COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 671
(By Senators Anderson, Minear, Bailey, Hunter, McKenzie, Sharpe,
Sprouse and Ball)
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[Originating in the Committee on Small Business;
reported March 5, 1998.]
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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 Act are proper governmental and public
services for which public monies 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
operated as a lodging facility which contains not more than six
bedrooms for the commercial accommodation of paying overnight
lodgers. 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 cottages, or more than one building or structure
that is used for lodging,
(ii) Any facility having more than six bedrooms for commercial
accommodation of paying overnight lodgers,
(iii) Rental condominiums, time sharing housing units and
similar accommodations.
(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 that is greater than 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 short term occupancy of less than thirty
consecutive days. Any facility or portion thereof for the
accommodation of tenants, guests, lodgers or lessees for more than
thirty consecutive days shall not qualify as a lodging facility for
purposes of this article, and shall not constitute qualified
tourism development property for purposes of this article.
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-eight.
(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, non-capitalized 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 least 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 the 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 Act 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 tht 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, unless the taxpayer elected to delay the beginning
of the ten-year period until the next succeeding tax year. This
election shall be made in the annual income tax return filed for
the tax year in which credit is first taken on the qualified
investment placed into service or use by the taxpayer. Once made,
the election cannot be revoked. 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 (or at the election of the eligible taxpayer, the
next succeeding tax year), 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, unless the taxpayer elected to delay
the beginning of the five-year period until the next succeeding tax
year. This election shall be made in the annual income tax return
filed for the tax year in which credit is first taken on the
qualified investment placed into service or use by the taxpayer.
Once made, the election cannot be revoked. 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 (or at the election of the eligible
taxpayer, the next succeeding tax year), and for the next
succeeding four 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 as follows:
(1) Out of the consumers sales and service tax imposed by
article fifteen of this chapter, collected on and after the first
day of July, one thousand nine hundred ninety-eight by the eligible
taxpayer from its patrons and vendees which is attributable to
operation of the qualified tourism development property, 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, or
(B) up to ninety 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
which is attributable to operation of the qualified tourism
development property during the tax year on and after the first day
of July, one thousand nine hundred ninety-eight, 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
ninety 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.
(d) 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, and shall not apply against any portion
of the eligible taxpayer's consumers sales and service tax
liability except that portion specifically attributable to and
exclusively resulting from operation of the qualified tourism
development property.
(e) 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 monthly or quarterly 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 null and 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 shall be certified under this article whereby
the amount of qualified investment exceeds four million dollars.
(f) No series of projects or group or number of projects shall
be certified under this article for any person or group of related
persons whereby the amount of aggregate qualified investment
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, 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 annual 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.
(d) 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.
(e) 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 qualified investment
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 during the taxable year for purposes
of claiming this credit 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
relating to this credit, its application, or the taxes against
which the credit may apply.
(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 entitlements.
(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 non-retention 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.
Except for the specific exceptions set forth in this article,
from the tax information and tax return information confidentiality
provisions of article ten of this chapter, 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
regulations as may be necessary to carry out the purpose of this
article and to implement the intent of the Legislature. Such
regulations 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% (or, in the case of bed and
breakfast facilities, 50%) of qualified investment in a
tourism attraction or amenity by offsetting up to 90% of
consumers sales and service tax collected by the Taxpayer from
customers over a period of either five or ten years at the
election of the Taxpayer.
Article thirteen-n is new; therefore, strike-throughs and
underscoring have been omitted.