Senate Bill No. 663
(By Senators Chafin, Craigo and Bailey)
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[Introduced February 23, 1998; referred to the
Committee on Finance.]
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A BILL to amend and reenact section three, article twelve-b,
chapter eleven of the code of West Virginia, one thousand
nine hundred thirty-one, as amended; and to amend and
reenact section three, article thirteen-a of said chapter,
all relating to minimum severance tax on coal and severance
and business privilege taxes.
Be it enacted by the Legislature of West Virginia:
That section three, article twelve-b, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that section three,
article thirteen-a of said chapter be amended and reenacted, all
to read as follows:
ARTICLE 12B. MINIMUM SEVERANCE TAX ON COAL.
§11-12B-3. Imposition of tax, credit.
(a) Imposition of tax. -- Upon every person exercising the
privilege of engaging within this state in severing, extracting,
reducing to possession or producing coal for sale, profit or
commercial use, there is hereby imposed an annual minimum
severance tax equal to fifty cents per ton of coal produced by
the taxpayer for sale, profit or commercial use during the
taxable year: Provided, That for taxable years ending after the
thirty-first day of May, one thousand nine hundred ninety-three,
the minimum severance tax imposed on coal produced by the
taxpayer for sale, profit or commercial use during such taxable
year shall be seventy-five cents per ton, with such rate increase
to apply only to tons of coal produced after the thirty-first day
of May, one thousand nine hundred ninety-three: Provided,
however, That the minimum severance tax imposed on coal produced
by the taxpayer for sale, profit or commercial use during the
taxable year may not exceed an amount equal to the severance tax
imposed on the taxpayer during the taxable year by section three,
article thirteen-a of this chapter, before application of any
credits allowed by this chapter.
(b) Credit against article thirteen-a tax. -- A person who
pays the minimum severance tax imposed by this article shall be
allowed a credit against the severance tax imposed on the
privilege of producing coal by section three, article thirteen-a of this chapter, but not including the additional severance tax
on coal imposed by section six of said article. The amount of
credit allowed shall be equal to the liability of the taxpayer
for the taxable year for payment of the minimum severance tax on
coal imposed by this article: Provided, That the amount of
credit allowed by this section shall not exceed the severance tax
liability of the taxpayer for the taxable year determined under
section three of said article exclusive of the additional tax on
coal imposed by section six of said article after application of
all credits to which the taxpayer may be entitled except any
credit allowed pursuant to chapter five-e of this code, any
credit for installment payments of estimated tax paid pursuant
to section six of this article during the taxable year and any
credit for overpayment of article thirteen-a tax.
Notwithstanding anything herein to the contrary, in no event
shall the credit allowed under chapter five-e of this code be
allowed as a credit against the minimum severance tax imposed by
this article.
ARTICLE 13A. SEVERANCE TAXES.
§11-13A-3. Imposition of tax or privilege of severing coal, limestone or sandstone, or furnishing certain health care services, effective dates therefor; reduction of severance rate for coal mined by underground methods based on seam thickness.
(a) Imposition of tax. -- Upon every person exercising the
privilege of engaging or continuing within this state in the
business of severing, extracting, reducing to possession and
producing for sale, profit or commercial use coal, limestone or
sandstone, or in the business of furnishing certain health care
services, there is hereby levied and shall be collected from
every person exercising such privilege an annual privilege tax.
(b) Rate and measure of tax. -- The tax imposed in
subsection (a) of this section shall be five percent of the gross
value of the natural resource produced or the health care service
provided, as shown by the gross income derived from the sale or
furnishing thereof by the producer or the provider of the health
care service, except as otherwise provided in this article. In
the case of coal, this five percent rate of tax includes the
thirty-five one hundredths of one percent additional severance
tax on coal imposed by the state for the benefit of counties and
municipalities as provided in section six of this article.
(c) "Certain health care services" defined. -- For purposes
of this section, the term "certain health care services" means,
and is limited to, behavioral health services and community care
services.
(d) Tax in addition to other taxes. -- The tax imposed by this section shall apply to all persons severing or processing
(or both severing and processing) in this state natural resources
enumerated in subsection (a) of this section, and to all persons
providing certain health care services in this state as
enumerated in subsection (c) of this section, and shall be in
addition to all other taxes imposed by law.
(e) Effective date. -- This section, as amended in the year
one thousand nine hundred ninety-three, shall apply to gross
proceeds derived after the thirty-first day of May of such year.
The language of this section, as in effect on the first day of
January of such year, shall apply to gross proceeds derived prior
to the first day of June of such year and, with respect to such
gross proceeds, shall be fully and completely preserved.
(f) Reduction of severance tax rate for thin seam coal. --
For tax years beginning after the effective date of this
subsection eleventh day of April, one thousand nine hundred
ninety-seven, any person exercising the privilege of engaging
within this state in the business of severing coal for the
purposes provided in subsection (a) of this section, shall be
allowed a reduced rate of tax on coal mined by underground
methods in accordance with the following:
(i) For coal mined by underground methods from seams with an
average thickness of thirty-seven inches to forty-five inches, the tax imposed in subsection (a) of this section shall be two
percent of the gross value of the coal produced. For coal mined
by underground methods from seams with an average thickness of
less than thirty-seven inches, the tax imposed in subsection (a)
of this section shall be one percent of the gross value of the
coal produced. Gross value is determined from the sale of the
mined coal by the producer. This rate of tax includes the
thirty-five one hundredths of one percent additional severance
tax imposed by the state for the benefit of counties and
municipalities as provided in section six of this article.
(ii) This reduced rate of tax applies to any new underground
mine producing coal after the effective date of this subsection
eleventh day of April, one thousand nine hundred ninety-seven,
from seams of less than forty-five inches in average thickness or
any existing mine that has not produced coal from seams forty- five inches or less in thickness in the one hundred eighty days
immediately preceding the effective date of this subsection
eleventh day of April, one thousand nine hundred ninety-seven.
(iii) The seam thickness shall be based on the weighted
average isopach mapping of actual coal thickness by mine as
certified by a professional engineer.
(iv) Whenever the reduced rate of tax provided in this
subsection (f) applies to coal produced from seams of less than forty-five inches in average thickness, the minimum severance tax
imposed by article twelve-b of this chapter does not apply to the
tons of coal produced from those seams. This provision does
apply to tons produced on or after the effective date of this
subdivision (iv).
NOTE: This bill provides that the minimum severance tax on
coal does not exceed the amount of the severance tax imposed on
coal, prior to application of any credits against the severance
tax. It also seeks to clarify that when the gross proceeds from
sales of thin seam coal are subject to the reduced severance tax
rate, the tons of thin seam tax are not subject to the 75 cents
per ton minimum severance tax.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.