Senate Bill No. 671
(By Senators Anderson, Minear, Bailey, Hunter, McKenzie,
Sharpe, Sprouse and Ball)
____________
[Introduced February 23, 1998; referred to the
Committee on Small Business; and then to the Committee on
Finance.]
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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-n,
relating to taxation; setting forth short title; setting
forth legislative findings; defining terms; setting forth
effective date; specifying eligibility for tax credit;
specifying certification of project plans; setting forth
maximum project investment limitation; specifying qualified
investment for tax credit; specifying amount of credit
allowed; setting forth application of credit; specifying
unused credit forfeiture; specifying method for assertion of
credit; specifying requirements for reporting of credit; setting forth total maximum aggregate tax credit limitation;
specifying forfeiture of unused tax credits; specifying
redetermination of credit; specifying recapture of credit;
specifying treatment for premature disposition of qualified
property; specifying treatment for premature cessation of
use of qualified property; specifying recapture tax;
specifying imposition of recapture tax; setting forth rules
for transfer of qualified property to successors; specifying
treatment of successor businesses where predecessor is
entitled to the credit; specifying treatment of a mere
change in the form of doing business; requiring and
specifying identification of qualified tourism development
property; specifying rules for failure to keep adequate
records; specifying credit information to be published as
public information; authorizing audits and joint audits of
taxpayers claiming the credit and others; requiring program
evaluation; setting forth expiration date for the tax credit
program; requiring preservation of vested entitlement;
specifying general procedure and administration and adoption
of the West Virginia tax procedure and administration act;
authorizing promulgation of regulations; and setting forth
severability clause.
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-n, to
read as follows:
ARTICLE 13N. SMALL TOURISM BUSINESS DEVELOPMENT ACT.
§11-13N-1. Short title.
This article shall be known and cited as the "Small Tourism
Business Development Act."
§11-13N-2. Legislative findings.
The Legislature finds and declares that the general welfare
and material well-being of the people of West Virginia will be
improved and increased by the development of tourism attractions
and amenities in the less developed counties of this state with
high unemployment. It is in the best interests of this state to
induce the creation, expansion and improvement of tourism
attractions and amenities within such counties of this state.
Development of tourism attractions and amenities serves the
public purposes of relieving unemployment, preserving and
creating jobs, and creating tax revenues for the support of
essential public services. The Legislature finds and declares
that the purposes to be accomplished by this article are proper
governmental and public services for which public moneys can be
expended.
§11-13N-3. Definitions.
(a) General: When used in this article, or in the
administration of this article, terms defined in subsection (b)
of this section shall have the meanings ascribed to them by this
section, unless a different meaning is clearly required by either
the context in which the term is used, or by specific definition
in this article.
(b) Terms defined:
(1) Affiliate. -- The terms "affiliate" or "affiliates"
include all concerns which are affiliates of each other when
either directly or indirectly:
(A) One concern controls or has the power to control the
other; or
(B) A third party or third parties control or have the power
to control both. In determining whether concerns are
independently owned and operated and whether or not affiliation
exists, consideration shall be given to all appropriate factors,
including common ownership, common management and contractual
relationships.
(2) Bed and breakfast facility. -- Bed and breakfast
facility shall mean:
(A) An architecturally interesting or historic structure
occupied as a single family dwelling by the owner thereof, and operated by the owner as a lodging facility which can accommodate
not more than eight overnight lodgers at any one time. In order
to qualify as a bed and breakfast facility under this article,
the facility, if located in an area subject to zoning laws, must
be located in an area legally zoned for such operation, and must
comply with all applicable tax, fire, building and health
requirements applicable to the property given its size and use.
(B) Exclusions. -- The term bed and breakfast shall not
include:
(i) Any complex, facility or set of facilities consisting of
more than one cottage, or more than one building or structure
that is used for lodging;
(ii) Any facility having an overnight lodging capacity of
more than eight persons at any one time;
(iii) Rental condominiums, time-sharing housing units and
similar accommodations shall not qualify as bed and breakfast
facilities;
(iv) Any lodging facility having a restaurant incorporated
into the property: Provided, That, if breakfast is only served
to overnight guests, and breakfast is the only meal served to
lodgers on the premises, the facility may qualify as a bed and
breakfast facility under this section.
(3) Corporation. -- The term "corporation" means any corporation, joint-stock company or association and any business
conducted by a trustee or trustees wherein interest or ownership
is evidenced by a certificate of interest or ownership or similar
written instrument.
(4) Delegate. -- The term "delegate" in the phrase "or his
or her delegate," when used in reference to the tax commissioner,
means any officer or employee of the tax commission of the
department of tax and revenue duly authorized by the tax
commissioner directly, or indirectly by one or more redelegations
of authority, to perform the functions mentioned or described in
this article.
(5) Eligible taxpayer. --
(A) The term "eligible taxpayer" means any person subject to
the taxes imposed by article twenty-one, twenty-three or
twenty-four of this chapter that makes qualified investment
pursuant to the terms of a certified project plan in qualified
tourism development property.
(B) The term "eligible taxpayer" also includes an affiliated
group of taxpayers if such group elects to file a consolidated
corporation net income tax return under article twenty-four of
this chapter and if one or more affiliates included in such
affiliated group would qualify as an eligible taxpayer under
paragraph (A) of this subdivision.
(C) The term "eligible taxpayer" does not include this
state, any state, territory or district of the United States, the
United States or, any agency, governmental subdivision,
authority, commission, department, division, office, bureau,
branch, board, district or other unit, or instrumentality of
federal, state, county or local government or any public
corporation, or governmental instrumentality or quasi- governmental instrumentality or entity created by statute or
ordinance.
(6) Includes and including. -- The terms "includes" and
"including", when used in a definition contained in this article,
shall not be deemed to exclude other things otherwise within the
meaning of the term defined.
(7) Natural person or individual. -- The term "natural
person" and the term "individual" mean a human being. The terms
"natural person" and "individual" do not mean, and specifically
exclude any corporation, limited liability company, partnership,
joint venture, trust, organization, association, agency,
governmental subdivision, syndicate, affiliate or affiliation,
group, unit or any entity other than a human being.
(8) Partnership and partner. -- The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization through or by means of which any business, financial operation or venture is carried on, and which
is not a trust or estate, a corporation or a sole proprietorship.
The term "partner" includes a member in such a syndicate, group,
pool, joint venture or organization.
(9) Person. -- The term "person" includes any natural
person, corporation, limited liability company or partnership.
(10) Qualified tourism development area. -- The term
"qualified tourism development area" means any of those counties
of this state that have, for the calendar year immediately
preceding the calendar year when qualified tourism investment
property is to be placed in service or use in the county, a
county average annual unemployment rate above the statewide
unemployment average, as determined by the West Virginia bureau
of employment programs.
(11) Qualified tourism development property. --
(A) The term "qualified tourism development property" means
property purchased or leased pursuant to the terms of a certified
project plan for the purpose of expanding, improving, enlarging,
constructing or creating in a qualified tourism development area:
(i) A site, area or facility which will constitute a tourism
attraction, as defined in this section, or part of a tourism
attraction; or
(ii) A lodging facility located in this state, which lodging facility primarily serves individuals who participate in,
patronize or attend a tour or trip constituting a tourism
attraction, or who visit an area, site or facility constituting
a tourism attraction, primarily for the purpose of personal
entertainment, recreation or amusement. For purposes of this
definition, the term "lodging facility" includes hotels, motels,
resorts, bed and breakfast facilities and hostels.
For purposes of this section, the terms expanding, improving
and enlarging mean:
In the case of a lodging facility: Expansion, improvement
or enlargement such as to create additional lodging capacity at
least ten percent greater than such capacity, measured at the
maximum, of the lodging facility as it existed immediately prior
to the expansion, improvement or enlargement;
In the case of an area, site or facility constituting a
tourism attraction, expansion, improvement or enlargement such as
to create additional daily visitor or daily customer capacity at
least ten percent greater than such capacity, measured at the
maximum, of the area, site or facility as it existed immediately
prior to the expansion, improvement or enlargement: Provided,
That, in the case of replacement property, only betterments
resulting in expansions of fifty percent or more, as specified in
this section will constitute qualified tourism development property.
(B) Excluded property: The term "qualified tourism
development property" shall not include:
(i) Property purchased or leased before the first day of
January, one thousand nine hundred ninety-nine;
(ii) Property owned or leased by the taxpayer, investment in
which will qualify for the business investment and jobs expansion
tax credit under article thirteen-c of this chapter, without
regard to whether the taxpayer actually takes or applies the
business investment and jobs expansion tax credit against tax
liabilities. Investment for which the business investment and
jobs expansion tax credit is or would be allowed is not eligible
for the credit allowed under this article, and no credit shall be
allowed or taken under this article for any such investment;
(iii) Property owned or leased by the taxpayer and for which
the taxpayer was previously allowed tax credit for industrial
expansion, tax credit for industrial revitalization, tax credit
for coal-loading facilities, the business investment and jobs
expansion tax credit, or the tax credits allowed by this article;
(iv) Property owned or leased by the taxpayer and for which
the seller, lessor or other transferor, was previously allowed
tax credit for industrial expansion, tax credit for industrial
revitalization, tax credit for coal-loading facilities, the business investment and jobs expansion tax credit or the credits
allowed by this article. However, successors in business shall
be allowed entitlement to this credit to the extent of the
predecessor's entitlement in accordance with section twelve of
this article;
(v) Repair costs, including materials used in the repair;
(vi) Airplanes;
(vii) Property which is primarily used outside this state,
with use being determined based upon the amount of time the
property is actually used both within and without this state;
(viii) Property which is acquired incident to the purchase
of the stock or capital assets of the seller, unless for good
cause shown, the tax commissioner consents to waiving this
requirement;
(ix) Natural resources in place;
(x) Property, either leased or purchased, the cost or
consideration for which cannot be quantified with any reasonable
degree of accuracy at the time such property is placed in service
or use: Provided, That when the contract of purchase or lease
specifies a minimum purchase price or minimum annual rent, the
amount thereof shall be used to determine the qualified
investment in such property under section five of this article if
the property otherwise qualifies as qualified tourism development property;
(xi) Property purchased for ongoing maintenance and upkeep,
repairs, facility maintenance or other maintenance, airplanes,
motor vehicles licensed by the division of motor vehicles,
inventories, noncapitalized property and property that does not
create additional lodging capacity or visitor or customer
capacity. For purposes of this section, the term "non- capitalized property" means property, the cost of which is not
required to be capitalized for federal income tax purposes under
the Internal Revenue Code or the rules, regulations or policies
implemented or promulgated by the United States Internal Revenue
Service;
(xii) Property owned or leased (as lessee) by this state,
any state, territory or district of the United States, the United
States or, any agency, governmental subdivision, authority,
commission, department, division, office, bureau, branch, board,
district or other unit, or instrumentality of federal, state,
county or local government or any public corporation, or
governmental instrumentality or quasi-governmental
instrumentality or entity created by statute or ordinance and
located in a state park or elsewhere in this state. However,
investment made by a qualified taxpayer in a facility or property
located in a state park may constitute qualified tourism development property if investment therein would otherwise
qualify for credit under this article;
(xiii) Replacement property, except certain replacement
property that will qualify as specified in these regulations.
For purposes of this section, the term "replacement property"
means property acquired by purchase or lease for the purpose of
replacing other property in a facility, the investment in which
replacement property would not have been made but for the loss of
service, destruction, removal or other loss of the property which
the replacement property is intended to replace: Provided, That
significant betterments will be recognized as qualified tourism
development property. The term "betterment" means and is limited
to:
(aa) Replacement property which enlarges the lodging
capacity of a lodging facility in which the replacement property
is installed or placed by at least fifty percent; and to
(bb) Replacement property which enlarges the daily visitor
or customer capacity of an area, site or facility that
constitutes a tourism attraction by at lease fifty percent. A
betterment will be treated as significant if it enlarges capacity
by at least fifty percent over such capacity, measured at the
maximum, of the lodging facility or area, site or facility
constituting a tourism attraction at the time the property which the replacement property is intended to replace was in operation.
Replacement property which is installed or constructed to replace
property that was destroyed by flood, storm or other casualty
will constitute qualified tourism development property if such
property would otherwise qualify as such under this section if
newly constructed, but the measure of the cost of such
replacement property for purposes of this article will be reduced
by any insurance proceeds or other proceeds received in
compensation for the casualty loss;
(xiv) The term "qualified tourism development property,"
does not mean or include investment (by purchase or lease) in any
property acquired from or between related entities. The tax
commissioner can waive this prohibition against related entity
acquisitions if the property was acquired from a related entity
for its fair market value and there is no manipulation of the
cost of, or amount of, investment in property for the purpose of
gaining entitlement to the credit allowed under this article.
(12) Related person. -- The term "related person" or "person
related to" a stated taxpayer means:
(A) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof
controlled by the taxpayer; or
(B) An individual, corporation, partnership, affiliate, association or trust or any combination or group thereof that is
in control of the taxpayer; or
(C) An individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof
controlled by an individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is
in control of the taxpayer; or
(D) A member of the same controlled group as the taxpayer.
For purposes of this article, "control", with respect to a
corporation means ownership, directly or indirectly, of stock
possessing fifty percent or more of the total combined voting
power of all classes of the stock of such corporation which
entitles its owner to vote. "Control", with respect to a trust,
means ownership, directly or indirectly, of fifty percent or more
of the beneficial interest in the principal or income of such
trust. The ownership of stock in a corporation, of a capital or
profits interest in a partnership or association or of a
beneficial interest in a trust shall be determined in accordance
with the rules for constructive ownership of stock provided in
Section 267(c), other than paragraph (3) of such section, of the
United States Internal Revenue Code, as amended.
(13) State fiscal year. -- "State fiscal year" means a
twelve-month period beginning on the first day of July and ending on the thirtieth day of June.
(14) Taxpayer. -- The term "taxpayer" means any person
subject to the tax imposed by article twenty-one, twenty-three or
twenty-four of this chapter (or any one or combination of such
articles of this chapter).
(15) Tourism attraction. -- "Tourism attraction" means:
(A) Any of the following facilities, sites or areas
occurring or present in this state:
(i)A cultural or historical site certified as such for
purposes of this article by the division of culture and history
of the department of education and the arts;
(ii) A recreational or entertainment facility;
(iii) An area of scenic beauty or a phenomenon of natural or
scientific significance;
(iv) A theme park;
(v) An amusement park;
(vi) An indoor or outdoor theater or amphitheater for the
exhibition of plays or live shows, but not theaters exclusively
for the exhibition of moving pictures or video presentations.
(vii) Botanical gardens;
(viii) Cultural or educational centers other than primary
and secondary schools and institutions of higher education;
(ix) Whitewater rafting trips, tours, areas or facilities or other water float trips, tours, areas or facilities;
(x) West Virginia state parks;
(xi) Rail excursion tours or facilities;
(xii) River boat tours or facilities;
(xiii) Excursions and tours over pathways, roads and trails
established pursuant to the West Virginia rails to trails
program;
(xv) Water sports facilities;
(xvi) Boating or canoeing trips, tours, areas or facilities;
(xvii) Mountain biking trips, tours, areas and facilities;
(xviii) Cycling trips, tours, areas and facilities;
(ixx) Hunting areas and facilities;
(xx) Snow skiing, snow boarding and snow sport or snow
recreation areas and facilities;
(xxi) Fishing areas and facilities;
(xxii) Golf courses;
(xxiii) Hiking trails, areas or facilities;
(xxiv) Bird watching areas or facilities;
(xxv) Camping areas or facilities;
(xxvi) Industrial tourism sites;
(xxvii) Sports arenas and sports centers;
(xxviii) Race tracks for automobile or motorcycle racing.
(B) The term "tourism attraction" shall not mean or include:
(i) Any facility, site or area not wholly occurring in this
state or not wholly located in this state;
(ii) Facilities, areas or sites that are primarily devoted
to the retail sale of goods, unless the goods are created at the
site of the tourism attraction or unless the sale of the goods is
incidental to the tourism attraction;
(iii) Facilities, tours, trips, areas or sites that are not
open to the public;
(iv) Facilities, sites or areas established wholly, or in
part, for the purpose of conducting legalized or illegal
gambling, or facilities, sites or areas where gambling occurs.
For purposes of this definition the term "gambling" shall not
include charitable bingo gaming sponsored and operated by an
organization licensed by this state to hold charitable bingo
occasions. For purposes of this definition the term "gambling"
shall not include charitable raffle gaming sponsored and operated
by an organization licensed by this state to hold charitable
raffle occasions.
§11-13N-4. Eligibility for tax credits; certification of project
plans by the division of tourism.
(a) A taxpayer which seeks to have a project certified
pursuant to this article shall submit to the commissioner of the
division of tourism an application for certification of a project plan, in such form as the commissioner of the division of tourism
shall prescribe, setting forth the project to be implemented, the
amount of projected qualified investment to be made, the nature
and location of the proposed project, the amount of total tax
credits to be created by the proposed project under this article,
an estimate of the number of new jobs to be created by the
project and the schedule for implementing the project.
Certification shall be issued for proposed projects in
chronological order: Provided, That no certification shall be
issued for any proposed project that is not in conformance with
the requirements of this article.
(b) Within sixty days after receipt by the commissioner of
the division of tourism of a completed application for
certification of a project under this article, the commissioner
of the division of tourism shall certify, or deny certification
of, the proposed project for which such application has been
filed: Provided, That applications for which the commissioner of
the division of tourism requires additional information shall not
constitute completed applications until such information has been
received by the commissioner of the division of tourism. Those
applications not approved by the commissioner of the division of
tourism within sixty days after receipt of a completed
application for certification by the division of tourism shall be deemed disapproved by operation of law.
(c) The division of tourism shall promptly notify an
applicant as to whether an application for certification of a
project plan has been approved or disapproved.
(d) Those prospective applicants which receive certification
of a project plan, and which otherwise comply with the
requirements of this article, may place qualified tourism
development property into service or use and begin taking the
credit allowed under this article upon receipt of certification.
Eligible taxpayers which make qualified investment in
qualified tourism development property shall receive a tax credit
as provided in section six of this article. No tax credit may be
granted under this article for any investment except qualified
investment in qualified tourism development property, as defined
in this article, placed in service in a project which has been
certified in accordance with the requirements of this article
prior to the placement of the qualified investment into service
or use. No tax credit may be granted under this article for any
investment which, if allowed, would cause the amount of tax
credit generated by the project to exceed the maximum amount of
tax credit for which the project was certified as stated in the
application for project certification filed with the division of
tourism.
No project shall be certified, in whole or in part, for
which the amount of the investment exceeds four million dollars.
(e) All applications for certification of a project filed
with the division of tourism, whether such project is certified
or denied certification, are public information which may be
viewed and copied by the public and, at the discretion of the
division of tourism, published by the division of tourism.
§11-13N-5. Qualified investment.
(a) General. -- Qualified investment in qualified tourism
development property is the applicable percentage of the cost of
property purchased or leased and constituting qualified tourism
development property as defined in this article which is placed
in service or use in this state by the taxpayer during the
taxable year.
(b) Applicable percentage. -- For the purpose of subsection
(a) of this section, the applicable percentage of any property
shall be determined under the following table:
If useful life is: The applicable
percentage is:
4 years or more but less than 6 years ....................33-%
6 years or more but less than 8 years ....................66|%
8 years or more ..........................................100%
The useful life of any property, for purposes of this section, shall be determined as of the date such property is first placed
in service or use in this state by the taxpayer, determined in
accordance with federal income tax law.
(c) Cost. -- For purposes of subsection (a) of this section,
the cost of each property purchased for business expansion shall
be determined under the following rules:
(1) Trade-ins. -- Cost shall not include the value of
property given in trade or exchange for the property purchased
for business expansion.
(2) Damaged, destroyed or stolen property. -- If property is
damaged or destroyed by fire, flood, storm or other casualty, or
is stolen, then the cost of replacement property shall not
include any insurance proceeds received in compensation for the
loss.
(3) Rental property. --
(A) The cost of real property acquired by written lease for
a primary term of ten years or longer shall be one hundred
percent of the rent reserved for the primary term of the lease,
not to exceed twenty years. Real property leased for a primary
term of less than ten years shall not constitute qualified
tourism development property.
(B) The cost of tangible personal property acquired by
written lease for a primary term of:
(i) Four years, or longer, shall be one third of the rent
reserved for the primary term of the lease;
(ii) Six years, or longer, shall be two thirds of the rent
reserved for the primary term of the lease; or
(iii) Eight years, or longer, shall be one hundred percent
of the rent reserved for the primary term of the lease, not to
exceed twenty years: Provided, That in no event shall rent
reserved include rent for any year subsequent to expiration of
the book life of the equipment, determined using the
straight-line method of depreciation.
(4) Self-constructed property. -- In the case of
self-constructed property, the cost thereof shall be the amount
properly charged to the capital account for depreciation in
accordance with federal income tax law.
(5) Transferred property. -- The cost of property used by
the taxpayer out-of-state and then brought into this state, shall
be determined based on the remaining useful life of the property
at the time it is placed in service or use in this state, and the
cost shall be the original cost of the property to the taxpayer
less straight line depreciation allowable for the tax years or
portions thereof taxpayer used the property outside this state.
In the case of leased tangible personal property, cost shall be
based on the period remaining in the primary term of the lease after the property is brought into this state for use in a new or
expanded business facility of the taxpayer, and shall be the rent
reserved for the remaining period of the primary term of the
lease, not to exceed twenty years, or the remaining useful life
of the property (determined as aforesaid), whichever is less.
§11-13N-6. Amount of credit allowed.
(a) Credit allowed. --
Eligible taxpayers shall be allowed a credit, the
application of which and the amount of which shall be determined
as provided in this article.
(b) Amount of credit. -- The amount of credit allowable is
twenty-five percent of the amount of the taxpayer's qualified
investment, as defined in this article: Provided, That in the
case of qualified investment in a bed and breakfast facility, as
defined in this article, the amount of credit allowable is fifty
percent of the amount of the taxpayer's qualified investment, as
defined in this article.
(c) Application of credit over either five years or ten
years at the election of the taxpayer, limitations. --
At the election of the taxpayer, the amount of credit
allowable under this article must be taken over either a five- year period or over a ten-year period. The election to take the
credit over a ten-year period or a five-year period shall be made in the application for certification of the project filed with
the commissioner of the division of tourism under this article.
Such election shall be irrevocable for the life of the credit.
The amount of credit allowed under this article shall be taken as
follows:
(1) If over a ten-year period, at the rate of one tenth of
the amount thereof per tax year, beginning with the tax year in
which the taxpayer places the qualified tourism development
property into service or use. A tax credit shall be allowable
under this article only for the tax year of the eligible taxpayer
in which the qualified tourism development property is placed in
service or use, and for the next succeeding nine tax years.
(2) If over a five-year period, at the rate of one fifth of
the amount thereof per tax year, beginning with the tax year in
which the taxpayer places the qualified tourism development
property into service or use. A tax credit shall be allowable
under this article only for the tax year of the eligible taxpayer
in which the qualified tourism development property is placed in
service or use, and for the next succeeding five tax years.
(d) Placed in service or use. -- For purposes of the credit
allowed by this article, property shall be considered placed in
service or use in the earlier of the following taxable years:
(1) The taxable year in which, under the taxpayer's depreciation practice, the period for depreciation with respect
to such property begins; or
(2) The taxable year in which the property is placed in a
condition or state of readiness and availability for a
specifically assigned function.
§11-13N-7. Application of annual credit allowance.
(a) In general. -- The aggregate annual credit allowance for
a current tax year is an amount equal to the sum of the
following:
(1) If taken over a ten-year period:
(A) The one-tenth part allowed under section six of this
article for qualified tourism development property placed into
service or use during a prior tax year; plus
(B) The one-tenth part allowed under section six of this
article for qualified tourism development property placed into
service or use during the current tax year.
(2) If taken over a five-year period:
(A) The one-fifth part allowed under section six of this
article for qualified tourism development property placed into
service or use during a prior tax year; plus
(B) The one-fifth part allowed under section six of this
article for qualified tourism development property placed into
service or use during the current tax year.
(b) Application of current year annual credit allowance. --
The amount determined under subsection (a) of this section shall
be allowed as a credit for tax years beginning on or after the
first day of January, one thousand nine hundred ninety-nine, as
follows:
(1) Out of the consumers sales and service tax imposed by
article fifteen of this chapter and collected by the eligible
taxpayer from its patrons and vendees for the tax year, which
amount would otherwise be remitted periodically by the eligible
taxpayer to the tax commissioner, the eligible taxpayer shall
withhold the lesser of:
(A) The annual credit determined under subsection (a) of
this section remaining after application of paragraphs (1), (2)
and (3) of this subsection; or
(B) Up to eighty percent of the amount of the consumers
sales and service tax imposed by article fifteen of this chapter
and so collected by the eligible taxpayer from its patrons and
vendees for the tax year, which amount would otherwise be
remitted in total by the eligible taxpayer to the tax
commissioner;
(C) The amount so withheld by the eligible taxpayer out of
each monthly or quarterly periodic remittance shall not exceed
eighty percent of the total periodic remittance which would otherwise be forwarded to the tax commissioner;
(D) Amounts of consumers sales and service tax withheld by
the eligible taxpayer in accordance with this subsection shall
become the property of the eligible taxpayer in satisfaction of
the credit allowed under this article.
(c) The credit allowed under this article shall not apply
against any other tax remittance or against any tax other than as
specified in this section.
(d) Unused credit forfeited. -- If any annual credit
allowable for the taxable year, as determined under subsection
(a) of this section, remains after application of subsection (b)
of this section, the amount thereof shall be forfeited. No
carryover to a subsequent taxable year or carryback to a prior
taxable year shall be allowed for the amount of any unused
portion of any annual credit allowance.
§11-13N-8. Assertion of the tax credit; reporting.
(a) Any eligible taxpayer that claims a tax credit as
provided in this article shall file with the periodic remittance
to the tax commissioner of the consumers sales and service tax
collected, a statement, in such form as the tax commissioner may
prescribe, of the amount of the consumers sales and service tax
withheld by the eligible taxpayer out of the periodic remittance,
along with such other information as the tax commissioner shall require.
(b) Any eligible taxpayer that claims a tax credit as
provided in this article shall file with the West Virginia tax
commissioner, in such form as the tax commissioner may prescribe,
an annual tax credit reporting schedule stating the amount of the
qualified tourism development property which the taxpayer has
placed into service or use. The eligible taxpayer shall file
with the tax credit reporting schedule a certificate, issued by
the commissioner of the division of tourism, evidencing
certification of the project plan by the commissioner of the
division of tourism, pursuant to which the qualified tourism
development property was placed into service or use.
(c) In the tax credit reporting schedule required under this
section, the taxpayer shall provide all information required by
the tax commissioner's prescribed form.
(d) The tax credit reporting schedule shall be filed with
the annual return for the taxes imposed by article twenty-four of
this chapter for the tax year in which the qualified investment
was first placed into service or use pursuant to a certified
project plan: Provided, That if the eligible taxpayer is not
required to file a tax return under article twenty-four of this
chapter, then such tax credit reporting schedule shall be filed
with the annual return for the taxes imposed by article twenty-three of this chapter for such year: Provided, however,
That if the eligible taxpayer is not required to file a tax
return under article twenty-three or twenty-four of this chapter,
then such tax credit reporting schedule shall be filed with the
annual return for the taxes imposed by article twenty-one of this
chapter for such year.
(e) The tax commissioner may disallow any credit claimed
under this article for which a properly completed tax credit
reporting schedule or other required documentation, statements or
proofs are not timely filed.
§11-13N-9. Total maximum aggregate tax credit amount;
certification of projects.
(a) The total amount of tax credits allowed under this
article may not exceed ten million dollars in any state fiscal
year.
(b) Applications for project certification shall be filed
with the division of tourism. The division of tourism shall
record the date each application is filed. All complete and
valid applications shall be considered for approval or
disapproval in a timely manner by the division of tourism.
(c) When the total amount of tax credits certified under
this article equals the maximum amount of tax credits allowed, as
specified in subsection (a) of this section, in any state fiscal year, no further certifications shall be issued in that same
fiscal year.
(d) All applications filed in any state fiscal year and not
certified during the state fiscal year in which they are filed
shall be void by operation of law on the last day of the state
fiscal year in which they are filed, and all applicants which
elect to seek certification of a project plan shall file anew on
and after the first day of the succeeding state fiscal year.
(e) No project or number of projects shall be certified
under this article whereby the amount of tax credit available
under this article to any person or group of related persons
exceeds four million dollars.
§11-13N-10. Forfeiture of unused tax credits; redetermination of
credit allowed; credit recapture.
(a) Disposition of property or cessation of use. -- If
during any taxable year, property with respect to which a tax
credit has been allowed under this article:
(1) Is disposed of prior to the end of its useful life; or
(2) Ceases to be used in an eligible business of the
taxpayer in this state prior to the end of its useful life, then
the unused portion of the credit allowed for such property shall
be forfeited for the taxable year and all ensuing years.
Additionally, except when the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, the taxpayer
shall redetermine the amount of credit allowed in all earlier
years by reducing the applicable percentage of cost of such
property allowed under section five of this article, to
correspond with the percentage of cost allowable for the period
of time that the property was actually used in this state in the
new or expanded business of the taxpayer. Taxpayer shall then
file a reconciliation statement with the tax credit reporting
schedule filed under section eight of this article, for the year
in which the forfeiture occurs. If the amount of credit taken
exceeds the amount of credit allowed as redetermined, the
taxpayer shall pay the recapture tax as specified in this
article.
(b) Cessation of operation of business facility. -- If
during any taxable year the taxpayer ceases operation of
qualified tourism development property in this state for which
credit was allowed under this article, before expiration of the
useful life of the property with respect to which tax credit has
been allowed under this article, then the unused portion of the
allowed credit shall be forfeited for the taxable year and all
ensuing years. Additionally, except when the cessation is due to
fire, flood, storm or other casualty, the taxpayer shall
redetermine the amount of credit allowed in earlier years by reducing the applicable percentage of cost of such property
allowed under section five of this article, to correspond with
the percentage of cost allowable for the period of time that the
qualified tourism development property was actually used in this
state in the business of the taxpayer. The taxpayer shall then
file a reconciliation statement with the tax credit reporting
schedule filed under section eight of this article, for the year
in which the forfeiture occurs. If the amount of credit taken
exceeds the amount of credit allowed as redetermined, the
taxpayer shall pay the recapture tax as specified in this
article.
§11-13N-11. Recapture of credit; recapture tax imposed.
(a) When recapture tax applies. --
(1) If it appears upon audit or otherwise that a taxpayer
has not placed qualified tourism development property into
service or use as represented but has nevertheless taken the
credit allowed by this article, the taxpayer shall pay the
recapture tax as specified in this section.
(2) Any person who places qualified tourism development
property in service or use in this state, and who fails to use
such qualified tourism development property for at least the
period of its useful life (determined as of the time the property
was placed in service or use under section five of this article), or the period of time over which tax credits allowed under this
article with respect to such property are applied under this
article, whichever period is less; such person shall pay the
recapture tax imposed by subsection (b) of this section.
(3) This section shall not apply when section twelve of this
article applies. However, the successor, or the successors, and
the person, or persons, who previously claimed credit under this
article with respect to such qualified tourism development
property and the new jobs attributable thereto, shall be jointly
and severally liable for payment of any recapture tax
subsequently imposed under this section with respect to such
qualified tourism development property and new jobs.
(b) Recapture tax imposed. -- The recapture tax imposed by
this section shall be the amount determined as follows:
The taxpayer shall recapture an amount of credit equal to
the difference between:
(1) The amount of credit claimed under section seven of this
article for the taxable year, and all preceding taxable years;
and
(2) The amount of credit:
(A) That would have been claimed in such years if the amount
of credit allowable under section five of this article had been
determined based on the qualified tourism development property which remains in service; plus
(B) An amount equal to the amount of interest that would
have been imposed on the difference between the amount that was
claimed and the amount that should have been claimed over the
period of time outstanding, in accordance with the interest
provisions of article ten of this chapter, as if that amount were
tax underpaid. In addition, the recapture tax may, at the
discretion of the tax commissioner include an amount equal to the
statutory penalties that can be imposed under article ten of
this chapter should it appear that the taxpayer has engaged in
conduct that would have resulted in the imposition of such
penalties in accordance with article ten of this chapter.
(c) Payment of recapture tax. -- The recapture tax imposed
under this section shall be due and payable on the day such
person's annual return is due for the taxable year in which this
section applies, under article twenty-one or twenty-four of this
chapter. When the employer is a partnership or S corporation, for
federal income tax purposes, the recapture tax shall be a joint
and several liability of and shall be paid by those persons who
are partners in such partnership or shareholders in such S
corporation, in the taxable year in which recapture occurs under
this section.
(d) Imposition of the recapture tax under this article shall not be interpreted as limiting or abrogating the authority of the
tax commissioner to audit and assess tax and to administer and
audit the application and entitlement to and calculation of, the
credit allowed under this article in accordance with the
provisions of article ten of this chapter.
§11-13N-12. Transfer of qualified investment to successors.
(a) Mere change in form of business. -- Qualified tourism
development property shall not be treated as disposed of under
section ten of this article by reason of a mere change in the
form of conducting the business as long as the property is
retained in a business in this state, and the eligible taxpayer
retains a controlling interest in the successor business. In
this event, the successor business shall be allowed to claim the
amount of credit still available with respect to the business
facility or facilities transferred, and the taxpayer (transferor)
shall not be required to redetermine the amount of credit allowed
in earlier years.
(b) Transfer or sale to successor. -- Qualified tourism
development property shall not be treated as disposed of under
section ten by reason of any transfer or sale to a successor
business which continues to operate the business facility in this
state. Upon transfer or sale, the successor (transferee) shall
acquire the amount of credit that remains available under this article for each subsequent taxable year for which the credit
would have been available to the transferor, and the transferor
shall not be required to redetermine the amount of credit allowed
in earlier years.
§11-13N-13. Identification of qualified tourism development
property.
Every taxpayer who claims credit under this article shall
maintain sufficient records to establish the following facts for
each item of qualified tourism development property:
(1) Its identity;
(2) Its actual or reasonably determined cost;
(3) Its straight-line depreciation life;
(4) The month and taxable year in which it was placed in
service;
(5) The amount of credit taken; and
(6) The date it was disposed of or otherwise ceased to be
qualified property.
§11-13N-14. Failure to keep records of qualified tourism
development property.
A taxpayer who does not keep the records required for
identification of qualified tourism development property is
subject to the following rules:
(1) A taxpayer shall be treated as having disposed of, during the taxable year, any qualified tourism development
property which the taxpayer cannot establish was still on hand,
in this state, at the end of that taxable year.
(2) If a taxpayer cannot establish when qualified tourism
development property reported for purposes of claiming this
credit during the taxable year was placed in service, the
taxpayer shall be treated as having placed it in service in the
most recent prior year in which similar property was placed in
service, unless the taxpayer can establish that the property
placed in service in the most recent year is still on hand. In
that event, the taxpayer will be treated as having placed the
returned property in service in the next most recent year.
§11-13N-15. Public information relating to tax credit.
The tax commissioner shall annually publish in the state
register the name and address of every taxpayer asserting this
credit, and the amount of any credit asserted under this article
by each such taxpayer, and the confidentiality provisions of
section four-a, article one, or section five-d, article ten of
this chapter, or of any other provision of this code, do not
apply to such information.
§11-13N-16. Audits and examinations; information sharing.
(a) The tax commissioner may, at his or her discretion,
perform joint audits or examinations with the division of tourism or independently audit or examine the books, records and other
information, as appropriate, of any taxpayer or of any person,
organization or entity which has filed an application for
certification of a project plan under this article, or of any
taxpayer which has asserted this credit, or of any person,
organization or entity believed to have relevant information.
(b) For purposes of joint audits, or any administrative or
judicial proceeding or procedure relating to any tax credit
taken, asserted or sought under this article, the tax
commissioner may share such tax information as the tax
commissioner may deem appropriate with the division of tourism,
notwithstanding the provisions of section four-a, article one of
this chapter or section five-d, article ten of said chapter, or
any other provision of this code to the contrary.
§11-13N-17. Program evaluation; expiration of credit;
preservation of entitlement.
(a) On or before the thirtieth day of September, two
thousand two, the division of tourism shall secure an independent
review of the small business tourism development act program as
created by this article and present the findings to the
Legislature. Such review shall focus upon:
(1) The cost effectiveness of the program;
(2) A calculation of the cost of the program per net job created (net of any jobs lost due to the nonretention of
businesses competing with businesses entitled to the credit
allowed under this article);
(3) The jobs creation effectiveness of the program;
(4) The value of the program with regard to fostering
economic development, particularly showing any increases in
out-of-state money flowing into West Virginia through tourism and
resulting from the program;
(5) The effect of the program on the retention of businesses
that existed in West Virginia prior to the implementation of the
program, and the competitive effect of the credit upon those
businesses.
(b) Pursuant to this report, and any independent evaluation
that the Legislature or the joint committee on government
operations may wish to initiate, the joint committee on
government operations shall issue a recommendation to the
Legislature, not later than the first day of February, two
thousand three, as to whether the program should continue.
(c) Except if continued by act of the Legislature, the small
business tourism development act shall terminate on the first day
of July, two thousand three, unless sooner terminated by law.
(d) Except if continued by act of the Legislature, no
entitlement to the tax credit under this article shall result from any investment in qualified tourism development property
placed in service or use after the first day of July, two
thousand three, and no credit shall be available to any taxpayer
for any property placed into service or use after that date.
Taxpayers which have gained entitlement to the credit pursuant to
qualified investment in qualified tourism development property
placed in service or use in certified projects prior to the first
day of July, two-thousand three, may retain that entitlement and
apply the credit in due course, provided the requirements and
limitations of this article are otherwise met.
§11-13N-18. General procedure and administration.
Each and every provision of the "West Virginia Tax Procedure
and Administration Act" set forth in article ten of this chapter
shall apply to the credit allowed by this article with like
effect as if said act were applicable only to such credit and
were set forth with respect thereto in extenso in this article.
§11-13N-19.
Regulations. -- The tax commissioner shall promulgate such
legislative rules as may be necessary to carry out the purpose of
this article and to implement the intent of the Legislature.
Such rules shall be promulgated in accordance with the provisions
of article three, chapter twenty-nine-a of this code.
§11-13N-20. Severability.
(a) If any provision of this article or the application
thereof shall for any reason be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not
affect, impair or invalidate the remainder of said article, but
shall be confined in its operation to the provision thereof
directly involved in the controversy in which such judgment shall
have been rendered, and the applicability of such provision to
other persons or circumstances shall not be affected thereby.
(b) If any provision of this article or the application
thereof shall be made invalid or inapplicable by reason of the
failure of the Legislature to enact any statute therein addressed
or referred to, or by reason of the repeal or any other
invalidation of any statute therein addressed or referred to,
such failure to reenact or such repeal or invalidation of any
such statute shall not affect, impair or invalidate the remainder
of the said article, but shall be confined in its operation to
the provision thereof directly involved with, pertaining to,
addressing or referring to the said statute, and the application
of such provision with regard to other statutes or in other
instances not affected by any such invalid or repealed statute
shall not be abrogated or diminished in any way.
NOTE: The purpose of this bill is to create a tax incentive for the creation, construction or enlargement of tourism
attractions or amenities. The credit operates to allow the
taxpayer to recover up to 25% (in the case of bed and breakfast
facilities, 50%) of qualified investment in a tourism attraction
or amenity by offsetting up to 80% of consumers sales and service
tax collected by the taxpayer over a period of either five or ten
years at the election of the taxpayer.
This article is new; therefore, strike-throughs and
underscoring have been omitted.