Senate Bill No. 218
(By Senators Ross, Helmick, Dittmar, Craigo, Deem, Anderson,
Dugan, Chafin, Love, Schoonover, Sharpe, Jackson, Ball, Sprouse,
Snyder, Bowman, Hunter, Fanning, Kessler and Minear)
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[Introduced January 26, 1998; referred to the Committee
on Natural Resources; and then to the Committee on Finance.]
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A BILL to amend and reenact section seven, article twenty-three,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to exempting
hunting clubs from paying a franchise tax if there is no
income and no dividends paid.
Be it enacted by the Legislature of West Virginia:
That section seven, article twenty-three, 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 23. BUSINESS FRANCHISE TAX.
§11-23-7. Persons and organizations exempt from tax.
The following organizations and persons shall be exempt from the tax imposed by this article to the extent provided in this
section:
(a) Natural persons doing business in this state that are
not doing business in the form of a partnership (as defined in
section three of this article) or in the form of a corporation
(as defined in section three of this article). Such persons
include persons doing business as sole proprietors, sole
practitioners and other self-employed persons.
(b) Corporations and organizations which by reason of their
purposes or activities are exempt from federal income tax:
Provided, That this exemption shall does not apply to that
portion of their capital (as defined in section three of this
article) which is used, directly or indirectly, in the generation
of unrelated business income (as defined in the Internal Revenue
Code) of any such corporation or organization if the unrelated
business income is subject to federal income tax.
(c) Insurance companies which pay this state a tax upon
premiums.
(d) Production credit associations organized under the
provisions of the federal "Farm Credit Act of 1933": Provided,
That this exemption shall does not apply to corporations or
associations organized under the provisions of article four,
chapter nineteen of this code.
(e) Any trust established pursuant to section one hundred
eighty-six, chapter seven, title twenty-nine of the code of the
laws of the United States (enacted 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 eighty-five.
(f) Any credit union organized under the provisions of
chapter thirty-one, or any other chapter of this code: Provided,
That this exemption shall does not apply to corporations or
cooperative associations organized under the provisions of
article four, chapter nineteen of this code.
(g) Any corporation organized under this code which is a
political subdivision of the state of West Virginia, or is an
instrumentality of a political subdivision of this state, and was
created pursuant to this code.
(h) Any corporation or partnership engaged in the activity
of agriculture and farming, as defined in paragraph (8),
subsection (b), section three of this article: Provided, That if
a corporation or partnership is not exclusively engaged in such
activity, its tax base under this article shall be apportioned,
in accordance with regulations promulgated by the tax
commissioner, among its several activities and only that portion
attributable to the activity of agriculture and farming shall be exempt from tax under this article.
(i) Any corporation or partnership licensed under article
twenty-three, chapter nineteen of this code, to conduct horse or
dog racing meetings or a pari-mutuel system of wagering:
Provided, That if such the corporation or partnership is not
exclusively engaged in such this activity, its tax base under
this article shall be apportioned, in accordance with regulations
promulgated by the tax commissioner, among its several activities
and only that portion attributable to the activity of conducting
a horse or dog racing meeting or a pari-mutuel system of wagering
shall be exempt from tax under this article.
(j) For those tax years beginning after the thirtieth day of
June, one thousand nine hundred ninety-eight, any corporation or
partnership operating as a hunting club: Provided, That the
corporation or partnership distributes no income or dividends to
its owners or stockholders. For the purposes of this subsection,
a hunting club is a group of persons owning land which is used
principally for hunting purposes by the members of the club and
guests, and where any charges made for hunting are principally
for the purpose of defraying the costs of operating and
maintaining the club and club properties or establishing a
reasonable reserve to meet the operating and maintenance costs of
the club. The tax commissioner shall by legislative rule promulgated in accordance with article three of chapter twenty- nine of this code further prescribe the definition of a hunting
club and the manner and method in which this credit may be
claimed.
NOTE: The purpose of this bill is to exempt hunting clubs
from the business franchise tax if there is no income and no
dividends are paid.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.