H. B. 2222
(By Delegates Manuel, Brown, D. Cook and Doyle)
[Introduced February 22, 1993; referred to the
Committee on Finance.]
A BILL to amend and reenact section nine, article fifteen,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to exemption
of preschools and day-care centers from the sales tax
imposed on food and textbooks and school supplies.
Be it enacted by the Legislature of West Virginia:
That section nine, article fifteen, 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 15. CONSUMERS SALES TAX.
§11-15-9. Exemptions.
The following sales and services are exempt:
(a) Sales of gas, steam and water delivered to consumers
through mains or pipes, and sales of electricity;
(b) Sales of textbooks required to be used in any of the
schools of this state or in any institution in this state which
qualifies as a nonprofit or educational institution subject tothe West Virginia department of education and the arts, board of
trustees of the university system of West Virginia, or the board
of directors for colleges located in this state;
(c) Sales of property or services to the state, its
institutions or subdivisions, governmental units, institutions or
subdivisions of other states:
Provided,
That the law of such
other state provides the same exemption to governmental units or
subdivisions of this state and to the United States, including
agencies of federal, state or local governments for distribution
in public welfare or relief work;
(d) Sales of vehicles which are titled by the division of
motor vehicles and which are subject to the tax imposed by
section four, article three, chapter seventeen-a of this code, or
like tax;
(e) Sales of property or services to churches and bona fide
charitable organizations who make no charge whatsoever for the
services they render:
Provided,
That the exemption herein
granted shall apply only to services, equipment, supplies, food
for meals and materials directly used or consumed by these
organizations, and shall not apply to purchases of gasoline or
special fuel;
(f) Sales of tangible personal property or services to a
corporation or organization which has a current registration
certificate issued under article twelve of this chapter is exempt
from federal income taxes under Section 501(c)(3) or (c)(4) of
the Internal Revenue Code of 1986, as amended, and is:
(g) Sales of textbooks and school supplies required to be
used by public or private preschools and day-care centers.
(1) A church or a convention or association of churches as
defined in Section 170 of the Internal Revenue Code of 1986, as
amended;
(2) An elementary or secondary school which maintains a
regular faculty and curriculum and has a regularly enrolled body
of pupils or students in attendance at the place in this state
where its educational activities are regularly carried on;
(3) A corporation or organization which annually receives
more than one half of its support from any combination of gifts,
grants, direct or indirect charitable contributions, or
membership fees;
(4) An organization which has no paid employees and its
gross income from fund raisers, less reasonable and necessary
expenses incurred to raise such gross income (or the tangible
personal property or services purchased with such net income), is
donated to an organization which is exempt from income taxes
under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of
1986, as amended;
(5) A youth organization, such as the girl scouts of the
United States of America, the boy scouts of America or the YMCA
Indian guide/princess program and the local affiliates thereof,
which is organized and operated exclusively for charitable
purposes and has as its primary purpose the nonsectarian
character development and citizenship training of its members;
(6) For purposes of this subsection:
(A) The term "support" includes, but is not limited to:
(i) Gifts, grants, contributions or membership fees;
(ii) Gross receipts from fund raisers which include receipts
from admissions, sales of merchandise, performance of services or
furnishing of facilities in any activity which is not an
unrelated trade or business within the meaning of Section 513 of
the Internal Revenue Code of 1986, as amended;
(iii) Net income from unrelated business activities, whether
or not such activities are carried on regularly as a trade or
business;
(iv) Gross investment income as defined in Section 509(e) of
the Internal Revenue Code of 1986, as amended;
(v) Tax revenues levied for the benefit of a corporation or
organization either paid to or expended on behalf of such
organization; and
(vi) The value of services or facilities (exclusive of
services or facilities generally furnished to the public without
charge) furnished by a governmental unit referred to in Section
170(c)(1) of the Internal Revenue Code of 1986, as amended, to an
organization without charge. This term does not include any gain
from the sale or other disposition of property which would be
considered as gain from the sale or exchange of a capital asset,
or the value of an exemption from any federal, state or local tax
or any similar benefit;
(B) The term "charitable contribution" means a contributionor gift to or for the use of a corporation or organization,
described in Section 170(c)(2) of the Internal Revenue Code of
1986, as amended;
(C) The term "membership fee" does not include any amounts
paid for tangible personal property or specific services rendered
to members by the corporation or organization; or
(7) The exemption allowed by this subdivision (f) does not
apply to sales of gasoline or special fuel or to sales of
tangible personal property or services to be used or consumed in
the generation of unrelated business income as defined in Section
513 of the Internal Revenue Code of 1986, as amended. The
provisions of this subsection as amended by this act shall apply
to sales made after the thirtieth day of June, one thousand nine
hundred eighty-nine:
Provided,
That the exemption herein granted
shall apply only to services, equipment, supplies and materials
used or consumed in the activities for which such organizations
qualify as tax exempt organizations under the Internal Revenue
Code by these organizations and shall not apply to purchases of
gasoline or special fuel;
(g) (h) Sales of property or services to persons engaged in
this state in the business of manufacturing, transportation,
transmission, communication or in the production of natural
resources:
Provided,
That the exemption herein granted shall
apply only to services, machinery, supplies and materials
directly used or consumed in the businesses or organizations
named above, and shall not apply to purchases of gasoline orspecial fuel:
Provided,
however, That on and after the first day
of July, one thousand nine hundred eighty-seven, the exemption
provided in this subsection shall apply only to services,
machinery, supplies and materials directly used or consumed in
the activities of manufacturing, transportation, transmission,
communication or the production of natural resources in the
businesses or organizations named above and shall not apply to
purchases of gasoline or special fuel;
(h) (i) An isolated transaction in which any taxable service
or any tangible personal property is sold, transferred, offered
for sale or delivered by the owner thereof or by his
representative for the owner's account, such sale, transfer,
offer for sale or delivery not being made in the ordinary course
of repeated and successive transactions of like character by such
owner or on his account by such representative:
Provided,
That
nothing contained herein may be construed to prevent an owner who
sells, transfers or offers for sale tangible personal property in
an isolated transaction through an auctioneer from availing
himself or herself of the exemption provided herein, regardless
where such isolated sale takes place. The tax commissioner may
adopt such legislative rule pursuant to chapter twenty-nine-a of
this code as he deems necessary for the efficient administration
of this exemption;
(i) (j) Sales of tangible personal property or of any
taxable services rendered for use or consumption in connection
with the commercial production of an agricultural product theultimate sale of which will be subject to the tax imposed by this
article or which would have been subject to tax under this
article:
Provided,
That sales of tangible personal property and
services to be used or consumed in the construction of or
permanent improvement to real property and sales of gasoline and
special fuel shall not be exempt:
Provided,
however, That nails
and fencing shall not be considered as improvements to real
property;
(j) (k) Sales of tangible personal property to a person for
the purpose of resale in the form of tangible personal property:
Provided, That sales of gasoline and special fuel by distributors
and importers shall be taxable except when the sale is to another
distributor for resale:
Provided,
however, That sales of
building materials or building supplies or other property to any
person engaging in the activity of contracting, as defined in
this article, which is to be installed in, affixed to or
incorporated by such person or his agent into any real property,
building or structure shall not be exempt under this subsection,
except that sales of tangible personal property to a person
engaging in the activity of contracting pursuant to a written
contract with the United States, this state, or with a political
subdivision thereof, or with a public corporation created by the
Legislature or by another governmental entity pursuant to an act
of the Legislature, for a building or structure, or improvement
thereto, or other improvement to real property that is or will be
owned and used by the governmental entity for a governmental orproprietary purpose, who incorporates such property in such
building, structure or improvement shall, with respect to such
tangible personal property, nevertheless be deemed to be the
vendor of such property to the governmental entity and any person
seeking to qualify for and assert this exception must do so
pursuant to such legislative rules and regulations as the tax
commissioner may promulgate and upon such forms as the tax
commissioner may prescribe. A subcontractor who, pursuant to a
written subcontract with a prime contractor who qualifies for
this exception, provides equipment, or materials, and labor to
such a prime contractor shall be treated in the same manner as
the prime contractor is treated with respect to the prime
contract under this exception and the legislative rules and
regulations promulgated by the tax commissioner:
Provided
further, That the exemption for government contractors in the
preceding proviso shall expire on the first day of October, one
thousand nine hundred ninety, subject to the transition rules set
forth in section eight-c of this article;
(k) (l) Sales of property or services to nationally
chartered fraternal or social organizations for the sole purpose
of free distribution in public welfare or relief work:
Provided,
That sales of gasoline and special fuel shall be taxable;
(l) (m) Sales and services, fire fighting or station house
equipment, including construction and automotive, made to any
volunteer fire department organized and incorporated under the
laws of the state of West Virginia:
Provided,
That sales ofgasoline and special fuel shall be taxable;
(m) (n) Sales of newspapers when delivered to consumers by
route carriers;
(n) (o) Sales of drugs dispensed upon prescription and sales
of insulin to consumers for medical purposes;
(o) (p) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(p) (q) Sales and services performed by day-care centers;
(q) (r) Casual and occasional sales of property or services
not conducted in a repeated manner or in the ordinary course of
repetitive and successive transactions of like character by a
corporation or organization which is exempt from tax under
subsection (f) of this section on its purchases of tangible
personal property or services:
(1) For purposes of this subsection, the term "casual and
occasional sales not conducted in a repeated manner or in the
ordinary course of repetitive and successive transactions of like
character" means sales of tangible personal property or services
at fund raisers sponsored by a corporation or organization which
is exempt, under subsection (f) of this section, from payment of
the tax imposed by this article on its purchases, when such fund
raisers are of limited duration and are held no more than six
times during any twelve-month period and limited duration means
no more than eighty-four consecutive hours;
(2) The provisions of this subsection, as amended by thisarticle, shall apply to sales made after the thirtieth day of
June, one thousand nine hundred eighty-nine;
(r) (s) Sales of property or services to a school which has
approval from the board of trustees of the university system of
West Virginia or the board of directors of the state college
system to award degrees, which has its principal campus in this
state, and which is exempt from federal and state income taxes
under Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended:
Provided,
That sales of gasoline and special fuel shall
be taxable;
(s) (t) Sales of mobile homes to be utilized by purchasers
as their principal year-round residence and dwelling: Provided,
That these mobile homes shall be subject to tax at the three
percent rate;
(t) (u) Sales of lottery tickets and materials by licensed
lottery sales agents and lottery retailers authorized by the
state lottery commission, under the provisions of article twenty-
two, chapter twenty-nine of this code;
(u) (v) Leases of motor vehicles titled pursuant to the
provisions of article three, chapter seventeen-a of this code to
lessees for a period of thirty or more consecutive days. This
exemption shall apply to leases executed on or after the first
day of July, one thousand nine hundred eighty-seven, and to
payments under long-term leases executed before such date, for
months thereof beginning on or after such date;
(v) (w) Notwithstanding the provisions of subsection (g) (h)of this section or any provisions of this article to the
contrary, sales of property and services to persons subject to
tax under article thirteen, thirteen-a or thirteen-b of this
chapter:
Provided,
That the exemption herein granted shall apply
both to property or services directly or not directly used or
consumed in the conduct of privileges which are subject to tax
under such articles but shall not apply to purchases of gasoline
or special fuel;
(w) (x) Sales of propane to consumers for poultry house
heating purposes, with any seller to such consumer who may have
prior paid such tax in his price, to not pass on the same to the
consumer, but to make application and receive refund of such tax
from the tax commissioner, pursuant to rules and regulations
which shall be promulgated by the tax commissioner; and
notwithstanding the provisions of section eighteen of this
article or any other provisions of such article to the contrary;
(x) (y) Any sales of tangible personal property or services
purchased after the thirtieth day of September, one thousand nine
hundred eighty-seven, and lawfully paid for with food stamps
pursuant to the federal food stamp program codified in 7 United
States Code, §2011, et seq., as amended, or with drafts issued
through the West Virginia special supplemental food program for
women, infants and children codified in 42 United States Code,
§1786;
(y) (z) Sales of tickets for activities sponsored by
elementary and secondary schools located within this state;
(z) (aa) Sales of electronic data processing services and
related software:
Provided,
That for the purposes of this
subsection "electronic data processing services" means: (1) The
processing of another's data, including all processes incident to
processing of data such as keypunching, keystroke verification,
rearranging or sorting of previously documented data for the
purpose of data entry or automatic processing, and changing the
medium on which data is sorted, whether these processes are done
by the same person or several persons; and (2) providing access
to computer equipment for the purpose of processing data or
examining or acquiring data stored in or accessible to such
computer equipment;
(aa) (bb) Tuition charged for attending educational summer
camps;
(bb) (cc) Sales of building materials or building supplies
or other property to an organization qualified under Section
501(c)(3) or (c)(4) of the Internal Revenue Code of 1986, as
amended, which are to be installed in, affixed to or incorporated
by such organization or its agent into real property, or into a
building or structure which is or will be used as permanent low-
income housing, transitional housing, emergency homeless shelter,
domestic violence shelter or emergency children and youth shelter
if such shelter is owned, managed, developed or operated by an
organization qualified under Section 501(c)(3) or (c)(4) of the
Internal Revenue Code of 1986, as amended;
(cc) (dd) Dispensing of services performed by onecorporation for another corporation when both corporations are
members of the same controlled group. Control means ownership,
directly or indirectly, of stock possessing fifty percent or more
of the total combined voting power of all classes of the stock of
a corporation entitled to vote or ownership, directly or
indirectly, of stock possessing fifty percent or more of the
value of the corporation;
(dd) (ee) Food for the following shall be exempt:
(1) Food purchased or sold by public or private schools,
school sponsored student organizations, or school sponsored
parent-teacher associations to students enrolled in such school
or to employees of such school during normal school hours; but
not those sales of food made to the general public;
(2) Food purchased or sold by a public or private college or
university or by a student organization officially recognized by
such college or university to students enrolled at such college
or university when such sales are made on a contract basis so
that a fixed price is paid for consumption of food products for
a specific period of time without respect to the amount of food
product actually consumed by the particular individual
contracting for the sale and no money is paid at the time the
food product is served or consumed;
(3) Food purchased or sold by a charitable or private
nonprofit organization, a nonprofit organization or a
governmental agency under a program to provide food to low-income
persons at or below cost;
(4) Food sold in an occasional sale by a charitable or
nonprofit organization including volunteer fire departments and
rescue squads, if the purpose of the sale is to obtain revenue
for the functions and activities of the organization and the
revenue so obtained is actually expended for that purpose;
(5) Food sold by any religious organization at a social or
other gathering conducted by it or under its auspices, if the
purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenue
obtained from selling the food is actually used in carrying on
such functions and activities:
Provided,
That purchases made by
such organizations shall not be exempt as a purchase for resale;
(6) Food purchased by public or private preschools and day-
care centers.
(ee) (ff) Sales of food by little leagues, midget football
leagues, youth football or soccer leagues and similar types of
organizations, including scouting groups and church youth groups,
if the purpose in selling the food is to obtain revenue for the
functions and activities of the organization and the revenues
obtained from selling the food is actually used in supporting or
carrying on functions and activities of the groups:
Provided,
That such purchases made by such organizations shall not be
exempt as a purchase for resale;
(ff) (gg) Charges for room and meals by fraternities and
sororities to their members:
Provided,
That such purchases made
by a fraternity or sorority shall not be exempt as a purchase forresale;
(gg) (hh) Sales of or charges for the transportation of
passengers in interstate commerce;
(hh) (ii) Sales of tangible personal property or services to
any person which this state is prohibited from taxing under the
laws of the United States or under the constitution of this
state;
(ii) (jj) Sales of tangible personal property or services to
any person who claims exemption from the tax imposed by this
article or article fifteen-a of this chapter pursuant to the
provisions of any other chapter of this code;
(jj) (kk) Charges for the services of opening and closing a
burial lot;
(kk) (ll) Sales of livestock, poultry or other farm products
in their original state by the producer thereof or a member of
the producer's immediate family who is not otherwise engaged in
making retail sales of tangible personal property; and sales of
livestock sold at public sales sponsored by breeder's or registry
associations or livestock auction markets:
Provided,
That the
exemptions allowed by this subsection shall apply to sales made
on or after the first day of July, one thousand nine hundred
ninety, and may be claimed without presenting or obtaining
exemption certificates:
Provided,
however, That the farmer shall
maintain adequate records;
(ll) (mm) Sales of motion picture films to motion picture
exhibitors for exhibition if the sale of tickets or the chargefor admission to the exhibition of the film is subject to the tax
imposed by this article and sales of coin-operated video arcade
machines or video arcade games to a person engaged in the
business of providing such machines to the public for a charge
upon which the tax imposed by this article is remitted to the tax
commissioner:
Provided,
That the exemption provided in this
subsection shall apply to sales made on or after the first day of
July, one thousand nine hundred ninety, and may be claimed by
presenting to the seller a properly executed exemption
certificate;
(mm) (nn) Sales of aircraft repair, remodeling and
maintenance services when such services are to an aircraft
operated by a certified or licensed carrier of persons or
property, or by a governmental entity, or to an engine or other
component part of an aircraft operated by a certificated or
licensed carrier of persons or property, or by a governmental
entity and sales of tangible personal property that is
permanently affixed or permanently attached as a component part
of an aircraft owned or operated by a certificated or licensed
carrier of persons or property, or by a governmental entity, as
part of the repair, remodeling or maintenance service and sales
of machinery, tools, or equipment, directly used or consumed
exclusively in the repair, remodeling, or maintenance of
aircraft, aircraft engines, or aircraft component parts, for a
certificated or licensed carrier of persons or property, or for
a governmental entity;
(nn) (oo) Sales of tangible personal property and services
to a person entitled to claim the tax credit for investment in
certain management information services facilities allowed under
section three-c, article thirteen-d of this chapter, pursuant to
the issuance of a management information services tax credit
certification by the tax commissioner in accordance with
subsection (e), section three-c, article thirteen-d of this
chapter, when such property or services are directly used or
consumed by the purchaser in the operation of the management
information services facility, as defined in section two of this
article for which credit is allowed under section three-c,
article thirteen-d of this chapter. Tangible personal property,
or services, directly used or consumed in the operation of a
management information services facility includes only: (1)
Computer processing and telecommunications equipment; (2) data
storage and input/output devices; (3) disaster recovery services;
(4) supplies; (5) application, telecommunication and operating
system software; (6) repair and maintenance of any of the
aforesaid items; and (7) other tangible personal property or
services directly used or consumed in the operation of a
management information services facility:
Provided,
That the
property is purchased or leased after the thirty-first day of
March, one thousand nine hundred ninety-one. This exemption
shall not apply to tangible personal property, or services, that
are not directly used or consumed in the operation of a
management information services facility, or to gasoline orspecial fuel:
Provided,
however, That nothing in this paragraph
shall be construed to limit, exclude or preclude the application
or availability of any other exemption set forth in this section,
or elsewhere in this code, which might otherwise apply to any
sale of tangible personal property or services;
(oo) (pp) Charges for memberships or services provided by
health and fitness organizations relating to personalized fitness
programs;
(pp) (qq) Sales of services by individuals who baby-sit for
a profit:
Provided,
That the gross receipts of the individual
from the performance of baby sitting services does not exceed
$5,000.00 in a taxable year; and
(qq) (rr) A corporation or organization which is a
not-for-profit entity which charges membership dues utilized for
and contributing significantly to traffic and pedestrian safety
and education programs whether or not the corporation or
organization is exempt from income tax under Section 501(c)(3) of
the Internal Revenue Code of 1985 1986, as amended.
NOTE: The purpose of this bill is to exempt public and
private preschools and day-care centers from the sales tax on
food served to students and sales of textbooks and school
supplies.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.