Senate Bill No. 447

(By Senators Minear, Sharpe, Miller, Ross, Love and Chafin)

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[Introduced February 19, 1996; referred to the Committee on Finance.]
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A BILL to amend and reenact sections one, two and three, article thirteen-h, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to the business and occupation tax credit for increased purchases of coal; legislative finding; definitions; and credit allowed, with effective date.

Be it enacted by the Legislature of West Virginia:
That sections one, two and three, article thirteen-h, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 13H. BUSINESS AND OCCUPATION TAX CREDIT FOR INCREASED PURCHASES OF WEST VIRGINIA COAL.

§11-13H-1. Legislative finding.

The Legislature finds that electricity generated in this state is by and large generated from coal; that this state and this region are blessed with large quantities of mineable coal that is suitable for use as fuel to generate electricity; that there are sound economic purposes to locating electric power generating facilities in the coal fields and to encouraging power companies to operate such plants at their most cost-effective level. and that many West Virginia miners work in mines located in other states and live or reside in this state Therefore, encouraging greater utilization of existing power plants and their use of coal produced by West Virginia miners at mines located in this or other states state, is in the public interest and promotes the general welfare of the people of this state, in that it will increase employment opportunities for West Virginia residents.
§11-13H-2. Definitions.

(1) Base year. -- The term "base year" means the average number of kilowatts of electric power generated in this state from coal by the taxpayer during either: (a) The three years year immediately preceding the current tax year; or (b) the three tax years immediately preceding the tax year one thousand nine hundred eighty-six tax year one thousand nine hundred ninety- four, whichever three-year period the taxpayer shall by the first day of July, one thousand nine hundred eighty-six one thousand nine hundred ninety-six, permanently elect to use as the base year.
(2) Eligible coal. -- The term "eligible coal" means coal produced from an eligible mine, as defined in subsection (3) of this section.
(3) Eligible mine. -- The term "eligible mine" means any mine located in this state. and any mine which employs at least one hundred West Virginia residents (as defined for personal income taxes in section seven, article twenty-one of this chapter) located in another state
(4) Other terms used in this article, shall have the meanings ascribed to them in section four, article ten of this chapter or section one, article thirteen of this chapter unless the context in which it is used in this article clearly requires another meaning.
§11-13H-3. Credit allowed; amount of credit; effective date.

(a) An electric power company that generates electricity at a power plant located in this state, that uses coal as its primary source of fuel to generate such electricity, shall be allowed a credit, as determined under subsection (b) of this section, against its liability for tax under section two-m two-o, article thirteen of this chapter, if the taxpayer increases the amount of electricity coal it generates purchased from eligible mines in this state. consuming coal produced from an eligible mine that employs miners who are residents of this state
(b) Amount of credit. -- The credit allowed by this section is an amount equal to the amount determined by: shall be two dollars per ton for every ton purchased from eligible mines in excess of the amount purchased during the base year.
(1) First multiplying the taxpayer's liability for tax under section two-m two-o, article thirteen of this chapter, for the tax year, by a fraction equal to one minus a fraction in which:
(A) The numerator is the kilowatts of electric power generated from coal in this state by the taxpayer during the base year; and
(B) The denominator is the kilowatts of electric power generated from coal in this state by the taxpayer during the tax year.
(2) Second multiplying the product determined under paragraph (1) of this section by a fraction in which:
(A) The numerator is tons of eligible coal purchased by the taxpayer during the tax year to generate electricity in this state; and
(B) The denominator is the total tons of coal purchased by the taxpayer during the tax year to generate electricity in this state.
(c) Effective date. -- The credit allowed by this section shall apply to business and occupation tax liabilities for calendar months beginning after the thirtieth day of June, one thousand nine hundred eighty-six one thousand nine hundred ninety-six. It shall not apply to liabilities for calendar months or quarters ending before such the thirtieth day of June.





NOTE: The purpose of this bill is to exempt electric power generators who increase their purchase of West Virginia coal for West Virginia plants to receive B&O tax exemption as directly relates to such increased coal purchases.

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