H. B. 3201
(By Delegates Shaver and Argento)
[Introduced February 22, 2007; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact §11-12-5 of the Code of West Virginia,
1931, as amended, relating to authorizing the tax commissioner
to refuse, revoke, suspend or refuse to renew a business
registration certificate for a business that is the alter ego,
nominee or instrumentality of a business in certain
situations; and defining alter ego.
Be it enacted by the Legislature of West Virginia:
That §11-12-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 12. BUSINESS REGISTRATION TAX.
§11-12-5. Time for which registration certificate granted; power
of tax commissioner to suspend or cancel certificate; refusal
to renew; business alter ego, nominee or instrumentality.
(a) Registration period. -- All business registration
certificates issued under the provisions of section four of this article are for the period of one year beginning the first day of
July and ending the thirtieth day of the following June: Provided,
That beginning on or after the first day of July, one thousand nine
hundred ninety-nine, all business registration certificates issued
under the provisions of section four of this article shall be
issued for two fiscal years of this state, subject to the following
transition rule. If the first year for which a business was issued
a business registration certificate under this article began on the
first day of July of an even-numbered calendar year, then the tax
commissioner may issue a renewal certificate to that business for
the period beginning the first day of July, one thousand nine
hundred ninety-nine, and ending the thirtieth day of June, two
thousand, upon receipt of fifteen dollars for each such one-year
certificate. Thereafter, only certificates covering two fiscal
years of this state shall be issued.
(b) Revocation or suspension of certificate. --
(1) The tax commissioner may cancel or suspend a business
registration certificate at any time during a registration period
if:
(A) The registrant filed an application for a business
registration certificate, or an application for renewal thereof,
for the registration period that was false or fraudulent.
(B) The registrant willfully refused or neglected to file a
tax return or to report information required by the tax commissioner for any tax imposed by or pursuant to this chapter.
(C) The registrant willfully refused or neglected to pay any
tax, additions to tax, penalties or interest, or any part thereof,
when they became due and payable under this chapter, determined
with regard to any authorized extension of time for payment.
(D) The registrant neglected to pay over to the tax
commissioner on or before its due date, determined with regard to
any authorized extension of time for payment, any tax imposed by
this chapter which the registrant collects from any person and
holds in trust for this state.
(E) The registrant abused the privilege afforded to it by
article fifteen or fifteen-a of this chapter to be exempt from
payment of the taxes imposed by such articles on some or all of the
registrant's purchases for use in business upon issuing to the
vendor a properly executed exemption certificate, by failing to
timely pay use tax on taxable purchase for use in business, or by
failing to either pay the tax or give a properly executed exemption
certificate to the vendor.
(F) The registrant has failed to pay in full delinquent
personal property taxes owing for the calendar year immediately
preceding the calendar year in which the application is made.
(2) Before canceling or suspending any business registration
certificate, the tax commissioner shall give written notice of his
or her intent to suspend or cancel the business registration certificate of the taxpayer, the reason for the suspension or
cancellation, the effective date of the cancellation or suspension
and the date, time and place where the taxpayer may appear and show
cause why such business registration certificate should not be
canceled or suspended. This written notice shall be served on the
taxpayer in the same manner as a notice of assessment is served
under article ten of this chapter, not less than twenty days prior
to the date of the show cause informal hearing. The taxpayer may
appeal cancellation or suspension of its business registration
certificate in the same manner as a notice of assessment is
appealed under article ten-a of this chapter: Provided, That the
filing of a petition for appeal does not stay the effective date of
the suspension or cancellation. A stay may be granted only after
a hearing is held on a motion to stay filed by the registrant, upon
finding that state revenues will not be jeopardized by the granting
of the stay. The tax commissioner may, in his or her discretion
and upon such terms as he or she may specify, agree to stay the
effective date of the cancellation or suspension until another date
certain.
(3) On or before the first day of July, two thousand five, the
tax commissioner shall propose for promulgation legislative rules
establishing ancillary procedures for the tax commissioner's
suspension of business registration certificates for failure to pay
delinquent personal property taxes pursuant to paragraph (F), subdivision (1) of this section. The rules shall at a minimum
establish any additional requirements for the provision of notice
deemed necessary by the tax commissioner to meet requirements of
law; establish protocols for the communication and verification of
information exchanged between the tax commissioner, sheriffs and
others; and establish fees to be assessed against delinquent
taxpayers that shall be deposited into a special fund which is
hereby created and expended for general tax administration by the
tax division of the department of tax and revenue and for operation
of the tax division. Upon authorization of the Legislature, the
rules shall have the same force and effect as if set forth herein.
No provision of this subdivision may be construed to restrict in
any manner the authority of the tax commissioner to suspend such
certificates for failure to pay delinquent personal property taxes
under paragraph (C) or (F), subdivision (1) of this section or
under any other provision of this code prior to the authorization
of the rules.
(c) Refusal to renew. -- The tax commissioner may refuse to
issue or renew a business registration certificate if the
registrant is delinquent in the payment of any tax administered by
the tax commissioner under article ten of this chapter or the
corporate license tax imposed by article twelve-c of this chapter,
until the registrant pays in full all the delinquent taxes
including interest and applicable additions to tax and penalties. In his or her discretion and upon such terms as he or she may
specify, the tax commissioner may enter into an installment payment
agreement with the taxpayer in lieu of the complete payment.
Failure of the taxpayer to fully comply with the terms of the
installment payment agreement shall render the amount remaining due
thereunder immediately due and payable and the tax commissioner may
suspend or cancel the business registration certificate in the
manner provided in this section.
(d) Refusal to renew due to delinquent personal property tax.
-- The tax commissioner shall refuse to issue or renew a business
registration certificate when informed in writing, signed by the
county sheriff, that personal property owned by the applicant and
used in conjunction with the business activity of the applicant is
subject to delinquent property taxes. The tax commissioner shall
forthwith notify the applicant that the commissioner will not act
upon the application until information is provided evidencing that
the taxes due are either exonerated or paid.
(e) Refusal to issue, revocation, suspension and refusal to
renew business registration certificate of alter ego, nominee or
instrumentality of a business that has previously been the subject
of a lawful refusal to issue, revocation, suspension or refuse to
renew. --
(1) The tax commissioner may refuse to issue a business
registration certificate, or may revoke a business registration certificate or may suspend a business registration certificate or
may refuse to renew a business registration certificate for any
business determined by the tax commissioner to be an alter ego,
nominee or instrumentality of a business that has previously been
the subject of a lawful refusal to issue a business registration
certificate or of a lawful revocation, suspension or refusal to
renew a business registration certificate pursuant to this section,
and for which the business registration certificate has not been
lawfully reinstated or reissued.
(2) For purposes of this section, a business is presumed to be
an alter ego, nominee or instrumentality of another business or
other businesses if:
(A) More than twenty percent of the real assets or more than
twenty percent of the operating assets or more than twenty percent
of the tangible personal property of one business are or have been
transferred to the other business or businesses, or are or have
been used in the operations of the other business or businesses,
or more than twenty percent of the real assets or more than twenty
percent of the operating assets or more than twenty percent of the
tangible personal property of one business are or have been used to
collateralize or secure debts or obligations of the other business
or businesses;
(B) Ownership of the businesses is so configured that the
attribution rules of either Internal Revenue Code section 267 or Internal Revenue Code section 318 would apply to cause ownership of
the businesses to be attributed to the same person or entity; or
(C) Substantive control of the businesses is held or retained
by the same person, entity or individual, directly or indirectly,
or through attribution under paragraph (B) of this subdivision.
NOTE: The purpose of this bill is to authorize the tax
commissioner to refuse, revoke, suspend or refuse to renew a
business registration certificate for a business that is the alter
ego, nominee or instrumentality of a business in certain
situations; and defining alter ego.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.