ENGROSSED
Senate Bill No. 21
(By Senators Scott and Ross)
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[Introduced January 10, 1996; referred to the Committee
on Small Business; and then to the Committee on Finance.]
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A BILL to amend and reenact sections eight and twenty, article
one, chapter five-e of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, all relating
to the West Virginia capital company act; limiting
percentage of total capital base which may be owned by
financial institutions; providing limitations on voting by
financial institutions; tax credits for qualified companies;
limitations on amounts of tax credits; providing an
effective date; promulgation of rules; reducing the total
amount of tax credits available each fiscal year; removing
cap on tax credits; providing for the receipt of
applications on a first come first serve basis; providing
for review of simultaneously received applications;
providing for a lottery where applications exceed available
credits; tax credit for investors; manner of taking the tax
credit; availability of tax credit; and categorizing credits
by dollar amount.
Be it enacted by the Legislature of West Virginia:
That sections eight and twenty, article one, chapter five-e
of the code of West Virginia, one thousand nine hundred thirty-
one, as amended, be amended and reenacted, all to read as
follows:
ARTICLE 1. WEST VIRGINIA CAPITAL COMPANY ACT.
§5E-1-8. Tax credits.
(a) The total amount of tax credits authorized for a single
qualified company may not exceed two million dollars.
Capitalization of the company may be increased pursuant to a
legislative promulgated rule by the authority in accordance with
article three, chapter twenty-nine-a of this code. The authority
may promulgate an emergency rule in accordance with article
three, chapter twenty-nine-a of this code to implement the
provisions of this section.
(b) The total credits authorized by the authority for all
companies may not exceed a total of ten million dollars each
fiscal year: Provided, That for the fiscal year beginning the
first day of July, one thousand nine hundred ninety-five, the
total credits authorized by the authority for all companies under
this section may not exceed a total of seven million five hundred
thousand dollars: Provided, however, That for the fiscal year
beginning the first day of July, one thousand nine hundred
ninety-six, and for each fiscal year thereafter, the total
credits authorized by the authority for all companies under this
section or this article may not exceed a total of five million
dollars each fiscal year: Provided further, That for each fiscal
year, the authority shall, for the first one hundred eighty days of the fiscal year, accept applications only from companies who
certify in their application that the investment of their entire
capital base will be in one or more small business investment
corporations organized under the small business investment act:
And provided further, That the capital base of any qualified
company shall be invested in accordance with the provisions of
this article. The authority shall allocate these credits to
qualified companies in the order that the companies are
qualified: And provided further, That the provisions of this
subsection are effective on the twenty-second day of February,
one thousand nine hundred ninety-six.
(c) The authority shall receive and accept applications for
capital company certification on a first come, first served basis
beginning on the first business day of each fiscal year and
continuing thereafter on each business day in that fiscal year
until all tax credits authorized for that fiscal year have been
exhausted. The authority shall record the date of receipt of all
applications. In the event that more than one application is
received on any business day, the authority shall consider that
all applications received on that date were simultaneously
received.
(d) The authority shall review all applications in the order
of their receipt to determine if they are complete. In the event
the authority determines an application to be incomplete, the
authority shall notify the applicant, in writing, of the reasons
for its determination and shall return the incomplete application
to the applicant. The applicant may resubmit the application
within fifteen days. If the initial filing was substantially complete, as determined by the authority, the time of filing for
the resubmitted application, for purposes of review by the
authority, shall be the date of the initial filing. If the
initial filing was not substantially complete, the time of filing
shall be the date when the resubmitted application is received by
the authority.
(e) In the event of simultaneously received applications,
the authority shall first review the applications to determine
the total tax credits sought by all of those applications. If
the total tax credits sought by all the applications exceed the
total tax credits then available for that fiscal year, the
authority shall, within fifteen days after receipt of the
applications, conduct a lottery to determine the order of review
of the applications. The authority shall notify, in writing, all
applicants that submitted simultaneously received applications of
the lottery drawing and provide the applicants the opportunity
for their designated representative to attend the lottery
drawing. Prior to, or at any time during the lottery process,
one or more applicants may, by agreement, voluntarily decrease
the amount of tax credits sought by their applications:
Provided, That the minimum capitalization requirements of this
article continue to be satisfied.
(f) Any investor, including an individual, partnership or
corporation who makes a capital investment in a qualified West
Virginia capital company, is entitled to a tax credit equal to
fifty percent of the investment, except as otherwise provided in
this section or in this article. The investor may take the
credit allowed by this article after the investor has taken all other credits allowed by chapter eleven of this code. The
investor shall take the tax credit against the same taxes and in
the same order as set forth in subsections (c) through (i),
section five, article thirteen-c, chapter eleven of this code.
The credit for investments by a partnership or by a corporation
electing to be treated as a subchapter S corporation may be
divided pursuant to election of partners or shareholders.
(g) The tax credit allowed under this section is to be
credited against the taxpayer's tax liability for the taxable
year in which the investment in a qualified West Virginia capital
company is made. If the amount of the tax credit exceeds the
taxpayer's tax liability for the taxable year, the amount of the
credit which exceeds the tax liability for the taxable year may
be carried forward to succeeding taxable years until used in
full, or until forfeited: Provided, That: (i) Tax credits may
not be carried forward beyond fifteen years; and (ii) tax credits
may not be carried back to prior taxable years. Any tax credit
remaining after the fifteenth taxable year is forfeited.
(h) The tax credit provided for in this section is available
only to those taxpayers whose investment in a qualified West
Virginia capital company occurs after the first day of July, one
thousand nine hundred eighty-six.
(i) The tax credit allowed under this section may not be
used against any liability the taxpayer may have for interest,
penalties or additions to tax.
(j) Notwithstanding any provision of this code to the
contrary, the tax commissioner shall publish in the state
register the name and address of every taxpayer, and the amount, by category, of any credit asserted under this article for any
tax year beginning on or after the first day of January, one
thousand nine hundred ninety-one. The categories by dollar
amount of credit received shall be as follows:
(1) More than $1.00, but not more than $50,000;
(2) More than $50,000, but not more than $100,000;
(3) More than $100,000, but not more than $250,000;
(4) More than $250,000, but not more than $500,000;
(5) More than $500,000, but not more than $1,000,000;
(6) More than $1,000,000.
§5E-1-20. Limitation on financial institutions.
Not more than forty-nine percent of the total capital base
of any capital company may be owned by banks, savings and loan
associations, savings banks or other financial institutions, or
any affiliate thereof, as investors. No officer, employee or
director of any such financial institution may serve on vote as
a member of the board of any capital company formed under the
provisions of this article if the matter being voted upon affects
the financial institution for which the board member serves as an
officer, employee or director.