Senate Bill No. 604

(By Senators McCabe, Rowe, Plymale and White)

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[Introduced February 17, 2003; referred to the Committee on Economic Development; 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-t; and to amend article fifteen of said chapter by adding thereto a new section, designated section twenty-seven, all relating to establishing a tourism development project tax credit; specifying short titles; specifying legislative findings and purpose for new credit; defining terms; specifying activity that qualifies for credits, how amount of allowable credits are determined, how credits may be applied and against what tax liabilities credits may be applied; providing for forfeiture of unused tax credits, redetermination of credits and recapture of credits under certain circumstances; imposing recapture tax, interest and civil money penalty and specifying circumstance when they apply; allowing transfer of qualified investment to successors; requiring identification of tax credit property; requiring persons claiming credit to keep records and to provide information to tax commissioner; providing rules for interpretation, construction, severability and burden of proof; requiring filing of application for credit as condition precedent to claiming credit and imposing consequences for failure to make timely application; specifying business activity eligible for tourism development project tax credit; requiring periodic review of tax credit; and requiring performance reports to governor and Legislature .

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-t; and that article fifteen of said chapter eleven be amended by adding thereto a new section, designated section twenty-seven, all to read as follows:

ARTICLE 13T. TOURISM DEVELOPMENT PROJECT TAX CREDIT.

§11-13T-1. Short title.

This article may be cited as the "West Virginia Tourism Development Project Tax Credit Act."

§11-13T-2. Legislative finding and purpose.

The Legislature finds that the encouragement of the development of destination oriented tourism projects in this state is in the public interest and promotes the general welfare of the
people of this state. In order to encourage greater capital investment in destination oriented tourism projects in this state and thereby increase economic activity in this state, there is hereby enacted the tourism development project tax credit.
§11-13T-3. Definitions.

(a) General. -- When used in this article, or in the administration of this article, terms defined in subsection (b) of this section 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) Business. -- The term "business" means any activity which is engaged in by any person in this state which is taxable under article fifteen, twenty-one, twenty-three or twenty-four of this chapter (or any combination of those articles of this chapter).

(2) Business expansion. -- The term "business expansion" means capital investment in a new or expanded tourism development project in this state.

(3) Commissioner or tax commissioner. -- The terms "commissioner" and "tax commissioner" are used interchangeably herein and mean the tax commissioner of the state of West Virginia, or his or her designee.

(4) Controlled group. -- The term "controlled group" means one
or more chains of corporations connected through stock ownership with a common parent corporation if stock possessing at least fifty percent of the voting power of all classes of stock of each of the corporations is owned directly or indirectly by one or more of the corporations; and the common parent owns directly stock possessing at least fifty percent of the voting power of all classes of stock of at least one of the other corporations.
(5) 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.

(6) Designee. -- The term "designee" in the phrase "or his designee," when used in reference to the commissioner, means any officer or employee of the state tax department duly authorized by the commissioner directly, or indirectly by one or more redelegations of authority, to perform the functions mentioned or described in this article.

(7) Eligible taxpayer. -- The term "eligible taxpayer" means any person who makes qualified investment in a new or expanded tourism development project located in this state and who is subject to any of the taxes imposed by articles fifteen, twenty- one, twenty-three and twenty-four of this chapter (or any combination of those articles). "Eligible taxpayer" shall also
include a related person to taxpayer.
(8) Expanded tourism facility. -- The term "expanded tourism facility" means any tourism facility (other than a new or replacement tourism facility) resulting from the acquisition, construction, reconstruction, installation or erection of improvements or additions to existing property if the improvements or additions are purchased on or after the first day of July, two thousand three, but only to the extent of the taxpayer's qualified investment in the improvements or additions.

(9) Includes and including. -- The terms "includes" and "including," when used in a definition contained in this article, shall not be considered to exclude other things otherwise within the meaning of the term defined.

(10) Leased property. -- The term "leased property" does not include property which the taxpayer is required to show on its books and records as an asset under generally accepted principles of financial accounting. If the taxpayer is prohibited from expensing the lease payments for federal income tax purposes, the property shall be treated as purchased property under this section.

(11) New tourism facility. -- The term "new tourism facility" means a tourism facility which satisfies all the requirements of paragraphs (A), (B), (C) and (D) of this subdivision.

(A) The facility is employed by the taxpayer in the conduct of a destination oriented tourism business the net income of which is
or would be taxable under article twenty-one or twenty-four of this chapter. The facility is not considered a new tourism facility in the hands of the taxpayer if the taxpayer's only activity with respect to the facility is to lease it to another person or persons. (This provision is not to be interpreted as precluding operation of a hotel, motel or other type of lodging as part of a larger tourism development project.)
(B) The facility is purchased by, or leased to, the taxpayer on or after the first day of July, two thousand three.

(C) The facility was not purchased or leased by the taxpayer from a related person. The commissioner may waive this requirement if the facility was acquired from a related party for its fair market value and the acquisition was not tax motivated.

(D) The facility was not in service or use during the ninety days immediately prior to transfer of the title to the facility, or prior to the commencement of the term of the lease of the facility.

(12) New property. -- The term "new property" means:

(A) Property, the construction, reconstruction or erection of which is completed on or after the first day of July, two thousand three, and placed in service or use after that date; and

(B) Property leased or acquired by the taxpayer that is placed in service or use in this state on or after the first day of July, two thousand three, if the original use of the property commences with the taxpayer and commences after that date.

(13) Original use. -- The term "original use" means the first use to which the property is put, whether or not the use corresponds to the use of the property by the taxpayer.

(14) Partnership and partner. -- The term "partnership" includes a syndicate, group, pool, joint venture, limited liability company (unless the limited liability company elects to be taxed as a corporation in which case it will be considered to be a corporation for purposes of this article) 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 other organization.

(15) Person. -- The term "person" includes any natural person, corporation or partnership.

(16) Property purchased or leased for business expansion.

(A) Included property. -- Except as provided in paragraph (B) of this subdivision, the term "property purchased or leased for business expansion" means real property and improvements thereto, and tangible personal property, but only if the real or personal property was constructed, purchased, or leased and placed in service or use by the taxpayer, for use as a component part of a new or expanded tourism development project as defined in this section, which is located within the state of West Virginia. This
term includes only:
(i) Real property and improvements thereto having a useful life of four or more years, placed in service or use on or after the first day of July, two thousand three, by the taxpayer.

(ii) Real property and improvements thereto, acquired by written lease having a primary term of ten or more years and placed in service or use by the taxpayer on or after the first day of July, two thousand three.

(iii) Tangible personal property placed in service or use by the taxpayer on or after the first day of July, two thousand three, with respect to which depreciation, or amortization in lieu of depreciation, is allowable in determining the personal or corporation net income tax liability of the business taxpayer under article twenty-one or twenty-four of this chapter, and which has a useful life, at the time the property is placed in service or use in the state, of four or more years.

(iv) Tangible personal property acquired by written lease having a primary term of four years or longer, that commenced and was executed by the parties thereto on or after the first day of July, two thousand three, if used as a component part of a new or expanded business facility, shall be included within this definition.

(v) Tangible personal property owned or leased, and used by the taxpayer at a business location outside the state which is
moved into the state of West Virginia on or after the first day of July, two thousand three, for use as a component part of a new or expanded tourism development project located in the state: Provided, That if the property is owned, it must be depreciable or amortizable personal property for income tax purposes, and have a useful life of four or more years remaining at the time it is placed in service or use in the state, and if the property is leased, the primary term of the lease remaining at the time the leased property is placed in service or use in the state, must be four or more years.
(B) Excluded property. - The term "property purchased or leased for business expansion" does not include:

(i) Repair costs, including materials used in the repair, unless for federal income tax purposes the cost of the repair must be capitalized and not expensed.

(ii) Airplanes.

(iii) Property which is primarily used outside the state, with use being determined based upon the amount of time the property is actually used both within and outside the state.

(iv) Property which is acquired incident to the purchase of the stock or assets of the seller, unless for good cause shown, the commissioner consents to waiving this requirement.

(v) Natural resources in place.

(vi) Purchased or leased property, the cost or consideration
for which cannot be quantified with any reasonable degree of accuracy at the time the 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 the property under section eight of this article if the property otherwise qualifies as property purchased or leased for business expansion.
(17) Purchase. -- The term "purchase" means any acquisition of property, but only if:

(A) The property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of deductions under section 267 or 707 (b) of the United States Internal Revenue Code of 1986, as amended, and in effect on the first day of July, two thousand three.

(B) The property is not acquired by one component member of a controlled group from another component member of the same controlled group. The commissioner can waive this requirement if the property was acquired from a related party for its then fair market value; and

(C) The basis of the property for federal income tax purposes, in the hands of the person acquiring it, is not determined:

(i) In whole or in part, by reference to the federal adjusted basis of the property in the hands of the person from whom it was acquired; or

(ii) Under Section 1014 (e) of the United States Internal Revenue Code of 1986, as amended, and in effect on the first day of July, two thousand three.

(18) Qualified activity. -- The term "qualified activity" means any business or other activity subject to any of the taxes imposed by article fifteen, twenty-one, twenty-three or twenty-four of this chapter (or any combination of those articles of this chapter), but does not include the activity of severance or production of natural resources.

(19) Related person. -- The term "related person" means:

(A) A corporation, partnership, association or trust controlled by the taxpayer;

(B) An individual, corporation, partnership, association or trust that is in control of the taxpayer;

(C) A corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of the taxpayer; or

(D) A member of the same controlled group as the taxpayer.

For purposes of this section, "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 the corporation entitled to vote. "Control", with respect to a partnership or association means ownership, directly or indirectly, of fifty percent or more of the
capital or profits interest of the partnership or association. "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 the 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 is determined in accordance with the rules for constructive ownership of stock provided in section 267 (c) of the United States Internal Revenue Code of 1986, as amended, other than paragraph (3) of that section.
(20) Taxpayer. -- The term "taxpayer" means any person subject to any of the taxes imposed by article fifteen, twenty-one, twenty-three or twenty-four of this chapter (or any combination of those articles of this chapter).

(21) This code. -- The term "this code" means the code of West Virginia, one thousand nine hundred thirty-one, as amended.

(22) This state. -- The term "this state" means the state of West Virginia.

(23) Tourism development project. -- The term "tourism development project" includes any development project certified by the tax commissioner which results in the creation of a new or expanded tourism facility. The minimum qualified investment in property purchased or leased for business expansion required to qualify a project as a new tourism development project is twenty million dollars. The minimum qualified investment in property
purchased or leased for business expansion required to qualify a project as an expanded tourism development project is five million dollars. In addition, in order for a project to qualify as an expanded tourism development project, taxpayer's total investment in its tourism facility after the completion of the expansion project must be at least twenty million dollars. For purposes of the computations in this subsection, taxpayer's investment in its tourism facility prior to the expansion project will be its total original cost before the capital addition.
(24) Tourism facility. -- The term "tourism facility" means any destination oriented recreation and tourism attraction, including, but not limited to, resorts, amusement parks, theme parks, sports arenas and stadiums, convention centers, racetracks, ski resorts, golf courses, whitewater rafting operations, cultural sites, areas of natural phenomenon or scenic beauty, historical sites and recreation destinations, museums, destination oriented shopping and recreational activity complexes and other tourism oriented facilities, located within this state. Tourism facility includes the building or complex of buildings in which the facility operates, the land on which it is located, and all machinery, equipment and other real and personal property located at or within such facility, used in connection with the operation of such facility, in a business that is taxable in this state, and all site preparation and start-up costs of the taxpayer for the tourism
facility which it capitalizes for federal income tax purposes. In order for a facility to qualify as a tourism facility for purposes of this article it must attract at least twenty-five percent of its business from out-of-state customers. Hotels, motels, other lodging facilities and restaurants will not qualify as a tourism facility unless constructed as part of a project which qualif ies as the development of a tourism facility or as an addition to an existing tourism facility.
(25) Used property. -- The term "used property" means property acquired on or after the first day of July, two thousand three, that is not "new property."

§11-13T-4. Amount of credit allowed; certified projects.

(a) Credit allowed. -- Eligible taxpayers are allowed a credit against the portion of taxes imposed by this state that are attributable to and the consequence of the taxpayer's qualified investment in a new or expanded tourism development project in this state. The amount of this credit is determined and applied as provided in this article.

(b) Amount of credit. -- The amount of credit allowable shall be equal to twenty-five percent of the taxpayer's "qualified investment" determined under section five of this article, in "property purchased or leased for business expansion," as defined in section three of this article. This calculation establishes the maximum amount of credit allowable under this article.

(c) Application of credit over ten years. -- The amount of credit allowable must be taken over a ten-year period, at the rate of one tenth of the amount thereof per taxable year, beginning with the taxable year in which the taxpayer places the qualified investment in service or use in this state, unless the taxpayer elected to delay the beginning of the ten-year period until the next succeeding taxable year. This election shall be made in the annual income tax return filed under this chapter for the taxable year in which qualified investment is first placed into service or use by the taxpayer. Once made, the election cannot be revoked. The annual credit allowance is taken in the manner prescribed in section seven of this article.

(d) Placed in service or use. -- For purposes of the credit allowed by this section, property is 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 the 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.

(e) Certified project. -- A multiple year project certified by the commissioner is eligible for the credit allowable by this article. A project eligible for certification under this section
is one where the qualified investment under this article is placed in service or use over a period of up to three successive tax years: Provided, That the qualified investment is made pursuant to a written development plan of the taxpayer providing for an integrated project for investment at one or more new or expanded destination oriented tourism facilities, a copy of which must be attached to the taxpayer's application for project certification and approved by the commissioner, and the qualified investment placed in service or use during the first tax year would not have been made without the expectation of making the qualified investment placed in service or use during the next two succeeding tax years;
(f) Certification of continuing eligibility. -- The taxpayer claiming the credit shall annually file with its income tax returns filed under this chapter:

(1) Certification that its qualified investment property continues to be used in the project and if disposed of during the tax year, was not disposed of prior to expiration of its useful life; and

(2) Any other information the commissioner requires to determine continuing eligibility to claim the annual credit allowance for the project's qualified investment.

§11-13T-5. Application of annual credit allowance.

(a) In general. -- The aggregate annual credit allowance for
the current taxable year is an amount equal to the sum of the following:
(1) The one-tenth part allowed under section four of this article for qualified investment placed into service or use during a prior taxable year; plus

(2) The one-tenth part allowed under section four of this article for qualified investment placed into service or use during the current taxable year.

(b) Application of current year annual credit allowance. -- The amount determined under subsection (a) of this section is allowed as a credit against the consumers sales and service tax collected by taxpayer on sales which are attributable to and the direct result of the taxpayer's qualified investment. The amount determined under subsection (a) of this section may be used as a credit against taxes required to be remitted on taxpayer's monthly consumers sales and service tax returns, which are filed pursuant to section sixteen, article fifteen of this chapter. If the consumers sales and service taxes collected during the month are solely attributable to and the direct result of the taxpayer's qualified investment in a tourism development project, taxpayer may claim the credit by reducing the amount of consumers sales and service tax required to be remitted with its monthly consumers sales and service tax returns by the amount of taxpayers' aggregate annual credit allowance until such time as the full current year
annual credit allowance has been claimed. If the consumers sales and service taxes collected are not solely attributable to and the direct result of the taxpayer's qualified investment in a tourism development project, the amount of the taxes which are so attributable is determined by multiplying the amount of taxes due by a fraction, the numerator of which is all sales of tangible personal property and taxable services made during the month which are directly or indirectly attributable to or as a result of the qualified investment in the tourism development project. The denominator of the fraction is all sales of tangible personal property and taxable services made in this state during the month. Once the total credit claimed for the tax year equals taxpayer's aggregate annual credit allowance no further reductions to taxpayer's monthly consumers sales and service tax returns will be permitted.
(c) If taxpayer's sales apportionment provisions in subsection (b) of this section do not fairly represent the taxes solely attributable to and the direct result of qualified investment of the taxpayer the commissioner may require, in respect to all or any part of the taxpayer's businesses or activities, if reasonable:

(1) Separate accounting or identification;

(2) Adjustment to the sales allocation formula to reflect all components of the tax liability;

(3) The inclusion of one or more additional factors that will
fairly represent the taxes attributable to and the direct or indirect result of the qualified investment of the taxpayer; or
(4) The employment of any other method to effectuate an equitable attribution of the taxes.

In order to effectuate the purposes of this subsection, the commissioner may propose for promulgation rules, including emergency rules, in accordance with article three, chapter twenty-nine-a of this code.

(d) Unused credit. -- If any credit remains after application of subsection (b) of this section, the amount thereof is carried forward to each ensuing tax year until used or until the expiration of the third taxable year subsequent to the end of the initial ten year credit application period. If any unused credit remains after the thirteenth year, the amount thereof is forfeited. No carryback to a prior taxable year is allowed for the amount of any unused portion of any annual credit allowance.

§11-13T-6. Qualified investment.

(a) General. -- The qualified investment in property purchased or leased for business expansion is the applicable percentage of the cost of each property purchased or leased for the purpose of business expansion 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), the applicable percentage of any property is determined under
the following table:
If useful life is: The applicable percentage is:

Less than 4 years....................................0%

4 years or more but less than 6 years ..........33 1/3%

6 years or more but less than 8 years ..........66 2/3%

8 years or more ...................................100%

The useful life of any property, for purposes of this section, is determined as of the date the property is first placed in service or use in this state by the taxpayer, determined in accordance with such rules and requirements the tax commissioner may prescribe.

(c) Cost. -- For purposes of subsection (a), the cost of each property purchased for business expansion is determined under the following rules:

(1) Trade-ins. -- Cost does 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 does 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 is one hundred percent of the
rent reserved for the primary term of the lease, not to exceed twenty years.
(B) The cost of tangible personal property acquired by written lease for a primary term of:

(i) Four years, or longer, is one-third of the rent reserved for the primary term of the lease;

(ii) Six years, or longer, is two-thirds of the rent reserved for the primary term of the lease; or

(iii) Eight years, or longer, is one hundred percent of the rent reserved for the primary term of the lease, not to exceed twenty years: Provided, That in no event may 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 is 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, is 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 is the original cost of the property to the taxpayer less straight line depreciation allowable for the tax years or portions thereof
the taxpayer used the property outside this state. In the case of leased tangible personal property, cost is 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 is 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.
§11-13T-7. Forfeiture of unused tax credits; redetermination of credit allowed.

(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, as determined under section seven of this article; or
(2) Ceases to be used in a tourism development project prior to the end of its useful life, then the unused portion of the credit allowed for the property is 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 the property allowed under section six 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 tourism development project. The taxpayer shall then file a reconciliation statement for the year in which the forfeiture occurs and pay any additional taxes owed due to reduction of the amount of credit allowable for the earlier years, plus interest and any applicable penalties. The reconciliation statement shall be filed with the annual return for the primary tax for which the taxpayer is liable under articles thirteen and twenty-three of this chapter.
(b) Cessation of operation of tourism facility. -- If during any taxable year the taxpayer ceases operation of a tourism facility in this state for which credit was allowed under this article, before expiration of the useful life of property with respect to which tax credit has been allowed under this article, then the unused portion of the allowed credit is forfeited for the taxable year and for 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 the property allowed under section eight 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 a tourism development project. The taxpayer shall then file a reconciliation statement with the annual return for the primary tax for which the taxpayer is liable under articles thirteen, twenty-one or twenty-three of this chapter, for the year in which the forfeiture occurs, and pay any additional taxes owed due to the reduction of the amount of credit allowable for the earlier years, plus interest and any applicable penalties.
§11-13T-8. Transfer of qualified investment to successors.
(a) Mere change in form of business. -- Property may not be treated as disposed of under section seven of this article, by reason of a mere change in the form of conducting the business as long as the property is retained in the successor business in this state, and the transferor business retains a controlling interest in the successor business. In this event, the successor business is allowed to claim the amount of credit still available with respect to the tourism development project transferred, and the transferor business may not be required to redetermine the amount of credit allowed in earlier years.
(b) Transfer or sale to successor. -- Property is not treated as disposed of under section seven of this article by reason of any transfer or sale to a successor business which continues to operate the tourism development project in this state. Upon transfer or sale, the successor shall acquire the amount of credit that remains available under this article for each subsequent taxable year and the transferor business is not required to redetermine the amount of credit allowed in earlier years.
§11-13T-9. Identification of tax credit property.
Every taxpayer who claims credit under this article shall maintain sufficient records to establish the following facts for each item of qualified 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.
§11-13T-10. Failure to keep records of tax credit property.

A taxpayer who does not keep the records required for identification of tax credit property is subject to the following rules:
(a) A taxpayer is treated as having disposed of, during the taxable year, any tax credit property which the taxpayer cannot establish was still on hand, in this state, at the end of that year.
(b) If a taxpayer cannot establish when tax credit property reported for purposes of claiming this credit was placed in service, the taxpayer is 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 property in service in the next most recent year.
§11-13T-11. Interpretation and construction.
(a) No inference, implication or presumption of legislative construction or intent may be drawn or made by reason of the location or grouping of any particular section, provision or portion of this article; and no legal effect may be given to any descriptive matter or heading relating to any section, subsection or paragraph of this article.
(b) The provisions of this article shall be reasonably construed in order to effectuate the legislative intent recited in section two of this article.
§11-13T-12. Severability.
(a) If any provision of this article or the application thereof is for any reason adjudged by any court of competent jurisdiction to be invalid, the judgment may not affect, impair or invalidate the remainder of the article, but shall be confined in its operation to the provision thereof directly involved in the controversy in which the judgment shall have been rendered, and the applicability of the provision to other persons or circumstances may not be affected thereby.
(b) If any provision of this article or the application thereof is made invalid or inapplicable by reason of the repeal or any other invalidation of any statute therein addressed or referred to, such invalidation or inapplicability may not affect, impair or invalidate the remainder of the article, but shall be confined in its operation to the provision thereof directly involved with, pertaining to, addressing or referring to the statute, and the application of the provision with regard to other statutes or in other instances not affected by any such repealed or invalid statute may not be abrogated or diminished in any way.
§11-13T-13. Burden of proof; application required; failure to make timely application.

(a) The burden of proof is on the taxpayer to establish by clear and convincing evidence that the taxpayer is entitled to the benefits allowed by this article.
(b) Application for credit required.
(1) Application required. -- Notwithstanding any provision of this article to the contrary, no credit is allowed or applied under this article for any qualified investment property placed in service or use until the person asserting a claim for the allowance of credit under this article makes written application to the commissioner for allowance of credit as provided in this subsection. An application for credit shall be filed no later than the last day of the due date for filing the tax returns required under article twenty-one or twenty-four of this chapter for the taxable year in which the property to which the credit relates is placed in service or use and all information required by the form is provided.
(2) Failure to make timely application. -- The failure to timely apply for the credit results in the forfeiture of fifty percent of the annual credit allowance otherwise allowable under this article. This penalty applies annually until the application is filed.
§11-13T-14. Tax credit review and accountability.
(a) Beginning on the first day of February, two thousand six and every third year thereafter, the commissioner shall submit to the governor, the president of the Senate and the speaker of the House of Delegates a tax credit review and accountability report evaluating the cost effectiveness of the economic opportunity credit during the most recent three-year period for which information is available. The criteria to be evaluated shall include, but not be limited to, for each year of the three-year period:
(1) The numbers of taxpayers claiming the credit;
(2) The net number of new jobs created by all taxpayers claiming the credit;
(3) The cost of the credit;
(4) The cost of the credit per new job created; and
(5) Comparison of employment trends for an industry and for taxpayers within the industry that claim the credit.
(b) Taxpayers claiming the credit shall provide any information the tax commissioner may require to prepare the report: Provided, That the information provided is subject to the confidentiality and disclosure provisions of sections five-d and five-s, article ten of this chapter.
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.

§11-15-27. Tourism development project tax credit.
There shall be allowed as a credit against the tax collected and required to be remitted pursuant to this article, the amount determined under article thirteen-t of this chapter relating to the tourism development project tax credit.



NOTE: The purpose of this bill is to provide for a new tourism development project tax credit to be applied against the consumers sales and service tax.

Article thirteen-t is new; therefore, strike-throughs and underscoring have been omitted.


§11-15-27 is new; therefore, strike-throughs and underscoring have been omitted.