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Enrolled Version - Final Version House Bill 4035 History

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Key: Green = existing Code. Red = new code to be enacted
ENROLLED

COMMITTEE SUBSTITUTE

FOR

H. B. 4035

(By Mr. Speaker, (Mr. Thompson) and Delegate Armstead)

[By Request of the Executive]



[Passed March 10, 2010; in effect ninety days from passage.]


AN ACT to amend and reenact §11-10-5t and §11-10-5z of the Code of West Virginia, 1931, as amended; to amend and reenact §11-13V-7 of said code; and to amend and reenact §11-21-54 and §11-21-74 of said code, all relating to electronic filing of tax returns and electronic funds transfers in payment of taxes; requiring taxpayers with a tax liability of $10,000 or more to file electronically; requiring electronic filing for certain tax preparers and employers; providing exceptions; and providing a $10,000 tax liability threshold amount to require taxpayers to pay by electronic funds transfers.

Be it enacted by the Legislature of West Virginia:
That §11-10-5t and §11-10-5z of the Code of West Virginia, 1931, as amended, be amended and reenacted; that §11-13V-7 of said code be amended and reenacted; and that §11-21-54 and §11-21-74 of said code be amended and reenacted, all to read as follows:
ARTICLE 10. TAX PROCEDURE AND ADMINISTRATION ACT.
§11-10-5t. Payment by electronic funds transfers.

(a) The term "electronic funds transfer" means and includes automated clearinghouse debit, automated clearinghouse credit, wire transfer and any other means recognized by the Tax Commissioner for payment of taxes.
(b) The Tax Commissioner may prescribe by emergency rules, administrative notices, forms and instructions, and the procedures and criteria to be followed by certain taxpayers in order to pay taxes by electronic funds transfer methods.
(c) The rules shall set forth the following:
(1) Acceptable indicia of timely payment;
(2) Which type of electronic filing method or methods a particular type of taxpayer may or may not use;
(3) Which types of taxes to which electronic filing requirements apply for any given tax year and implementation dates: Provided, That the type of tax to which electronic funds transfer requirements apply during the first tax year is personal income tax withholding by employers;
(4) The dollar amount of tax liability per year which, when exceeded, requires or permits electronic funds transfer. Unless and until a legislative rule is promulgated or this section is amended, no person may be required to pay any tax by electronic funds transfer if the amount owed for the tax during the preceding year was less than $120,000: Provided, That for tax years beginning on or after January 1, 2011, no person may be required to pay any tax by electronic funds transfer if the amount owed for the tax during the preceding tax year was less than $10,000;
(5) What, if any, exceptions are allowable, and alternative methods of payment to be used for any exceptions;
(6) Procedures for making voluntary electronic funds transfer payments;
(7) Any provisions needed to implement the civil penalty created by this section; and
(8) Any other provisions necessary to ensure the timely implementation of electronic funds transfer payments.
(d) In addition to any other additions and penalties which may be applicable, there is a civil penalty for failing or refusing to use an appropriate electronic funds transfer method when required to do so. The amount of this penalty is three percent of the total tax liability which is or was to be paid by electronic funds transfer for any tax for which electronic funds transfer methods are required to be used by the taxpayer.
(e) The provisions of this section are not intended to affect the provisions of other sections of this chapter concerning filing of returns or any other provisions which are not in direct conflict with this section.
(f) The State Treasurer shall adopt any procedures or rules necessary or convenient for implementing electronic funds transfers of tax payments authorized by this section and rules adopted by the Tax Commissioner. The treasurer shall draft any procedures and rules adopted in consultation with the Tax Commissioner and the procedures and rules may not conflict with this section or rules adopted by the Tax Commissioner.
(g) The provisions of this section become effective on or after January 1, 1998.
§11-10-5z. Electronic filing for certain persons.
(a) For tax years beginning on or after January 1, 2009, any person required to file a return for a tax administered under the provisions of this article and who had total annual remittance for any single tax equal to or greater than $100,000 during the immediately preceding taxable year shall file electronically all returns for all taxes administered under this article. For tax years beginning on or after January 1, 2011, any person required to file a return for a tax administered under the provisions of this article and who had total annual remittance for any single tax equal to or greater than $10,000 during the immediately preceding tax year shall file electronically all returns for all taxes administered under this article.
(b) The Tax Commissioner shall implement the provisions of this section using any combination of notices, forms, instructions and rules that he or she determines necessary. All rules shall be promulgated pursuant to article three, chapter twenty-nine-a of this code.
ARTICLE 13V. WORKERS' COMPENSATION DEBT REDUCTION ACT.
§11-13V-7. Periodic installment payments of taxes imposed by this article; exceptions.

(a) General rule. -- Except as provided in subsection (b) of this section, taxes levied by this article are due and payable in periodic installments as follows:
(1) Tax of $50 or less per month. -- If a person's aggregate annual tax liability under this article and article thirteen-a of this chapter is reasonably expected to be $50 or less per month, no installment payments of tax are required under this section during that taxable year.
(2) Tax of more than $1,000 per month. -- For taxpayers whose aggregate estimated tax liability under this article and article thirteen-a of this chapter exceeds $1,000 per month, the tax is due and payable in monthly installments on or before the last day of the month following the month in which the tax accrued: Provided, That the installment payment otherwise due under this subdivision on or before June 30 each year shall be remitted to the Tax Commissioner on or before June 15 each year. When this subdivision applies, the taxpayer shall, on or before the due date specified in this subdivision, make out an estimate of the tax for which the taxpayer is liable for the preceding month, sign the estimate and mail it together with a remittance, in the form prescribed by the Tax Commissioner, of the amount of tax due to the office of the Tax Commissioner: Provided, however, That the installment payment otherwise due under this paragraph on or before June 30 each year shall be remitted to the Tax Commissioner on or before June 15.
(3) Tax of $1,000 per month or less. -- For taxpayers whose estimated tax liability under this article is $1,000 per month or less, the tax is due and payable in quarterly installments on or before the last day of the month following the quarter in which the tax accrued. When this subdivision applies, the taxpayer shall, on or before the last day of the fourth, seventh and tenth months of the taxable year, make out an estimate of the tax for which the taxpayer is liable for the preceding quarter, sign the same and mail it together with a remittance, in the form prescribed by the Tax Commissioner, of the amount of tax due to the office of the Tax Commissioner.
(b) Exception. -- Notwithstanding the provisions of subsection (a) of this section, the Tax Commissioner, if he or she considers it necessary to ensure payment of the tax, may require the return and payment under this section for periods of shorter duration than those prescribed in subsection (a) of this section.
(c) Remittance by electronic funds transfer. -- When the taxpayer's annual aggregate liability for tax under this article and article thirteen-a of this chapter exceeds $50,000 for the prior tax year, payments of estimated tax required by this article and article thirteen-a during the then current tax year shall be by electronic funds transfer, in accordance with rules of the Tax Commissioner and rules of the State Treasurer, except as otherwise permitted by the Tax Commissioner: Provided, That for tax years beginning on or after January 1, 2011, when the taxpayer's annual aggregate liability for tax under this article and article thirteen-a of this chapter exceeds $10,000 for the prior tax year, payments of estimated tax required by this article and article thirteen-a during the then current tax year shall be by electronic funds transfer, in accordance with rules of the Tax Commissioner and rules of the State Treasurer, except as otherwise permitted by the Tax Commissioner.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-54. Electronic filing for certain tax preparers.
(a) If an income tax return preparer filed more than one hundred personal income tax returns for any taxable year that began after January 1, 2005, and if during calendar year 2006 or any calendar year thereafter that income tax preparer prepares one or more personal income tax returns using tax preparation software for a previous taxable year, then for each current taxable year all unamended personal income tax returns prepared by that preparer shall be filed electronically, except as provided in subsections (c) and (d) of this section: Provided, That if an income tax return preparer filed more than twenty-five personal income tax returns for any tax year that began on or after January 1, 2010, and if that income tax preparer prepares one or more personal income tax returns using tax preparation software, then for each tax year beginning on or after January 1, 2011, all unamended personal income tax returns prepared by that preparer shall be filed electronically, except as provided in subsections (c) and (d) of this section.
(b) For purposes of this section:
(1) "Income tax preparer" means any person who prepares, in exchange for compensation, or who employs another person to prepare, in exchange for compensation, all or a substantial portion of any return for a taxpayer for the tax imposed by this article and who is identified as the preparer for the taxpayer on the return. A person who only performs those acts described in clauses (i) through (iv) of Section 7701(a)(36)(B) of the Internal Revenue Code with respect to the preparation of a return for a trust or estate for which he or she is a fiduciary or a return for a partnership of which he or she is a partner is not an income tax preparer for purposes of this section.
(2) "Electronic filing" or "e-filing" means filing using electronic technology such as computer modem, magnetic media, optical disk, facsimile machine, telephone or other technology approved by the Tax Commissioner, in such manner as he or she deems acceptable.
(3) "Tax preparation software" means any computer software program intended for accounting or tax return preparation.
(c) Subsection (a) of this section shall cease to apply to an income tax preparer if, for the previous taxable year, that income tax preparer prepared no more than twenty-five personal income tax returns.
(d) This section first applies to personal income tax returns required to be filed for taxable years beginning January 1, 2006. This section does not require electronic filing of: (1) Returns that were not required to be filed for taxable years beginning prior to that date; (2) returns for prior taxable years beginning prior to that date; or (3) amended returns for any taxable year.
(e) An income tax preparer who is required to e-file under this section but does not do so is liable for a penalty in the amount of $25 for each return prepared that is not e-filed, unless the preparer shows that the failure to do so is due to technical inability to comply on the part of a tax preparer or a documented election by a client not to file electronically.
(f) The commissioner shall implement the provisions of this section using any combination of notices, forms, instructions and rules that he or she deems necessary.
§11-21-74. Filing of employer's withholding return and payment of withheld taxes; annual reconciliation; e-filing required for certain tax preparers and employer.

(a) General. -- Every employer required to deduct and withhold tax under this article shall, for each calendar quarter, on or before the last day of the month following the close of the calendar quarter, file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes required to be deducted and withheld. Where the average quarterly amount deducted and withheld by any employer is less than $150 and the aggregate for the calendar year can reasonably be expected to be less than $600, the Tax Commissioner may by regulation permit an employer to file an annual return and pay over to the Tax Commissioner the taxes deducted and withheld on or before the last day of the month following the close of the calendar year. The Tax Commissioner may, by nonemergency legislative rules promulgated pursuant to article three, chapter twenty-nine-a of this code, change the minimum amounts established by this subsection. The Tax Commissioner may, if he or she determines necessary for the protection of the revenues, require any employer to make the return and pay to him or her the tax deducted and withheld at any time or from time to time. Notwithstanding the provisions of this subsection, on or after January 1, 2009, every employer required to deduct and withhold tax under this article shall file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes required to be deducted and withheld, in accordance with the procedures established by the Internal Revenue Service pursuant to Section 3402 of the Internal Revenue Code.
(b) Monthly returns and payments of withheld tax on and after January 1, 2001. -- Notwithstanding the provisions of subsection (a) of this section, on and after January 1, 2001, every employer required to deduct and withhold tax under this article shall, for each of the first eleven months of the calendar year, on or before the twentieth day of the succeeding month and for the last calendar month of the year, on or before the last day of the succeeding month, file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes required to be deducted and withheld, if the withheld taxes aggregate $250 or more for the month, except any employer with respect to whom the Tax Commissioner may have by regulation provided otherwise in accordance with the provisions of subsection (a) of this section. Notwithstanding the provisions of this subsection, on and after January 1, 2009, every employer required to deduct and withhold tax under this article shall file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes required to be deducted and withheld. The due dates for returns and payments shall be established by the Tax Commissioner to match as closely as practicable the due dates in effect for federal income tax purposes, in accordance with the procedures established by the Internal Revenue Service pursuant to Section 3402 of the Internal Revenue Code.
(c) Annual returns and payments of withheld tax of certain domestic and household employees. -- Employers of domestic and household employees whose withholdings of federal income tax are annually paid and reported by the employer pursuant to the filing of Schedule H of federal form 1040, 1040A, 1040NR, 1040NR-EZ, 1040SS or 1041 may, on or before January 31 next succeeding the end of the calendar year for which withholdings are deducted and withheld, file an annual withholding return with the Tax Commissioner and annually remit to the Tax Commissioner West Virginia personal income taxes deducted and withheld for the employees. The Tax Commissioner may promulgate legislative or other rules pursuant to article three, chapter twenty-nine-a of this code for implementation of this subsection. Notwithstanding the provisions of this subsection, on or after January 1, 2009, every employer required to deduct and withhold tax under this article shall file a withholding return as prescribed by the Tax Commissioner and pay over to the Tax Commissioner the taxes required to be deducted and withheld. The due dates for annual returns and payments shall be established by the Tax Commissioner to match as closely as practicable the due dates in effect for federal income tax purposes in accordance with the procedures established by the Internal Revenue Service pursuant to Section 3402 of the Internal Revenue Code.
(d) Deposit in trust for Tax Commissioner. -- Whenever any employer fails to collect, truthfully account for or pay over the tax, or to make returns of the tax as required in this section, the Tax Commissioner may serve a notice requiring the employer to collect the taxes which become collectible after service of the notice, to deposit the taxes in a bank approved by the Tax Commissioner, in a separate account, in trust for and payable to the Tax Commissioner and to keep the amount of the tax in the separate account until payment over to the Tax Commissioner. The notice shall remain in effect until a notice of cancellation is served by the Tax Commissioner.
(e) Accelerated payment. -- (1) Notwithstanding the provisions of subsections (a) and (b) of this section, for calendar years beginning after December 31, 1990, every employer required to deduct and withhold tax whose average payment per calendar month for the preceding calendar year under subsection (b) of this section exceeded $100,000 shall remit the tax attributable to the first fifteen days of June each year on or before June 23: Provided, That on and after June 1, 2007, the provisions of this subsection that require the accelerated payment on or before June 23 of the tax imposed by this article are no longer effective and any tax due and owing shall be payable in accordance with subsection (a) of this section.
(2) For purposes of complying with subdivision (1) of this subsection, the employer shall remit an amount equal to the withholding tax due under this article on employee compensation subject to withholding tax payable or paid to employees for the first fifteen days of June or, at the employer's election, the employer may remit an amount equal to fifty percent of the employer's liability for withholding tax under this article on compensation payable or paid to employees for the preceding month of May.
(3) For an employer which has not been in business for a full calendar year, the total amount the employer was required to deduct and withhold under subsection (b) of this section for the prior calendar year shall be divided by the number of months, including fractions of a month, that it was in business during the prior calendar year and if that amount exceeds $100,000, the employer shall remit the tax attributable to the first fifteen days of June each year on or before June 23, as provided in subdivision (2) of this subsection.
(4) When an employer required to make an advanced payment of withholding tax under subdivision (1) of this subsection makes out its return for the month of June, which is due on July 20, that employer may claim as a credit against its liability under this article for tax on employee compensation paid or payable for employee services rendered during the month of June the amount of the advanced payment of tax made under subdivision (1) of this subsection.
(f) The amendments to this section enacted in the year 2006 are effective for tax years beginning on or after January 1, 2006.
(g) An annual reconciliation of West Virginia personal income tax withheld shall be submitted by the employer on or before February 28 following the close of the calendar year, together with Tax Division copies of all withholding tax statements for that preceding calendar year. The reconciliation shall be accompanied by a list of the amounts of income withheld for each employee in such form as the Tax Commissioner prescribes and shall be filed separately from the employer's monthly or quarterly return.
(h) Any employer required to file a withholding return for two hundred fifty or more employees shall file its return using electronic filing as defined in section fifty-four of this article: Provided, That for any tax period beginning on or after January 1, 2011, any employer with fifty or more employees shall file its return using electronic filing as defined in section fifty-four of this article. An employer that is required to file electronically but does not do so is subject to a penalty in the amount of $25 per employee for whom the return was not filed electronically, unless the employer shows that the failure is due to a technical inability to comply.
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