H. B. 4071
(By Delegate Kiss)
[Introduced January 16, 1996; 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 exemptions
from consumers sales tax; and exempting members of the music
teacher's national association and commissions received by
a manufacturer's representative from consumers sales tax.
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 to
the 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 may 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:
(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 contribution
or 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 subsection subdivision
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 subdivision as amended by this
article 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
may not apply to purchases of gasoline or special fuel;
(g) 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 on and after the first day of July,
one thousand nine hundred eighty-seven, the exemption provided in
this subsection subdivision 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 may not apply
to purchases of gasoline or special fuel: Provided, however,
That on and after the first day of May, one thousand nine hundred
ninety-three, the exemption provided in this subsection
subdivision shall apply only to services, machinery, supplies and
materials directly used or consumed in the activities of
manufacturing, transportation, transmission, communication,
production of natural resources, gas storage, generation or
production of selling electric power, provision of a public
utility service or the operation of a utility service or the
operation of a utility business, in the businesses or
organizations named above and shall may not apply to purchases of
gasoline or special fuel;
(h) 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 or her
representative for the owner's account, such the sale, transfer,
offer for sale or delivery not being made in the ordinary course
of repeated and successive transactions of like character by such
the owner or on his or her 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 the isolated sale takes
place. The tax commissioner may adopt such legislative rule
pursuant to chapter twenty-nine-a of this code as he or she deems
necessary for the efficient administration of this exemption;
(i) 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 the ultimate
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 may not be exempt: Provided, however, That nails and fencing may not be considered as improvements to real property;
(j) 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 or her agent into any real
property, building or structure shall may not be exempt under
this subdivision, 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 or proprietary purpose, who
incorporates such the property in such the building, structure or
improvement shall, with respect to such the tangible personal
property, nevertheless be deemed to be the vendor of such the
property to the governmental entity and any person seeking to qualify for and assert this exception must do so pursuant to such
the 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) 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) 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 of
gasoline and special fuel shall be taxable;
(m) Sales of newspapers when delivered to consumers by route carriers;
(n) Sales of drugs dispensed upon prescription and sales of
insulin to consumers for medical purposes;
(o) Sales of radio and television broadcasting time,
preprinted advertising circulars and newspaper and outdoor
advertising space for the advertisement of goods or services;
(p) Sales and services performed by day-care centers;
(q) 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 subdivision (f) of this section on its purchases of
tangible personal property or services:
(1) For purposes of this subsection subdivision, 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 subdivision (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 subdivision, as
amended by this article, shall apply to sales made after the
thirtieth day of June, one thousand nine hundred eighty-nine;
(r) 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) 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) 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) 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 that date,
for months thereof beginning on or after such that date;
(v) Sales of propane to consumers for poultry house heating
purposes, with any seller to such a consumer who may have prior
paid such the tax in his or her price, to not pass on the same to
the consumer, but to make application and receive refund of such
the 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 the article to the
contrary;
(w) 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;
(x) Sales of tickets for activities sponsored by elementary
and secondary schools located within this state;
(y) Sales of electronic data processing services and related
software: Provided, That for the purposes of this subsection
subdivision "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;
(z) Tuition charged for attending educational summer camps;
(aa) 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;
(bb) Dispensing of services performed by one corporation 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;
(cc) 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 the
school or to employees of such the 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 the college or university to students enrolled at such the
college or university when such the 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 may not be exempt as a purchase for
resale;
(dd) 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 may not be
exempt as a purchase for resale;
(ee) Charges for room and meals by fraternities and
sororities to their members: Provided, That such purchases made by a fraternity or sorority shall may not be exempt as a purchase
for resale;
(ff) Sales of or charges for the transportation of
passengers in interstate commerce;
(gg) 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;
(hh) 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;
(ii) Charges for the services of opening and closing a
burial lot;
(jj) 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 breeders or registry
associations or livestock auction markets: Provided, That the
exemptions allowed by this subsection subdivision 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;
(kk) Sales of motion picture films to motion picture
exhibitors for exhibition if the sale of tickets or the charge
for 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
subdivision 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;
(ll) 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;
(mm) 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) of said section, 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 may 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 or
special fuel: Provided, however, That nothing in this paragraph
shall may 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;
(nn) Charges for memberships or services provided by health
and fitness organizations relating to personalized fitness
programs;
(oo) 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 do not exceed five
thousand dollars in a taxable year;
(pp) 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 1986, as amended;
(qq) Sales of tangible personal property or services by any
member of the music teacher's national association; and
(rr) Commissions received by a manufacturer's
representative.
NOTE: The purpose of this bill is to exempt the sales of
tangible personal property or services by any member of the Music
Teacher's National Association and commissions received by a
manufacturer's representative from the consumers sales tax.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.