SENATE BILL NO. 17
(By Senators Craigo, Tomblin, Mr. President, Chafin, Jackson,
Wooton, Bailey, Walker, Wagner, Manchin, Anderson, Plymale, White,
Whitlow, Dittmar, Bowman, Macnaughtan, Miller, Helmick, Sharpe,
Ross, Schoonover, Love, Blatnik, Grubb, Oliverio, Wiedebusch,
Buckalew, Deem, Kimble, Yoder, Boley, Minear, Scott and Dugan)
[Originating in the Committee on Finance; reported
January 12, 1996.]
A BILL to amend article twenty-one, chapter eleven of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
ten; and to amend and reenact sections fifty-one and seventy-
one of said article, all relating generally to imposing
personal income taxes; providing a low income exclusion from
federal adjusted gross income; increasing threshold for filing
certain income tax returns; making technical corrections; and
specifying effective dates.
Be it enacted by the Legislature of West Virginia:
That article twenty-one, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section ten;
and that sections fifty-one and seventy-one of said article be
amended and reenacted, all to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-10. Low income exclusion.
(a) Earned income exclusion. -- In the case of an eligible
taxpayer, there shall be allowed as a deduction from federal
adjusted gross income the amount of his or her earned income
included therein, not to exceed ten thousand dollars, except that
when a husband and wife file separate returns under this article,
this exclusion shall not exceed five thousand dollars per separate
return: Provided, That for the taxable year beginning the first
day of January, one thousand nine hundred ninety-six, the exclusion
provided for in this section applies only to earned income received
after the thirtieth day of June, one thousand nine hundred ninety-
six, and the amount excluded shall not exceed fifty percent of the
annual low income exclusion amounts set forth in this subsection.
(b) "Eligible taxpayer" defined. -- The term "eligible
(1) Any unmarried individual and any husband and wife filing
a joint return under this article who has or have federal adjusted
gross income of ten thousand dollars or less for the taxable year;
(2) Any husband or wife filing a separate return under this
article who has federal adjusted gross income of five thousand
dollars or less.
(c) "Earned income" defined. --
(1) The term "earned income" means:
(A) Wages, salaries, tips and other employee compensation;
(B) The amount of the taxpayer's net earnings from self-
employment for the taxable year (within the meaning of Section
1402(a) of the Internal Revenue Code), but such net earnings shall
be determined with regard to the deduction allowed to the taxpayer
under Section 164 of the Internal Revenue Code.
(2) For purposes of this section:
(A) The earned income of an individual shall be computed
without regard to any community property laws;
(B) No amount received as pension or annuity shall be taken
into account; and
(C) No amount received for services provided by an individual
while the individual is an inmate at a penal institution shall be
taken into account.
(d) Taxable year must be full taxable year. -- Except in the
case of a taxable year closed by reason of the death of the
taxpayer, no credit shall be allowed under this section in the case
of a taxable year covering a period of less than twelve months.
§11-21-51. Returns and liabilities.
(a) General. -- On or before the fifteenth day of the fourth
month following the close of a taxable year, an income tax return
under this article shall be made and filed by or for:
(1) Every resident individual required to file a federal income tax return for the taxable year, or having West Virginia
adjusted gross income for the taxable year, determined under
section twelve of this article in excess of the sum of his or her
West Virginia personal exemptions: Provided, That the tax
commissioner shall promulgate a legislative rule under the
provisions of article three, chapter twenty-nine-a of this code,
specifying the circumstances when an individual is not required to
file a return;
(2) Every resident estate or trust required to file a federal
income tax return for the taxable year, or having any West Virginia
taxable income for the taxable year, determined under section
eighteen of this article;
(3) Every nonresident individual having any West Virginia
adjusted gross income for the taxable year, determined under
section thirty-two of this article, in excess of the sum of his or
her West Virginia personal exemptions, except when all of the
nonresident individual's West Virginia source income is taxed on a
composite return filed under this article for the taxable year; and
(4) Every nonresident estate or trust having items of income
or gain derived from West Virginia sources, determined in
accordance with the applicable rules of section thirty-two of this
article as in the case of a nonresident individual, in excess of
its West Virginia exemption.
(b) Husband and wife. --
(1) If the federal income tax liability of husband or wife is
determined on a separate federal income tax return, their West Virginia income tax liabilities and returns shall be separate.
(2) If the federal income tax liabilities of husband and wife
other than a husband and wife described in subdivision (3) of this
subsection are determined on a joint federal return, or if neither
files a federal return:
(A) They shall file a joint West Virginia income tax return,
and their tax liabilities shall be joint and several; or
(B) They may elect to file separate West Virginia income tax
returns on a single or separate form, as may be required by the tax
commissioner, if they comply with the requirements of the tax
commissioner in setting forth information, and in that event their
tax liabilities shall be separate.
(3) If either husband and wife is a resident and the other is
a nonresident, they shall file separate West Virginia income tax
returns on such single or separate forms as may be required by the
tax commissioner, and in such event their tax liabilities shall be
(c) Decedents. -- The return of any deceased individual shall
be made and filed by his or her executor, administrator or other
person charged with his or her property.
(d) Individuals under a disability. -- The return for an
individual who is unable to make a return by reason of minority or
other disability shall be made and filed by his or her guardian,
committee, fiduciary or other person charged with the care of his
or her person or property (other than a receiver in possession of
only a part of his or her property), by his or her duly authorized agent.
(e) Estates and trusts. -- The return for an estate or trust
shall be made and filed by the fiduciary.
(f) Joint fiduciaries. -- If two or more fiduciaries are
acting jointly, the return may be made by any one of them.
(g) Tax a debt. -- Any tax under this article, and any
increase, interest or penalty thereon, shall, from the time it is
due and payable, be a personal debt of the person liable to pay the
same, to the state of West Virginia.
(h) Cross reference. -- The provisions as to information
returns by partnerships, employers and other persons, are set forth
in section fifty-eight of this article. The provisions relating to
composite returns of nonresidents are set forth in section fifty-
one-a of this article. The provisions regarding information
returns by electing small business corporations, are set forth in
section thirteen-b, article twenty-four of this chapter.
(i) Effective date. -- This section, as amended by this act in
the year one thousand nine hundred ninety-six, applies to all
taxable years beginning after the thirty-first day of December, one
thousand nine hundred ninety-five.
§11-21-71. Requirement of withholding tax from wages.
(a) General. -- Every employer maintaining an office or
transacting business within this state and making payment of any
wage taxable under this article to a resident or nonresident
individual shall deduct and withhold from such wages for each
payroll period a tax computed in such manner as to result, so far as practicable, in withholding from the employee's wages during
each calendar year an amount substantially equivalent to the tax
reasonably estimated to be due under this article resulting from
the inclusion in the employee's West Virginia adjusted gross income
of wages received during that calendar year. The method of
determining the amount to be withheld shall be prescribed by the
tax commissioner, with due regard to the West Virginia withholding
exemption of the employee and any low income exclusion allowed to
the employee under section eight of this article and asserted in
good faith by the employee. This section shall not apply to
payments by the United States for service in the armed forces of
the United States: Provided, That the tax commissioner may execute
an agreement with the secretary of the treasury, as provided in 5
U. S. C., §5517, for the mandatory withholding of tax under this
section on pay to members of the national guard while participating
in exercises or performing duty under 32 U. S. C., §502, and on pay
to members of the ready reserve while participating in scheduled
drills or training periods or serving on active duty for training
under 10 U. S. C., §270(a).
(b) Withholding exemptions. -- For purposes of this section:
(1) An employee is entitled to the same number of West
Virginia withholding exemptions as the number of withholding
exemptions to which he or she is entitled for federal income tax
withholding purposes. An employer may rely upon the number of
federal withholding exemptions claimed by the employee, except
where the employee claims a higher number of West Virginia withholding exemptions.
(2) With respect to any taxable year beginning after the
thirty-first day of December, one thousand nine hundred eighty-six,
the amount of each West Virginia exemption is two thousand dollars
whether the individual is a resident or nonresident.
(c) Exception for certain nonresidents. -- If the income tax
law of another state of the United States or of the District of
Columbia results in its residents being allowed a credit under
section forty of this article sufficient to offset all taxes
required by this article to be withheld from wages of an employee,
the tax commissioner may by rule relieve the employers of such
employees from withholding requirements of this article with
respect to such employees.
(d) Effective date. -- The provisions of this section, as
amended in the year one thousand nine hundred ninety-six, apply to
all taxable years or portions thereof beginning after the
thirtieth day of June, one thousand nine hundred ninety-six.