H. B. 4533


(By Delegates McKinley and Kiss)
[Introduced February 21, 1994; referred to the
Committee on Finance.]




A BILL to amend and reenact section eight, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to a personal income tax credit for natural persons who become new resident or new graduate taxpayers, and a personal income tax credit for new residents who create jobs for residents of the state; specifying restrictions and limitations on the credits; limiting the credit application to five years; barring any credit carryover; requiring application for credit to be filed with the individual's tax return; and deleting language about an expired severance tax credit.
Be it enacted by the Legislature of West Virginia:

That section eight, 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 - 8. Credits against tax.

(a) Business and occupation tax credit. -- A credit shall be allowed against the tax imposed by section three of this article equal to the amount of the liability of the taxpayer for the taxable year for any tax imposed under article thirteen, chapter eleven of this code: Provided, That the amount of such business and occupation tax credit shall not exceed the portion of the tax imposed by this article which is attributable to the West Virginia taxable income derived by the taxpayer for the taxable year from the business or occupation with respect to which said tax under article thirteen was imposed. In case the West Virginia taxable income of a taxpayer includes income from a partnership, estate, trust or a corporation electing to be taxed under subchapter S of the Internal Revenue Code of 1954 1986, as amended, a part of any tax liability of the partnership, estate, trust or corporation under said article thirteen shall be allowed to the taxpayer, in computing the credit provided for by this section, in an amount proportionate to the income of such partnership, estate, trust or corporation, which is included in the taxpayer's West Virginia taxable income.

For purposes of this section, the tax imposed under article thirteen, chapter eleven of this code shall be the amount of the liability of the taxpayer for such tax under said article thirteen computed without reduction for the tax credit for industrial expansion or revitalization allowed for such year.
(b) Severance tax credit. -- On and after the first day of July, one thousand nine hundred eighty-seven, a credit shall be allowed against the tax imposed by section three of this article equal to the amount of the liability of the taxpayer for the taxable year for any tax imposed under article thirteen-a, chapter eleven of this code: Provided, That the amount of such severance tax credit shall not exceed the portion of the tax imposed by this article which is attributable to the West Virginia taxable income derived by the taxpayer for the taxable year from the activities with respect to which said tax under article thirteen-a was imposed. In case the West Virginia taxable income of a taxpayer includes income from a partnership, estate, trust or a corporation electing to be taxed under subchapter S of the Internal Revenue Code of 1954, as amended, a part of any tax liability of the partnership, estate, trust or corporation under said article thirteen-a shall be allowed to the taxpayer, in computing the credit provided for by this section, in an amount proportionate to the income of such partnership, estate, trust or corporation, which is included in the taxpayer's West Virginia taxable income Personal relocation and jobs tax credits. -- For taxable years beginning on and after the first day of January, one thousand nine hundred ninety-five, a credit described in either or both of subdivisions (1) and (2) of this subsection shall be allowed against the tax imposed by section three of this article to (A) a taxpayer, hereafter in this subsection referred to as a "new resident," who has established his or her primary residence in this state on or after the first day of July, one thousand nine hundred ninety-four, and has not been a taxpayer of this state for a period of at least five years prior to establishment of such primary residence, or (B) a taxpayer, hereafter in this subsection referred to as a "new graduate," who is employed in this state within six months following graduation from: an accredited college, university or postsecondary educational institution as defined in section two, article one, chapter eighteen-b of this code; a correspondence, business, occupational or trade school that has obtained a permit as required by section five, article three, chapter eighteen-b of this code; or a comparable educational institution located outside this state.
(1) The credit available to a new resident taxpayer who earns gross annual income of at least twenty-five thousand dollars, or to a new graduate taxpayer who earns gross annual income of at least fifteen thousand dollars, is twenty percent of the amount of the liability of the taxpayer with respect to such earned income for the tax imposed under section three of this article for the taxable year.
(2) The credit available to a new resident taxpayer or a new graduate taxpayer who employs, or causes a corporation of which the employer taxpayer is the majority stockholder or a partnership of which the employer taxpayer is the general or managing partner to employ, one or more residents of this state whose gross annual income from such employment is at least fifteen thousand dollars is ten percent of the amount of the liability of the taxpayer for the tax imposed under section three of this article for the taxable year, multiplied by the number of such employees employed during the taxable year: Provided, That the maximum credit available under this subdivision for any taxable year is twenty percent of the amount of the liability of the taxpayer for the tax imposed under section three of this article for the taxable year.
(3) The credits under subdivisions (1) and (2) of this subsection is available for the taxable year and for succeeding taxable years in which the taxpayer continues to meet the requirements for such credit: Provided, That no taxpayer is entitled to such credit for more than five taxable years: Provided, however, That no taxpayer is entitled to such credit for a succeeding taxable year following a taxable year for which the taxpayer was not entitled to such credit: Provided further, That a taxpayer who meets the residence or employment requirement of subdivision (1) or (2) of this subsection for less than the full taxable year, or whose failure to meet the minimum gross annual income requirement of subdivision (1) of this subsection is due solely to the taxpayer's residence or employment in this state for less than the full taxable year, is entitled to a partial credit equal to the amount of such credit calculated as provided in subdivision (1) of this subsection multiplied by a fraction the numerator of which is the number of days during which a new resident taxpayer is a resident of, or a new graduate taxpayer is employed in, this state during the taxable year and the denominator of which is three hundred sixty-five.
(4) Application for any credit available under subdivision (1) or (2) of this subsection shall be made no later than the due date, including any extensions, for filing the tax return required under this article for the taxable year, and shall include such information as the commissioner may by rule require: Provided, That no carryforward to a future taxable year or carryback to a prior taxable year is allowed.
(c) Expiration of credit. -- The credits authorized in subsection (b) of this section shall expire and not be authorized or allowed for any taxable year beginning on or after the first day of October January, one two thousand: nine hundred ninety Provided, That a taxpayer who has met all requirements for either or both of such credits prior to the first day of January, two thousand, shall be permitted to apply for such credit for succeeding taxable years in which the taxpayer continues to meet the requirements for such credit: Provided, however, That no taxpayer is entitled to such credit for more than five taxable years: Provided further, That no taxpayer is entitled to such credit for a succeeding taxable year following a taxable year for which the taxpayer was not entitled to such credit.



NOTE: The purpose of this bill is to create the personal relocation tax credit to promote relocation in the State of West Virginia by individual taxpayers earning at least $25,000 per year, and to promote such individuals' creation of jobs paying at least $15,000 per year. The basic credit of 20% of the individual's West Virginia personal income tax liability, and an additional credit of 10% of such tax liability for up to two new jobs paying at least $15,000 per year, would be applied against the individual's West Virginia personal income tax liability for each year in which all criteria were met, for a maximum of five years. The bill also eliminates language referring to the severance tax credit which expired in 1990.

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