Introduced Version
House Bill 2739 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 2739
(By Delegate Lane)
[Introduced February 26, 2013; referred to the
Committee on Political Subdivisions then Finance.]
A BILL to amend and reenact §8-13-5 of the Code of West Virginia,
1931, as amended, relating to the business and occupation tax;
and altering the basis for municipal business and occupational
taxation from gross income to net income.
Be it enacted by the Legislature of West Virginia:
That §8-13-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 13. TAXATION AND FINANCE.
§8-13-5. Business and occupation or privilege tax; limitation on
rates; effective date of tax; exemptions; activity in
two or more municipalities; administrative provisions.
(a) Authorization to impose tax. -- (1) Whenever any business
activity or occupation, for which the state imposed its annual
business and occupation or privilege tax under article thirteen,
chapter eleven of this code, prior to July 1, 1987, is engaged in
or carried on within the corporate limits of any municipality, the
governing body thereof shall have plenary power and authority, unless prohibited by general law, to impose a similar business and
occupation tax thereon for the use of the municipality.
(2) Municipalities may impose a business and occupation or
privilege tax upon every person engaging or continuing within the
municipality in the business of aircraft repair, remodeling,
maintenance, modification and refurbishing services to any aircraft
or to an engine or other component part of any aircraft as a
separate business activity.
(b) Maximum tax rates. -- In no case shall the rate of such
municipal business and occupation or privilege tax on a particular
activity exceed the maximum rate imposed by the state, exclusive of
surtaxes, upon any business activities or privileges taxed under
sections two-a, two-b, two-c, two-d, two-e, two-g, two-h, two-I and
two-j, article thirteen of said chapter eleven, as such rates were
in effect under said article thirteen, on January 1, 1959, or in
excess of one percent of gross net income under section two-k of
said article thirteen, or in excess of three tenths of one percent
of gross net value or gross net proceeds of sale under section two-
m of said article thirteen. The rate of municipal business and
occupation or privilege tax on the activity described in
subdivision (2), subsection (a) of this section shall be ten one-
hundredths of one percent. The rate of municipal business and
occupation or privilege tax on the activity of a health maintenance
organization holding a certificate of authority under the
provisions of article twenty-five-a, chapter thirty-three of this
code, shall not exceed one half of one percent to be applied solely to that portion of gross net income received from the Medicaid
program pursuant to Title XIX of the Social Security Act, the state
employee programs administered by the Public Employees Insurance
Agency pursuant to article sixteen, chapter five of this code, and
other federal programs, for health care items or services provided
directly or indirectly by the health maintenance organization, that
is expended for administrative expenses; and shall not exceed one
half of one percent to be applied to the gross net income received
from enrollees, or from employers on behalf of enrollees, from
sources other than Medicaid, state employee programs administered
by the Public Employees Insurance Agency and other federal programs
for health care items or services provided directly or indirectly
by the health maintenance organization: Provided, That this tax
rate limitation shall not extend to that part of the gross income
of health maintenance organizations which is received from the use
of real property other than property in which any such company
maintains its office or offices in this state, whether such income
is in the form of rentals or royalties. This provision concerning
the maximum municipal business and occupation tax rate on the
activities of health maintenance organizations is effective
beginning after December 31, 1996. Any payments of business and
occupation tax made by a health maintenance organization to a
municipality for calendar year 1997 shall not be subject to
recovery by the health maintenance organization. Administrative
expenses shall include all expenditures made by a health
maintenance organization other than expenses paid for claims incurred or payments made to providers for the benefits received by
enrollees.
(c) Effective date of local tax. -- Any taxes levied pursuant
to the authority of this section may be made operative as of the
first day of the then current fiscal year or any date thereafter:
Provided, That any new imposition of tax or any increase in the
rate of tax upon any business, occupation or privilege taxed under
section two-e of said article thirteen shall apply only to gross
income derived from contracts entered into after the effective date
of such imposition of tax or rate increase, and which effective
date shall not be retroactive in any respect: Provided, however,
That no tax imposed or revised under this section upon public
utility services may be effective unless and until the municipality
provides written notice of the same by certified mail to said
public utility at least sixty days prior to the effective date of
said tax or revision thereof.
(d) Exemptions. -- A municipality shall not impose its
business and occupation or privilege tax on any activity that was
exempt from the state's business and occupation tax under the
provisions of section three, article thirteen of said chapter
eleven, prior to July 1, 1987, and determined without regard to any
annual or monthly monetary exemption also specified therein:
Provided, That on and after July 1, 2007, a municipality may impose
its business and occupation or privilege tax on any activity of a
corporation, association or society organized and operated
exclusively for religious or charitable purposes that was exempt from the state's business and occupation tax under the provisions
of section three, article thirteen of chapter eleven, prior to July
1, 1987, but only to the extent that the income generated by the
activity is subject to taxation under the provisions of section 511
of the Internal Revenue Code of 1986, as amended.
(e) Activity in two or more municipalities. -- Whenever the
business activity or occupation of the taxpayer is engaged in or
carried on in two or more municipalities of this state, the amount
of gross net income, or gross net proceeds of sales, taxable by
each municipality shall be determined in accordance with such
legislative regulations as the Tax Commissioner may prescribe. It
being the intent of the Legislature that multiple taxation of the
same gross net income, or gross net proceeds of sale, under the
same classification by two or more municipalities shall not be
allowed, and that gross net income, or gross net proceeds of sales,
derived from activity engaged in or carried on within this state,
that is presently subject to state tax under section two-c or two-
h, article thirteen, chapter eleven of this code, which is not
taxed or taxable by any other municipality of this state, may be
included in the measure of tax for any municipality in this state,
from which the activity was directed, or in the absence thereof,
the municipality in this state in which the principal office of the
taxpayer is located. Nothing in this subsection shall be construed
as permitting any municipality to tax gross net income or gross net
proceeds of sales in violation of the Constitution and laws of this
state or the United States, or as permitting a municipality to tax any activity that has a definite situs outside its taxing
jurisdiction.
(f) Where the governing body of a municipality imposes a tax
authorized by this section, such governing body shall have the
authority to offer tax credits from such tax as incentives for new
and expanding businesses located within the corporate limits of the
municipality.
(g) Administrative provisions. -- The ordinance of a
municipality imposing a business and occupation or privilege tax
shall provide procedures for the assessment and collection of such
tax, which shall be similar to those procedures in article
thirteen, chapter eleven of this code, as in existence on June 30,
1978, or to those procedures in article ten, chapter eleven of this
code, and shall conform with such provisions as they relate to
waiver of penalties and additions to tax.
NOTE: The purpose of this bill is
to
alter the basis for
municipal business and occupational taxation from gross income to
net income.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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