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Introduced Version Senate Bill 689 History

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Senate Bill No. 689

(By Senator Unger)

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[Introduced March 21, 2005; referred to the Committee

on Finance.]

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A BILL to amend and reenact §11-15-9h of the Code of West Virginia, 1931, as amended, relating to providing an exemption for sales of high-technology business services by high-technology businesses; and removing the limitation on the application of the exemption to sales of such services directly used in the fulfillment of government contracts.

Be it enacted by the Legislature of West Virginia:
That §11-15-9h of the Code of West Virginia, 1931, as amended, be amended and reenacted to read as follows:
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-9h. Exemptions for sales of computer hardware and software directly incorporated into manufactured products; certain leases; sales of electronic data processing service; sales of computer hardware and software directly used in communication; sales of educational software; sales of internet advertising; sales of high technology business services; definitions.

(a) In order to modernize the exemptions from tax contained in this article as a result of technological advances in computers and the expanded role of computers, the internet and global instant communications in business, and to encourage computer software developers, computer hardware designers, systems engineering firms, electronic data processing companies and other high technology companies to locate and expand their businesses in West Virginia, the following sales of tangible personal property and software are exempt:
(1) Sales of computer hardware or software (including custom designed software) to be directly incorporated by a manufacturer into a manufactured product. For purposes of this subsection, the payment of licensing fees for the right to incorporate hardware or software developed by persons other than the manufacturer into a manufactured product is exempt from the tax imposed by this article;
(2) Sales of computer hardware or software (including custom designed software) directly used in communication as defined in this article;
(3) Sales of electronic data processing services;
(4) Sales of educational software required to be used in any of the public schools of this state or in any institution in this state which qualifies as a nonprofit or educational institution subject to administration, regulation, certification or approval of the Department of Education, the Department of Education and the Arts or the Higher Education Policy Commission;
(5) Sales of internet advertising of goods and services; and
(6) Sales of high technology business services to by high technology businesses. which enter into contracts with this state, its institutions and subdivisions, governmental units, institutions or subdivisions of other states, or with the United States, including agencies of federal, state or local governments for direct use in fulfilling the government contract.
(b) Definitions. -- As used in this article, the following terms have the following meanings:
(1) "Computer hardware" means a computer, as defined in article fifteen-b of this chapter, and the directly and immediately connected physical equipment involved in the performance of data processing or communications functions, including data input, data output, data processing, data storage, and data communication apparatus that is directly and immediately connected to the computer. The term "computer hardware" does not include computer software.
(2) "High technology business" means, and is limited to, businesses primarily engaged in the following activities: Computer hardware design and development; computer software design, development, customization and upgrade; computer systems design and development; website design and development; network design and development; design and development of new manufactured products which incorporate computer hardware and software; electronic data processing; network management, maintenance, engineering, administration and security services; website management, maintenance, engineering, administration and security services and computer systems management, maintenance, engineering, administration and security services: Provided, That high technology business as defined herein is intended to include businesses which engage in the activities enumerated in this definition as their primary business activity, and not as a secondary or incidental activity and not as an activity in support of, or incidental to, business activity not specifically enumerated in this definition.
(3) "High technology business services" means and is limited to computer hardware design and development; computer software design, development, customization and upgrade; computer systems design and development; website design and development; network design and development; electronic data processing; computer systems management; computer systems maintenance; computer systems engineering; computer systems administration; and computer systems
security services.



NOTE: The purpose of this bill is to provide a sales tax exemption for high technology services by removing the requirement that high technology business must be fulfilling a government contract before the sales tax exemption for high technology service applies.

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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