Senate Bill No. 28
(By Senators Burdette, Mr. President, and Boley,
By Request of the Executive)
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[Introduced January 14, 1994; referred to the Committee
on Finance.]
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A BILL to amend chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article thirteen-j,
relating to the creation of a tax credit and defrayment
allowance for costs of relocating a corporate commercial
domicile from a location outside this state to a location in
this state on or after the first day of July, one thousand
nine hundred ninety-four, and for costs of relocating all or
part of the operations of a corporation domiciled in West
Virginia from a location in this state to another location
in this state for the purpose of expanding the operations so
relocated; setting forth legislative findings; specifying
definitions; providing procedures for determining and
allowing of the credit and defrayment allowance; specifying
application of the credit; specifying restrictions and
limitations on the credit; setting forth methods for
apportionment of tax liabilities against which the credit is
allowed; prescribing a property factor; prescribing a
payroll factor; prescribing a combined property and payroll
factor; specifying a ten-year credit application period;
specifying that there shall be no credit carryover beyond
the specified ten-year period; specifying a required
application for credit to be filed with the tax
commissioner; prescribing treatment of resident taxpayers
which establish corporate commercial domicile; specifying
penalty for failure to file the applications for credit;
providing an absolute limitation for the amount of total
credit certified for all taxpayers in the aggregate in any
one fiscal year shall not exceed a total of one million
dollars; limiting application of the credit to West Virginia
domiciliaries; providing for transfer of credit to
successors in business; requiring identification of property
transferred into West Virginia or transferred within West
Virginia for taxpayers which claim the credit; setting forth
mandated interpretation and construction to be applied to
the article; and providing a severability clause.
Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article thirteen-j, to
read as follows:
ARTICLE 13J. CORPORATE COMMERCIAL RELOCATION TAX CREDIT.
§11-13J-1. Legislative finding.
The Legislature finds that the establishment by relocation
of corporate commercial domiciles in this state by business and
industry and expansion by relocation of domestic business and
industry is conducive to economic development and the expansion,
growth and improvement of the economy of the state, and that such
expansion, growth and improvement are in the public interest, and
promote the general welfare of the people of this state.
In order to encourage the establishment of corporate
commercial domiciles in the state by business and industry, and
the expansion of business and industry by relocation, there is
hereby established the Corporate Commercial Relocation Tax
Credit.
§11-13J-2. Definitions.
(a) Any term used in this article shall have the same
meaning as when used in a comparable context in article twenty-
four of this chapter, unless a different meaning is clearly
required by the context of its use or by definition in this
article.
(b) For purposes of this article, the following definitions
apply:
(1) Corporation -- The term "corporation" means and
includes a joint-stock company and any association or other
organization which is taxable as a corporation under the federal
income tax law.
(2) Eligible taxpayer --
(A) The term "eligible taxpayer" means a corporation whichhas relocated all or a portion of its business from a location
outside this state to a location in this state on or after the
first day of July, one thousand nine hundred ninety-four, and
which has become a taxpayer, as herein defined, and which
otherwise qualifies for the tax credit authorized under this
article. The term "eligible taxpayer" includes an affiliated
group of corporations which elects to file a consolidated,
unitary or combined tax return under article twenty-four of this
chapter, which group contains at least one corporation which has
relocated all or a portion of its business from a location
outside this state to a location in this state on or after the
first day of July, one thousand nine hundred ninety-four, and
which has become a taxpayer, as herein defined, and which
otherwise qualified for the tax credit authorized under this
article.
(B) The term "eligible taxpayer" also means a corporation
which has established all or a portion of its business in this
state and which, on or after the first day of July, one thousand
nine hundred ninety-four, has relocated all or part of its
operations from a location in this state to another location in
this state for the purpose of expanding the operations so
relocated.
(3) Employee -- The term "employee" means and is limited to
a natural person subject to the West Virginia personal income tax
under article twenty-one of this chapter and residing and
domiciled in this state, hired by a taxpayer to fill a full-timeor part-time job.
(4) Natural person -- The term "natural person" means a
human being.
(5) Person -- The term "person" means and includes a legal
or natural person and is deemed interchangeable with the term
"corporation" for purposes of this article.
(6) Reasonable and necessary expenses incurred to relocate
a corporate commercial domicile or operation -- The term
"reasonable and necessary expenses incurred to relocate a
corporate commercial domicile or operation" means only those
expenses incurred and paid to unrelated third parties by a
corporation which becomes an eligible taxpayer to move that
corporation's corporate commercial domicile into this state from
a location outside this state, or to relocate all or part of its
operations from a location in this state to another location in
this state for the purpose of expanding the operations so
relocated; which expenses are, upon application by the
corporation, determined by the tax commissioner to have been both
reasonable and necessary to effectuate the relocation. In no
case shall the term "reasonable and necessary expenses incurred
to relocate a corporate commercial domicile or operation" include
any capital investment in land, buildings, equipment or inventory
in this state or any other state; nor shall the term include any
expenses incurred in this state or any other state to "butt out,"
terminate, accelerate, relieve or otherwise alter or liquidate
any liability or obligation under any lease of realty or personalproperty, or any supply contract or any other express or implied
legal obligation or contract or any use, custom or course of
dealing; which supply contract, obligation, contract, use, custom
or course of dealing was preexistent prior to the relocation and
unrelated to the relocation. The term "reasonable and necessary
expenses incurred to relocate a corporate commercial domicile or
operation" shall not include any expense incurred to directly or
indirectly pay or reimburse the cost of relocation of any former,
current or prospective owner, officer or employee of any
corporation which becomes an eligible taxpayer, or the cost of
any temporary or permanent housing for any such owner, officer or
employee.
(7) State -- The term "state" means any state of the United
States, the District of Columbia, the Commonwealth of Puerto
Rico, any territory or possession of the United States, and any
foreign country or political subdivision thereof.
(8) Taxable year -- The term "taxable year" means the
taxable year for which the taxable income of the taxpayer is
computed under the federal income tax.
(9) Tax commissioner -- The term "tax commissioner" means
the tax commissioner of the state of West Virginia or the
delegate of the tax commissioner.
(10) Taxpayer -- The term "taxpayer" means any person
subject to the tax imposed by article twenty-four of this
chapter.
(11) This code -- The term "this code" means the code ofWest Virginia, one thousand nine hundred thirty-one, as amended.
(12) This state -- The term "this state" means and shall be
limited to the State of West Virginia.
§11-13J-3. Credit allowed for corporate relocation.
(a) Credit allowed. -- An eligible taxpayer shall be allowed
a credit under this article, the amount of which shall be
determined as provided in subsection (b) of this section.
(b) Determination of credit. -- The amount of credit allowed
by subsection (a) of this section shall be an amount not to
exceed the reasonable and necessary expenses incurred to relocate
a corporate commercial domicile from a location outside this
state to a location in this state or a corporate business
operation from a location in this state to another location in
this state for the purpose of expansion.
(c) Application of credit. -- The credit allowed by this
article shall be applied over a period not to exceed ten
consecutive years:
(1) Against up to one hundred percent of that portion of the
eligible taxpayer's annual liability for the West Virginia
business franchise tax imposed under article twenty-three of this
chapter attributable to that portion of the eligible taxpayer's
operations resulting from relocation of its corporate commercial
domicile from a location outside this state to a location in this
state, or attributable to relocation of a business operation from
a location within this state to another location within this
state for the purpose of expansion.
(2) If any credit remains after application as authorized in
subdivision (1) of this subsection, against up to one hundred
percent of that portion of the eligible taxpayer's annual
liability for the West Virginia corporation net income tax
imposed under article twenty-four of this chapter attributable to
that portion of the eligible taxpayer's operations resulting from
relocation of its corporate commercial domicile from a location
outside this state to a location in this state or attributable to
relocation of a business operation from a location within this
state to another location within this state for the purpose of
expansion.
(3) Credit defrayment allowance --
(A) If the sum of the amounts offset under subdivisions (1)
and (2) of this subsection is less than thirty percent of that
portion of the amount of tax withheld under article twenty-one of
this chapter from employees of the eligible taxpayer during the
taxable year which is attributable to the portion of the
operations relocated to this state from a location outside this
state, or attributable to the portion of operations resulting
from an expansion undertaken pursuant to a relocation of a
business operation from a location within this state for the
purpose of expansion, then the eligible taxpayer may apply to
this state, by filing an application form to be prescribed by the
tax commissioner, for a payment of a further amount of this
credit, which amount shall be the difference between the sum of
the amounts offset under subdivisions (1) and (2) of thissubsection is less than thirty percent of that portion of the
amount of tax withheld under article twenty-one of this chapter
from employees of the eligible taxpayer during the taxable year
which is attributable to the portion of the operations relocated
to this state from a location outside this state, or attributable
to the portion of operations resulting from an expansion
undertaken pursuant to a relocation of a business operation from
a location within this state to another location within this
state for the purpose of expansion. This payment shall be paid
to the eligible taxpayer out of the general fund in the manner of
a refund of a tax overpayment.
(B) The application for this payment shall be filed no later
than the last day of the due date, without extensions, for filing
the tax return required under article twenty-four of this chapter
for the taxable year, and all information required by the
prescribed form shall be provided.
(C) That portion of the amount of tax withheld under article
twenty-one of this chapter from employees of the eligible
taxpayer during the taxable year which is attributable to the
portion of the operations relocated to this state from a location
outside this state, or attributable to the portion of operations
resulting from an expansion undertaken pursuant to a relocation
of a business operation from a location within this state for the
purpose of expansion shall be determined by multiplying the total
amount of tax withheld under article twenty-one of this chapter
from employees of the eligible taxpayer during the taxable yearby the payroll factor prescribed in section three of this
article.
§11-13J-4. Restrictions and limitations on credits allowed by
this article.
(a) The amount of credit allowed under this article shall be
limited to the greater of:
(1) One hundred percent of the tax liability for the tax
imposed on the eligible taxpayer under articles twenty-three and
twenty-four of this chapter attributable to the portion of the
operations relocated to this state from a location outside this
state, or the portion of operations resulting from an expansion
undertaken pursuant to a relocation of a business operation from
a location within this state to another location within this
state for the purpose of expansion, or
(2) Thirty percent of the portion of annual tax withheld
from employees of an eligible taxpayer under article twenty-one
of this chapter which is attributable to the portion of the
operations relocated to this state from a location outside this
state, or the portion of operations resulting from an expansion
undertaken pursuant to a relocation of a business operation from
a location within this state to another location within this
state for the purpose of expansion.
(b) Apportionment. -- That portion of the eligible
taxpayer's operations resulting from relocation of its corporate
commercial domicile from a location outside this state to a
location in this state or relocation of a business operation froma location within this state to another location within this
state for the purpose of expansion shall consist only of that
portion of the annual tax liability under each of the said
articles twenty-three and twenty-four of this chapter, which is
attributable to the operations of the eligible taxpayer, the
corporate commercial domicile of which was relocated to this
state, or the operations of which were relocated from a location
within this state to another location within this state for the
purpose of expansion; based upon apportionment of the said annual
tax liabilities of the eligible taxpayer using a combined payroll
and property apportionment factor.
(1) The property factor shall be a fraction:
(A) The numerator of which is the value of property of the
eligible taxpayer which was relocated from outside this state to
a location in this state, or in the case of operations which were
relocated from a location within this state to another location
within this state for the purpose of expansion, the value of
property so relocated; and
(B) The denominator of which is all property of the eligible
taxpayer.
The value of property for purposes of this property factor
shall be original cost.
(2) The payroll factor shall be a fraction:
(A) The numerator of which is the annual payroll of
employees of the eligible taxpayer which is attributable to the
relocation of the corporate commercial domicile from a locationoutside of this state to a location in this state, or, in the
case of an eligible taxpayer, the operations of which were
relocated from a location within this state to another location
within this state for the purpose of expansion; the increase in
payroll attributable to the expanded operations so relocated over
the last annual payroll for the operations so relocated prior to
the relocation; and
(B) The denominator of which is all payroll of the eligible
taxpayer.
(3) The combined property and payroll factor shall be a
fraction:
(A) The numerator of which shall be the sum of the property
factor, as determined under subdivision (2) of this subsection,
and the payroll factor, as determined under subdivision (2) of
this subsection; and
(B) The denominator of which shall be two.
(c) Ten year credit application period; no carryover of
credit. -- The credit allowed under this article shall be applied
for a period not to exceed ten consecutive tax years, beginning
in the first tax year when the relocation of a corporate
commercial domicile or operation of an eligible taxpayer began.
Any amount of credit remaining after the expiration of such ten
consecutive tax years shall be forfeited, and shall not carry
over to any other taxable year.
(d) Establishment of corporate commercial domicile by a
resident taxpayer. -- In the case of a taxpayer which hadpreexisting operations or property in this state prior to the
relocation of its corporate commercial domicile to this state,
and which relocates tangible personal property from a location
outside this state to a location inside this state, thus
establishing its corporate commercial domicile in this state by
exceeding the requirement that more than fifty percent of the
payroll and property of the corporation be West Virginia payroll
and West Virginia property, that eligible taxpayer shall be
treated as a taxpayer which has relocated operations within this
state from a location in this state to another location in this
state for the purpose of expansion.
(e) Application for credit required. -- No credit shall be
allowed or applied under this article for any taxpayer until the
person asserting a claim for the allowance of such credit makes
written application to the tax commissioner for allowance of
credit and receives written certification of the application from
the tax commissioner. The application for credit shall be filed
no later than the last day of the due date, without extensions,
for filing the tax return required under article twenty-four of
this chapter for the taxable year in which the corporate
commercial domicile relocation or relocation of operations was
completed, and all information required by the tax commissioner's
prescribed form shall be provided.
(f) Failure to file. -- The failure to timely apply for the
credit shall result in forfeiture of the credit otherwise
allowable under this article.
(g) Absolute limitation. -- Total credit certified for all
taxpayers in the aggregate in any one year shall not exceed a
total of one million dollars.
(h) Credit limited to domiciliaries. -- This credit shall
not be allowed to any person or taxpayer which has not
established its corporate commercial domicile in this state prior
to applying for this credit.
§11-13J-5. Transfer of credit to successors.
The amount of credit that remains available to an eligible
taxpayer at the time of a transfer, merger, acquisition or asset
purchase, where substantially all operations relocated in this
state are transferred to a successor which carries on with those
operations, shall be transferred to the successor in business
from the original predecessor eligible taxpayer on the date of
transfer, merger, acquisition or asset purchase.
The amount of time remaining at the time of transfer,
merger, acquisition or asset purchase over which the predecessor
eligible taxpayer could have applied its remaining credit shall
be the time over which the successor may apply the credit
acquired. In no case shall transferred credit be applied over a
period extending longer than the remaining time period applicable
to the original eligible taxpayer, and in no case shall the
amount of credit applied exceed the credit remaining and
available to a predecessor at the time of transfer.
§11-13J-6. Identification of property transferred into the state
of West Virginia from a location outside this state by an
eligible taxpayer or of property of a business operation
relocated from a location within this state to another
location within this state for the purpose of expansion.
Every taxpayer which claims credit under this article shall
maintain sufficient records to establish the identity of property
transferred to the new location.
§11-13J-7. Interpretation and construction.
(a) No inference, implication or presumption of legislative
construction or intent shall be drawn or made by reason of the
location or grouping of any particular section, provision, or
portion of this article; and no legal effect shall be given to
any descriptive matter or heading relating to any section,
subsection or paragraph of this article.
(b) The provisions of this article shall be strictly
construed, and the person claiming entitlement to the credit
allowed under this article shall bear the burden of proving any
claim of such entitlement.
§11-13J-8. Severability.
(a) If any provision of this article or the application
thereof shall for any reason be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not
affect, impair or invalidate the remainder of the said article,
but shall be confined in its operation to the provision thereof
directly involved in the controversy in which such judgment shall
have been rendered, and the applicability of such provision to
other persons or circumstance shall not be affected thereby.
(b) If any provision of this article or the application
thereof shall be made invalid or inapplicable by reason of the
failure of the Legislature to enact any statute therein addressed
or referred to, or by reason of the repeal or any other
invalidation of any statute therein addressed or referred to,
such failure to reenact on such repeal or invalidation of any
such statute shall not affect, impair or invalidate the remainder
of the said article, but shall be confined in its operation to
the provision thereof directly involved with, pertaining to,
addressing or referring to the said statute, and the application
of such provision with regard to other statutes or in other
instances not affected by any such invalid or repealed statute
shall not be abrogated or diminished in any way.
NOTE: The purpose of this bill is to create the corporate
commercial relocation tax credit, a tax credit to promote the
relocation of corporate commercial domiciles from locations
outside the State of West Virginia to locations in the State of
West Virginia, and to promote the relocation of corporate
operations from one location in the State of West Virginia to
another location within the State of West Virginia for the
purpose of expanding operations in the State of West Virginia.
The credit would apply against 100% of the West Virginia business
franchise tax attributable to relocation, and against 100% of the
West Virginia corporation net income tax attributable to
relocation, and would, in addition, provide a direct payment out
of the general fund to corporations entitled to the credit in the
amount of the excess of 30% of the personal income tax
withholdings of the employees of the corporation over the amount
of the business franchise tax and corporation net income tax
offset by the credit.
Article 13J is new; therefore, strike-throughs and
underscoring have been omitted.