Senate Bill No. 69
(By Senators McCabe, White, Foster, Unger, Palumbo and Chafin)
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[Introduced January 13, 2010; referred to the Committee on
Transportation and Infrastructure; 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, §11-13AA-4, §11-13AA-5, §11-13AA-6,
§11-13AA-7, §11-13AA-8, §11-13AA-9, §11-13AA-10, §11-13AA-11,
§11-13AA-12, §11-13AA-13, §11-13AA-14 and §11-13AA-15, all
relating to authorizing a tax credit against business
franchise tax, corporate net income tax or personal income tax
for eligible expenditures incurred in placing in service a
residential or nonresidential energy efficient building.
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, §11-13AA-4, §11-13AA-5, §11-13AA-6, §11-13AA-7,
§11-13AA-8, §11-13AA-9, §11-13AA-10, §11-13AA-11, §11-13AA-12, §11-13AA-13, §11-13AA-14 and §11-13AA-15, all to read as follows:
ARTICLE 13AA. ENERGY EFFICIENT BUILDING PROPERTY TAX CREDIT.
§11-13AA-1. Short title.
This article may be cited as the "Energy Efficient Building
Act."
§11-13AA-2. Legislative finding and purpose.
The Legislature finds that encouraging the construction and
rehabilitation of energy efficient buildings is in the public
interest and promotes the general welfare of the people of this
state. It contributes to economic growth and, in time, will
improve environmental quality in the state by decreasing discharge
of pollutants from buildings, improving energy efficiency and
reducing greenhouse gas emissions. To accomplish these ends, there
is hereby enacted the energy efficient building tax credit.
§11-13AA-3. Definitions.
(a)
General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b)
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) "EPA" means the United States Environmental Protection
Agency.
(2) "Designed to Earn the Energy Star®" means a designation given by the EPA as part of the Energy Star® program to identify
plans for the construction of residential or nonresidential
buildings that incorporate energy-efficient details and
specifications typically found in Energy Star® qualified buildings.
(3) "Eligible buildings" means energy efficient residential or
nonresidential building property to which the EPA has awarded an
Energy Star® label.
(4) "Eligible expenditures" means expenses incurred on or
after July 1, 2010, for the planning, construction or
rehabilitation of energy efficient residential or nonresidential
building property. Eligible expenditures do not include:
(A) Legal fees related to construction or remodeling;
(B) Site purchase or preparation costs;
(C) Interest related to construction or remodeling;
(D) Architectural, engineering and other professional fees
related to construction or remodeling; and
(E) Closing costs related to construction or remodeling
(F) Costs related to issuance, or procurement of loans, bond
issuances or costs of capital or related administrative expenses.
(5) "Eligible building plans" means plans for the construction
of residential or nonresidential buildings that incorporate energy-
efficient details and specifications typically found in Energy
Star® qualified buildings that have earned the Designed to Earn the
Energy Star® label under the Energy Star® program.
(6) "Eligible taxpayer" means the owner of a residential or
commercial building property to which the EPA has awarded an Energy
Star® label, or the owner of building plans which have earned the
Designed to Earn the Energy Star® label by the Energy Star®
program.
(7) "Energy efficient residential or nonresidential building"
means residential or nonresidential building property:
(A) Which is installed on or in any building which is:
(i) Located in West Virginia; and
(ii) Within the scope of the Energy Star® performance ratings
system utilized in the Energy Star® program established by 42
U.S.C. §6294a.
(B) Which is installed as part of:
(i) The interior lighting systems;
(ii) The heating, cooling, ventilation, and hot water systems;
or
(iii) The building envelope.
(C) To which the Administrator of the EPA has awarded an
Energy Star® label for energy efficient buildings and manufacturing
plants in accordance with the requirements and procedures
established by the EPA under the Energy Star® program.
(8) "Energy Star® label" means, in the context of buildings,
a designation given by the EPA as part of the Energy Star® program
to identify residential and nonresidential buildings that meet EPA strict energy efficiency guidelines.
(9) "Energy Star® program" means a joint voluntary program
established within the United States Department of Energy and the
EPA to identify and promote energy-efficient products and buildings
in order to reduce energy consumption, improve energy security, and
reduce pollution through voluntary labeling of, or other forms of
communication about, products and buildings that meet the highest
energy conservation standards.
(10) "Energy Star® performance ratings system" means the
ratings system used by the EPA in the Energy Star® program for
buildings and manufacturing plants to award the Energy Star® label.
(11) "Placed in service" means the eligible building is placed
in a condition or state of readiness and availability for use as a
residential or nonresidential building.
(12) "Tax Commissioner" means the appointed official, or his
or her designee, charged with administering the West Virginia State
Tax Department.
§11-13AA-4. Amount of credit allowed.
(a)
Credit allowed. --
(1) Eligible taxpayers are allowed a credit against the taxes
imposed by articles twenty-three, twenty-four and twenty-one of
this chapter, in that order, for owning a residential or commercial
building to which the EPA has awarded an Energy Star® label, or
owning building plans which have earned the
Designed to Earn the Energy Star® label.
(2) Taxpayers who have taken the credit based on ownership of
eligible building plans must complete construction of the eligible
building and obtain Energy Star® certification for the completed
building within three years from the time the credit was initially
taken.
(A) If the building fails to obtain Energy Star® certification
by the end of year three, the credit allowed under this article
shall be redetermined and amended returns filed for the first and
second taxable years.
(B) In applying the amount of redetermined credit allowable
for the two preceding taxable years, the redetermined credit shall
first be applied to the extent it was originally applied in such
prior two years to business franchise taxes, then to corporation
net income taxes, then to personal income taxes. Any additional
taxes due under this chapter shall be remitted with the amended
returns filed with the Tax Commission, along with interest, as
provided in section seventeen, article ten of this chapter, and a
ten percent penalty.
(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 Energy Star® eligible building
placed in service or use or for any Designed to Earn the Energy Star® building plans until the eligible taxpayer claiming the
credit makes written application to the Tax Commissioner for
allowance of credit as provided in this subsection. This
application shall be in the form prescribed by the Tax
Commissioner, and shall be filed with the Tax Commissioner no later
than the last day for filing the annual return, determined by
including any authorized extension of time for filing the return,
required under article twenty-one or twenty-four of this chapter
for the taxable year in which the property to which the credit
relates is placed in service or use.
(2)
Failure to file.
-- The failure to timely file the
application for credit under this section results in forfeiture of
fifty percent of the annual credit otherwise allowable under this
article. This penalty applies annually until the application is
filed.
§11-13AA-5. Amount of credit allowed.
The amount of credit allowed by subsection (a) is the greater
of:
(1) One and one-half percent of eligible expenditures; or
(2) One dollar per square foot of the eligible building as
constructed or as designed and portrayed on the building plan.
§11-13AA-6. Application of credit.
(a)
Application of credit over ten years. -- The amount of
credit allowable must be taken over a ten-year period, at the rate of one tenth of the amount thereof per taxable year, beginning with
the taxable year in which the taxpayer places the eligible building
in service or use in this state
: Provided, That the taxpayer may
elect to delay the beginning of the ten-year period until the next
succeeding taxable year after the taxable year in which the
taxpayer places the eligible building in service or use in this
state or the building plan is approved to receive the Designed to
Earn the Energy Star® label. This election shall be made in the
annual income tax return filed under this chapter for the taxable
year in which the eligible building is first placed into service or
use by the taxpayer. Once made, the election cannot be revoked. In
the event of a failure to make a timely election to delay the
beginning of the credit application period, the credit shall be
applied beginning in the taxable year in which the taxpayer places
the eligible building in service or use in this state. No
retroactive election to delay the beginning of the credit
application period shall be allowed.
(1) The eligible taxpayer may take the tax credit
(b)
Business franchise tax. -- The credit is first applied to
reduce the taxes imposed by article twenty-three of this chapter
for the taxable year, determined after application of the credits
against tax provided in section seventeen of said article, but
before application of any other allowable credits against tax.
(c) C
orporation net income taxes. -- After application of subsection (b) of this section, any unused credit is next applied
to reduce the taxes imposed by article twenty-four of this chapter
for the taxable year, determined before application of allowable
credits against tax.
(d)
Personal income tax. --
(1) 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 subsections (b) and (c) of this
section, as applicable, is allowed as a credit against the taxes
imposed by article twenty-one of this chapter.
(2) Electing small business corporations, limited liability
companies, partnerships and other unincorporated organizations
shall allocate the credit allowed by this article among its members
in the same manner as profits and losses are allocated for the
taxable year.
§11-13AA-7. Limitation on use of credit.
(a)
Withholding. -- No credit is allowed under this section
against any employer withholding taxes imposed by article
twenty-one of this chapter.
(b)
No other tax credit authorized. -- The credit allowed or
authorized under the provisions of this article shall not be allowed, authorized or applied against tax if any tax credit is
authorized, applied for or used or applied against tax by the
taxpayer, or by any other person, under article thirteen-d, article
thirteen-e, article thirteen-q, article thirteen-r, or article
thirteen-s of this chapter, or any combination thereof, for, or
with relation to, investment in any building, or facility for which
credit is, or may be, allowed, authorized or applied against tax
under this article.
§11-13AA-8. Excess credit; carryforward; carryback prohibited.
(a) If the tax credit allowed under this article in any
taxable year exceeds the sum of the taxes enumerated in section
four of this article for that taxable year, the excess may be
applied against those taxes, in the order and manner stated in
section four of this article, for succeeding taxable years until
the earlier of the following:
(1) Five taxable years have elapsed; or
(2) The full amount of the excess tax credit is used.
(b) No carryback to a prior taxable year is allowed for the
amount of any unused portion of any annual credit allowance.
(c) The transfer or sale of this credit does not extend the
time in which the credit can be used. The carry forward period for
the credit that is transferred or sold begins on the date on which
the credit was originally allowed to be used by the original
taxpayer for which credit entitlement was initially authorized.
§11-13AA-9. Transfer or sale of credit.
(a) Any tax credit issued in accordance with this article,
which has been issued to an eligible taxpayer, and to the extent
not previously claimed against the tax of the eligible taxpayer or
the owner of the credit, may be transferred or sold by such
eligible taxpayer to another West Virginia taxpayer, subject to the
following conditions:
(1) A single transfer or sale may involve one or more
transferees, assignees or purchasers. A transfer of sale of the
credits may involve multiple transfers to one or more transferees,
assignees or purchasers.
(2) Transferors and sellers shall apply to the tax department
for approval of any transfer, sale or assignment of the tax credit.
Any amount of the tax credit that has been transferred or assigned
shall be subject to the same limitations and conditions that apply
to the eligible transferor taxpayer's or seller's entitlement, use
and application of the credit. The application for sale, transfer
or assignment of the credit shall include the transferor's tax
credit balance prior to transfer, the credit certificate number
,
the name of the seller, the transferor's remaining tax credit
balance after transfer, if any, all tax identification numbers for
both transferor and transferee, the date of transfer, the amount
transferred, a copy of the credit certificate
and any other
information required by the Tax Commissioner.
(3) The Tax Commissioner shall not approve the transfer or
assignment of a tax credit to a taxpayer if the seller or
transferor has an outstanding tax obligation with the State of West
Virginia.
(b) The transferee, assignee or purchaser shall apply such
credits as required by this article, and subject to all conditions
and limitations of this article.
(c) For purposes of this chapter, any proceeds received by the
eligible company or transferor for its assignment or sale of the
tax credits allowed pursuant to this section are exempt from the
West Virginia consumers sales and service tax and use tax and from
the corporate net income tax and personal income tax.
§11-13AA-10. Credit recapture.
(a) If it appears upon audit or otherwise that any taxpayer
has taken the credit against tax allowed under this article and was
not entitled to take the credit, then the credit improperly taken
under this article shall be recaptured.
(b) Amended returns shall be filed for any tax year for which
the credit was improperly taken. Any additional taxes due under
this chapter shall be remitted with the amended return or returns
filed with the Tax Commissioner, along with interest, as provided
in section seventeen, article ten of this chapter and such other
penalties and additions to tax as may be applicable pursuant to the
provisions of article ten of this chapter.
§11-13AA-11. Interest; penalties; additions to tax.
Notwithstanding the provisions of article ten of this chapter,
penalties and additions to tax imposed under article ten of this
chapter may be waived at the discretion of the Tax Commissioner:
Provided, That interest is not subject to waiver, except in
accordance with the provisions of article ten of this chapter.
§11-13AA-12. Statute of limitations.
Notwithstanding the provisions of article ten of this chapter,
the statute of limitations for the issuance of an assessment of tax
by the Tax Commissioner shall be five years from the date of filing
of any tax return on which this credit was taken or five years from
the date of payment of any tax liability, calculated pursuant to
the assertion of the credit allowed under this article, whichever
is later.
§11-13AA-13. Report on credit.
(a) The Tax Commissioner shall provide to the Joint Committee
on Government and Finance by July 1, 2012, and on July 1 of each
year thereafter, a report detailing the amount of credit claimed
pursuant to this article. The report is to include the amount of
credit claimed against the business franchise tax, the amount of
credit claimed against the corporate net income tax and the amount
of credit claimed against the personal income tax.
(b) Taxpayers claiming the credit shall provide the
information as the Tax Commissioner may require to prepare the report:
Provided, That the information is subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter.
§11-13AA-14. Legislative rules.
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.
§11-13AA-15. Effective date.
This article shall be effective for business franchise tax
years, corporate net income tax years and personal income tax years
beginning on or after January 1, 2010.
NOTE: The purpose of this bill is to authorize the creation of
a new tax credit for eligible expenditures incurred in placing in
service residential or nonresidential energy efficient building
property. The bill's incentive will encourage the construction of
energy efficient buildings, thereby reducing the total amount of
energy consumed in the state.
This article is new; therefore, strike-throughs and
underscoring have been omitted.
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