Senate Bill No. 259
(By Senators McCabe, Minear, Prezioso, Plymale and Kessler)
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[Introduced January 24, 2006; referred to the Committee
on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-5-13b, relating
to exempting manufacturing inventory from ad valorem
property taxation in the state.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §11-5-13b, to read as
follows:
ARTICLE 5. ASSESSMENT OF PERSONAL PROPERTY.
§11-5-13b. Application of exemption of manufacturing inventory.
(a) This section is intended to clarify the intent of the
Legislature and the citizens in establishing the exemption from
ad valorem property taxation granted by section one-c, article
ten of the West Virginia Constitution and section thirteen of
this article as it pertains to manufacturing inventory. It is
the intent of the Legislature that the provisions of this section
are to be liberally construed in favor of a person claiming exemption from tax pursuant to section one-c, article ten of the
West Virginia Constitution and section thirteen of this article.
(b) The term "manufacturing inventory" includes stocks of
raw or unfinished materials, unassembled parts, work in progress,
finished products, supplies and shipping containers.
(c) The term "manufacturer" means any person or business
entity that engages in activities in which materials are
substantially modified, altered or changed in the ordinary course
of the taxpayer's manufacturing, processing or production
operations in this state: Provided, That person or business
entity is subject to regulation by any administrative agency of
the United States, including, but not limited to, the Department
of Labor, the Department of Transportation, the Environmental
Protection Agency or the Department of Homeland Security.
(d) In addition to the property exempt from ad valorem
taxation as proscribed in section thirteen-a, article six of this
chapter, manufacturing inventory owned by or consigned for any
manufacturer in West Virginia for a period of time not to exceed
one year is deemed to be moving in interstate commerce over the
territory of the state and therefore is exempt from ad valorem
property tax and does not have a tax situs in West Virginia for
purposes of ad valorem taxation: Provided, That a portion of the
manufacturer's finished goods is reasonably anticipated to be
sold to customers in West Virginia, the portion of the
manufacturing inventory that is exempt from taxation shall be the
same as the portion of the finished goods that is reasonably anticipated to be sold to customers outside of West Virginia to
the total of all finished goods.
(e) The portion of the manufacturer's finished goods that
will be sold to customers outside of West Virginia may be
established through a historical sales or shipment analysis,
either of which utilizes information from the preceding calendar
year, or other reasonable documented method. Such other
reasonable, documented method may only be utilized in the case of
a new business, in the case of a substantial change in scope of
an existing business or in other unusual situations where a
historical sales or shipment analysis does not adequately reflect
future anticipated shipments to a final destination outside this
state. It is not necessary that the actual final destination be
known as of the first day of July in order to qualify for the
exemption.
(f) It is hereby declared to be the policy of this state,
through the exemption of manufacturing inventory property from ad
valorem taxation to encourage the development and retention of
manufacturers in the State of West Virginia.
(g) This section is intended to be declarative of the law as
of the enactment thereof and shall be fully retroactive.
NOTE: The purpose of this bill is to
exempt manufacturing
inventory from ad valorem property taxation in the state
.
§11-5-13b is new; therefore, strike-throughs and
underscoring have been omitted.