H. B. 2421

(By Delegates Michael, Given, Martin and Mezzatesta)
[Introduced March 5, 1997; referred to the
Committee on Finance.]

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-l, relating to providing for a credit for ad valorem property taxes paid during the taxable year for inventory; providing for a credit carry-over; and providing for the use of the credit by a shareholder or partner.

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-l, to read as follows:
ARTICLE 13L. BUSINESS INVENTORY CREDIT.
§11-13L-1. Definitions.
As used in this article:
(a) "Assessed value" means the average fair market value of all inventory owned throughout the tax year;
(b) "Inventory" means items of property held for resale or raw materials, ingredients or components used to produce a product for the sale of the product;
(c) "Pass through entity" means: (1) A corporation that is exempt from the adjusted gross income tax by reason of electing to be taxed under subchapter S of the Internal Revenue Code of 1986, as amended; or (2) a partnership;
(d) "State tax liability" means a taxpayer's tax liability that is incurred under:
(1) Articles twenty-one and twenty-four of chapter eleven (personal and corporate net income tax);
(2) Article twenty-three, chapter eleven (business franchise tax);
(3) Article twelve, chapter eleven (business registration tax); and
(4) Article thirteen, chapter eleven (business and occupation tax).
(e) "Taxpayer" means an individual or entity that has a state tax liability.
§11-13L-2. Tax credit for tax on inventory; amount of credit.
(a) A taxpayer is entitled to a credit against the taxpayer's state tax liability for a taxable year for the ad valorem property taxes paid in the taxable year on inventory.
(b) The amount of the credit is equal to the lesser of:
(1) The ad valorem property taxes paid on inventory in the taxable year; or
(2) An amount equal to the ad valorem property taxes paid on inventory, as identified by the taxpayer, with an assessed value not exceeding the following:
(A) For the taxable year beginning in one thousand nine hundred ninety-six, twenty thousand dollars;
(B) For the taxable year beginning in one thousand nine hundred ninety-seven, thirty thousand dollars;
(C) For the taxable year beginning in one thousand nine hundred ninety-eight, forty-five thousand dollars;
(D) For the taxable year beginning in one thousand nine hundred ninety-nine, seventy thousand dollars;
(E) For the taxable year beginning in two thousand, one hundred five thousand dollars;
(F) For the taxable year beginning in two thousand one, one hundred sixty thousand dollars;
(G) For the taxable year beginning in two thousand two, two hundred fifty thousand dollars;
(H) For the taxable year beginning in two thousand threewo, three hundred seventy-five thousand dollars;
(I) For the taxable year beginning in two thousand fourthree, five hundred sixty-five thousand dollars; and
(J) For the taxable year beginning in two thousand fiveour, one million dollars.
§11-13L-3. Carry-overs.
(a) If the amount determined under subsection (b), section two of this article for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess over to the following taxable years. The amount of the credit carry-over from a taxable year shall be reduced to the extent that the carry-over is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year. A taxpayer is not entitled to a carryback.
(b) A taxpayer is entitled to a refund of any unused credit.
§11-13L-4. Shareholder or partner use of credit.
If a pass through entity does not have state income tax liability against which the tax credit may be applied, a shareholder or partner of the pass through entity is entitled to a tax credit equal to the tax credit determined for the pass through entity for the taxable year; multiplied by the percentage of the pass through entity's distributive income to which the shareholder or partner is entitled.
§11-13L-5. Proof of payment.
To receive the credit provided by this articlechapter, a taxpayer must claim the credit on the taxpayer's state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department proof of payment of an ad valorem property tax and all information that the department determines is necessary for the calculation of the credit provided by this chapter.
§11-13L-6. Retroactively effective.
This article shall be effective retroactively beginning on the first day of January, one thousand nine hundred ninety-six.

NOTE: The purpose of this bill is to provide for a credit for ad valorem property taxes paid during the taxable year for inventory; to provide for a credit carry-over; and to provide for the use of the credit by a shareholder or partner.

This article is new; therefore, strike-throughs and underscoring have been omitted.