COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 540
(By Senators Helmick and McCabe)
____________
[Originating in the Committee on Finance;
reported March 19, 2009.]
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A BILL to amend and reenact §11-6I-3 and §11-6I-5 of the Code of
West Virginia, 1931, as amended; to amend and reenact §11-10-
5e of said code; to amend said code by adding thereto a new
section, designated §11-10-25; to amend and reenact §11-13Q-22
of said code; to amend and reenact §11-15-3c of said code; to
amend said code by adding thereto a new section, designated
§11-15-9m; to amend and reenact §11-21-21, §11-21-22 and §11-
21-23 of said code; to amend and reenact §11-24-3a and §11-24-
4b of said code; and to amend and reenact §21A-6-1c of said
code, all relating to taxation; specifying authority of the
Tax Commissioner to designate Tax Division documents that may
be sent by personal service, United States postal service,
regular mail, certified mail or registered mail or other
means; specifying statutory burden of proof and presumption
against tax exemptions; specifying inflation adjustment for certain economic opportunity tax credit entitlement
requirements; specifying exclusion of sales and use of certain
motor vehicles and certain trailers and classes of vehicle and
vehicular apparatus from state consumers sales and use tax on
certain vehicles; specifying exclusion of sales and use of
certain motor vehicles and certain trailers and classes of
vehicle and vehicular apparatus from municipal and local
consumers sales and service tax and use tax, or special
downtown redevelopment district excise tax, or special
district excise tax and other sales taxes; authorizing
discretionary designation of per se exemptions from the
consumers sales and service tax and use tax by the Tax
Commissioner; specifying exclusion of federal alternative
minimum income taxpayers from eligibility for property tax
payment deferment and assessor's denial of deferment;
disqualifying persons who pay the federal alternative minimum
income tax in specified years from qualification for the
senior citizens' tax credit; disqualifying persons who pay the
federal alternative minimum income tax in specified years from
qualification for the low-income family tax credit;
disqualifying persons who pay the federal alternative minimum
income tax in specified years from qualification for the
refundable tax credit for real property taxes paid in excess
of four percent of income; defining terms; specifying treatment of certain income and deduction items for certain
regulated investment companies and real estate investment
companies; authorizing state income tax withholding from the
individual's payment of unemployment compensation; specifying
effective dates; and making technical corrections.
Be it enacted by the Legislature of West Virginia:
That §11-6I-3 and §11-6I-5 of the Code of West Virginia, 1931,
as amended, be amended and reenacted; that §11-10-5e of said code
be amended and reenacted; that said code be amended by adding
thereto a new section, designated §11-10-25; that §11-13Q-22 of
said code be amended and reenacted; that §11-15-3c of said code be
amended and reenacted; that said code be amended by adding thereto
a new section, designated §11-15-9m; that §11-21-21, §11-21-22 and
§11-21-23 of said code be amended and reenacted; that §11-24-3a and
§11-24-4b of said code be amended and reenacted; and that §21A-6-1c
of said code be amended and reenacted, all to read as follows:
CHAPTER 11. TAXATION.
ARTICLE 6I. SENIOR CITIZEN PROPERTY TAX PAYMENT DEFERMENT ACT.
§11-6I-3. Property tax payment deferment.
(a) The following homesteads shall qualify for the deferment
provided in subsection
(b) (c) of this section:
(1) Any homestead owned by an owner sixty-five years of age or
older and used and occupied exclusively for residential purposes by
such the owner; and
(2) Any homestead that:
(A) Is owned by an owner sixty-five years of age or older who,
as a result of illness, accident or infirmity, is residing with a
family member or is a resident of a nursing home, personal care
home, rehabilitation center or similar facility;
(B) Was most recently used and occupied exclusively for
residential purposes by the owner or the owner's spouse; and
(C) Has been retained by the owner for noncommercial purposes.
(b) A homestead which is owned, in whole or in part, by any
person who is required to pay the federal alternative minimum
income tax in the current tax year, or who was required to pay the
federal alternative minimum income tax in the tax year immediately
preceding the current tax year, is disqualified from the deferment
provided in this article.
(b) (c) (1) For tax years commencing on or after January 1,
2009, the owner of a homestead meeting the qualifications set forth
in subsection (a) of this section may apply for a deferment in the
payment of the tax increment of ad valorem taxes assessed under the
authority of article three of this chapter on the homestead
:
Provided, That the deferment may be authorized only when the tax
increment is the greater of $300 or ten percent or more:
Provided,
however, That all deferred taxes are not subject to any rate of
interest.
(2) In lieu of the deferment of the tax increment authorized pursuant to this article, a taxpayer entitled to
such the deferment
may elect to instead apply the senior citizen property tax relief
credit authorized under section twenty-four, article twenty-one of
this chapter. Any taxpayer making such election shall be fully
subject to the terms and limitations set forth in section twenty-
four, article twenty-one of this chapter:
Provided, That for tax
years beginning on and after January 1, 2009, no credit shall be
allowed under the provisions of this subdivision or under section
twenty-four, article twenty-one of this chapter.
§11-6I-5. Determination; notice of denial of application for
deferment.
(a) The assessor shall, as soon as practicable after an
application for deferment is filed, review that application and
either approve or deny it. The assessor shall approve or
disapprove an application for deferment within thirty days of
receipt. Any application not approved or denied within thirty days
is deemed approved. If the application is denied, the assessor
shall promptly, but not later than January 1, serve the owner with
written notice explaining why the application was denied and
furnish a form for filing with the county commission, should the
owner desire to take an appeal. The notice required or authorized
by this section shall be served on the owner or his or her
authorized representative either by personal service or by
certified mail.
(b) In the event that the assessor has information sufficient
to form a reasonable belief that an owner, after having been
originally granted a deferment, is no longer eligible for the
deferment, he or she shall, within thirty days after forming this
reasonable belief, revoke the deferment and serve the owner with
written notice explaining the reasons for the revocation and
furnish a form for filing with the county commission should the
owner desire to take an appeal.
(c) The assessor shall deny any application made by or for an
owner who is required to pay the federal alternative minimum income
tax in the current tax year or who was required to pay the federal
alternative minimum income tax in the tax year immediately
preceding the current tax year. The application may contain an
affirmation, prescribed by the Tax Commissioner, whereby the
applicant shall indicate whether the applicant is required to pay
the federal alternative minimum income tax in the current tax year
or was required to pay the federal alternative minimum income tax
in the tax year immediately preceding the current tax year.
Failure to truthfully indicate whether the applicant is required to
pay the federal alternative minimum income tax in the current tax
year and failure to indicate whether the applicant was required to
pay the federal alternative minimum income tax in the tax year
immediately preceding the current tax year shall be subject to the
applicable penalties of articles nine and ten of this chapter.
ARTICLE 10. TAX PROCEDURE AND ADMINISTRATION ACT.
§11-10-5e. Service of notice.
Notwithstanding any other provision of this code, the Tax
Commissioner may designate those assessments, notices, statements
of account or other Tax Division documents which shall be sent by
personal service or United States Postal Service regular mail, or
certified mail or registered mail or by any other means at the
discretion of the Tax Commissioner, pursuant to any provision of
this chapter. Notices of assessments and administrative decisions
shall be served upon the taxpayer either by personal or substituted
service or by certified mail. Service of notice by personal or
substituted service shall be valid if made by any method authorized
by Rule 4 of the West Virginia Rules of Civil Procedure. Service
Any service of notice addressed by United States Postal Service
regular mail is presumed to be accepted upon mailing unless proven
otherwise by the taxpayer. Any service of notice by certified mail
shall be valid if accepted by the taxpayer or if addressed to and
mailed to the taxpayer's usual place of business or usual place of
abode or last known address and accepted by any officer, partner,
employee, spouse or child of the taxpayer over the age of eighteen.
Any notice addressed and mailed in the above manner and accepted by
any person shall be presumed to be accepted by such person unless
proven otherwise by the taxpayer.
Any notice addressed and mailed
in the above manner, and which is refused or not claimed, may then be served by regular mail if such notice is subsequently mailed by
first class mail, postage prepaid, to the same address; and date of
posting in the United States mail shall be the date of service.
§11-10-25. Taxpayer must show tax exemption applies; presumption.
(a) The burden of proving that a tax exemption applies to any
tax administered by the Tax Commissioner shall be upon the
taxpayer. Tax exemptions administered by the Tax Commissioner
shall be strictly construed against the taxpayer and for the
payment of any applicable tax.
(b) To prevent evasion, it is presumed that a tax exemption
does not apply until the contrary is clearly established by clear
and convincing evidence.
ARTICLE 13Q. ECONOMIC OPPORTUNITY TAX CREDIT.
§11-13Q-22. Credit available for taxpayers which do not satisfy
the new jobs percentage requirement.
(a) Notwithstanding any provision of this article to the
contrary, a taxpayer engaged in one or more of the industries or
business activities specified in section nineteen of this article
which does not satisfy the new jobs percentage requirement
prescribed in subsection (c), section nine of this article or, if
the taxpayer is a small business as defined in section ten of this
article, does not create at least ten new jobs within twelve months
after placing qualified investment into service as required by
section ten of this article, but which otherwise fulfills the requirements prescribed in this article, is permitted to claim a
credit against the taxes specified in section seven of this article
in the order so specified that are attributable to and the
consequence of the taxpayer's business operations in this state
which result in the creation of net new jobs. Credit under this
section is allowed in the amount of $3,000 per year, per new job
created and filled by a new employee, as those terms are defined in
section three of this article for a period of five consecutive
years beginning in the tax year when the new employee is first
hired. In no case may the number of new employees determined for
purposes of this section exceed the total net increase in the
taxpayer's employment in this state. Credit allowed under this
section shall be allowed beginning in the tax year when the new
employee is first hired:
Provided, That each new job:
(1) Pays at least $32,000 annually.
Beginning January 1,
2010, and on January 1 of each year thereafter, the commissioner
shall prescribe an amount that shall apply in lieu of the $32,000
amount during that calendar year. This amount is prescribed by
increasing the $32,000 figure by the cost-of-living adjustment for
that calendar year;
(2) Provides health insurance and may offer benefits including
child care, retirement or other benefits; and
(3) Is a full-time, permanent position, as those terms are
defined in section three of this article.
Jobs that pay less than $32,000 annually,
or less than the
amount prescribed by the commissioner pursuant to subdivision (1)
of this subsection, whichever is higher, or that pay that salary
but do not also provide benefits in addition to the salary do not
qualify for the credit authorized by this section. Jobs that are
less than full-time, permanent positions do not qualify for the
credit authorized by this section.
(b) For purposes of this section, the following definitions
apply:
(1) Cost-of-living adjustment. -- For purposes of subsection
(a) of this section, the cost-of-living adjustment for any calendar
year is the percentage (if any) by which the consumer price index
for the preceding calendar year exceeds the consumer price index
for the calendar year 2009.
(2) Consumer price index for any calendar year. -- For
purposes of subdivision (1) of this subsection, the consumer price
index for any calendar year is the average of the federal consumer
price index as of the close of the twelve-month period ending on
August 31 of that calendar year.
(3) Consumer price index. -- For purposes of subdivision (2)
of this subsection, the term "Federal Consumer Price Index" means
the most recent consumer price index for all urban consumers
published by the United States Department of Labor.
(4) Rounding. -- If any increase under subdivision (1) of this subsection is not a multiple of $50, the increase shall be rounded
to the next lowest multiple of $50.
(b) (c) Unused credit remaining in any tax year after
application against the taxes specified in section seven of this
article is forfeited and does not carry forward to any succeeding
tax year and does not carry back to a prior tax year.
(c) (d) The tax credit authorized by this section may be taken
in addition to any credits allowable under article thirteen-c,
thirteen-d, thirteen-e, thirteen-f, thirteen-g, thirteen-j,
thirteen-r or thirteen-s of this chapter.
(d) (e) Reduction in number of employees credit forfeiture. --
If, during the year when a new job was created for which credit was
granted under this section or during any of the next succeeding
four tax years thereafter, net jobs that are attributable to and
the consequence of the taxpayer's business operations in this state
decrease, counting both new jobs for which credit was granted under
this section and preexisting jobs, then the total amount of credit
to which the taxpayer is entitled under this section shall be
decreased and forfeited in the amount of $3,000 for each net job
lost.
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-3c. Imposition of consumers sales tax on motor vehicle
sales; rate of tax; use of motor vehicle purchased
out of state; definition of sale; definition of motor vehicle; exemptions; collection of tax by
Division of Motor Vehicles; dedication of tax to
highways; legislative and emergency rules.
(a) Notwithstanding any provision of this article or article
fifteen-a of this chapter to the contrary, beginning on July 1,
2008, all motor vehicle sales to West Virginia residents shall be
subject to the consumers sales tax imposed by this article.
(b)
Rate of tax on motor vehicles. -- Notwithstanding any
provision of this article or article fifteen-a of this chapter to
the contrary, the rate of tax on the sale and use of a motor
vehicle shall be five percent of its sale price, as defined in
section two, article fifteen-b of this chapter:
Provided, That so
much of the sale price or consideration as is represented by the
exchange of other vehicles on which the tax imposed by this section
or section four, article three, chapter seventeen-a of this code
has been paid by the purchaser shall be deducted from the total
actual sale price paid for the motor vehicle, whether the motor
vehicle be new or used.
(c)
Motor vehicles purchased out of state. -- Notwithstanding
this article or article fifteen-a to the contrary, the tax imposed
by this section shall apply to all motor vehicles, used as defined
by section one, article fifteen-a of this chapter, within this
state, regardless of whether the vehicle was purchased in a state
other than West Virginia.
(d)
Definition of sale. -- Notwithstanding any provision of
this article or article fifteen-a of this chapter to the contrary,
for purposes of this section, "sale", "sales" or "selling" means
any transfer or lease of the possession or ownership of a motor
vehicle for consideration, including isolated transactions between
individuals not being made in the ordinary course of repeated and
successive business and also including casual and occasional sales
between individuals not conducted in a repeated manner or in the
ordinary course of repetitive and successive transactions.
(e)
Definition of motor vehicle. -- For purposes of this
section, "motor vehicle" means every propellable device in or upon
which any person or property is or may be transported or drawn upon
a highway including, but not limited to: Automobiles; buses; motor
homes; motorcycles; motorboats; all-terrain vehicles; snowmobiles;
low-speed vehicles; trucks, truck tractors and road tractors having
a weight of less than fifty-five thousand pounds; trailers,
semitrailers, full trailers, pole trailers and converter gear
having a gross weight of less than two thousand pounds; and
motorboat trailers, fold-down camping trailers, traveling trailers,
house trailers and motor homes; except that the term "motor
vehicle" does not include: Modular homes, manufactured homes,
mobile homes, similar nonmotive propelled vehicles susceptible of
being moved upon the highways but primarily designed for habitation
and occupancy; devices operated regularly for the transportation of persons for compensation under a certificate of convenience and
necessity or contract carrier permit issued by the Public Service
Commission; mobile equipment as defined in section one, article
one, chapter seventeen-a of this code; special mobile equipment as
defined in said section; trucks, truck tractors and road tractors
having a gross weight of fifty-five thousand pounds or more;
trailers, semitrailers, full trailers, pole trailers and converter
gear having weight of two thousand pounds or greater:
Provided,
That notwithstanding the provisions of section nine, article
fifteen, chapter eleven of this code, the exemption from tax under
this section for mobile equipment as defined in section one,
article one, chapter seventeen-a of this code; special mobile
equipment defined in said section; Class B trucks, truck tractors
and road tractors registered at a gross weight of fifty-five
thousand pounds or more; and Class C trailers, semitrailers, full
trailers, pole trailers and converter gear having weight of two
thousand pounds or greater does not subject the sale or purchase of
the vehicle to the consumer sales and service tax imposed by
section three of this article.
(f)
Exemptions. -- Notwithstanding any other provision of this
code to the contrary, the tax imposed by this section shall not be
subject to any exemption in this code other than the following:
(1) The tax imposed by this section does not apply to any
passenger vehicle offered for rent in the normal course of business by a daily passenger rental car business as licensed under the
provisions of article six-d,
of this chapter
seventeen-a of this
code. For purposes of this section, a daily passenger car means a
motor vehicle having a gross weight of eight thousand pounds or
less and is registered in this state or any other state. In lieu
of the tax imposed by this section, there is hereby imposed a tax
of not less than $1 nor more than $1.50 for each day or part of the
rental period. The Commissioner of Motor Vehicles shall propose an
emergency rule in accordance with the provisions of article three,
chapter twenty-nine-a of this code to establish this tax.
(2) The tax imposed by this section does not apply where the
motor vehicle has been acquired by a corporation, partnership or
limited liability company from another corporation, partnership or
limited liability company that is a member of the same controlled
group and the entity transferring the motor vehicle has previously
paid the tax on that motor vehicle imposed by this section. For
the purposes of this section, control means ownership, directly or
indirectly, of stock or equity interests possessing fifty percent
or more of the total combined voting power of all classes of the
stock of a corporation or equity interests of a partnership or
limited liability company entitled to vote or ownership, directly
or indirectly, of stock or equity interests possessing fifty
percent or more of the value of the corporation, partnership or
limited liability company.
(3) The tax imposed by this section does not apply where motor
vehicle has been acquired by a senior citizen service organization
which is exempt from the payment of income taxes under the United
States Internal Revenue Code, Title 26 U. S. C. §501(c)(3) and
which is recognized to be a bona fide senior citizen service
organization by the Bureau of Senior Services existing under the
provisions of article five, chapter sixteen of this code.
(4) The tax imposed by this section does not apply to any
active duty military personnel stationed outside of West Virginia
who acquires a motor vehicle by sale within nine months from the
date the person returns to this state.
(5) The tax imposed by this section does not apply to motor
vehicles acquired by registered dealers of this state for resale
only.
(6) The tax imposed by this section does not apply to motor
vehicles acquired by this state or any political subdivision
thereof or by any volunteer fire department or duly chartered
rescue or ambulance squad organized and incorporated under the laws
of this state as a nonprofit corporation for protection of life or
property.
(7) The tax imposed by this section does not apply to motor
vehicles acquired by an urban mass transit authority, as defined in
article twenty-seven, chapter eight of this code, or a nonprofit
entity exempt from federal and state income tax under the Internal Revenue Code for the purpose of providing mass transportation to
the public at large or designed for the transportation of persons
and being operated for the transportation of persons in the public
interest.
(8) The tax imposed by this section does not apply to the
registration of a vehicle owned and titled in the name of a
resident of this state if the applicant:
(A) Was not a resident of this state at the time the applicant
purchased or otherwise acquired ownership of the vehicle;
(B) Presents evidence as the Commissioner of Motor Vehicles
may require of having titled the vehicle in the applicant's
previous state of residence;
(C) Has relocated to this state and can present such evidence
as the Commissioner of Motor Vehicles may require to show bona fide
residency in this state;
and
(D) Presents an affidavit, completed by the assessor of the
applicant's county of residence, establishing that the vehicle has
been properly reported and is on record in the office of the
assessor as personal property; and
(E) (D) Makes application to the Division of Motor Vehicles
for a title and registration and pays all other fees required by
chapter seventeen-a of this code within thirty days of establishing
residency in this state as prescribed in subsection (a), section
one-a of this article.
(9) On and after January 1, 2009, the tax imposed by this
section does not apply to Class B trucks, truck tractors and road
tractors registered at a gross weight of fifty-five thousand pounds
or more or to Class C trailers, semitrailers, full trailers, pole
trailers and converter gear having a weight of two thousand pounds
or greater. If an owner of a vehicle has previously titled the
vehicle at a declared gross weight of fifty-five thousand pounds or
more and the title was issued without the payment of the tax
imposed by this section, then before the owner may obtain
registration for the vehicle at a gross weight less than fifty-five
thousand pounds, the owner shall surrender to the commissioner the
exempted registration, the exempted certificate of title and pay
the tax imposed by this section based upon the current market value
of the vehicle.
(10) The tax imposed by this section does not apply to
vehicles leased by residents of West Virginia. On or after
January 1, 2009, a tax is imposed upon the monthly payments for the
lease of any motor vehicle leased under a written contract of lease
by a resident of West Virginia for a contractually specified
continuous period of more than thirty days, which tax is equal to
five percent of the amount of the monthly payment, applied to each
payment, and continuing for the entire term of the initial lease
period. The tax shall be remitted to the Division of Motor
Vehicles on a monthly basis by the lessor of the vehicle. Leases of thirty days or less are taxable under the provisions of this
article and article fifteen-a of this chapter without reference to
this section.
(g)
Division of Motor Vehicles to collect.-- Notwithstanding
any provision of this article and articles fifteen-a and ten of
this chapter to the contrary, the Division of Motor Vehicles shall
collect the tax imposed by this section:
Provided, That such tax
is imposed upon the monthly payments for the lease of any motor
vehicle leased by a resident of West Virginia, which tax is equal
to five percent of the amount of the monthly payment, applied to
each payment, and continuing for the entire term of the initial
lease period. The tax shall be remitted to the Division of Motor
Vehicles on a monthly basis by the lessor of the vehicle.
(h)
Dedication of tax to highways. -- Notwithstanding any
provision of this article or article fifteen-a of this chapter to
the contrary, all taxes collected pursuant to this section, after
deducting the amount of any refunds lawfully paid, shall be
deposited in the State Road Fund in the State Treasury and expended
by the Commissioner of Highways for design, maintenance and
construction of roads in the state highway system.
(i)
Legislative rules; emergency rules. -- Notwithstanding any
provision of this article and articles fifteen-a and ten of this
chapter to the contrary, the Commissioner of Motor Vehicles shall
promulgate legislative rules explaining and implementing this section, which rules shall be promulgated in accordance with the
provisions of article three, chapter twenty-nine-a of this code and
should include a minimum taxable value and set forth instances when
a vehicle is to be taxed at fair market value rather than its
purchase price. The authority to promulgate rules includes
authority to amend or repeal those rules. If proposed legislative
rules for this section are filed in the State Register before
June 15, 2008, those rules may be promulgated as emergency
legislative rules as provided in article three of said chapter
twenty-nine-a.
(j) Notwithstanding any other provision of this code,
effective January 1, 2009, no municipal sales or use tax or local
sales or use tax or special downtown redevelopment district excise
tax or special district excise tax shall be imposed under article
twenty-two, chapter seven of this code or article thirteen, chapter
eight of this code or article thirteen-b of said chapter or article
thirty-eight of said chapter or any other provision of this code,
except this section, on sales of motor vehicles as defined in this
article or on any tangible personal property excepted or exempted
from tax under this section. Nothing in this subsection shall be
construed to prevent the application of the municipal business and
occupation tax on motor vehicle retailers and leasing companies.
§11-15-9m. Discretionary designation of per se exemptions.
Notwithstanding any other provision of this code, the Tax Commissioner may, by rule, specify those exemptions authorized in
this article or in other provisions of this code or applicable
federal law for which exemption certificates or direct pay permits
are not required.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-21. Senior citizens' tax credit for property tax paid on
first $10,000 of taxable assessed value of a
homestead in this state; tax credit for property tax
paid on the first
$20,000 of value for property tax
years after December 31, 2006.
(a)
Allowance of credit. --
(1) A low-income person who is allowed a $20,000 homestead
exemption from the assessed value of his or her homestead for ad
valorem property tax purposes, as provided in section three,
article six-b of this chapter, shall be allowed a refundable credit
against the taxes imposed by this article equal to the amount of ad
valorem property taxes paid on up to the first $10,000 of taxable
assessed value of the homestead for property tax years that begin
on or after January 1, 2003, except as provided in subdivision (2)
of this subsection.
(2) For tax years beginning on or after January 1, 2007, a
low-income person who is allowed a $20,000 homestead exemption from
the assessed value of his or her homestead for ad valorem property
tax purposes, as provided in section three, article six-b of this chapter, shall be allowed a refundable credit against the taxes
imposed by this article equal to the amount of ad valorem property
taxes paid on up to the first $20,000 of taxable assessed value of
the homestead for property tax years that begin on or after
January 1, 2007:
Provided, That for tax years beginning on and
after January 1, 2009, any person who is required to pay the
federal alternative minimum income tax in the current tax year or
who was required to pay the federal alternative minimum income tax
in the tax year immediately preceding the current tax year is
disqualified from receiving any tax credit provided under this
section.
(3) Due to the administrative cost of processing, the
refundable credit authorized by this section may not be refunded if
less than $10.
(4) The credit for each property tax year shall be claimed by
filing a claim for refund within three years after the due date for
the personal income tax return upon which the credit is first
available.
(b)
Terms defined. --
For purposes of this section:
(1) "Low income" means federal adjusted gross income for the
taxable year that is one hundred fifty percent or less of the
federal poverty guideline for the year in which property tax was
paid, based upon the number of individuals in the family unit residing in the homestead, as determined annually by the United
States Secretary of Health and Human Services.
(2) (A) For tax years beginning before January 1, 2007, "taxes
paid" means the aggregate of regular levies, excess levies and bond
levies extended against not more than $10,000 of the taxable
assessed value of a homestead that are paid during the calendar
year determined after application of any discount for early payment
of taxes but before application of any penalty or interest for late
payment of property taxes for a property tax year that begins on or
after January 1, 2003, except as provided in paragraph (B) of this
subdivision.
(B) For tax years beginning on or after January 1, 2007,
"taxes paid" means the aggregate of regular levies, excess levies
and bond levies extended against not more than $20,000 of the
taxable assessed value of a homestead that are paid during the
calendar year determined after application of any discount for
early payment of taxes but before application of any penalty or
interest for late payment of property taxes for a property tax year
that begins on or after January 1, 2007.
(c)
Legislative rule. --
The Tax Commissioner shall propose a legislative rule for
promulgation as provided in article three, chapter twenty-nine-a of
this code to explain and implement this section.
(d)
Confidentiality. --
The Tax Commissioner shall utilize property tax information in
the statewide electronic data processing system network to the
extent necessary for the purpose of administering this section,
notwithstanding any provision of this code to the contrary.
§11-21-22. Low-income family tax credit.
In order to eliminate West Virginia personal income tax on
families with incomes below the federal poverty guidelines and to
reduce the West Virginia personal income tax on families with
incomes that are immediately above the federal poverty guidelines,
there is hereby created a nonrefundable tax credit, to be known as
the low-income family tax credit, against the West Virginia
personal income tax. The low-income family tax credit is based
upon family size and the federal poverty guidelines.
and The low-
income tax credit reduces the tax imposed by the provisions of this
article on families with modified federal adjusted gross income
below or near the federal poverty guidelines:
Provided, That for
tax years beginning on and after January 1, 2009, any person who is
required to pay the federal alternative minimum income tax in the
current tax year or who was required to pay the federal alternative
minimum income tax in the tax year immediately preceding the
current tax year is disqualified from receiving any tax credit
provided under this section.
§11-21-23. Refundable credit for real property taxes paid in
excess of four percent of income.
(a) For the tax years beginning on or after January 1, 2008,
any homeowner living in his or her homestead shall be allowed a
refundable credit against the taxes imposed by this article equal
to the amount of real property taxes paid in excess of four percent
of their income. If the refundable credit provided in this section
exceeds the amount of taxes imposed by this article, the state
Department of Revenue shall refund that amount to the homeowner.
(b) Due to the administrative cost of processing, the
refundable credit authorized by this section may not be refunded if
less than $10.
(c) The credit for each property tax year shall be claimed by
filing a claim for refund within twelve months after the real
property taxes are paid on the homestead.
(d) For the purposes of this section:
(1) "Gross household income" is defined as federal adjusted
gross income plus the sum of the following:
(A) Modifications in subsection (b), section twelve of this
article increasing federal adjusted gross income;
(B) Federal tax-exempt interest reported on federal tax
return;
(C) Workers' compensation and loss of earnings insurance; and
(D) Nontaxable Social Security benefits; and
(2) For the tax years beginning before January 1, 2008, "real
property taxes paid" means the aggregate of regular levies, excess levies and bond levies extended against the homestead that are paid
during the calendar year and determined after any application of
any discount for early payment of taxes but before application of
any penalty or interest for late payment of property taxes for
property tax years that begin on or after January 1, 2008.
(e) A homeowner is eligible to benefit from this section or
section twenty-one of this article, whichever section provides the
most benefit as determined by the homeowner. No homeowner may
receive benefits under both this section and section twenty-one of
this article during the same taxable year.
For tax years beginning
on and after January 1, 2009, any person who is required to pay the
federal alternative minimum income tax in the current tax year or
who was required to pay the federal alternative minimum income tax
in the tax year immediately preceding the current tax year is
disqualified from receiving any tax credit provided under this
section. Nothing in this section denies those entitled to the
homestead exemption provided in section three, article six-b of
this chapter.
(f) No homeowner may receive a refundable tax credit imposed
by this article in excess of $1,000. This amount shall be reviewed
annually by the Legislature to determine if an adjustment is
necessary.
ARTICLE 24. CORPORATION NET INCOME TAX.
§11-24-3a. Specific terms defined.
(a) For purposes of this article:
(1) Aggregate effective rate of tax.-- The term "aggregate
effective rate of tax" shall mean the sum of the effective rates of
tax imposed by a state or United States possession or any
combination thereof on a related member.
(1) (2) Business income.-- The term "business income" means
income arising from transactions and activity in the regular course
of the taxpayer's trade or business and includes income from
tangible and intangible property if the acquisition, management and
disposition of the property or the rendering of services in
connection therewith constitute integral parts of the taxpayer's
regular trade or business operations and includes all income which
is apportionable under the Constitution of the United States.
(3) Captive real estate investment trust. -- The term "captive
real estate investment trust" shall mean a real estate investment
trust, the shares or beneficial interests of which:
(A) Are not regularly traded on an established securities
market and:
(B) Are more than fifty percent of the voting power or value
of the beneficial interests or shares of which are owned or
controlled, directly or indirectly or constructively, by a single
entity that is:
(i) Treated as an association taxable as a corporation under
the Internal Revenue Code of 1986, as amended; and
(ii) Not exempt from federal income tax pursuant to the
provisions of Section 501(a) of the Internal Revenue Code of 1986,
as amended:
(C) For purposes of applying subparagraph (i), paragraph (B)
of this subdivision, the following entities are not considered an
association taxable as a corporation:
(i) Any real estate investment trust as defined in paragraph
(31), other than a "captive real estate investment trust;"
(ii) Any qualified real estate investment trust subsidiary
under Section 856(i) of the Internal Revenue Code of 1986, as
amended, other than a qualified real estate investment trust
subsidiary of a "captive real estate investment trust";
(iii) Any listed Australian property trust, meaning an
Australian unit trust registered as a "managed investment scheme"
under the Australian Corporations Act in which the principal class
of units is listed on a recognized stock exchange in Australia and
is regularly traded on an established securities market, or an
entity organized as a trust, provided that a listed Australian
property trust owns or controls, directly or indirectly, seventy-
five percent or more of the voting power or value of the beneficial
interests or shares of the trust; or
(iv) Any qualified foreign entity, meaning a corporation,
trust, association or partnership organized outside the laws of the
United States and which satisfies the following criteria:
(1) At least seventy-five percent of the entity's total asset
value at the close of its taxable year is represented by real
estate assets as defined in Section 856(c)(5)(B) of the Internal
Revenue Code of 1986, as amended, thereby including shares or
certificates of beneficial interest in any real estate investment
trust, cash and cash equivalents and United States Government
securities;
(2) The entity is not subject to tax on amounts distributed to
its beneficial owners or is exempt from entity-level taxation;
(3) The entity distributes at least eighty-five percent of its
taxable income as computed in the jurisdiction in which it is
organized to the holders of its shares or certificates of
beneficial interest on an annual basis;
(4) Not more than ten percent of the voting power or value in
the entity is held directly or indirectly or constructively by a
single entity or individual or the shares or beneficial interests
of the entity are regularly traded on an established securities
market; and
(5) The entity is organized in a country which has a tax
treaty with the United States.
(D) A real estate investment trust that is intended to be
regularly traded on an established securities market, and that
satisfies the requirements of Section 856(a)(5) and (6) of the U.
S. Internal Revenue Code by reason of Section 856(h)(2) of the Internal Revenue Code is not considered a captive real estate
investment trust within the meaning of this section.
(E) A real estate investment trust that does not become
regularly traded on an established securities market within one
year of the date on which it first becomes a real estate investment
trust is not considered not to have been regularly traded on an
established securities market, retroactive to the date it first
became a real estate investment trust, and shall file an amended
return reflecting the retroactive designation for any tax year or
part year occurring during its initial year of status as a real
estate investment trust. For purposes of this section, a real
estate investment trust becomes a real estate investment trust on
the first day that it has both met the requirements section 856 of
the Internal Revenue Code and has elected to be treated as a real
estate investment trust pursuant to Section 856(c)(1) of the
Internal Revenue Code.
(2) Business income. (4) Combined group. -- The term
"combined group" means the group of all persons whose income and
apportionment factors are required to be taken into account
pursuant to subsection
(a) or (b) (j) or (k), section thirteen-a of
this article in determining the taxpayer's share of the net
business income or loss apportionable to this state.
(3) (5) Commercial domicile.-- The term "commercial domicile"
means the principal place from which the trade or business of the taxpayer is directed or managed:
Provided, That the commercial
domicile of a financial organization, which is subject to
regulation as such, shall be at the place designated as its
principal office with its regulating authority.
(4) (6) Compensation.-- The term "compensation" means wages,
salaries, commissions and any other form of remuneration paid to
employees for personal services.
(5) (7) Corporation. -- "Corporation" means any corporation as
defined by the laws of this state or organization of any kind
treated as a corporation for tax purposes under the laws of this
state, wherever located, which if it were doing business in this
state would be subject to the tax imposed by this article. The
business conducted by a partnership which is directly or indirectly
held by a corporation shall be considered the business of the
corporation to the extent of the corporation's distributive share
of the partnership income, inclusive of guaranteed payments to the
extent prescribed by regulation. The term "corporation" includes
a joint-stock company and any association or other organization
which is taxable as a corporation under the federal income tax law.
(6) (8) 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 regulations promulgated
thereunder.
(7) (9) Domestic corporation.-- The term "domestic
corporation" means any corporation organized under the laws of West
Virginia and certain corporations organized under the laws of the
state of Virginia before June 20, 1863. Every other corporation is
a foreign corporation.
(10) Effective rate of tax. -- The term "effective rate of
tax" means, as to any state or United States possession, the
maximum statutory rate of tax imposed by the state or possession on
a related member's net income multiplied by the apportionment
percentage, if any, applicable to the related member under the laws
of said jurisdiction. For purposes of this definition, the
effective rate of tax as to any state or United States possession
is zero where the related member's net income tax liability in said
jurisdiction is reported on a combined or consolidated return
including both the taxpayer and the related member where the
reported transactions between the taxpayer and the related member
are eliminated or offset. Also, for purposes of this definition,
when computing the effective rate of tax for a jurisdiction in
which a related member's net income is eliminated or offset by a
credit or similar adjustment that is dependent upon the related
member either maintaining or managing intangible property or
collecting interest income in that jurisdiction, the maximum statutory rate of tax imposed by said jurisdiction shall be
decreased to reflect the statutory rate of tax that applies to the
related member as effectively reduced by the credit or similar
adjustment.
(8) (11) Engaging in business. -- The term "engaging in
business" or "doing business" means any activity of a corporation
which enjoys the benefits and protection of government and laws in
this state.
(9) (12) Federal Form 1120. -- The term "Federal Form 1120"
means the annual federal income tax return of any corporation made
pursuant to the United States Internal Revenue Code of 1986, as
amended, or in successor provisions of the laws of the United
States, in respect to the federal taxable income of a corporation,
and filed with the federal Internal Revenue Service. In the case
of a corporation that elects to file a federal income tax return as
part of an affiliated group, but files as a separate corporation
under this article, then as to such corporation Federal Form 1120
means its pro forma Federal Form 1120.
(10) (13) Fiduciary. -- The term "fiduciary" means, and
includes, a guardian, trustee, executor, administrator, receiver,
conservator or any person acting in any fiduciary capacity for any
person.
(11) (14) Financial organization. -- The term "financial
organization" means:
(A) A holding company or a subsidiary thereof. As used in this
section "holding company" means a corporation registered under the
federal Bank Holding Company Act of 1956 or registered as a savings
and loan holding company other than a diversified savings and loan
holding company as defined in Section 408(a)(1)(F) of the federal
National Housing Act, 12 U. S. C. §1730(a)(1)(F);
(B) A regulated financial corporation or a subsidiary thereof.
As used in this section "regulated financial corporation" means:
(i) An institution, the deposits, shares or accounts of which
are insured under the Federal Deposit Insurance Act or by the
federal Savings and Loan Insurance Corporation;
(ii) An institution that is a member of a federal home loan
bank;
(iii) Any other bank or thrift institution incorporated or
organized under the laws of a state that is engaged in the business
of receiving deposits;
(iv) A credit union incorporated and organized under the laws
of this state;
(v) A production credit association organized under 12 U. S.
C. §2071;
(vi) A corporation organized under 12 U. S. C. § 611 through
§ 631 (an Edge Act corporation); or
(vii) A federal or state agency or branch of a foreign bank as
defined in 12 U. S. C. §3101; or
(C) A corporation which derives more than fifty percent of its
gross business income from one or more of the following activities:
(i) Making, acquiring, selling or servicing loans or
extensions of credit. Loans and extensions of credit include:
(I) Secured or unsecured consumer loans;
(II) Installment obligations;
(III) Mortgages or other loans secured by real estate or
tangible personal property;
(IV) Credit card loans;
(V) Secured and unsecured commercial loans of any type; and
(VI) Loans arising in factoring;
(ii) Leasing or acting as an agent, broker or advisor in
connection with leasing real and personal property that is the
economic equivalent of an extension of credit as defined by the
Federal Reserve Board in 12 CFR 225.25(b)(5);
(iii) Operating a credit card business;
(iv) Rendering estate or trust services;
(v) Receiving, maintaining or otherwise handling deposits;
(vi) Engaging in any other activity with an economic effect
comparable to those activities described in subparagraph (
I)
(i),
(ii), (iii), (iv) or (v) of this paragraph.
(12) (15) Fiscal year. -- The term "fiscal year" means an
accounting period of twelve months ending on any day other than the
last day of December and on the basis of which the taxpayer is required to report for federal income tax purposes.
(13) (16) Includes and including. -- The terms "includes" and
"including", when used in a definition contained in this article,
do not exclude other things otherwise within the meaning of the
term being defined.
(14) (17) Insurance company. -- The term "insurance company"
means any corporation subject to taxation under section twenty-two,
article three, chapter twenty-nine of this code or chapter thirty-
three of this code or an insurance carrier subject to the surcharge
imposed by subdivision (1) or (3), subsection (f), section three,
article two-c, chapter twenty-three of this code or any corporation
that would be subject to taxation under any of those provisions
were its business transacted in this state.
(18) Intangible expense. -- The term "intangible expense"
includes: (A) Expenses, losses and costs for, related to or in
connection directly or indirectly with the direct or indirect
acquisition, use, maintenance or management, ownership, sale,
exchange or any other disposition of intangible property to the
extent those amounts are allowed as deductions or costs in
determining taxable income before operating loss deductions and
special deductions for the taxable year under the Internal Revenue
Code; (B) amounts directly or indirectly allowed as deductions
under Section 163 of the Internal Revenue Code for purposes of
determining taxable income under the Internal Revenue Code to the extent those expenses and costs are directly or indirectly for,
related to or in connection with the expenses, losses and costs
referenced in subdivision(A) of this subsection; (C) losses related
to, or incurred in connection directly or indirectly with,
factoring transactions or discounting transactions; (D) royalty,
patent, technical and copyright fees; (E) licensing fees; and (F)
other similar expenses and costs.
(19) Intangible property. -- "Intangible property" includes
patents, patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets and similar types of
intangible assets.
(20) Interest expense. -- "Interest expense" means amounts
directly or indirectly allowed as deductions under Section 163 of
the Internal Revenue Code for purposes of determining taxable
income under the Internal Revenue Code.
(15) (21) "
Internal Revenue Code" means the Internal Revenue
Code as defined in section three of this article,
as amended and in
effect for the taxable year and without regard to application of
federal treaties unless expressly made applicable to states of the
United States.
(16) (22) Nonbusiness income.-- The term "nonbusiness income"
means all income other than business income.
(23) Ownership. -- In determining the ownership of stock,
assets or net profits of any person, the constructive ownership of Section 318(a) of the Internal Revenue Code of 1986, as amended, as
modified by Section 856(d)(5) of the Internal Revenue Code of 1986,
as amended, shall apply.
(17) (24) "Partnership" means a general or limited partnership
or organization of any kind treated as a partnership for tax
purposes under the laws of this state.
(18) (25) Person. -- The term "person" is considered
interchangeable with the term "corporation" in this section. The
term "person" means any individual, firm, partnership, general
partner of a partnership, limited liability company, registered
limited liability partnership, foreign limited liability
partnership, association, corporation whether or not the
corporation is, or would be if doing business in this state,
subject to the tax imposed by this article, company, syndicate,
estate, trust, business trust, trustee, trustee in bankruptcy,
receiver, executor, administrator, assignee or organization of any
kind.
(19) (26) Pro forma return. -- The term "pro forma return"
when used in this article means the return which the taxpayer would
have filed with the Internal Revenue Service had it not elected to
file federally as part of an affiliated group.
(20) (27) Public utility. -- The term "public utility" means
any business activity to which the jurisdiction of the Public
Service Commission of West Virginia extends under section one, article two, chapter twenty-four of this code.
(21) Qualified real estate investment trust. - The term
"Qualified Real Estate Investment Trust" means any real estate
invest trust where no single entity owns or controls, directly or
indirectly, constructively or otherwise, fifty percent or more of
the voting power or value of the beneficial interests or shares of
the trust, if the single entity is:
(A) Subject to the provisions of subchapter C, chapter 1,
subtitle A, title 26 of the United States Code, as amended;
(B) Not exempt from federal income tax pursuant to the
provisions of Section 501 of the Internal Revenue Code of 1986, as
amended; and
(C) Not a real estate invest trust as defined in this section
or a qualified real estate invest trust subsidiary under Section
856(I) of the Internal Revenue Code of 1986, as amended.
(22) (28) Qualified regulated investment company. -- The term
"qualified regulated investment company" means any regulated
investment company
where no single entity owns or controls, other
than a regulated investment company where more than fifty percent
of the voting power or value of the beneficial interests or share
of which are owned or controlled, directly or indirectly,
constructively or otherwise,
fifty percent or more of the voting
power or value of the beneficial interests or shares of the
company, if the by a single entity
that is:
(A) Subject to the provision of subchapter C, chapter 1,
subtitle A, Title 26 of the United States Code, as amended;
(B) Not exempt from federal income tax pursuant to the
provision of Section 501 of the Internal Revenue Code of 1986, as
amended; and
(C) Not a regulated investment company as defined in Section
3 of the Investment Company Act of 1940, as amended, 15 U. S. C.
80a-3.
(23) (29) Real estate investment trust.-- The term "real
estate investment trust" has the meaning ascribed to such term in
Section 856 of the Internal Revenue Code of 1986, as amended.
(24) (30) Regulated investment company.-- The term "regulated
investment company" has the same meaning as ascribed to such term
in Section 851 of the Internal Revenue Code of 1986, as amended.
(31) Related entity. -- "Related entity" means: (A) A
stockholder who is an individual or a member of the stockholder's
family set forth in Section 318 of the Internal Revenue Code if the
stockholder and the members of the stockholder's family own,
directly, indirectly, beneficially or constructively, in the
aggregate, at least fifty percent of the value of the taxpayer's
outstanding stock; (B) a stockholder, or a stockholder's
partnership, limited liability company, estate, trust or
corporation, if the stockholder and the stockholder's partnerships,
limited liability companies, estates, trusts and corporations own directly, indirectly, beneficially or constructively, in the
aggregate, at least fifty percent of the value of the taxpayer's
outstanding stock; or (C) a corporation, or a party related to the
corporation in a manner that would require an attribution of stock
from the corporation to the party or from the party to the
corporation under the attribution rules of the Internal Revenue
Code if the taxpayer owns, directly, indirectly, beneficially or
constructively, at least fifty percent of the value of the
corporation's outstanding stock. The attribution rules of the
Internal Revenue Code shall apply for purposes of determining
whether the ownership requirements of this definition have been
met.
(32) Related member. -- "Related member" means a person that,
with respect to the taxpayer during all or any portion of the
taxable year, is: (A) A related entity; (B) a component member as
defined in subsection (b), Section 1563 of the Internal Revenue
Code; (C) a person to or from whom there is attribution of stock
ownership in accordance with subsection (e), Section 1563 of the
Internal Revenue Code; or (D) a person that, notwithstanding its
form or organization, bears the same relationship to the taxpayer
as a person described in subdivisions (A) through (C), inclusive,
of this subsection.
(25) (33) Sales.-- The term "sales" means all gross receipts
of the taxpayer that are "business income" as defined in this section.
(26) (34) State.-- The term "state" means any state of the
United States, the District of Columbia, the Commonwealth of Puerto
Rico, any territory or possession of the United States and any
foreign country or political subdivision thereof.
(28) (35) Tax.-- The term "tax" includes, within its meaning,
interest and additions to tax, unless the intention to give it a
more limited meaning is disclosed by the context.
(27) (36) Taxable year, tax year. -- The term "taxable year"
or "tax year" means the taxable year for which the taxable income
of the taxpayer is computed under the federal income tax law.
(29) (37) Tax Commissioner.-- The term "Tax Commissioner"
means the Tax Commissioner of the State of West Virginia or his or
her delegate.
(30) (38) Tax haven. -- The term "tax haven" means a
jurisdiction that, for a particular tax year in question: (A) Is
identified by the Organization for Economic Cooperation and
Development as a tax haven or as having a harmful preferential tax
regime; or (B) a jurisdiction that has no, or nominal, effective
tax on the relevant income and: (i) That has laws or practices
that prevent effective exchange of information for tax purposes
with other governments regarding taxpayers subject to, or
benefitting from, the tax regime; (ii) that lacks transparency.
For purposes of this definition, a tax regime lacks transparency if the details of legislative, legal or administrative provisions are
not open to public scrutiny and apparent or are not consistently
applied among similarly situated taxpayers; (iii) facilitates the
establishment of foreign-owned entities without the need for a
local substantive presence or prohibits these entities from having
any commercial impact on the local economy; (iv) explicitly or
implicitly excludes the jurisdiction's resident taxpayers from
taking advantage of the tax regime's benefits or prohibits
enterprises that benefit from the regime from operating in the
jurisdiction's domestic market; or (v) has created a tax regime
which is favorable for tax avoidance, based upon an overall
assessment of relevant factors, including whether the jurisdiction
has a significant untaxed offshore financial or other services
sector relative to its overall economy. For purposes of this
definition, the phrase "tax regime" means a set or system of rules,
laws, regulations or practices by which taxes are imposed on any
person, corporation or entity, or on any income, property,
incident, indicia or activity pursuant to governmental authority.
(31) (39) Taxpayer. -- The term "taxpayer" means any person
subject to the tax imposed by this article.
(32) (40) This code. -- The term "this code" means the Code of
West Virginia, 1931, as amended.
(33) (41) This state. -- The term "this State" means the State
of West Virginia.
(34) (42) "United States" means the United States of America
and includes all of the states of the United States, the District
of Columbia and United States territories and possessions.
(35) (43) "Unitary business" means a single economic
enterprise that is made up either of separate parts of a single
business entity or of a commonly controlled group of business
entities that are sufficiently interdependent, integrated and
interrelated through their activities so as to provide a synergy
and mutual benefit that produces a sharing or exchange of value
among them and a significant flow of value to the separate parts.
For purposes of this article and article twenty-three of this
chapter, any business conducted by a partnership shall be treated
as conducted by its partners, whether directly held or indirectly
held through a series of partnerships, to the extent of the
partner's distributive share of the partnership's income,
regardless of the percentage of the partner's ownership interest or
the percentage of its distributive or any other share of
partnership income. A business conducted directly or indirectly by
one corporation through its direct or indirect interest in a
partnership is unitary with that portion of a business conducted by
one or more other corporations through their direct or indirect
interest in a partnership if there is a synergy and mutual benefit
that produces a sharing or exchange of value among them and a
significant flow of value to the separate parts and the corporations are members of the same commonly controlled group.
(36) (44) West Virginia taxable income. -- The term "West
Virginia taxable income" means the taxable income of a corporation
as defined by the laws of the United States for federal income tax
purposes, adjusted, as provided in this article:
Provided, That in
the case of a corporation having income from business activity
which is taxable without this state, its "West Virginia taxable
income" shall be the portion of its taxable income as defined and
adjusted as is allocated or apportioned to this state under the
provisions of this article.
(45) Valid business purpose. -- " Valid business purpose"
means one or more business purposes, other than the avoidance or
reduction of taxation, which alone or in combination constitute the
primary motivation for a business activity or transaction, which
activity or transaction changes in a meaningful way, apart from tax
effects, the economic position of the taxpayer. The economic
position of the taxpayer includes an increase in the market share
of the taxpayer or the entry by the taxpayer into new business
markets.
(b) Effective date. -- The amendments to this section made in
the year 2009 are retroactive and are effective for tax years
beginning on and after January 1, 2009.
§11-24-4b. Dividends paid deduction to be added back in
determining net income for captive real estate investment trusts and regulated investment companies; deductible
intangible expenses and deductible interest paid to be added
back in determining net income of certain entities.
(a) The dividend paid deduction otherwise allowed by federal
law in computing net income of a real estate investment trust that
is subject to federal income tax shall be added back in computing
the tax imposed by this article if the real estate investment trust
is a captive real estate investment trust.
(b) The dividend paid deduction otherwise allowed by federal
law in computing net income of a regulated investment company that
is subject to federal income tax shall be added back in computing
the tax imposed by this article unless the regulated investment
company is a qualified regulated investment company as defined in
this article.
(c)
Intangible expenses otherwise deductible to be added back
for certain taxpayers. --
(1) For purposes of computing its net income under this
chapter, a taxpayer shall add back otherwise deductible intangible
expense directly or indirectly paid, accrued or incurred in
connection with one or more direct or indirect transactions with
one or more related members.
(2) If the related member was subject to tax in this state or
another state or possession of the United States or a foreign
nation or some combination thereof on a tax base that included the intangible expense paid, accrued or incurred by the taxpayer, the
taxpayer shall receive a credit against tax due in this state in an
amount equal to the higher of the tax paid by the related member
with respect to the portion of its income representing the
intangible expense paid, accrued or incurred by the taxpayer, or
the tax that would have been paid by the related member with
respect to that portion of its income if: (A) That portion of its
income had not been offset by expenses or losses; or (B) the tax
liability had not been offset by a credit or credits. The credit
determined shall be multiplied by the apportionment factor of the
taxpayer in this state. However, in no case shall the credit
exceed the taxpayer's liability in this state attributable to the
net income taxed as a result of the adjustment required by
subdivision (1) of this subsection.
(3) (A) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply to the portion of the intangible expense
that the taxpayer establishes by clear and convincing evidence
meets both of the following requirements: (i) The related member
during the same taxable year directly or indirectly paid, accrued
or incurred a portion to a person that is not a related member; and
(ii) the transaction giving rise to the intangible expense between
the taxpayer and the related member was undertaken for a valid
business purpose.
(B) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
Tax Commissioner that: (i) The related member was subject to tax
on its net income in this state or another state or possession of
the United States or some combination thereof; (ii) the tax base
for said tax included the intangible expense paid, accrued or
incurred by the taxpayer; and (iii) the aggregate effective rate of
tax applied to the related member is no less than the tax rate
imposed under this article.
(C) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The intangible expense was paid, accrued or
incurred to a related member organized under the laws of a country
other than the United States; (ii) the related member's income from
the transaction was subject to a comprehensive income tax treaty
between that country and the United States; (iii) the related
member's income from the transaction was taxed in that country at
a tax rate at least equal to that imposed by this state; and (iv)
the intangible expense was paid, accrued or incurred pursuant to a
transaction that was undertaken for a valid business purpose and using terms that reflect an arm's length relationship.
(D) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the corporation and the commissioner
agree in writing to the application or use of alternative
adjustments or computations. The commissioner may, in his or her
discretion, agree to the application or use of alternative
adjustments or computations when he or she concludes that in the
absence of agreement the income of the taxpayer would not be
reflected accurately.
(d)
Interest expense otherwise deductible to be added back for
certain taxpayers. --
(1) For purposes of computing its net income under this
chapter, a taxpayer shall add back otherwise deductible interest
paid, accrued or incurred to a related member during the taxable
year.
(2) If the related member was subject to tax in this state or
another state or possession of the United States or a foreign
nation or some combination thereof on a tax base that included the
interest expense paid, accrued or incurred by the taxpayer, the
taxpayer shall receive a credit against tax due in this state equal
to the higher of the tax paid by the related member with respect to
the portion of its income representing the interest expense paid,
accrued or incurred by the taxpayer, or the tax that would have been paid by the related member with respect to that portion of its
income if: (A) That portion of its income had not been offset by
expenses or losses; or (B) the tax liability had not been offset by
a credit or credits. The credit determined shall be multiplied by
the apportionment factor of the taxpayer in this state. However,
in no case shall the credit exceed the taxpayer's liability in this
state attributable to the tax imposed under this article as a
result of the adjustment required by subdivision (1) of this
subsection.
(3) (A) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence, of the type and in the form determined by the
commissioner, that: (i) The transaction giving rise to interest
expense between the taxpayer and the related member was undertaken
for a valid business purpose; and (ii) the interest expense was
paid, accrued or incurred using terms that reflect an arm's length
relationship.
(B) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The related member was subject to tax on
its net income in this state or another state or possession of the United States or some combination thereof; (ii) the tax base for
said tax included the interest expense paid, accrued or incurred by
the taxpayer; and (iii) the aggregate effective rate of tax applied
to the related member is no less than the statutory rate of tax
applied to the taxpayer under this chapter.
(C) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the taxpayer establishes by clear and
convincing evidence of the type and in the form specified by the
commissioner that: (i) The interest expense is paid, accrued or
incurred to a related member organized under the laws of a country
other than the United States; (ii) the related member's income from
the transaction is subject to a comprehensive income tax treaty
between that country and the United States; (iii) the related
member's income from the transaction is taxed in that country at a
tax rate at least equal to that imposed by this state; and (iv) the
interest expense was paid, accrued or incurred pursuant to a
transaction that was undertaken for a valid business purpose and
using terms that reflect an arm's length relationship.
(D) The adjustment required in subdivision (1) of this
subsection and the credit allowed in subdivision (2) of this
subsection shall not apply if the corporation and the commissioner
agree in writing to the application or use of alternative
adjustments or computations. The commissioner may, in his or her discretion, agree to the application or use of alternative
adjustments or computations when he or she concludes that in the
absence of agreement the income of the taxpayer would not be
properly reflected.
(e) Nothing in this subsection shall be construed to limit or
negate the commissioner's authority to otherwise enter into
agreements and compromises otherwise allowed by law.
(f)
Effective date. -- The amendments to this section made in
the year 2009 are retroactive and are effective for tax years
beginning on and after January 1, 2009.
CHAPTER 21A. UNEMPLOYMENT COMPENSATION.
ARTICLE 6. EMPLOYEE ELIGIBILITY; BENEFITS.
§21A-6-1c. Voluntary withholding program.
(a) An individual filing a new claim for unemployment
compensation shall, at the time of filing
such the claim, be
advised by the appropriate bureau employee that:
(1) Unemployment compensation is subject to federal
and state
income tax;
(2) Requirements exist pertaining to estimated tax payments;
(3) The individual may elect to have federal
and state income
tax deducted and withheld from the individual's payment of
unemployment compensation at the
specified in the federal Internal
Revenue Code appropriate federal and state withholding rate; and
(4) The individual may change a previously elected withholding status.
(b) Amounts deducted and withheld from unemployment
compensation shall remain in the unemployment fund until
transferred to the
appropriate federal
or state taxing authority as
payment of income tax.
(c) The commissioner shall follow all procedures specified by
the United States Department of Labor,
and the federal Internal
Revenue Service
and the West Virginia State Tax Division pertaining
to the deducting and withholding of income tax.
(d) Amounts shall be deducted and withheld in accordance with
the priorities established in rules developed by the commissioner.
(e) This section shall not be effective prior to payments made
after December 31, one thousand nine hundred and ninety-six.
(e) Effective date. -- The amendments made to this section
regarding withholding for state income tax shall be effective for
payments made on and after January 1, 2010.