H. B. 3077
(By Delegates Craig, Morgan, Campbell,
Amores and Stalnaker)
[Passed March 6, 2003; in effect ninety days from passage
AN ACT to amend and reenact section eleven, article ten, chapter
eleven of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, relating to the West Virginia tax
procedure and administration act; and authorizing tax
commissioner to enter into agreements with Internal Revenue
Service for offsetting tax refunds against tax liabilities.
Be it enacted by the Legislature of West Virginia:
That section eleven, article ten, chapter eleven of the code
of West Virginia, one thousand nine hundred thirty-one, as amended,
be amended and reenacted to read as follows:
ARTICLE 10. PROCEDURE AND ADMINISTRATION.
§11-10-11. Collection of tax.
(a) General. -- The tax commissioner shall collect the taxes,
additions to tax, penalties and interest imposed by this article or
any of the other articles of this chapter to which this article is applicable. In addition to all other remedies available for the
collection of debts due this state, the tax commissioner may
proceed by foreclosure of the lien provided in section twelve, or
by levy and distraint under section thirteen.
(b) Prerequisite to final settlement of contracts with
nonresident contractor; user personally liable.
(1) Any person contracting with a nonresident contractor
subject to the taxes imposed by articles thirteen, twenty-one and
twenty-four of this chapter, shall withhold payment, in the final
settlement of the contract, of a sufficient amount, not exceeding
six percent of the contract price, as will in the person's opinion
be sufficient to cover the taxes, until the receipt of a
certificate from the tax commissioner to the effect that the above
referenced taxes imposed against the nonresident contractor have
been paid or provided for.
(2) If any person shall fail to withhold as provided in
subdivision (1) of this subsection, that person is personally
liable for the payment of all taxes attributable to the contract,
not to exceed six percent of the contract price. The taxes
attributable shall be recoverable by the tax commissioner by
appropriate legal proceedings, which may include issuance of an
assessment under this article.
(c) Prerequisite for issuance of certificate of dissolution or
withdrawal of corporation. -- The secretary of state shall withhold the issuance of any certificate of dissolution or withdrawal in the
case of any corporation organized under the laws of this state, or
organized under the laws of another state and admitted to do
business in this state, until the receipt of a certificate from the
tax commissioner to the effect that every tax administered under
this article imposed against any corporation has been paid or
provided for, or that the applicant is not liable for any tax
administered under this article.
(d) Prerequisite to final settlement of contract with this
state or political subdivision; penalty. -- All state, county,
district and municipal officers and agents making contracts on
behalf of this state or any political subdivision thereof shall
withhold payment, in the final settlement of any contract, until
the receipt of a certificate from the tax commissioner to the
effect that the taxes imposed by articles thirteen, twenty-one and
twenty-four of this chapter against the contractor have been paid
or provided for. If the transaction embodied in the contract or
the subject matter of the contract is subject to county or
municipal business and occupation tax, then the payment shall also
be withheld until receipt of a release from the county or
municipality to the effect that all county or municipal business
and occupation taxes levied or accrued against the contractor have
been paid. Any official violating this section is subject to a
civil penalty of one thousand dollars, recoverable as a debt in a civil action brought by the tax commissioner.
(e) Limited effect of tax commissioner's certificates. -- The
certificates of the tax commissioner provided for in subsections
(b), (c) and (d) of this section shall not bar subsequent
investigations, assessments, refunds and credits with respect to
(f) Payment when person sells out or quits business; liability
of successor; lien.
(1) If any person subject to any tax administered under this
article sells out his, her or its business or stock of goods, or
ceases doing business, any tax, additions to tax, penalties and
interest imposed by this article or any of the other articles of
this chapter to which this article is applicable shall become due
and payable immediately and that person shall, within thirty days
after selling out his, her or its business or stock of goods or
ceasing to do business, make a final return or returns and pay any
tax or taxes which are due. The unpaid amount of any tax is a lien
upon the property of that person.
(2) The successor in business of any person who sells out his,
her or its business or stock of goods, or ceases doing business, is
personally liable for the payments of tax, additions to tax,
penalties and interest unpaid after expiration of the thirty-day
period allowed for payment: Provided, That if the business is
purchased in an arms-length transaction, and if the purchaser withholds so much of the consideration for the purchase as will
satisfy any tax, additions to tax, penalties and interest which may
be due until the seller produces a receipt from the tax
commissioner evidencing the payment thereof, the purchaser is not
personally liable for any taxes attributable to the former owner of
the business unless the contract of sale provides for the purchaser
to be liable for some or all of the taxes. The amount of tax,
additions to tax, penalties and interest for which the successor is
liable is a lien on the property of the successor, which shall be
enforced by the tax commissioner as provided in this article.
(g) Priority in distribution of estate or property in
receivership; personal liability of fiduciary. -- All taxes due and
unpaid under this article shall be paid from the first money
available for distribution, voluntary or compulsory, in
receivership, bankruptcy or otherwise, of the estate of any person,
firm or corporation, in priority to all claims, except taxes and
debts due the United States which under federal law are given
priority over the debts and liens created by this article. Any
trustee, receiver, administrator, executor or person charged with
the administration of an estate who violates the provisions of this
section is personally liable for any taxes accrued and unpaid under
this article, which are chargeable against the person, firm or
corporation whose estate is in administration.
(h) Injunction. -- If the taxpayer fails for a period of more than sixty days to fully comply with any of the provisions of this
article or of any other article of this chapter to which this
article is applicable, the tax commissioner may institute a
proceeding to secure an injunction to restrain the taxpayer from
doing business in this state until the taxpayer fully complies with
the provisions of this article or any other articles. No bond is
required of the tax commissioner in any action instituted under
(i) Costs. -- In any proceeding under this section, upon
judgment or decree for the tax commissioner, he or she shall be
awarded his or her costs.
(j) Refunds; credits; right to offset.
(1) Whenever a taxpayer has a refund or credit due it for an
overpayment of any tax administered under this article, the tax
commissioner may reduce the amount of the refund or credit by the
amount of any tax administered under this article, whether it be
the same tax or any other tax, which is owed by the same taxpayer,
and collectible as provided in subsection (a) of this section.
(2) The tax commissioner may enter into agreements with the
Internal Revenue Service that provide for offsetting state tax
refunds against federal tax liabilities; offsetting federal tax
refunds against state tax liabilities; and establishing the amount
of the offset fee per transaction which both agencies may charge
each other: Provided, That offsets under subdivision (1) of this subsection shall occur prior to offset under this subdivision. At
the times moneys are received as a result of an offset of a
taxpayer's federal tax refund under the provisions of section
6402(e) of the Internal Revenue Code, the taxpayer is given credit
against state tax liability for the amount of the offset less a
deduction for the offset fee imposed by the Internal Revenue
(k) Spouse relieved of liability in certain cases.
(1) In general. -- Under regulations prescribed by the tax
(A) A joint personal income tax return has been made for a
(B) On the return there is a substantial understatement of tax
attributable to grossly erroneous items of one spouse;
(C) The other spouse establishes that in signing the return he
or she did not know, and had no reason to know, that there was a
substantial understatement; and
(D) Taking into account all the facts and circumstances, it is
inequitable to hold the other spouse liable for the deficiency in
tax for the taxable year attributable to the substantial
understatement, then the other spouse is relieved of any liability
for tax, including interest, additions to tax, and other amounts
for the taxable year to the extent the liability is attributable to
the substantial understatement.
(2) Grossly erroneous items. -- For purposes of this
subsection, the term "grossly erroneous items" means, with respect
to any spouse:
(A) Any item of gross income attributable to a spouse which is
omitted from gross income; and
(B) Any claim of a deduction, credit, or basis by a spouse in
an amount for which there is no basis in fact or law.
(3) Substantial understatement. -- For purposes of this
subsection, the term "substantial understatement" means any
understatement, as defined in regulations prescribed by the tax
commissioner which exceed five hundred dollars.
(4) Understatement must exceed specified percentage of
(A) Adjusted gross income of $20,000 or less. -- If the
spouse's adjusted gross income for the preadjustment year is twenty
thousand dollars or less, this subsection applies only if the
liability described in paragraph (1) of this subsection is greater
than ten percent of the adjusted gross income.
(B) Adjusted gross income of more than twenty thousand
dollars. -- If the spouse's adjusted gross income for the
preadjustment year is more than twenty thousand dollars,
subparagraph (A) of this subdivision is applied by substituting
"twenty-five percent" for "ten percent."
(C) Preadjustment year. -- For purposes of this paragraph, the term "preadjustment year" means the most recent taxable year of the
spouse ending before the date the deficiency notice is mailed.
(D) Computation of spouse's adjusted gross income. -- If the
spouse is married to another spouse at the close of the
preadjustment year, the spouse's adjusted gross income shall
include the income of the new spouse whether or not they file a
(E) Exception for omissions from gross income. -- This
paragraph shall not apply to any liability attributable to the
omission of an item from gross income.
(5) Adjusted gross income. -- For purposes of this subsection,
the term "adjusted gross income" means the West Virginia adjusted
gross income of the taxpayer, determined under article twenty-one
of this chapter.