H. B. 2835
(By Delegates Claypole and Coleman)
[Introduced January 14, 1998; referred to the
Committee on Finance.]
A BILL to amend and reenact section five, article twenty-four,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to taxation of
for-profit subsidiary companies or services of not-for- profit hospitals; dedication of revenues derived.
Be it enacted by the Legislature of West Virginia:
That section five, article twenty-four, 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 24. CORPORATION NET INCOME TAX.
§11-24-5. Corporations exempt from tax.
The following corporations shall be exempt from the tax
imposed by this article to the extent provided in this section:
(a) Corporations which by reason of their purposes or activities are exempt from federal income tax: Provided,
shall does not apply to the unrelated business
income, as defined in the Internal Revenue Code, of any such
corporation if such income is subject to federal income tax:
Provided, however, That any for-profit subsidiary or affiliate
company, corporation or service organized under the auspices of
or as an adjunct to a hospital not held or leased out for profit,
including, but not limited to, lawn care services and laundry
services, is not exempt from the tax imposed by this article.
Notwithstanding any other section in this code to the contrary,
all income derived by such for-profit subsidiaries or affiliates
of a not-for-profit hospital is taxable at the regular corporate
rates. Revenues derived from this corporate net taxation on such
for-profit subsidiaries or affiliates of a
hospitals are dedicated: (1) One third of the revenues for the
purpose of job creation, infrastructure construction and economic
development; (2) one third of the revenues to increase wages and
benefits for public employees; and (3) one third of the revenues
for funding public schools and institutions of higher education.
(b) Insurance companies which pay this state a tax upon
(c) Production credit associations organized under the
provisions of the federal "Farm Credit Act of 1933": Provided,
That the exemption
shall does not apply to corporations or
associations organized under the provisions of article four,
chapter nineteen of this code.
(d) Corporations electing to be taxed under subchapter S of
the Internal Revenue Code of one thousand nine hundred
eighty-six, as amended: Provided,
said the corporations
shall file the information return required by section thirteen-b
of this article.
(e) Trusts established pursuant to section one hundred
eighty-six, chapter seven, title twenty-nine of the code of the
laws of the United States (enacted as section three hundred two
(c) of the labor management relations act, one thousand nine
hundred forty-seven), as amended prior to the first day of
January, one thousand nine hundred sixty-seven.
NOTE: The purpose of this bill is to impose corporate net
income tax on income derived by for-profit subsidiaries or
affiliates of a not-for-profit hospital, and to dedicate the
revenues derived from such a tax.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.