ENGROSSED
Senate Bill No. 405
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
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[Introduced March 6, 2001; referred to the Committee on Finance.]
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A BILL to amend and reenact section nine, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to updating the meaning of certain terms used in the West Virginia personal income tax act by bringing them into conformity with their meaning for federal income tax purposes; and specifying effective dates.

Be it enacted by the Legislature of West Virginia:
That section nine, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-9. Meaning of terms.
(a) Any term used in this article has the same meaning as when used in a comparable context in the laws of the United States relating to income taxes unless a different meaning is clearly required. Any reference in this article to the laws of the United States means the provisions of the Internal Revenue Code of 1986, as amended, and any other provisions of the laws of the United States that relate to the determination of income for federal income tax purposes. All amendments made to the laws of the United States after the thirty-first day of December, one thousand nine hundred ninety-eight ninety-nine, but prior to the first day of January, two thousand one, shall be given effect in determining the taxes imposed by this article to the same extent those changes are allowed for federal income tax purposes, whether the changes are retroactive or prospective, but no amendment to the laws of the United States made on or after the first day of January, two thousand one, shall be given any effect.
(b) Medical savings accounts. -- The term "taxable trust" does not include a medical savings account established pursuant to section twenty, article fifteen, chapter thirty-three of this code or section fifteen, article sixteen of said chapter. Employer contributions to a medical savings account established pursuant to said sections are not "wages" for purposes of withholding under section seventy-one of this article.
(c) Surtax. -- The term "surtax" means the 20 percent additional tax imposed on taxable withdrawals from a medical savings account under section twenty, article fifteen, chapter thirty-three of this code, and the 20 percent additional tax imposed on taxable withdrawals from a medical savings account under section fifteen, article sixteen of said chapter which are collected by the tax commissioner as tax collected under this article.
(d) Effective date. -- The amendments to this section enacted in the year two thousand one are retroactive to the extent allowable under federal income tax law. With respect to taxable years that begin began prior to the first day of January, one thousand nine hundred ninety-nine two thousand, the law in effect for each of those years shall be fully preserved as to that year, except as provided in this section.

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(NOTE:

The purpose of this bill is to update the meaning of "federal adjusted gross income" and certain other terms used in the West Virginia personal income tax act by bringing them into conformity with their meanings for federal income tax purposes. This bill would adopt changes made after December 31, 1999, but before January 1, 2001. The changes would apply to the 2000 tax year to the extent the changes were allowed for federal income tax purposes.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.)