COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 441
(By Senators Helmick, McCabe, Green, Unger, Plymale, Foster,
Kessler and Wells)
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[Originating in the Committee on Finance;
reported February 19, 2010.]
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A BILL to amend and reenact §11-13Z-1, §11-13Z-2 and §11-13Z-3 of
the Code of West Virginia, 1931, as amended; and to amend said
code by adding thereto eight new sections, designated
§11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8,
§11-13Z-9, §11-13Z-10 and §11-13Z-11, all relating to the tax
credit for residential solar energy systems; identifying
legislative purpose; creating certain definitions; defining
"solar energy system"; limiting amount of credit to a maximum
of $2,000; specifying application of credit and carryforward
periods; establishing burden of proof on taxpayer; requiring
that written application for credit be filed with the Tax
Commissioner not later than specified date; allowing a penalty
of fifty percent of credit for failure to make timely
application; establishing eligibility requirements for credit; disqualifying from credit taxpayer that purchases solar energy
systems from related persons; providing for credit recapture
and imposition of recapture tax if property disposed of in the
first or succeeding tax year the system put into service;
authorizing promulgation of rules; specifying credit exclusion
when other credits are applied, or where federal grant or
federal deduction applies, indicating nontransferability of
credit; requiring Tax Commissioner to undertake a solar energy
tax credit review beginning in 2013 and report results to the
Governor, the President of the Senate and the Speaker of the
House of Delegates; requiring taxpayers to submit confidential
data for inclusion in said review and report; and terminating
the solar energy tax credit in 2013.
Be it enacted by the Legislature of West Virginia:
That §11-13Z-1, §11-13Z-2 and §11-13Z-3 of the Code of West
Virginia, 1931, as amended, be amended and reenacted; and that said
code be amended by adding thereto eight new sections, designated
§11-13Z-4, §11-13Z-5, §11-13Z-6, §11-13Z-7, §11-13Z-8, §11-13Z-9,
§11-13Z-10 and §11-13Z-11, all to read as follows:
ARTICLE 13Z. RESIDENTIAL SOLAR ENERGY TAX CREDIT.
§
11-13Z-1. Legislative purpose.
The purpose of this article is to provide a tax credit against
West Virginia state personal income tax for qualified purchases and
installation of solar energy systems by qualified taxpayers.
§11-13Z-2. Definitions.
(a) When used in this article, words defined in subsection (b)
of this section shall have the meanings ascribed to them in this
section, except in those instances where a different meaning is
provided in this article or the context in which the word is used
clearly indicates that a different meaning is intended by the
Legislature.
(b)
Definitions. --
(1) "Cost to purchase and install" means amounts actually
invested and expended by a taxpayer to acquire and place into
service equipment and components of a solar energy system in a
residence.
(A) "Cost to purchase and install" includes: Architectural
and engineering services and costs of designs and plans directly
related to the construction or installation of the solar energy
system; labor costs properly allocable to on-site preparation,
assembly and original installation; material costs and delivery
fees.
(B) "Cost to purchase and install" does not include: Any
amount not includable under federal income tax law in the
Taxpayer's federal income tax basis in the residential property
into which the solar energy system is installed, any amount that
has been or will be deducted, or which is allowable as a deduction,
from federal adjusted gross income in determining the taxpayer's federal income tax liability, costs attributable to extended
warranties, guarantees and optional insurance on the solar energy
system, discounts; rebates; refunds or any cost paid with a federal
grant or state grant or other grants, fees for use permits or
variances; interest or other finance charges; land costs; legal
fees and costs and court costs, deed preparation costs, operating
and maintenance costs, patent search fees; repair costs; service
contracts, costs for supplemental heating equipment used with, or
in addition to, solar collectors; any amount that is not an actual
cost or monetary outlay, including but not limited to, unpaid costs
of equipment or materials, and unpaid labor, including the
taxpayer's labor. For purposes of this credit, there shall be
deducted from the cost to purchase and install a solar energy
system any amount of federal tax credit that has offset, or will
offset, the taxpayer's federal income tax liability or a portion
thereof, that is based upon, or calculated from, the cost to
purchase or the cost to install the solar energy system, or both
the cost to purchase and the cost to install the solar energy
system.
(2) "Placed in service" means that condition and circumstance
in which a solar energy system is ready and available to produce
useable energy, with all solar energy equipment, apparatus,
components, connections and installations having been fully
completed.
(3) "Residence" means the dwelling place of a natural person,
owned or rented by that person, used as that person's primary
abode, and not held out for rent or other income generating
activity by that person.
(4) "Solar energy system" means:
(A) A solar thermal system or solar photovoltaic system which
uses solar energy to generate electricity; heat or cool a structure
or provide hot water for use in the structure or to provide solar
process heat, including controls, tanks, pumps, heat exchangers,
and other equipment used directly and exclusively for the solar
energy system.
(B) The term "solar energy system" does not include land or
structural elements of the building, such as walls, roofs, or other
equipment or structures ordinarily contained in the structure, or
a swimming pool, hot tub or any other energy storage medium that
has a function other than energy storage; or a system which derives
less than fifty percent of its energy to heat or cool from the sun.
(5) "Taxpayer" means a natural person who is subject to the
West Virginia personal income tax imposed in article twenty-one of
this chapter.
§11-13Z-3. Amount of credit.
Any taxpayer who purchases and installs, or who purchases and
causes to be installed through a contractor, a solar energy system
on property located in this state within or on property owned and used by the taxpayer as the taxpayer's personal residence, on or
after July 1, 2009, shall be allowed a credit against the taxes
imposed in article twenty-one of this chapter in an amount equal to
thirty percent of the cost to purchase and install a solar energy
system up to a maximum amount of $2,000.
§11-13Z-4. Application of credit.
(a) The credit provided in this article shall be applied
against the tax imposed by article twenty-one of this chapter and
shall be credited against the taxpayer's tax liability as follows:
(1) The tax credit authorized in this article shall be applied
against the taxpayer's tax liability imposed by article twenty-one
of this chapter, for the first tax year during which the solar
energy system is first place in service and;
(2) Remaining credit, if any, may be carried forward, until
used up, or until the end of the four year carry forward period,
whichever comes first. Credit carried forward after the first tax
year during which the solar energy system is first placed in
service shall be applied against the taxpayer's tax liability
imposed by article twenty-one of this chapter, for a carry forward
period not exceeding the four consecutive tax years immediately
succeeding the end of the first tax year when the solar energy
system is first place in service, for a total maximum credit
application period of five consecutive years. The credit may not
be carried forward beyond those five tax years, and may not be carried back to prior taxable years;
(3) Any tax credit remaining after the fifth tax year is
forfeited.
(b) Application of the credit authorized by this article, by
itself, or in combination with all other applicable tax credits,
exemptions and deductions shall in no event reduce the tax
liability of the taxpayer below zero, and shall in no circumstances
be applied as a refundable tax credit, or result in a refundable
tax credit.
§11-13Z-5. Burden of proof; application required; failure to make
timely application.
(a) The burden of proof is on the taxpayer to establish by
clear and convincing evidence that the taxpayer is entitled to the
benefits allowed by this article.
(b) Application for credit required:
(1)
Application required. -- Notwithstanding any provision of
this article to the contrary, no credit is allowed or may be
applied under this article for any cost to purchase and install a
solar energy system until the person asserting a claim for the
allowance of credit under this article makes written application to
the Tax Commissioner for allowance of credit as provided in this
article. An application for credit shall be filed, in the form
prescribed by the Tax Commissioner, no later than the last day for
filing the tax returns, determined by including any authorized extension of time for filing the return, required under article
twenty-one of this chapter for the taxable year in which the solar
energy system to which the credit relates is placed in service, and
all information required by the form shall be provided.
(2)
Failure to make timely application. -- The failure to
timely apply for the credit results in the forfeiture of fifty
percent of the total credit otherwise allowable under this article.
§11-13Z-6. Eligibility for credit.
(a) The credit authorized by this section is available to any
taxpayer, as defined in this article, who installs or causes to be
installed a solar energy system as defined in this article, on
property located in this state and owned by the taxpayer and used
and occupied as a residence by the taxpayer for at least one
hundred eighty-three days during a taxable year beginning on or
after January 1, 2009.
(b) The credit authorized by this section is available for
qualified taxpayers and qualified solar energy systems
notwithstanding the availability and application of any federal tax
credits for solar energy systems:
Provided, That the credit
authorized by this article shall not be available for any portion
of the purchase cost or installation cost of the solar energy
system that is funded by a federal grant or a state grant or any
other grant source.
(c) The credit authorized by this article shall not be available to a taxpayer who purchases the solar energy system from
a person whose relationship to the taxpayer would result in the
disallowance of deductions under 26 U.S.C. §267 or §707 or §707(b)
of the United States Internal Revenue Code of 1986, as amended.
§11-13Z-7. Recapture Of credit; recapture tax imposed, rules.
(a)
When recapture tax applies. -- A qualified taxpayer who
purchases and installs a solar energy system for use in a
residential property who has applied for and received the tax
credit provided in this article, and who disposes of such
residential property in either the first tax year during which the
solar energy system is first placed in service or the next
immediately succeeding tax year, shall be subject to the recapture
tax imposed by subsection (b) of this section.
(b)
Recapture tax imposed. --
(1)
Full recapture. -- If the qualified taxpayer disposes of
the residential property for which the solar energy system was
installed in either the first tax year during which the solar
energy system is first place in service or the next immediately
succeeding tax year, and has applied for and received the credit
provided in this article, the taxpayer shall be subject to full
recapture of the credit. The amount of tax due under this
subdivision shall be an amount equal to the full amount of credit
received by the taxpayer for the purchase and installation of the
solar energy system.
(2)
Payment of recapture tax. -- The amount of tax recaptured
under this section is due and payable on the day the taxpayer's
annual return, under article twenty-one of this chapter, is due for
the taxable year in which this section applies.
(c)
Rules. -- The Tax Commissioner may promulgate such rules
as may be useful or necessary to carry out the purposes of this
article and to implement the intent of the Legislature. Rules
shall be promulgated in accordance with the provisions of article
three, chapter twenty-nine-a of this code.
§11-13Z-8. Credit exclusion.
Any taxpayer that has taken the credits authorized by section
eight-a or eight-g, article twenty-one of this chapter based on
installation or purchase of a solar energy system is not eligible
for application of the credit authorized by this article for
installation or purchase of the same solar energy system or any
part thereof.
§11-13Z-9. Credit is nontransferable.
Taxpayers eligible for the credit provided in this article may
not sell, assign or otherwise transfer their credit to another
taxpayer. No tax credit shall be allowed under this article to
grantees, lessees, transferees, or successor owners of residential
property in which a solar energy system has been installed or
placed in service by any grantor, lessor, transferor or predecessor
owner of such property, or for which tax credit has been authorized pursuant to this article for any grantor, lessor, transferor or
predecessor owner of such property. No credit may be authorized
under this article for a speculative builder of residential
property in which a solar energy system has been installed or
placed in service, or for any person who purchases from a
speculative builder, residential property in which a solar energy
system has been installed or placed in service by the speculative
builder.
§11-13z-10. Tax credit review and accountability.
(a) Beginning on February 1, 2013, and every third year
thereafter, the Tax Commissioner shall submit to the Governor, the
President of the Senate and the Speaker of the House of Delegates
a tax credit review and accountability report evaluating the cost
of the credit set forth in this article, during the most recent
three-year period for which information is available. The criteria
to be evaluated shall include, but not be limited to, for each year
of the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The cost of the credit;
(b) Taxpayers claiming the credit shall provide any
information the Tax Commissioner may require to prepare the report.
The information provided shall not be subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter because the information relates to individual taxpayers for whom personal tax information
confidentiality would be compromised by disclosure of personal tax
credit information.
§11-13Z-11. Credit termination.
No taxpayer shall be entitled to take any credit pursuant to
this article for a solar energy system placed in service on or
after July 1, 2013.