Senate Bill No. 176

(By Senators Sprouse, Smith, Minear, Guills and Weeks)

____________

[Introduced January 20, 2003; referred to the Committee on Economic Development; and then to the Committee on Finance.]

____________




A BILL to amend and reenact section six, article twenty-three, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to the business franchise tax generally; and providing for the rollback of the business franchise tax until it is eliminated.

Be it enacted by the Legislature of West Virginia:
That section six, article twenty-three, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 23. BUSINESS FRANCHISE TAX.

 §11-23-6. Imposition of tax; change in rate of tax.
(a) General. -- An annual business franchise tax is hereby imposed on the privilege of doing business in this state and in respect of the benefits and protection conferred. Such tax shall be collected from every domestic corporation, every corporation having its commercial domicile in this state, every foreign or domestic corporation owning or leasing real or tangible personal property located in this state or doing business in this state and from every partnership owning or leasing real or tangible personal property located in this state or doing business in this state, effective on and after the first day of July, one thousand nine hundred eighty-seven.
(b) Amount of tax and rate; effective date. --
(1) On and after the first day of July, one thousand nine hundred eighty-seven, the amount of tax shall be the greater of fifty dollars or fifty-five one hundredths of one percent of the value of the tax base, as determined under this article: Provided, That when the taxpayer's first taxable year under this article is a short taxable year, the taxpayer's liability shall be prorated based upon the ratio which the number of months in which such short taxable year bears to twelve: Provided, however, That this subdivision shall not apply to taxable years beginning on or after the first day of January, one thousand nine hundred eighty-nine.
(2) Taxable years after December 31, 1988. -- For taxable years beginning on or after the first day of January, one thousand nine hundred eighty-nine, the amount of tax due under this article shall be the greater of fifty dollars or seventy-five one hundredths of one percent of the value of the tax base as determined under this article.
(3) Taxable years after June 30, 1997. -- For taxable years beginning on or after the first day of July, one thousand nine hundred ninety-seven, the amount of tax due under this article shall be the greater of fifty dollars or seventy hundredths of one percent of the value of the tax base as determined under this article.
(c) Short taxable years. -- When the taxpayer's taxable year for federal income tax purposes is a short taxable year, the tax determined by application of the tax rate to the taxpayer's tax base shall be prorated based upon the ratio which the number of months in such short taxable year bears to twelve: Provided, That when the taxpayer's first taxable year under this article is less than twelve months, the taxpayer's liability shall be prorated based upon the ratio which the number of months the taxpayer was doing business in this state bears to twelve but in no event shall the tax due be less than fifty dollars.
(d) Roll back of amount of tax and rate. -- Effective with the tax year beginning the first day of January, two thousand four and on that date every year thereafter, the amount of the business franchise tax or rate provided in this article shall be rolled back in increments of one tenth of the tax or one tenth of the rate, whichever is higher, for that tax year and for each succeeding tax year thereafter until the business franchise tax is eliminated. The tax commissioner shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty- nine-a of this code to ensure that the provisions of this subsection are made effective and that the business franchise tax is eliminated effective the thirty-first day of December, two thousand thirteen.


NOTE: The purpose of this bill is to roll back the business franchise tax over a ten-year period until the tax is eliminated.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.