Senate Bill No. 324
(By Senators McCabe, Browning, Kessler,
D. Facemire, Wells, Barnes, Jenkins, Chafin, White, Stollings,
Plymale, Prezioso, Palumbo and Oliverio)
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[Introduced January 21, 2010; referred to the Committee on
Education; and then to the Committee on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended,
by
adding thereto a new article, designated §11-13AA-1, §11-
13AA-2, §11-13AA-3 and §11-13AA-4
; and to amend and reenact
§11-21-12 of said code, all relating to
establishing a tax
credit for graduates of a higher education institution for a
portion of the interest paid on student loans; providing for
the promulgation of rules by the State Tax Commissioner for
such purpose; establishing a modification reducing federal
adjusted gross income for recent graduates of higher education
institutions; and providing for the promulgation of rules by
the Tax Commissioner for such purpose.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated
§11-13AA-1, §11-13AA-
2, §11-13AA-3 and §11-13AA-4
;
and that §11-21-12 of said code be
amended and reenacted
, all to read as follows:
ARTICLE 13AA. TAX CREDIT FOR PAYMENT OF HIGHER EDUCATION LOANS.
§11-13AA-1. Legislative findings.
The Legislature finds and declares that:
(1) The State of West Virginia faces a demographic problem due
to the inability of our state in the past two decades to attract
and retain the younger generation into our state;
(2) The loss of young professionals and skilled workers is a
self perpetuating cycle and requires decisive and creative action
to reverse the trend;
(3) The retention, recruitment, and advancement of young
talent is critical to the future success of our state's economy,
communities and intellectual infrastructure;
(4) States are in a stiff competition for the coveted younger
demographic and are employing innovative strategies to create an
economy and community attractive to this younger generation;
(5) The increase of intellectual capital through the
attraction of the younger generation will enable the state to
become more attractive to national and global companies to relocate
to the State of West Virginia;
(6) Providing the younger generation with an incentive to
live, work, and play in West Virginia will increase the
intellectual capital of the state and combat the demographic
problem currently facing West Virginia and is therefore in the best
interest of the State of West Virginia.
§11-13AA-2. Definitions.
(a) General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b) of
this section have the meanings ascribed to them by this section,
unless a different meaning is clearly required by the context in
which the term is used.
(b) Terms defined --
(1) "Eligible taxpayer" means any taxpayer who has paid
interest on a qualified student loan and who has yet to attain the
age of forty by December 31 in the tax year for which the credit is
being claimed.
(2) "Higher education institution" means all regionally
accredited post secondary institutions in the United States and all
accredited post secondary institutions within the State of West
Virginia.
(3) "Qualified student loan" means a loan made to a student
for the purposes of paying the tuition, books, fees or any other
educational expense or living expenses of a student to obtain a two
year degree, four-year degree or advanced degree from a higher
education institution.
§11-13AA-3. Tax credits for a portion of the interest paid on
student loans.
(a) Credit allowed. -- For those tax years beginning on or
after January 1, 2010, there shall be allowed a credit for any
eligible taxpayer against personal income taxes as described in subsection (c) of this section for a portion of the interest paid
on a qualified student loan by such taxpayer in the tax year that
such taxpayer paid the interest on the qualified student loan.
(b) Amount of credit. -- The tax credit shall be in an amount
equal to the amount of money paid as interest on a qualified
student loan in the tax year up to a maximum amount of $500.
(c) Application of annual credit allowance. -- The amount of
credit as determined under subsection (b) of this section is
allowed as a credit against the taxes imposed by article twenty-one
of this chapter.
§11-13AA-4. Carryover credit allowed; Tax Commissioner to
promulgate rules.
(a) If the tax credit allowed under this article in any
taxable year exceeds the taxpayer's tax liability as determined in
accordance with article twenty-one of this chapter for that taxable
year, the excess may be applied for succeeding taxable years until
the earlier of the following:
(1) The full amount of the excess tax credit is used;
(2) The taxpayer reaches the age of forty, whereupon no tax
credit may be claimed in that taxable year.
(b) No carryback to a prior taxable year is allowed for the
amount of any unused credit in any taxable year.
(c) A tax credit is subject to recapture, elimination or
reduction if it is determined by the Tax Commissioner that a
taxpayer was not entitled to the credit, in whole or in part, in the tax year in which it was claimed by the taxpayer.
(d) The Tax Commissioner shall propose for promulgation rules
pursuant to the provisions of article three, chapter twenty-nine-a
of this code, as may be necessary to carry out the purposes of this
article.
ARTICLE 21. PERSONAL INCOME TAX.
PART I. GENERAL.
§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 not exceed $2,000 per
person receiving retirement benefits and this limitation shall
apply to all returns or amended returns filed after December 31,
1986;
(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 retirement income from the regular Armed Forces, reserves
and National Guard paid by the United States or by this state after
December 31, 2000, including any survivorship annuities, 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) 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 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) 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) 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) 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) of this subsection;
(10) 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) 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) Any other income which this state is prohibited from
taxing under the laws of the United States;
and
(13) Federal adjusted gross income in the amount of $25,000
received from any source after December 31, 2010, by a taxpayer who
has yet to attain the age of forty by December 31 of the tax year
for which the taxpayer is filing and has graduated from a higher
education institution, as that term as defined in section two,
article thirteen-aa chapter eleven of this code, with a two-year,
four-year, or advanced degree in a tax year which is not more than
two years prior to the year which the taxpayer is filing; Provided, that, no taxpayer is eligible to take such a modification for more
than any two tax years; Provided further, That, the State Tax
Commissioner shall promulgate legislative rules pursuant to the
provisions of chapter twenty-nine-a of this code regarding the
documentation necessary to claim such a modification.
(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.
NOTE: The purpose of this bill is to establish incentives to
attract and retain young talent to the State of West Virginia.
Article thirteen-aa is new; therefore, strike-throughs and
underscoring have been omitted.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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