ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 596
(Senators Helmick and Love, original sponsors)
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[Passed March 8, 2008; in effect from passage.]
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AN ACT to repeal §11-15B-16 of the Code of West Virginia, 1931, as
amended; and to amend and reenact §11-15B-2, §11-15B-2a,
§11-15B-2b, §11-15B-10, §11-15B-11, §11-15B-12, §11-15B-14,
§11-15B-14a, §11-15B-15, §11-15B-18, §11-15B-19, §11-15B-20,
§11-15B-24, §11-15B-25, §11-15B-26, §11-15B-27, §11-15B-28,
§11-15B-30 and §11-15B-32 of said code, all relating to
Streamlined Sales and Use Tax Agreement and the West Virginia
consumers sales and service tax and use tax; defining terms;
specifying applicable dates; specifying procedures; providing
relief from liability in specified circumstances; specifying
certain sourcing rules; specifying interpretation; specifying
discovery criteria; specifying monetary allowance criteria;
and specifying effective date.
Be it enacted by the Legislature of West Virginia:
That §11-15B-16 of the Code of West Virginia, 1931, as amended, be repealed; and that §11-15B-2, §11-15B-2a, §11-15B-2b,
§11-15B-10, §11-15B-11, §11-15B-12, §11-15B-14, §11-15B-14a,
§11-15B-15, §11-15B-18, §11-15B-19, §11-15B-20, §11-15B-24,
§11-15B-25, §11-15B-26, §11-15B-27, §11-15B-28, §11-15B-30 and
§11-15B-32 of said code be amended and reenacted, all to read as
follows:
ARTICLE 15B. STREAMLINED SALES AND USE TAX ADMINISTRATION ACT.
§11-15B-2. Definitions.
(a) General. -- When used in this article and articles
fifteen and fifteen-a of this chapter, words defined in subsection
(b) of this section shall have the meanings ascribed to them in
this section, except in those instances where a different meaning
is distinctly expressed or the context in which the term is used
clearly indicates that a different meaning is intended by the
Legislature.
(b) Terms defined. --
(1) "Agent" means a person appointed by a seller to represent
the seller before the member states.
(2) "Agreement" means the Streamlined Sales and Use Tax
Agreement as defined in section two-a of this article.
(3) "Alcoholic beverages" means beverages that are suitable
for human consumption and contain one half of one percent or more
of alcohol by volume.
(4) "Bundled transaction" means the retail sale of two or more products, except real property and services to real property,
where: (i) The products are otherwise distinct and identifiable;
and (ii) the products are sold for one nonitemized price. A
"bundled transaction" does not include the sale of any products in
which the "sales price" varies, or is negotiable, based on the
selection by the purchaser of the products included in the
transaction.
(A) "Distinct and identifiable products" does not include:
(i) Packaging such as containers, boxes, sacks, bags and
bottles or other materials such as wrapping, labels, tags and
instruction guides that accompany the "retail sale" of the products
and are incidental or immaterial to the "retail sale" thereof.
Examples of packaging that are incidental or immaterial include
grocery sacks, shoe boxes, dry cleaning garment bags and express
delivery envelopes and boxes;
(ii) A product provided free of charge with the required
purchase of another product. A product is "provided free of
charge" if the "sales price" of the product purchased does not vary
depending on the inclusion of the product "provided free of
charge"; or
(iii) Items included in the member state's definition of
"sales price", as defined in this section.
(B) The term "one nonitemized price" does not include a price
that is separately identified by product on binding sales or other supporting sales-related documentation made available to the
customer in paper or electronic form including, but not limited to,
an invoice, bill of sale, receipt, contract, service agreement,
lease agreement, periodic notice of rates and services, rate card
or price list.
(C) A transaction that otherwise meets the definition of a
"bundled transaction", as defined in this subdivision, is not a
"bundled transaction" if it is:
(i) The "retail sale" of tangible personal property and a
service where the tangible personal property is essential to the
use of the service and is provided exclusively in connection with
the service and the true object of the transaction is the service;
or
(ii) The "retail sale" of services where one service is
provided that is essential to the use or receipt of a second
service and the first service is provided exclusively in connection
with the second service and the true object of the transaction is
the second service; or
(iii) A transaction that includes taxable products and
nontaxable products and the "purchase price" or "sales price" of
the taxable products is de minimis.
(I) "De minimis" means the seller's "purchase price" or "sales
price" of the taxable products is ten percent or less of the total
"purchase price" or "sales price" of the bundled products.
(II) Sellers shall use either the "purchase price" or the
"sales price" of the products to determine if the taxable products
are de minimis. Sellers may not use a combination of the "purchase
price" and "sales price" of the products to determine if the
taxable products are de minimis.
(III) Sellers shall use the full term of a service contract to
determine if the taxable products are de minimis; or
(iv) A transaction that includes products taxable at the
general rate of tax and food or food ingredients taxable at a lower
rate of tax and the "purchase price" or "sales price" of the
products taxable at the general sales tax rate is de minimis. For
purposes of this subparagraph, the term "de minimis" has the same
meaning as ascribed to it under subparagraph (iii) of this
paragraph.
(v) The "retail sale" of exempt tangible personal property, or
food and food ingredients taxable at a lower rate of tax, and
tangible personal property taxable at the general rate of tax
where:
(I) The transaction includes "food and food ingredients",
"drugs", "durable medical equipment", "mobility-enhancing
equipment", "over-the-counter drugs", "prosthetic devices" or
medical supplies, all as defined in this article ; and
(II) Where the seller's "purchase price" or "sales price" of
the taxable tangible personal property taxable at the general rate of tax is fifty percent or less of the total "purchase price" or
"sales price" of the bundled tangible personal property. Sellers
may not use a combination of the "purchase price" and "sales price"
of the tangible personal property when making the fifty percent
determination for a transaction.
(5) "Candy" means a preparation of sugar, honey or other
natural or artificial sweeteners in combination with chocolate,
fruits, nuts or other ingredients or flavorings in the form of
bars, drops or pieces. "Candy" shall not include any preparation
containing flour and shall require no refrigeration.
(6) "Clothing" means all human wearing apparel suitable for
general use. The following list contains examples and is not
intended to be an all-inclusive list.
(A) "Clothing" shall include:
(i) Aprons, household and shop;
(ii) Athletic supporters;
(iii) Baby receiving blankets;
(iv) Bathing suits and caps;
(v) Beach capes and coats;
(vi) Belts and suspenders;
(vii) Boots;
(viii) Coats and jackets;
(ix) Costumes;
(x) Diapers, children and adult, including disposable diapers;
(xi) Ear muffs;
(xii) Footlets;
(xiii) Formal wear;
(xiv) Garters and garter belts;
(xv) Girdles;
(xvi) Gloves and mittens for general use;
(xvii) Hats and caps;
(xviii) Hosiery;
(xix) Insoles for shoes;
(xx) Lab coats;
(xxi) Neckties;
(xxii) Overshoes;
(xxiii) Pantyhose;
(xxiv) Rainwear;
(xxv) Rubber pants;
(xxvi) Sandals;
(xxvii) Scarves;
(xxviii) Shoes and shoe laces;
(xxix) Slippers;
(xxx) Sneakers;
(xxxi) Socks and stockings;
(xxxii) Steel-toed shoes;
(xxxiii) Underwear;
(xxxiv) Uniforms, athletic and nonathletic; and
(xxxv) Wedding apparel.
(B) "Clothing" shall not include:
(i) Belt buckles sold separately;
(ii) Costume masks sold separately;
(iii) Patches and emblems sold separately;
(iv) Sewing equipment and supplies including, but not limited
to, knitting needles, patterns, pins, scissors, sewing machines,
sewing needles, tape measures and thimbles; and
(v) Sewing materials that become part of "clothing" including,
but not limited to, buttons, fabric, lace, thread, yarn and
zippers.
(7) "Clothing accessories or equipment" means incidental items
worn on the person or in conjunction with "clothing". "Clothing
accessories or equipment" are mutually exclusive of and may be
taxed differently than apparel within the definition of "clothing",
"sport or recreational equipment" and "protective equipment". The
following list contains examples and is not intended to be an
all-inclusive list. "Clothing accessories or equipment" shall
include:
(a) Briefcases;
(b) Cosmetics;
(c) Hair notions, including, but not limited to, barrettes,
hair bows and hair nets;
(d) Handbags;
(e) Handkerchiefs;
(f) Jewelry;
(g) Sunglasses, nonprescription;
(h) Umbrellas;
(i) Wallets;
(j) Watches; and
(k) Wigs and hair pieces.
(8) "Certified automated system" or "CAS" means software
certified under the agreement to calculate the tax imposed by each
jurisdiction on a transaction, determine the amount of tax to remit
to the appropriate state and maintain a record of the transaction.
(9) "Certified service provider" or "CSP" means an agent
certified under the agreement to perform all of the seller's sales
and use tax functions other than the seller's obligation to remit
tax on its own purchases.
(10) "Computer" means an electronic device that accepts
information in digital or similar form and manipulates the
information for a result based on a sequence of instructions.
(11) "Computer software" means a set of coded instructions
designed to cause a "computer" or automatic data processing
equipment to perform a task.
(12) "Delivered" means delivered to the purchaser by means
other than tangible storage media.
(13) "Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a
location designated by the purchaser of personal property or
services including, but not limited to, transportation, shipping,
postage, handling, crating and packing.
(14) "Dietary supplement" means any product, other than
"tobacco", intended to supplement the diet that:
(A) Contains one or more of the following dietary ingredients:
(i) A vitamin;
(ii) A mineral;
(iii) An herb or other botanical;
(iv) An amino acid;
(v) A dietary substance for use by humans to supplement the
diet by increasing the total dietary intake; or
(vi) A concentrate, metabolite, constituent, extract or
combination of any ingredient described in subparagraph (i) through
(v), inclusive, of this paragraph;
(B) And is intended for ingestion in tablet, capsule, powder,
softgel, gelcap or liquid form, or if not intended for ingestion in
such a form, is not represented as conventional food and is not
represented for use as a sole item of a meal or of the diet; and
(C) Is required to be labeled as a dietary supplement,
identifiable by the "Supplemental Facts" box found on the label as
required pursuant to 21 CFR §101.36 or in any successor section of
the Code of Federal Regulations.
(15) "Direct mail" means printed material delivered or
distributed by United States mail or other delivery service to a
mass audience or to addressees on a mailing list provided by the
purchaser or at the direction of the purchaser when the cost of the
items are not billed directly to the recipients. "Direct mail"
includes tangible personal property supplied directly or indirectly
by the purchaser to the direct mail seller for inclusion in the
package containing the printed material. "Direct mail" does not
include multiple items of printed material delivered to a single
address.
(16) "Drug" means a compound, substance or preparation, and
any component of a compound, substance or preparation, other than
food and food ingredients, dietary supplements or alcoholic
beverages:
(A) Recognized in the official United States Pharmacopoeia,
official Homeopathic Pharmacopoeia of the United States or official
National Formulary, and supplement to any of them;
(B) Intended for use in the diagnosis, cure, mitigation,
treatment or prevention of disease in humans; or
(C) Intended to affect the structure or any function of the
human body.
(17) "Durable medical equipment" means equipment including
repair and replacement parts for the equipment, but does not
include "mobility-enhancing equipment", which:
(A) Can withstand repeated use;
(B) Is primarily and customarily used to serve a medical
purpose;
(C) Generally is not useful to a person in the absence of
illness or injury; and
(D) Is not worn in or on the body.
(18) "Electronic" means relating to technology having
electrical, digital, magnetic, wireless, optical, electromagnetic
or similar capabilities.
(19) "Eligible property" means an item of a type, such as
clothing, that qualifies for a sales tax holiday exemption in this
state.
(20) "Energy Star qualified product" means a product that
meets the energy efficient guidelines set by the United States
Environmental Protection Agency and the United States Department of
Energy that are authorized to carry the Energy Star label. Covered
products are those listed at www.energystar.gov or successor
address.
(21) "Entity-based exemption" means an exemption based on who
purchases the product or service or who sells the product or
service. An exemption that is available to all individuals shall
not be considered an entity-based exemption.
(22) "Food and food ingredients" means substances, whether in
liquid, concentrated, solid, frozen, dried or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for
their taste or nutritional value. "Food and food ingredients" does
not include alcoholic beverages, prepared food or tobacco.
(23) "Food sold through vending machines" means food dispensed
from a machine or other mechanical device that accepts payment.
(24) "Fur clothing" means "clothing" that is required to be
labeled as a fur product under the Federal Fur Products Labeling
Act (15 U. S. C.§69) and the value of the fur components in the
product is more than three times the value of the next most
valuable tangible component. "Fur clothing" is human-wearing
apparel suitable for general use but may be taxed differently from
"clothing". For the purposes of the definition of "fur clothing",
the term "fur" means any animal skin or part thereof with hair,
fleece or fur fibers attached thereto, either in its raw or
processed state, but shall not include such skins that have been
converted into leather or suede, or which in processing, the hair,
fleece or fur fiber has been completely removed.
(25) "Governing board" means the governing board of the
Streamlined Sales and Use Tax Agreement.
(26) "Grooming and hygiene products" are soaps and cleaning
solutions, shampoo, toothpaste, mouthwash, antiperspirants and sun
tan lotions and screens, regardless of whether the items meet the
definition of "over-the-counter drugs".
(27) "Includes" and "including" when used in a definition contained in this article is not considered to exclude other things
otherwise within the meaning of the term being defined.
(28) "Layaway sale" means a transaction in which property is
set aside for future delivery to a customer who makes a deposit,
agrees to pay the balance of the purchase price over a period of
time and, at the end of the payment period, receives the property.
An order is accepted for layaway by the seller when the seller
removes the property from normal inventory or clearly identifies
the property as sold to the purchaser.
(29) "Lease" includes rental, hire and license. "Lease" means
any transfer of possession or control of tangible personal property
for a fixed or indeterminate term for consideration. A lease or
rental may include future options to purchase or extend.
(A) "Lease" does not include:
(i) A transfer of possession or control of property under a
security agreement or deferred payment plan that requires the
transfer of title upon completion of the required payments;
(ii) A transfer or possession or control of property under an
agreement that requires the transfer of title upon completion of
required payments and payment of an option price does not exceed
the greater of one hundred dollars or one percent of the total
required payments; or
(iii) Providing tangible personal property along with an
operator for a fixed or indeterminate period of time. A condition of this exclusion is that the operator is necessary for the
equipment to perform as designed. For the purpose of this
subparagraph, an operator must do more than maintain, inspect or
set-up the tangible personal property.
(iv) "Lease" or "rental" includes agreements covering motor
vehicles and trailers where the amount of consideration may be
increased or decreased by reference to the amount realized upon
sale or disposition of the property as defined in 26 U. S.
C.7701(h)(1).
(B) This definition shall be used for sales and use tax
purposes regardless if a transaction is characterized as a lease or
rental under generally accepted accounting principles, the Internal
Revenue Code, the Uniform Commercial Code or other provisions of
federal, state or local law.
(30) "Load and leave" means delivery to the purchaser by use
of a tangible storage media where the tangible storage media is not
physically transferred to the purchaser.
(31) "Mobility-enhancing equipment" means equipment, including
repair and replacement parts to the equipment, but does not include
"durable medical equipment", which:
(A) Is primarily and customarily used to provide or increase
the ability to move from one place to another and which is
appropriate for use either in a home or a motor vehicle;
(B) Is not generally used by persons with normal mobility; and
(C) Does not include any motor vehicle or equipment on a motor
vehicle normally provided by a motor vehicle manufacturer.
(32) "Model I seller" means a seller that has selected a
certified service provider as its agent to perform all the seller's
sales and use tax functions, other than the seller's obligation to
remit tax on its own purchases.
(33) "Model II seller" means a seller that has selected a
certified automated system to perform part of its sales and use tax
functions, but retains responsibility for remitting the tax.
(34) "Model III seller" means a seller that has sales in at
least five member states, has total annual sales revenue of at
least five hundred million dollars, has a proprietary system that
calculates the amount of tax due each jurisdiction and has entered
into a performance agreement with the member states that
establishes a tax performance standard for the seller. As used in
this definition, a seller includes an affiliated group of sellers
using the same proprietary system.
(35) "Over-the-counter drug" means a drug that contains a
label that identifies the product as a drug as required by 21 CFR
§201.66. The "over-the-counter drug" label includes:
(A) A "drug facts" panel; or
(B) A statement of the "active ingredient(s)" with a list of
those ingredients contained in the compound, substance or
preparation.
(36) "Person" means an individual, trust, estate, fiduciary,
partnership, limited liability company, limited liability
partnership, corporation or any other legal entity.
(37) "Personal service" includes those:
(A) Compensated by the payment of wages in the ordinary course
of employment; and
(B) Rendered to the person of an individual without, at the
same time, selling tangible personal property, such as nursing,
barbering, manicuring and similar services.
(38) (A) "Prepared food" means:
(i) Food sold in a heated state or heated by the seller;
(ii) Two or more food ingredients mixed or combined by the
seller for sale as a single item; or
(iii) Food sold with eating utensils provided by the seller,
including plates, knives, forks, spoons, glasses, cups, napkins or
straws. A plate does not include a container or packaging used to
transport the food.
(B) "Prepared food" in subparagraph (ii), paragraph (A) of
this subdivision does not include food that is only cut, repackaged
or pasteurized by the seller, and eggs, fish, meat, poultry and
foods containing these raw animal foods requiring cooking by the
consumer as recommended by the Food and Drug Administration in
Chapter 3, Part 401.11 of its Food Code of 2001 so as to prevent
food-borne illnesses.
(C) Additionally, "prepared food" as defined in this
subdivision does not include:
(i) Food sold by a seller whose proper primary NAICS
classification is manufacturing in Sector 311, except Subsection
3118 (bakeries);
(ii) Food sold in an unheated state by weight or volume as a
single item; or
(iii) Bakery items, including bread, rolls, buns, biscuits,
bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies,
tarts, muffins, bars, cookies, tortillas.
(39) "Prescription" means an order, formula or recipe issued
in any form of oral, written, electronic or other means of
transmission by a duly licensed practitioner authorized by the laws
of this state to issue prescriptions.
(40) "Prewritten computer software" means "computer software",
including prewritten upgrades, which is not designed and developed
by the author or other creator to the specifications of a specific
purchaser.
(A) The combining of two or more prewritten computer software
programs or prewritten portions thereof does not cause the
combination to be other than prewritten computer software.
(B) "Prewritten computer software" includes software designed
and developed by the author or other creator to the specifications
of a specific purchaser when it is sold to a person other than the specific purchaser. Where a person modifies or enhances computer
software of which the person is not the author or creator, the
person is considered to be the author or creator only of the
person's modifications or enhancements.
(C) "Prewritten computer software" or a prewritten portion
thereof that is modified or enhanced to any degree, where the
modification or enhancement is designed and developed to the
specifications of a specific purchaser, remains prewritten computer
software: Provided, That where there is a reasonable, separately
stated charge or an invoice or other statement of the price given
to the purchaser for the modification or enhancement, the
modification or enhancement does not constitute prewritten computer
software.
(41) "Product-based exemption" means an exemption based on the
description of the product or service and not based on who
purchases the product or service or how the purchaser intends to
use the product or service.
(42) "Prosthetic device" means a replacement, corrective or
supportive device, including repair and replacement parts for the
device worn on or in the body, to:
(A) Artificially replace a missing portion of the body;
(B) Prevent or correct physical deformity or malfunction of
the body; or
(C) Support a weak or deformed portion of the body.
(43) "Protective equipment" means items for human wear and
designed as protection of the wearer against injury or disease or
as protections against damage or injury of other persons or
property but not suitable for general use.
(44) "Purchase price" means the measure subject to the tax
imposed by article fifteen or fifteen-a of this chapter and has the
same meaning as sales price.
(45) "Purchaser" means a person to whom a sale of personal
property is made or to whom a service is furnished.
(46) "Registered under this agreement" means registration by
a seller with the member states under the central registration
system provided in article four of the agreement.
(47) "Retail sale" or "sale at retail" means:
(A) Any sale, lease or rental for any purpose other than for
resale as tangible personal property, sublease or subrent; and
(B) Any sale of a service other than a service purchased for
resale.
(48) (A) "Sales price" means the measure subject to the tax
levied under articles fifteen or fifteen-a of this chapter and
includes the total amount of consideration, including cash, credit,
property and services, for which personal property or services are
sold, leased or rented, valued in money, whether received in money
or otherwise, without any deduction for the following:
(i) The seller's cost of the property sold;
(ii) The cost of materials used, labor or service cost,
interest, losses, all costs of transportation to the seller, all
taxes imposed on the seller and any other expense of the seller;
(iii) Charges by the seller for any services necessary to
complete the sale, other than delivery and installation charges;
(iv) Delivery charges; and
(v) Installation charges.
(B) "Sales price" does not include:
(i) Discounts, including cash, term or coupons that are not
reimbursed by a third party that are allowed by a seller and taken
by a purchaser on a sale;
(ii) Interest, financing and carrying charges from credit
extended on the sale of personal property, goods or services, if
the amount is separately stated on the invoice, bill of sale or
similar document given to the purchaser; or
(iii) Any taxes legally imposed directly on the consumer that
are separately stated on the invoice, bill of sale or similar
document given to the purchaser.
(C) "Sales price" shall include consideration received by the
seller from third parties if:
(i) The seller actually receives consideration from a party
other than the purchaser and the consideration is directly related
to a price reduction or discount on the sale;
(ii) The seller has an obligation to pass the price reduction or discount through to the purchaser;
(iii) The amount of the consideration attributable to the sale
is fixed and determinable by the seller at the time of the sale of
the item to the purchaser; and
(iv) One of the following criteria is met:
(I) The purchaser presents a coupon, certificate or other
documentation to the seller to claim a price reduction or discount
where the coupon, certificate or documentation is authorized,
distributed or granted by a third party with the understanding that
the third party will reimburse any seller to whom the coupon,
certificate or documentation is presented;
(II) The purchaser identifies himself or herself to the seller
as a member of a group or organization entitled to a price
reduction or discount (a "preferred customer" card that is
available to any patron does not constitute membership in such a
group); or
(III) The price reduction or discount is identified as a
third-party price reduction or discount on the invoice received by
the purchaser or on a coupon, certificate or other documentation
presented by the purchaser.
(49) "Sales tax" means the tax levied under article fifteen of
this chapter.
(50) "School art supply" means an item commonly used by a
student in a course of study for artwork. The term is mutually exclusive of the terms "school supply", "school instructional
material" and "school computer supply" and may be taxed
differently. The following is an all-inclusive list:
(A) Clay and glazes;
(B) Paints; acrylic, tempora and oil;
(C) Paintbrushes for artwork;
(D) Sketch and drawing pads; and
(E) Watercolors.
(51) "School instructional material" means written material
commonly used by a student in a course of study as a reference and
to learn the subject being taught. The term is mutually exclusive
of the terms "school supply", "school art supply" and "school
computer supply" and may be taxed differently. The following is an
all-inclusive list:
(A) Reference books;
(B) Reference maps and globes;
(C) Textbooks; and
(D) Workbooks.
(52) "School computer supply" means an item commonly used by
a student in a course of study in which a computer is used. The
term is mutually exclusive of the terms "school supply", "school
art supply" and "school instructional material" and may be taxed
differently. The following is an all-inclusive list:
(A) Computer storage media; diskettes, compact disks;
(B) Handheld electronic schedulers, except devices that are
cellular phones;
(C) Personal digital assistants, except devices that are
cellular phones;
(D) Computer printers; and
(E) Printer supplies for computers; printer paper, printer
ink.
(53) "School supply" means an item commonly used by a student
in a course of study. The term is mutually exclusive of the terms
"school art supply", "school instructional material" and "school
computer supply" and may be taxed differently. The following is an
all-inclusive list of school supplies:
(A) Binders;
(B) Book bags;
(C) Calculators;
(D) Cellophane tape;
(E) Blackboard chalk;
(F) Compasses;
(G) Composition books;
(H) Crayons;
(I) Erasers;
(J) Folders; expandable, pocket, plastic and manila;
(K) Glue, paste and paste sticks;
(L) Highlighters;
(M) Index cards;
(N) Index card boxes;
(O) Legal pads;
(P) Lunch boxes;
(Q) Markers;
(R) Notebooks;
(S) Paper; loose-leaf ruled notebook paper, copy paper, graph
paper, tracing paper, manila paper, colored paper, poster board and
construction paper;
(T) Pencil boxes and other school supply boxes;
(U) Pencil sharpeners;
(V) Pencils;
(W) Pens;
(X) Protractors;
(Y) Rulers;
(Z) Scissors; and
(AA) Writing tablets.
(54) "Seller" means any person making sales, leases or rentals
of personal property or services.
(55) "Service" or "selected service" includes all
nonprofessional activities engaged in for other persons for a
consideration which involve the rendering of a service as
distinguished from the sale of tangible personal property, but does
not include contracting, personal services, services rendered by an employee to his or her employer, any service rendered for resale or
any service furnished by a business that is subject to the control
of the Public Service Commission when the service or the manner in
which it is delivered is subject to regulation by the Public
Service Commission of this state. The term "service" or "selected
service" does not include payments received by a vendor of tangible
personal property as an incentive to sell a greater volume of such
tangible personal property under a manufacturer's, distributor's or
other third-party's marketing support program, sales incentive
program, cooperative advertising agreement or similar type of
program or agreement and these payments are not considered to be
payments for a "service" or "selected service" rendered, even
though the vendor may engage in attendant or ancillary activities
associated with the sales of tangible personal property as required
under the programs or agreements.
(56) "Soft drink" means nonalcoholic beverages that contain
natural or artificial sweeteners. "Soft drinks" do not include
beverages that contain milk or milk products, soy, rice or similar
milk substitutes or greater than fifty percent of vegetable or
fruit juice by volume.
(57) "Sport or recreational equipment" means items designed
for human use and worn in conjunction with an athletic or
recreational activity that are not suitable for general use.
"Sport or recreational equipment" are mutually exclusive of and may be taxed differently than apparel within the definition of
"clothing", "clothing accessories or equipment" and "protective
equipment". The following list contains examples and is not
intended to be an all-inclusive list. "Sport or recreational
equipment" shall include:
(A) Ballet and tap shoes;
(B) Cleated or spiked athletic shoes;
(C) Gloves, including, but not limited to, baseball, bowling,
boxing, hockey and golf;
(D) Goggles;
(E) Hand and elbow guards;
(F) Life preservers and vests;
(G) Mouth guards;
(H) Roller and ice skates;
(I) Shin guards;
(J) Shoulder pads;
(K) Ski boots;
(L) Waders; and
(M) Wetsuits and fins.
(58) "State" means any state of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
(59) "Tangible personal property" means personal property that
can be seen, weighed, measured, felt or touched or that is in any
manner perceptible to the senses. "Tangible personal property" includes, but is not limited to, electricity, steam, water, gas and
prewritten computer software.
(60) "Tax" includes all taxes levied under articles fifteen
and fifteen-a of this chapter and additions to tax, interest and
penalties levied under article ten of this chapter.
(61) "Tax Commissioner" means the State Tax Commissioner or
his or her delegate. The term "delegate" in the phrase "or his or
her delegate", when used in reference to the Tax Commissioner,
means any officer or employee of the State Tax Division duly
authorized by the Tax Commissioner directly, or indirectly by one
or more redelegations of authority, to perform the functions
mentioned or described in this article or rules promulgated for
this article.
(62) "Taxpayer" means any person liable for the taxes levied
by articles fifteen and fifteen-a of this chapter or any additions
to tax penalties imposed by article ten of this chapter.
(63) "Telecommunications service" or "telecommunication
service" when used in this article and articles fifteen and
fifteen-a shall have the same meaning as that term is defined in
section two-b of this article.
(64) "Tobacco" means cigarettes, cigars, chewing or pipe
tobacco or any other item that contains tobacco.
(65) "Use tax" means the tax levied under article fifteen-a of
this chapter.
(66) "Use-based exemption" means an exemption based on a
specified use of the product or service by the purchaser.
(67) "Vendor" means any person furnishing services taxed by
article fifteen or fifteen-a of this chapter or making sales of
tangible personal property or custom software. "Vendor" and
"seller" are used interchangeably in this article and in articles
fifteen and fifteen-a of this chapter.
(c) Additional definitions. -- Other terms used in this
article are defined in articles fifteen and fifteen-a of this
chapter, which definitions are incorporated by reference into this
article. Additionally, other sections of this article may define
terms primarily used in the section in which the term is defined.
§11-15B-2a. Streamlined Sales and Use Tax Agreement defined.
As used in this article and articles fifteen and fifteen-a of
this chapter, the term "Streamlined Sales and Use Tax Agreement" or
"agreement" means the agreement adopted the twelfth day of
November, two thousand two, by states that enacted authority to
engage in multistate discussions similar to that provided in
section four of this article, except when the context in which the
term is used clearly indicates that a different meaning is intended
by the Legislature. "Agreement" includes amendments to the
agreement adopted by the implementing states in calendar years two
thousand three, two thousand four, two thousand five and amendments
adopted by the governing board on or before the thirty-first day of January, two thousand eight, but does not include any substantive
changes in the agreement adopted after the thirty-first day of
January, two thousand eight.
§11-15B-2b. Telecommunications definitions.
(a) General. -- When used in this article and articles
fifteen and fifteen-a of this chapter, words defined in subsection
(b) of this section shall have the meanings ascribed to them in
this section, except in those instances where a different meaning
is distinctly expressed or the context in which the term is used
clearly indicates that a different meaning is intended by the
Legislature.
(b) Terms defined. --
(1) "Telecommunications service" or "telecommunication
service" means the electronic transmission, conveyance or routing
of voice, data, audio, video or any other information or signals to
a point, or between or among points.
(A) The terms "telecommunications service" or
"telecommunication service" includes the transmission, conveyance
or routing in which computer processing applications are used to
act on the form, code or protocol of the content for purposes of
transmission, conveyance or routing without regard to whether the
service is referred to as voice over internet protocol services or
is classified by the Federal Communications Commission as enhanced
or value added.
(B) "Telecommunications service" or "telecommunication
service" does not include:
(i) Advertising, including, but not limited to, directory
advertising;
(ii) "Ancillary services";
(iii) Billing and collection services provided to third
parties;
(iv) Data processing and information services that allow data
to be generated, acquired, stored, processed or retrieved and
delivered by an electronic transmission to a purchaser where the
purchaser's primary purpose for the underlying transaction is the
processed data or information;
(v) Digital products "delivered electronically", including,
but not limited to, software, music, video, reading materials or
ring tones;
(vi) Installation or maintenance of wiring or equipment on a
customer's premises;
(vii) Internet access service;
(viii) Radio and television audio and video programming
services, regardless of the medium, including the furnishing of
transmission, conveyance and routing of services by the programming
service provider. Radio and television audio and video programming
services shall include, but not be limited to, cable service as
defined in 47 U. S. C. 522(6) and audio and video programming services delivered by commercial mobile radio service providers, as
defined in 47 CFR 20.3; or
(ix) Tangible personal property.
(2) Related or ancillary terms.--
The following terms are either used in subsection (a) of this
section or are commonly associated with terms used in that
subsection.
(A) "800 service" means a "telecommunications service" that
allows a caller to dial a toll-free number without incurring a
charge for the call. The service is typically marketed under the
name "800", "855", "866", "877" and "888" toll-free calling and any
subsequent numbers designated by the Federal Communications
Commission.
(B) "900 service" means an inbound toll "telecommunications
service" purchased by a subscriber that allows the subscriber's
customers to call in to the subscriber's prerecorded announcement
or live service. "900 service" does not include the charge for
collection services provided by the seller of the
"telecommunications services" to the subscriber or service or
product sold by the subscriber to the subscriber's customer. The
service is typically marketed under the name "900 service" and any
subsequent numbers designated by the Federal Communications
Commission.
(C) "Coin-operated telephone service" means a "telecommunications service" paid for by inserting money into a
telephone accepting direct deposits of money to operate.
(D) "Conference-bridging service" means an "ancillary service"
that links two or more participants of an audio or video conference
call and may include the provision of a telephone number.
"Conference-bridging service" does not include the
"telecommunications services" used to reach the conference bridge.
(E) "Detailed telecommunications billing service" means an
"ancillary service" of separately stating information pertaining to
individual calls on a customer's billing statement.
(F) "Directory assistance" means an "ancillary service" of
providing telephone number information and/or address information.
(G) "Fixed wireless service" means a "telecommunications
service" that provides radio communication between fixed points.
(H) "International" means a "telecommunications service" that
originates or terminates in the United States and terminates or
originates outside the United States, respectively. United States
includes the District of Columbia or a United States territory or
possession.
(I) "Interstate" means a "telecommunications service" that
originates in one United States state, territory or possession and
terminates in a different United States state, territory or
possession.
(J) "Intrastate" means a "telecommunications service" that originates in one United States state, territory or possession and
terminates in the same United States state, territory or
possession.
(K) "Mobile wireless service" means a "telecommunications
service" that is transmitted, conveyed or routed regardless of the
technology used, whereby the origination and/or termination points
of the transmission, conveyance or routing are not fixed,
including, by way of example only, "telecommunications services"
that are provided by a commercial mobile radio service provider.
(L) "Paging service" means a "telecommunications service" that
provides transmission of coded radio signals for the purpose of
activating specific pagers and may include messages and/or sounds.
(M) "Pay telephone service" means a "telecommunications
service" provided through any pay telephone.
(N) "Residential telecommunications service" means a
"telecommunications service" or "ancillary services" provided to an
individual for personal use at a residential address, including an
individual dwelling unit such as an apartment. In the case of
institutions where individuals reside, such as schools or nursing
homes, "telecommunications service" is considered residential if it
is provided to and paid for by an individual resident rather than
the institution.
(O) "Value-added nonvoice data service" means a service that
otherwise meets the definition of "telecommunications services" in which computer processing applications are used to act on the form,
content, code or protocol of the information or data primarily for
a purpose other than transmission, conveyance or routing.
(P) "Vertical service" means an "ancillary service" that is
offered in connection with one or more "telecommunications
services" which offers advanced calling features that allow
customers to identify callers and to manage multiple calls and call
connections, including "conference-bridging services".
(Q) "Voice mail service" means an "ancillary service" that
enables the customer to store, send or receive recorded messages.
"Voice mail service" does not include any "vertical services" that
the customer may be required to have in order to utilize the "voice
mail service".
(c) Effective date. -- This section enacted in the year two
thousand six shall apply to purchases made on or after the first
day of July, two thousand six.
§11-15B-10. Seller and third-party liability.
(a) (1) A certified service provider is the agent of a seller,
with whom the certified service provider has contracted, for the
collection and remittance of sales and use taxes. As the seller's
agent, the certified service provider is liable for sales and use
tax due the state on all sales transactions it processes for the
seller except as set out in this section.
(2) A seller that contracts with a certified service provider is not liable to the state for sales or use tax due on transactions
processed by the certified service provider unless the seller
misrepresented the type of items it sells or committed fraud. In
the absence of probable cause to believe that the seller has
committed fraud or made a material misrepresentation, the seller is
not subject to audit on the transactions processed by the certified
service provider. A seller is subject to audit for transactions
not processed by the certified service provider. The member states
acting jointly may perform a system check of the seller and review
the seller's procedures to determine if the certified service
provider's system is functioning properly and the extent to which
the seller's transactions are being processed by the certified
service provider.
(b) A person that provides a certified automated system is
responsible for the proper functioning of that system and is liable
to the state for underpayments of tax attributable to errors in the
functioning of the certified automated system. A seller that uses
a certified automated system remains responsible and is liable to
the state for reporting and remitting tax.
(c) A seller that has a proprietary system for determining the
amount of tax due on transactions and has signed an agreement
establishing a performance standard for that system is liable for
the failure of the system to meet the performance standard.
§11-15B-11. Seller registration under Streamlined Sales and Use Tax Agreement.
(a) General. -- A seller that registers to collect West
Virginia sales and use taxes using the online sales and use tax
registration system established under the Streamlined Sales and Use
Tax Agreement is not required to also register under article twelve
of this chapter unless the seller has sufficient presence in this
state that provides at least the minimum contacts necessary for a
constitutionally sufficient nexus for this state to require
registration and payment of the registration tax under article
twelve of this chapter.
(b) Registration by agent. -- A person appointed by a seller
to represent the seller before the states that are members of the
Streamlined Sales and Use Tax Agreement may register the seller
under the agreement under uniform procedures approved by the
governing board. The appointment of an agent shall be in writing
and submitted to this state if requested by the Tax Commissioner.
(c) Cancellation of registration. -- A seller may cancel its
registration under the system at any time under uniform procedures
adopted by the governing board. Cancellation does not relieve the
seller of its liability for remitting to the state any taxes
collected.
§11-15B-12. Effect of seller registration and participation in
streamlined sales and use tax administration.
(a) Collection of tax. -- By registering under the Streamlined Sales and Use Tax Agreement, the seller agrees to
collect and remit sales and use taxes as levied under articles
fifteen and fifteen-a of this chapter for all taxable sales into
this state as well as for all other states participating in the
agreement. Subsequent withdrawal or revocation of a member state
does not relieve a seller of its responsibility to remit taxes
previously or subsequently collected on behalf of the state.
(b) Effect of registration. -- If the state has withdrawn or
been expelled from the Streamlined Sales and Use Tax Agreement, the
Tax Commissioner may not use registration with the central
registration system and the collection of sales and use taxes in
the member states as a factor in determining whether the seller has
a nexus with the state for any tax at any time.
§11-15B-14. General sourcing definitions.
(a) Definition of receive or receipt. -- For the purposes of
subsection (a), section fifteen of this article, the terms
"receive" and "receipt" mean:
(1) Taking possession of tangible personal property;
(2) Making first use of services; or
(3) Taking possession or making first use of computer software
or digital goods, whichever comes first.
(b) Limitation. -- The terms "receive" and "receipt" do not
include possession by a shipping company on behalf of the
purchaser.
§11-15B-14a. Application of general sourcing rules and exclusion
from the rules.
(a) Sellers shall source the sale of a product in accordance
with section fifteen of this article. The provisions of said
section apply regardless of the characterization of the product as
tangible personal property, computer software or digital goods or
a service. The provisions of said section only apply to determine
a seller's obligation to pay or collect and remit a sales or use
tax with respect to the seller's sale of a product. These
provisions do not affect the obligation of a purchaser or lessee to
remit tax on the use of the product to the taxing jurisdiction of
that use.
(b) Section fifteen of this article does not apply to sales or
use tax levied on telecommunication services as defined in section
two-b of this article. Telecommunication services shall be sourced
in accordance with section nineteen of this article.
§11-15B-15. General transaction sourcing rules.
(a) General rule. -- For purposes of articles fifteen and
fifteen-a of this chapter, the retail sale, excluding lease or
rental, of a product shall be sourced as follows:
(1) When the product is received by the purchaser at a
business location of the seller, the sale is sourced to that
business location.
(2) When the product is not received by the purchaser at a business location of the seller, the sale is sourced to the
location where receipt by the purchaser or the purchaser's
designated donee occurs, including the location indicated by
instructions for delivery to the purchaser or donee, known to the
seller.
(3) When subdivisions (1) and (2) of this subsection do not
apply, the sale is sourced to the location indicated by an address
for the purchaser that is available from the business records of
the seller that are maintained in the ordinary course of the
seller's business when use of this address does not constitute bad
faith.
(4) When subdivisions (1), (2) and (3) of this subsection do
not apply, the sale is sourced to the location indicated by an
address for the purchaser obtained during the consummation of the
sale, including the address of a purchaser's payment instrument, if
no other address is available, provided use of this address does
not constitute bad faith.
(5) When none of the previous subdivisions of this subsection
apply, including the circumstance in which the seller is without
sufficient information to apply the previous rules, then the
location will be determined by the address from which tangible
personal property or computer software was shipped, from which the
digital goods delivered electronically was first available for
transmission by the seller or from which the service was provided: Provided, That any location that merely provided the digital
transfer of the product sold is disregarded for these purposes.
(b) Lease or rental. -- The lease or rental of tangible
personal property or custom software, other than property
identified in subsection (c) or (d) of this section, shall be
sourced as follows:
(1) For a lease or rental that requires recurring periodic
payments, the first periodic payment is sourced the same as a
retail sale in accordance with the provisions of subsection (a) of
this section. Periodic payments made subsequent to the first
payment are sourced to the primary property location for each
period covered by the payment. The primary property location is as
indicated by an address for the property provided by the lessee
that is available to the lessor from its records maintained in the
ordinary course of business, when use of this address does not
constitute bad faith. The property location may not be altered by
intermittent use at different locations, such as use of business
property that accompanies employees on business trips and service
calls.
(2) For a lease or rental that does not require recurring
periodic payments, the payment is sourced the same as a retail sale
in accordance with the provisions of subsection (a) of this
section.
(3) This subsection does not affect the imposition or computation of sales or use tax on leases or rentals based on a
lump sum or accelerated basis or on the acquisition of property for
lease.
(c) Vehicles. -- The lease or rental of motor vehicles,
trailers, semitrailers or aircraft that do not qualify as
transportation equipment, as defined in subsection (d) of this
section, shall be sourced as follows:
(1) For a lease or rental that requires recurring periodic
payments, each periodic payment is sourced to the primary property
location. The primary property location is indicated by an address
for the property provided by the lessee that is available to the
lessor from its records maintained in the ordinary course of
business, when use of this address does not constitute bad faith.
This location shall not be altered by intermittent use at different
locations.
(2) For a lease or rental that does not require recurring
periodic payments, the payment is sourced the same as a retail sale
in accordance with the provisions of subsection (a) of this
section.
(3) This subsection does not affect the imposition or
computation of sales or use tax on leases or rentals based on a
lump sum or accelerated basis or on the acquisition of property for
lease.
(d) Sale or lease or rental of transportation equipment. -- The retail sale, including lease or rental, of transportation
equipment is sourced the same as a retail sale in accordance with
the provisions of subsection (a) of this section, notwithstanding
the exclusion of lease or rental in said subsection.
"Transportation equipment" means any of the following:
(1) Locomotives and railcars that are utilized for the
carriage of persons or property in interstate commerce.
(2) Trucks and truck-tractors with a gross vehicle weight
rating of ten thousand pounds or greater, trailers, semitrailers or
passenger buses that are:
(A) Registered through the international registration plan;
and
(B) Operated under authority of a carrier authorized and
certificated by the United States Department of Transportation or
another federal authority to engage in the carriage of persons or
property in interstate commerce.
(3) Aircraft that are operated by air carriers authorized and
certificated by the United States Department of Transportation or
another federal or foreign authority to engage in the carriage of
persons or property in interstate or foreign commerce.
(4) Containers designed for use on and component parts
attached or secured on the items set forth in subdivisions (1)
through (3), inclusive, of this subsection.
(e) Exceptions. -- Subsections (a) and (b) of this section shall not apply to the following goods or services:
(1) Telecommunications services, ancillary services and
internet access services, as set out in section twenty of this
article, shall be sourced in accordance with section nineteen of
this article; and
(2) Until the first day of January, two thousand ten, a seller
who is primarily engaged in the retail sale of cut flowers and
flower arrangements taking the original order to sell tangible
personal property shall source the sale to the place where order
was taken. For purposes of this exception, "primarily" means more
than fifty percent of the seller's total gross sales or receipts
are derived from that activity. In determining if a seller is
primarily a florist, the total sales price of cut flowers and
floral arrangements includes separately stated delivery or service
charges. After the thirty-first day of December, two thousand
nine, sales by florists shall be subject to the general sourcing
rules stated in subsection (a) of this section.
(f) Product defined. -- As used in subsection (a) of this
section, "product" includes tangible personal property, computer
software or digital goods or a service, or any combination thereof.
§11-15B-18. Relief from certain liability for purchasers.
(a) A purchaser is relieved from liability for penalty to
this state and local jurisdictions of this state for having failed
to pay the correct amount of sales or use tax in the following circumstances:
(1) A purchaser's seller or certified service provider relied
on erroneous data provided by this state on tax rates, boundaries,
taxing jurisdiction assignments or in the taxability matrix
completed by this state pursuant to Section 328 of the Streamlined
Sales and Use Tax Agreement;
(2) A purchaser holding a direct pay permit relied on
erroneous data provided by this state on tax rates, boundaries,
taxing jurisdiction assignments or in the taxability matrix
completed by this state pursuant to Section 328 of the Streamlined
Sales and Use Tax Agreement;
(3) A purchaser relied on erroneous data provided by this
state in the taxability matrix completed by this state pursuant to
Section 328 of the Streamlined Sales and Use Tax Agreement; or
(4) A purchaser using databases pursuant to subdivisions (3),
(4) and (5), subsection (d), section thirty-five of this article
relied on erroneous data provided by this state on tax rates,
boundaries or taxing jurisdiction assignments. After providing
adequate notice as determined by the governing board, this state,
having provided an address-based database for assigning taxing
jurisdictions pursuant to subdivisions (4) and (5), subsection (d),
section thirty-five of this article, shall cease providing
liability relief for errors resulting from the reliance on the
database provided by this state under the provisions of subdivision (3), subsection (d), section thirty-five of this article.
(b) A purchaser is relieved from liability for tax and
interest to this state and its local jurisdictions for having
failed to pay the correct amount of sales or use tax in the
circumstances described in subsection (a) of this section, provided
that, with respect to reliance on the taxability matrix completed
by this state pursuant to Section 328 of the Streamlined Sales and
Use Tax Agreement, relief is limited to the state's erroneous
classification in the taxability matrix of terms included in the
Streamlined Sales and Use Tax Agreement library of definitions as
"taxable" or "exempt", "included in sales price" or "excluded from
sales price" or "included in the definition" or "excluded from the
definition".
(c) For purposes of this section, the term "penalty" means an
amount imposed for noncompliance that is not fraudulent, willful or
intentional which is in addition to the correct amount of sales or
use tax and interest.
§11-15B-19. Telecommunications and related services sourcing rule.
(a) Except for the defined telecommunication services in
subsection (c) of this section, the sale of telecommunication
service sold on a call-by-call basis shall be sourced to: (1) Each
level of taxing jurisdiction where the call originates and
terminates in that jurisdiction; or (2) each level of taxing
jurisdiction where the call either originates or terminates and in which the service address is also located.
(b) Except for the defined telecommunication services in
subsection (c) of this section, a sale of telecommunication service
sold on a basis other than a call-by-call basis is sourced to the
customer's place of primary use.
(c) The sale of the following telecommunication services shall
be sourced to each level of taxing jurisdiction as follows:
(1) A sale of mobile telecommunication service, other than
air-to-ground radiotelephone service and prepaid calling service,
is sourced to the customer's place of primary use, as required by
the Mobile Telecommunications Sourcing Act.
(2) A sale of post-paid calling service is sourced to the
origination point of the telecommunications signal as first
identified by either: The seller's telecommunications system, or
information received by the seller from its service provider, where
the system used to transport the signal is not that of the seller.
(3) A sale of prepaid calling service or a sale of a prepaid
wireless calling service is sourced in accordance with section
fifteen of this article: Provided, That in the case of a sale of a
prepaid wireless calling service, the rule provided in subdivision
(5), subsection (a), section fifteen of this article shall include,
as an option, the location associated with the mobile telephone
number.
(4) A sale of a private communication service is sourced as follows:
(A) Service for a separate charge related to a customer
channel termination point is sourced to each level of jurisdiction
in which the customer channel termination point is located.
(B) Service where all customer termination points are located
entirely within one jurisdiction or levels of jurisdiction is
sourced in the jurisdiction in which the customer channel
termination points are located.
(C) Service for segments of a channel between two customer
channel termination points located in different jurisdictions and
which segment of channel are separately charged is sourced fifty
percent in each level of jurisdiction in which the customer channel
termination points are located.
(D) Service for segments of a channel located in more than one
jurisdiction or levels of jurisdiction and which segments are not
separately billed is sourced in each jurisdiction based on the
percentage determined by dividing the number of customer channel
termination points in the jurisdiction by the total number of
customer channel termination points.
(E) The sale of internet access service is sourced to the
customer's place of primary use.
(F) The sale of an ancillary service is sourced to the
customer's place of primary use.
§11-15B-20. Telecommunication sourcing definitions.
For the purpose of this article, including section nineteen of
this article, the following definitions apply:
(1) "Air-to-ground radiotelephone service" means a radio
service, as that term is defined in 47 CFR 22.99, in which common
carriers are authorized to offer and provide radio
telecommunications service for hire to subscribers in aircraft.
(2) "Ancillary services" means services that are associated
with or incidental to the provision of "telecommunications
services", including, but not limited to, "detailed
telecommunications billing", "directory assistance", "vertical
service" and "voice mail services".
(3) "Call-by-call basis" means any method of charging for
telecommunications services where the price is measured by
individual calls.
(4) "Communications channel" means a physical or virtual path
of communications over which signals are transmitted between or
among customer channel termination points.
(5) "Customer" means the person or entity that contracts with
the seller of telecommunications services. If the end user of
telecommunications services is not the contracting party, the end
user of the telecommunications service is the customer of the
telecommunication service, but this sentence only applies for the
purpose of sourcing sales of telecommunications services under
section nineteen of this article. "Customer" does not include a reseller of telecommunications service or for mobile
telecommunications service of a serving carrier under an agreement
to serve the customer outside the home service provider's licensed
service area.
(6) "Customer channel termination point" means the location
where the customer either inputs or receives the communications.
(7) "End user" means the person who utilizes the
telecommunication service. In the case of an entity, "end user"
means the individual who utilizes the service on behalf of the
entity.
(8) "Home service provider" means the same as that term is
defined in Section 124(5) of Public Law 106-252 (Mobile
Telecommunications Sourcing Act).
(9) "Mobile telecommunications service" means the same as that
term is defined in Section 124 (7) of Public Law 106-252 (Mobile
Telecommunications Sourcing Act).
(10) "Place of primary use" means the street address
representative where the customer's use of the telecommunication
service primarily occurs, which must be the residential street
address or the primary business street address of the customer. In
the case of mobile telecommunications services, "place of primary
use" must be within the licensed service area of the home service
provider.
(11) "Post-paid calling service" means the telecommunication service obtained by making a payment on a call-by-call basis either
through the use of a credit card or payment mechanism such as a
bank card, travel card, credit card or debit card or by charge made
to a telephone number which is not associated with the origination
or termination of the telecommunication service. A post-paid
calling service includes a telecommunication service, except a
prepaid wireless calling service, that would be a prepaid calling
service except it is not exclusively a telecommunication service.
(12) "Prepaid calling service" means the right to access
exclusively telecommunications services, which must be paid for in
advance and which enables the origination of calls using an access
number or authorization code, whether manually or electronically
dialed, and that is sold in predetermined units or dollars of which
the number declines with use in a known amount.
(13) "Prepaid wireless calling service" means a
telecommunications service that provides the right to utilize
mobile wireless service as well as other nontelecommunications
services, including the download of digital products delivered
electronically, content and ancillary services, which must be paid
for in advance that is sold in predetermined units or dollars of
which the number declines with use in a known amount.
(14) "Private communication service" means a telecommunication
service that entitles the customer to exclusive or priority use of
a communications channel or group of channels between or among termination points, regardless of the manner in which the channel
or channels are connected, and includes switching capacity,
extension lines, stations and any other associated services that
are provided in connection with the use of the channel or channels.
(15) "Service address" means:
(A) The location of the telecommunications equipment to which
a customer's call is charged and from which the call originates or
terminates, regardless of where the call is billed or paid;
(B) If the location in paragraph (A) of this subdivision is
not known, service address means the origination point of the
signal of the telecommunications services first identified by
either the seller's telecommunications system or in information
received by the seller from its service provider, where the system
used to transport the signals is not that of the seller; or
(C) If the location in paragraphs (A) and (B) of this
subdivision are not known, then "service address" means the
location of the customer's place of primary use.
§11-15B-24. Administration of exemptions.
(a) General rules. -- When a purchaser claims an exemption
from paying tax under article fifteen or fifteen-a of this chapter:
(1) Sellers shall obtain identifying information of the
purchaser and the reason for claiming a tax exemption at the time
of the purchase, as determined by the governing board.
(2) A purchaser is not required to provide a signature to claim an exemption from tax unless a paper exemption certificate is
used.
(3) The seller shall use the standard form for claiming an
exemption electronically that is adopted by the governing board.
(4) The seller shall obtain the same information for proof of
a claimed exemption regardless of the medium in which the
transaction occurred.
(5) The Tax Commissioner may utilize a system wherein the
purchaser exempt from the payment of the tax is issued an
identification number that is presented to the seller at the time
of the sale.
(6) The seller shall maintain proper records of exempt
transactions and provide the records to the Tax Commissioner or the
Tax Commissioner's designee.
(7) The Tax Commissioner shall administer use-based and
entity-based exemptions when practicable through a direct pay
permit, an exemption certificate or another means that does not
burden sellers.
(8) After the thirty-first day of December, two thousand
seven, in the case of drop shipments, a third-party vendor such as
a drop shipper may claim a resale exemption based on an exemption
certificate provided by its customer/reseller or any other
acceptable information available to the third-party vendor
evidencing qualification for a resale exemption, regardless of whether the customer/reseller is registered to collect and remit
sales and use taxes in this state, when the sale is sourced to this
state.
(b) The Tax Commissioner shall relieve sellers that follow the
requirements of this section from any tax otherwise applicable if
it is determined that the purchaser improperly claimed an exemption
and shall hold the purchaser liable for the nonpayment of tax.
This relief from liability does not apply:
(A) To a seller who fraudulently fails to collect the tax;
(B) To a seller who solicits purchasers to participate in the
unlawful claim of an exemption;
(C) To a seller who accepts an exemption certificate when the
purchaser claims an entity-based exemption when: (i) The subject of
the transaction sought to be covered by the exemption certificate
is actually received by the purchaser at a location operated by the
seller; and (ii) the state in which that location resides provides
an exemption certificate that clearly and affirmatively indicates
(graying out exemption reason types on uniform form and posting it
on a state's website is an indicator) that the claimed exemption is
not available in that state.
(c) Time within which seller must obtain exemption
certificates. -- A seller is relieved from paying tax otherwise
applicable under article fifteen or fifteen-a of this chapter if
the seller obtains a fully completed exemption certificate or captures the required data elements within ninety days subsequent
to the date of sale.
(1) If the seller has not obtained an exemption certificate or
all required data elements, the seller may, within one hundred
twenty days subsequent to a request for substantiation by the Tax
Commissioner, either prove that the transaction was not subject to
tax by other means or obtain a fully completed exemption
certificate from the purchaser, taken in good faith. For purposes
of this section, the Tax Commissioner may continue to apply this
state's standards of good faith until a uniform standard for good
faith is defined in the Streamlined Sales and Use Tax Agreement.
(2) Nothing in this section shall affect the ability of the
Tax Commissioner to require purchasers to update exemption
certificate information or to reapply with the state to claim
certain exemptions.
(3) Notwithstanding the preceding provisions of this section,
when an exemption may be claimed by exemption certificate, a seller
is relieved from paying the tax otherwise applicable if the seller
obtains a blanket exemption certificate from a purchaser with which
the seller has a recurring business relationship. The Tax
Commissioner may not request from the seller renewal of blanket
certificates or updates of exemption certificate information or
data elements when there is a recurring business relationship
between the buyer and seller. For purposes of this subdivision, a recurring business relationship exists when a period of no more
than twelve months elapses between sales transactions.
(d) Exception. - No exemption certificate or direct pay
permit number is required when the sale is exempt per se from the
taxes imposed by articles fifteen and fifteen-a of this chapter.
§11-15B-25. Uniform tax returns.
(a) General. -- A seller who registers with this state is
required to file one sales/use tax return with the Tax Commissioner
for each taxing period.
(b) Due date of return. -- This return shall be due on the
twentieth day of the month following the month in which the
transaction subject to tax occurred.
(c) Additional information returns. -- The Tax Commissioner
shall allow any Model I, Model II or Model III seller to submit its
sales and use tax returns in a simplified format that does not
include more data fields than permitted by the governing board.
The Tax Commissioner may require additional informational returns
to be submitted not more frequently than every six months under a
staggered system developed by the governing board.
(d) The Tax Commissioner shall allow any seller that is
registered with this state under the Streamlined Sales and Use Tax
Agreement which does not have a legal requirement to register in
this state under article twelve of this chapter and is not a Model
I, II or III seller to submit its sales and use tax returns as follows:
(1) Upon registration, the Tax Commissioner shall provide to
the seller the returns required by this state.
(2) The Tax Commissioner may require a seller to file a return
anytime within one year of the month of initial registration and
future returns may be required on an annual basis in succeeding
years.
(3) In addition to the returns required in subdivision (2) of
this subsection, a seller shall submit a return by the twentieth
day of the month following any month in which the seller
accumulated state and local tax funds for the state in the amount
of one thousand dollars or more.
(4) The Tax Commissioner shall participate with other states
that are members of the Streamlined Sales and Use Tax Agreement in
developing a more uniform sales and use tax return that, when
completed, is available to all sellers.
(5) All Model I, II and III sellers shall file returns
electronically after the first day of January, two thousand four.
§11-15B-26. Uniform rules for remittances of funds.
(a) General. -- Only one remittance is required for each
return except as provided in this section.
(b) When electronic remittance required. -- All remittances
from sellers under Models I, II and III shall be remitted
electronically after the thirty-first day of December, two thousand three.
(c) Method of remittance. -- Electronic payments shall be
made using either the ACH credit or ACH debit method.
(d) Alternative method. -- The Tax Commissioner shall provide
by rule, which may be an existing rule, an alternative method for
making "same day" payments if an electronic funds transfer fails.
(e) Format of data accompany remittance. -- Any data that
accompanies a remittance shall be formatted using uniform tax type
and payment type codes approved by the governing board.
§11-15B-27. Uniform rules for recovery of bad debt.
(a) General. -- A deduction from taxable sales is allowed for
bad debts. Any deduction taken that is attributed to bad debts may
not include interest or any amount upon which the sales or use tax
imposed by this state was not previously paid.
(b) "Bad debt" defined. -- The term "bad debt" has the same
meaning as when used in the federal definition of "bad debt" in 26
U. S. C. §166 as the basis for calculating bad debt recovery.
However, the amount calculated pursuant to 26 U. S. C. §166 is
adjusted to exclude:
(1) Financing charges or interest;
(2) Sales or use taxes charged on the purchase price;
(3) Uncollectible amounts on property that remain in the
possession of the seller until the full purchase price is paid;
(4) Expenses incurred in attempting to collect any debt; or
(5) Repossessed property.
(c) When deduction may be taken. -- Bad debts may be deducted
on the return for the period during which the bad debt is written
off as uncollectible in the claimant's books and records and is
eligible to be deducted for federal income tax purposes. For
purposes of this section, a claimant who is not required to file
federal income tax returns may deduct a bad debt on a return filed
for the period in which the bad debt is written off as
uncollectible in the claimant's books and records and would be
eligible for a bad debt deduction for federal income tax purposes
if the claimant was required to file a federal income tax return.
(d) Subsequent recovery. -- If a deduction is taken for a bad
debt and the debt is subsequently collected, in whole or in part,
the tax on the amount collected shall be paid and reported on the
return filed for the period in which the collection is made.
(e) When bad debt deduction exceeds taxable sales. -- When
the amount of bad debt exceeds the amount of taxable sales for the
period during which the bad debt is written off, a refund claim may
be filed within the period specified in section fourteen, article
ten of this chapter, for filing a claim for refund of sales or use
tax, except that the statute of limitations shall be measured from
the due date of the return on which the bad debt could first be
claimed.
(f) When certified service provider is used. -- Where filing responsibilities of the seller have been assumed by a certified
service provider, the certified service provider may claim, on
behalf of the seller, any bad debt allowance provided by this
section. The certified service provider shall credit or refund to
the seller the full amount of any bad debt allowance or refund
received under this section.
(g) Reporting of payment received on previously claimed bad
debt. -- For the purposes of reporting a payment received on a
previously claimed bad debt, any payments made on a debt or account
are applied first proportionally to the taxable price of the
property or service and the sales tax thereon, and secondly to
interest, service charges, and any other charges.
(h) Allocation. -- In situations where the books and records
of the party claiming the bad debt allowance support an allocation
of the bad debts among two or more states that are members of the
Streamlined Sales and Use Tax Agreement, the allocation is
permitted.
§11-15B-28. Confidentiality and privacy protections under Model I.
(a) Purpose. -- The purpose of this section is to set forth
the policy of this state for the protection of the confidentiality
rights of all participants in the streamlined sales and use tax
administration and collection system and of the privacy interests
of consumers who deal with Model I sellers.
(b) Certain terms defined. -- As used in this section:
(1) The term "confidential taxpayer information" means all
information that is protected under section five-d, article ten of
this chapter;
(2) The term "personally identifiable information" means
information that identifies a person; and
(3) The term "anonymous data" means information that does not
identify a person.
(c) Certified service providers. -- With very limited
exceptions, a certified service provider shall perform its tax
calculation, remittance and reporting functions without retaining
the personally identifiable information of consumers.
(d) Certification of service providers. -- The governing
board may certify a service provider only if that certified service
provider certifies that:
(1) Its system has been designed and tested to ensure that the
fundamental precept of anonymity is respected;
(2) That personally identifiable information is only used and
retained to the extent necessary for the administration of Model I
with respect to exempt purchasers;
(3) It provides consumers clear and conspicuous notice of its
information practices, including what information it collects, how
it collects the information, how it uses the information, how long,
if at all, it retains the information and whether it discloses the
information to member states. This notice is satisfied by a written privacy policy statement accessible by the public on the
official website of the certified service provider;
(4) Its collection, use and retention of personally
identifiable information is limited to that required by the states
that are members of the Streamlined Sales and Use Tax Agreement to
ensure the validity of exemptions from taxation that are claimed by
reason of a consumer's status or the intended use of the goods or
services purchased; and
(5) It provides adequate technical, physical and
administrative safeguards as to protect personally identifiable
information from unauthorized access and disclosure.
(e) State notification of privacy policy. -- The Tax
Commissioner shall provide public notification to consumers,
including their exempt purchasers, of this state's practices
relating to the collection, use and retention of personally
identifiable information.
(f) Destruction of confidential information. -- When any
personally identifiable information that has been collected and
retained by the Tax Commissioner is no longer required for the
purposes set forth in subdivision (4), subsection (d) of this
section, the information shall no longer be retained by the Tax
Commissioner.
(g) Review and correction by individuals. -- When personally
identifiable information regarding an individual is retained by or on behalf of the Tax Commissioner, the commissioner shall provide
reasonable access by an individual to his or her own information in
the commissioner's possession and a right to correct any
inaccurately recorded information.
(h) Discovery by other persons. -- If anyone other than the
individual, or a person authorized in writing by the individual, or
by controlling law seeks to discover personally identifiable
information, the Tax Commissioner shall make a reasonable and
timely effort to notify the individual of the request.
(i) Enforcement. -- This privacy policy shall be enforced by
the Tax Commissioner or the Attorney General of this state.
(j) This section shall not be interpreted as limiting or
abrogating any other statutory or regulatory provision of this
state regarding the collection, use and maintenance of confidential
taxpayer information, which provisions remain fully applicable and
binding. This section and the Streamlined Sales and Use Tax
Agreement do not enlarge or limit the authority of this state to:
(1) Conduct audits or other reviews as provided under the
Streamlined Sales and Use Tax Agreement and state law;
(2) Provide records pursuant to the Freedom of Information
Act, disclosure laws with governmental agencies or other laws or
regulations;
(3) Prevent, consistent with state law, disclosures of
confidential taxpayer information;
(4) Prevent, consistent with federal law, disclosures or
misuse of federal return information obtained under a disclosure
agreement with the Internal Revenue Service; or
(5) Collect, disclose, disseminate or otherwise use anonymous
data for governmental purposes.
(k) Service provider's confidentiality policy may be more
restrictive. -- This privacy policy does not preclude the
governing board from certifying a certified service provider whose
privacy policy is more protective of confidential taxpayer
information or personally identifiable information than is required
by the agreement or the laws of this state.
§11-15B-30. Monetary allowances for new technological models for
sales tax collection; delayed effective date.
(a) Monetary allowance under Model I. --
(1) The Tax Commissioner shall provide a monetary allowance to
a certified service provider in Model I. This allowance shall be
in accordance with the terms of the contract between the governing
board of the Streamlined Sales and Use Tax Agreement and the
certified service provider. The details of this monetary allowance
shall be developed and provided through the contract process. The
contract shall provide that the allowance be funded entirely from
money collected in Model I.
(2) The contract between the governing board and the certified
service provider may base the monetary allowance to a certified service provider on one or more of the following:
(A) A base rate that applies to taxable transactions processed
by the certified service provider; or
(B) For a period not to exceed twenty-four months following a
voluntary seller's registration through the agreement's central
registration process, a percentage of tax revenue generated for a
member state by the voluntary seller for each member state for
which the seller does not have a requirement to register to collect
the tax.
(b) Monetary allowance for Model II sellers. -- The monetary
allowance to sellers under Model II may be based on the following:
(1) All sellers shall receive a base rate for a period not to
exceed twenty-four months following the commencement of
participation by a seller. The base rate is set by the governing
board of the Streamlined Sales and Use Tax Agreement after the base
rate has been established for Model I certified service providers.
This allowance is in addition to any vendor or seller discount
afforded by each member state at the time.
(2) A voluntary Model II seller not otherwise required to
register with this state to collect the consumers sales and service
tax and use tax, that registers through the Streamlined Sales and
Use Tax Agreement's central registration process, shall receive for
a period not to exceed twenty-four months following the voluntary
seller's registration, the base rate percentage of tax revenue generated for this state by the voluntary seller.
(3) Following the conclusion of the 24-month period, a seller
will only be entitled to a vendor discount afforded under each
member state's law at the time the base rate expires.
(c) Monetary allowance for Model III sellers and all other
sellers that are not under Model I or II.
A monetary allowance to sellers under Model III and to all
other sellers registered under the agreement that are not sellers
under Model I or II may be allowed based on the following:
(1) For a period not to exceed twenty-four months following a
voluntary seller's registration through the agreement's central
registration process, a percentage of tax revenue generated for a
member state by the voluntary seller for each member state for
which the seller does not have a requirement to register to collect
the tax; and
(2) Vendor discounts afforded under each member state's law.
(d) Prohibition on allowance or payment of monetary
allowances.
Notwithstanding subsections (a), (b) and (c) of this section,
the Tax Commissioner may not allow any vendor, seller or certified
service provider any monetary allowance, discount or other
compensation for collecting and remitting the taxes levied by
articles fifteen and fifteen-a of this chapter, or for making and
filing the periodic reports required by this article, or articles fifteen and fifteen-a of this chapter, until the cost of collection
study required by the agreement is completed and the monetary
allowances are based on the results of that study, or on
requirements of federal law requiring remote sellers to collect
sales and use taxes for states that have signed the agreement.
§11-15B-32. Effective date.
(a) The provisions of this article, as amended or added during
the regular legislative session in the year two thousand three,
shall take effect the first day of January, two thousand four, and
apply to all sales made on or after that date and to all returns
and payments due on or after that day, except as otherwise
expressly provided in section five of this article.
(b) The provisions of this article, as amended or added during
the second extraordinary legislative session in the year two
thousand three, shall take effect the first day of January, two
thousand four, and apply to all sales made on or after that date.
(c) The provisions of this article, as amended or added by Act
of the Legislature in the year two thousand four, shall apply to
all sales made on or after the date of passage in the year two
thousand four.
(d) The provisions of this article, as amended or added during
the regular legislative session in the year two thousand eight,
shall apply to all sales made on or after the date of passage and
to all returns and payments due on or after that day, except as otherwise expressly provided in this article.