Senate Bill No. 305
(By Senators Miller, Wills and Klempa)
[Introduced January 27, 2011; referred to the Committee on Government Organization; and then to the Committee on Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §11-28-1, §11-28-2, §11-28-3, §11-28-4, §11-28-5, §11-28-6, §11-28-7, §11-28-8 and §11-28-9, all relating to authorizing a local option food and beverage tax for counties and municipalities; providing definitions; collection of the tax and uses; providing exemptions; providing that wrongful and fraudulent use of funds constitutes embezzlement subject to criminal penalties; providing for apportionment of taxes when a business is located partially within two or more local jurisdictions; and providing a severability clause.
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 §11-28-1, §11-28-2, §11-28-3, §11-28-4, §1l-28-5, §11-28-6, §11-28-7, §11-28-8 and §11-28-9, all to read as follows:
ARTICLE 28. LOCAL OPTION FOOD AND BEVERAGE TAX.
§11-28-1. Food and beverage tax.
A county or municipality is hereby authorized to levy a tax on food and beverages sold for human consumption by a restaurant as defined in this article. Any tax levied under this article may not exceed three percent of the gross amount charged for such food and beverages.
As used in this article.
(a) "Alcoholic beverage" means any alcohol, beer, wine and spirits and any liquid or solid capable of being used as a beverage, including any beverage that consists of a mixture of alcoholic and nonalcoholic liquids or solids.
(b) "Beverage" means any alcoholic or nonalcoholic liquid intended for human consumption.
(c) "Fund-raising organization" means any church, school, fraternal or social organization, volunteer fire department or rescue squad which periodically sells food and beverages for public consumption to raise funds to benefit the organization.
(d) "Municipal" or "municipality" means any city or town.
(e) "Not-for-profit capacity" means the sale of food for the intentional purpose of equaling the operating costs of the restaurant.
(f) "Restaurant" means any place where food is prepared for service to the public on or off the premises, or any place where food is served including, but not limited to, lunchrooms, food counters, food trucks or carts, short order or fast food eateries, cafeterias, coffee shops, cafes, taverns, delicatessens, dining accommodations of public or private clubs, kitchen facilities of hospitals and nursing homes and dining accommodations of public and private schools and colleges.
§11-28-3. County option.
(a) Any tax levied under this article shall be approved by referendum within the county in which the tax is to be levied.
(b) A referendum for imposition of a county food and beverage tax shall be initiated by:
(1) A resolution of the county commission; or
(2) A petition filed with the county commission signed by a minimum of ten percent of the county's registered voters as of January 1 in the year in which the petition is filed.
(c) A petition or resolution may designate the length of time of the tax's imposition or projects or purposes for which the tax will be levied: Provided, That this information shall be included on the referendum's ballot.
(d) The county commission shall publish a Class III legal advertisement in compliance with the provisions of article three, chapter fifty-nine of this code in a newspaper of general circulation in the county.
§11-28-4. Collection of tax, use.
(a) Any tax levied under section three of this article shall be collected in a manner prescribed by the county commission.
(b) Any tax levied under section three of this article shall be placed in the county's General Revenue Fund and expended as the county commission determines appropriate: Provided, That
(1) Any projects or purposes designated for the imposition of the tax and included on the referendum ballot shall be paid accordingly;
(2) A minimum of forty percent of the collected tax shall be remitted by the county to the Economic Development Authority of the county to be expended for economic development purposes.
(3) Forty percent of any tax collected under this article from a restaurant located in a municipality shall be remitted by the county to the municipality in which the restaurant is located, to be expended in a manner which the governing body of the municipality considers appropriate.
§1l-28-5. Municipal option.
Any municipality, located in a county that has not levied or sought to levy a food and beverage tax within one year following the effective date of this article, may levy a tax on food and beverages sold for human consumption by a restaurant as defined in this article. Any tax levied under this article may not exceed two percent of the gross amount charged for the food and beverages.
(a) Any tax levied under this article shall be approved by referendum within the municipality in which the tax is to be levied.
(b) A referendum for imposition of municipal food and beverage tax may be initiated by:
(1) A resolution of the governing body of the municipality; or
(2) A petition filed with the governing body of the municipality signed by a minimum of ten percent of the registered voters of the municipality as of the January 1 in the year in which the petition is filed.
(c) A petition or resolution may designate the length of time of the imposition of the tax or projects or purposes for which the tax will be levied: Provided, That this information shall be included on the referendum ballot.
(d) The governing body of the municipality shall publish a Class III legal advertisement in compliance with the provisions of article three, chapter fifty-nine of this code in a newspaper of general circulation in the municipality.
(a) This tax is applicable to any restaurant whose food and beverage preparation and service is regulated by county boards of health. Any tax levied under this article may not be levied upon food and beverages sold from:
(1) Places manufacturing packaged or canned foods which are distributed to grocery stores or other similar food retailers for sale to the public;
(2) Vending machines;
(3) Restaurants operating in a not-for-profit capacity;
(4) Churches which serve meals as a regular part of regular religious observances;
(5) Fund-raising organizations;
(6) Food counters or delicatessens which operate as part of a larger retail business which:
(i) Food and beverage sales do not exceed thirty percent of the larger retail business's total gross sales; and
(ii) Have ten or fewer seats on the premises at which food is consumed.
(b) Any tax levied under this article may not be applied to any discretionary gratuity paid by the purchaser in addition to the sales price, nor to any mandatory gratuity or service charge added by the restaurant to the sales price that does not exceed twenty percent of the sales price.
§11-28-7. Wrongful and fraudulent use of funds.
All food and beverage tax collections shall be considered to be in trust for the county or municipality imposing the applicable tax. The wrongful and fraudulent use of these proceeds other than remittance to the county or municipality as provided by this article constitutes embezzlement pursuant to the provisions of section twenty, article three, chapter sixty-one of this code.
When a business is located partially within two or more local jurisdictions by reason of the boundary line between the local jurisdictions passing through such place of business, and one or more of the local jurisdictions imposes the food and beverage tax, the tax rate of each applicable local jurisdiction constitutes such proportion of the entire tax as the area within that political subdivision, which the place of business actually occupies and actively uses in connection with the business, bears to the total area which the place of business actually occupies and actively uses in connection with the business.
If any provision of this article or the application thereof to any person or circumstance is held invalid, the invalidity may not affect other provisions or applications of this article which can be given effect without the invalid provision or application and to that end the provisions of this article are severable.
NOTE: The purpose of this bill is to authorize county and municipal government to levy a tax on food and beverages. It provides for county and municipal option elections relating to the tax. It also designates the usage of some funds collected by the tax.
This article is new; therefore, strike-throughs and underscoring have been omitted.