand, one
hundred five thousand dollars;
(F) For the taxable year beginning in two thousand one, one
hundred sixty thousand dollars;
(G) For the taxable year beginning in two thousand two, two
hundred fifty thousand dollars;
(H) For the taxable year beginning in two thousand threewo,
three hundred seventy-five thousand dollars;
(I) For the taxable year beginning in two thousand fourthree,
five hundred sixty-five thousand dollars; and
(J) For the taxable year beginning in two thousand fiveour, one
million dollars.
§11-13L-3. Carry-overs.
(a) If the amount determined under subsection (b), section
two of this article for a taxpayer in a taxable year exceeds the
taxpayer's state tax liability for that taxable year, the
taxpayer may carry the excess over to the following taxable
years. The amount of the credit carry-over from a taxable year
shall be reduced to the extent that the carry-over is used by the
taxpayer to obtain a credit under this chapter for any subsequent
taxable year. A taxpayer is not entitled to a carryback.
(b) A taxpayer is entitled to a refund of any unused credit.
§11-13L-4. Shareholder or partner use of credit.
If a pass through entity does not have state income tax
liability against which the tax credit may be applied, a
shareholder or partner of the pass through entity is entitled to
a tax credit equal to the tax credit determined for the pass
through entity for the taxable year; multiplied by the percentage
of the pass through entity's distributive income to which the
shareholder or partner is entitled.
§11-13L-5. Proof of payment.
To receive the credit provided by this articlechapter, a taxpayer
must claim the credit on the taxpayer's state tax return or
returns in the manner prescribed by the department. The taxpayer
shall submit to the department proof of payment of an ad valorem
property tax and all information that the department determines
is necessary for the calculation of the credit provided by this
chapter.
§11-13L-6. Retroactively effective.
This article shall be effective retroactively beginning on
the first day of January, one thousand nine hundred ninety-six.
NOTE: The purpose of this bill is to provide for a credit
for ad valorem property taxes paid during the taxable year for
inventory; to provide for a credit carry-over; and to provide for
the use of the credit by a shareholder or partner.
This article is new; therefore, strike-throughs and
underscoring have been omitted.