H. B. 4384
(By Delegates Skaff, Stowers, Hall and Reynolds)
[Introduced February 8, 2010; referred to the
Committee on Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §11-13AA-1,
§11-13AA-2, §11-13AA-3, §11-13AA-4 and §11-13AA-5; and to
amend and reenact §11-21-12 of said code, all relating to
establishing the "Stay Home and Work Income Tax Incentive
Act"; providing a tax credit for graduates of a higher
education institution for a portion of the interest paid on
student loans; providing for the promulgation of rules by the
State Tax Commissioner for such purpose; establishing a
one-time modification reducing federal adjusted gross income
for recent graduates of higher education institutions up to
the first $30,000.00 with a five year eligibility for such
modification; providing that such modification be revoked if
the eligible taxpayer establishes residency outside of West
Virginia; and providing for the promulgation of rules by the Tax Commissioner for such purpose.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new article, designated §11-13AA-1,
§11-13AA-2, §11-13AA-3 and §11-13AA-4; and that §11-21-12 of said
code be amended and reenacted, all to read as follows:
ARTICLE 13AA. STAY HOME IN WEST VIRGINIA AND WORK TAX INCENTIVE
ACT.
§11-13AA-1. Short Title.
This article is known as the "Stay Home in West Virginia and
Work Tax Incentive."
§11-13AA-2. Legislative findings.
The Legislature finds and declares that:
(1) The State of West Virginia faces a demographic problem due
to the inability of our state in the past two decades to attract
and retain the younger generation into our state;
(2) The loss of young professionals and skilled workers is a
self perpetuating cycle and requires decisive and creative action
to reverse the trend;
(3) The retention, recruitment and advancement of young talent
is critical to the future success of our state's economy,
communities and intellectual infrastructure;
(4) States are in a stiff competition for the coveted younger demographic and are employing innovative strategies to create an
economy and community attractive to this younger generation;
(5) The increase of intellectual capital through the
attraction of the younger generation will enable the state to
become more attractive to national and global companies to relocate
to the State of West Virginia;
(6) Providing the younger generation with an incentive to
live, work and play in West Virginia will increase the intellectual
capital of the state and combat the demographic problem currently
facing West Virginia and is therefore in the best interest of the
State of West Virginia.
§11-13AA-3. Definitions.
(a) General. -- When used in this article, or in the
administration of this article, terms defined in subsection (b) of
this section have the meanings ascribed to them by this section,
unless a different meaning is clearly required by the context in
which the term is used.
(b) Terms defined --
(1) "Eligible taxpayer" means any taxpayer who has paid
interest on a qualified student loan and who has yet to attain the
age of forty by December 31 in the tax year for which the credit is
being claimed.
(2) "Higher education institution" means all regionally
accredited post secondary institutions in the United States and all accredited post secondary institutions within the State of West
Virginia.
(3) "Qualified student loan" means a loan made to a student for
the purposes of paying the tuition, books, fees or any other
educational expense or living expenses of a student to obtain a
two-year degree, four-year degree or advanced degree from a higher
education institution.
§11-13AA-4. Tax credits for a portion of the interest paid on
student loans.
(a) Credit allowed. -- For those tax years beginning on or
after January 1, 2010, there shall be allowed a credit for any
eligible taxpayer against personal income taxes as described in
subsection (c) of this section for a portion of the interest paid
on a qualified student loan by such taxpayer in the tax year that
such taxpayer paid the interest on the qualified student loan.
(b) Amount of credit. -- The tax credit shall be in an amount
equal to the amount of money paid as interest on a qualified student
loan in the tax year up to a maximum amount of $500.
(c) Application of annual credit allowance. -- The amount of
credit as determined under subsection (b) of this section is allowed
as a credit against the taxes imposed by article twenty-one of this
chapter.
§11-13AA-5. Carryover credit allowed; Tax Commissioner to promulgate rules.
(a) If the tax credit allowed under this article in any taxable
year exceeds the taxpayers tax liability as determined in accordance
with article twenty-one of this chapter for that taxable year, the
excess may be applied for succeeding taxable years until the earlier
of the following:
(1) The full amount of the excess tax credit is used;
(2) The taxpayer reaches the age of forty, whereupon no tax
credit may be claimed in that taxable year.
(b) No carryback to a prior taxable year is allowed for the
amount of any unused credit in any taxable year.
(c) A tax credit is subject to recapture, elimination or
reduction if it is determined by the Tax Commissioner that a
taxpayer was not entitled to the credit, in whole or in part, in the
tax year in which it was claimed by the taxpayer.
(d) The Tax Commissioner shall propose for promulgation rules
pursuant to the provisions of article three, chapter twenty-nine-a
of this code, as may be necessary to carry out the purposes of this
article.
ARTICLE 21. PERSONAL INCOME TAX.
PART I. GENERAL.
§11-21-12. West Virginia adjusted gross income of resident
individual.
(a)
General. -- The West Virginia adjusted gross income of a
resident individual means his or her federal adjusted gross income
as defined in the laws of the United States for the taxable year
with the modifications specified in this section.
(b)
Modifications increasing federal adjusted gross income. --
There shall be added to federal adjusted gross income unless already
included therein the following items:
(1) Interest income on obligations of any state other than this
state or of a political subdivision of any other state unless
created by compact or agreement to which this state is a party;
(2) Interest or dividend income on obligations or securities of
any authority, commission or instrumentality of the United States,
which the laws of the United States exempt from federal income tax
but not from state income taxes;
(3) Any deduction allowed when determining federal adjusted
gross income for federal income tax purposes for the taxable year
that is not allowed as a deduction under this article for the
taxable year;
(4) Interest on indebtedness incurred or continued to purchase
or carry obligations or securities the income from which is exempt
from tax under this article, to the extent deductible in determining
federal adjusted gross income;
(5) Interest on a depository institution tax-exempt savings
certificate which is allowed as an exclusion from federal gross income under Section 128 of the Internal Revenue Code, for the
federal taxable year;
(6) The amount of a lump sum distribution for which the
taxpayer has elected under Section 402(e) of the Internal Revenue
Code of 1986, as amended, to be separately taxed for federal income
tax purposes; and
(7) Amounts withdrawn from a medical savings account
established by or for an individual under section twenty, article
fifteen, chapter thirty-three of this code or section fifteen,
article sixteen of said chapter that are used for a purpose other
than payment of medical expenses, as defined in those sections.
(c)
Modifications reducing federal adjusted gross income. --
There shall be subtracted from federal adjusted gross income to the
extent included therein:
(1) Interest income on obligations of the United States and its
possessions to the extent includable in gross income for federal
income tax purposes;
(2) Interest or dividend income on obligations or securities of
any authority, commission or instrumentality of the United States or
of the State of West Virginia to the extent includable in gross
income for federal income tax purposes but exempt from state income
taxes under the laws of the United States or of the State of West
Virginia, including federal interest or dividends paid to
shareholders of a regulated investment company, under Section 852 of the Internal Revenue Code for taxable years ending after June 30,
1987;
(3) Any amount included in federal adjusted gross income for
federal income tax purposes for the taxable year that is not
included in federal adjusted gross income under this article for the
taxable year;
(4) The amount of any refund or credit for overpayment of
income taxes imposed by this state, or any other taxing
jurisdiction, to the extent properly included in gross income for
federal income tax purposes;
(5) Annuities, retirement allowances, returns of contributions
and any other benefit received under the West Virginia Public
Employees Retirement System, the West Virginia State Teachers
Retirement System and all forms of military retirement, including
regular Armed Forces, reserves and National Guard, including any
survivorship annuities derived therefrom, to the extent includable
in gross income for federal income tax purposes:
Provided, That
notwithstanding any provisions in this code to the contrary this
modification shall be limited to the first $2,000 of benefits
received under the West Virginia Public Employees Retirement System,
the West Virginia State Teachers Retirement System and, including
any survivorship annuities derived therefrom, to the extent
includable in gross income for federal income tax purposes for
taxable years beginning after December 31, 1986 and the first $2,000 of benefits received under any federal retirement system to which
Title 4 U.S.C. §111 applies:
Provided, however, That the total
modification under this paragraph shall not exceed $2,000 per person
receiving retirement benefits and this limitation shall apply to all
returns or amended returns filed after December 31, 1986;
(6) Retirement income received in the form of pensions and
annuities after December 31, 1979, under any West Virginia police,
West Virginia Firemen's Retirement System or the West Virginia State
Police Death, Disability and Retirement Fund, the West Virginia
State Police Retirement System or the West Virginia Deputy Sheriff
Retirement System, including any survivorship annuities derived from
any of these programs, to the extent includable in gross income for
federal income tax purposes;
(7) (A) For taxable years beginning after December 31, 2000,
and ending prior to January 1, 2003, an amount equal to two percent
multiplied by the number of years of active duty in the Armed Forces
of the United States of America with the product thereof multiplied
by the first $30,000 of military retirement income, including
retirement income from the regular Armed Forces, reserves and
National Guard paid by the United States or by this state after
December 31, 2000, including any survivorship annuities, to the
extent included in gross income for federal income tax purposes for
the taxable year.
(B) For taxable years beginning after December 31, 2002, the first $20,000 of military retirement income, including retirement
income from the regular Armed Forces, reserves and National Guard
paid by the United States or by this state after December 31, 2002,
including any survivorship annuities, to the extent included in
gross income for federal income tax purposes for the taxable year.
(C) In the event that any of the provisions of this subdivision
are found by a court of competent jurisdiction to violate either the
Constitution of this state or of the United States, or is held to be
extended to persons other than specified in this subdivision, this
subdivision shall become null and void by operation of law.
(8) Federal adjusted gross income in the amount of $8,000
received from any source after December 31, 1986, by any person who
has attained the age of sixty-five on or before the last day of the
taxable year, or by any person certified by proper authority as
permanently and totally disabled, regardless of age, on or before
the last day of the taxable year, to the extent includable in
federal adjusted gross income for federal tax purposes:
Provided,
That if a person has a medical certification from a prior year and
he or she is still permanently and totally disabled, a copy of the
original certificate is acceptable as proof of disability. A copy
of the form filed for the federal disability income tax exclusion is
acceptable:
Provided, however, That:
(i) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is $8,000 per person or more, no deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is less than $8,000 per person,
the total modification allowed under this subdivision for all gross
income received by that person shall be limited to the difference
between $8,000 and the sum of modifications under subdivisions (1),
(2), (5), (6) and (7) of this subsection;
(9) Federal adjusted gross income in the amount of $8,000
received from any source after December 31, 1986, by the surviving
spouse of any person who had attained the age of sixty-five or who
had been certified as permanently and totally disabled, to the
extent includable in federal adjusted gross income for federal tax
purposes:
Provided, That:
(i) Where the total modification under subdivisions (1), (2),
(5), (6), (7) and (8) of this subsection is $8,000 or more, no
deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6), (7) and (8) of this subsection is less than $8,000 per
person, the total modification allowed under this subdivision for
all gross income received by that person shall be limited to the
difference between $8,000 and the sum of subdivisions (1), (2), (5),
(6), (7) and (8) of this subsection;
(10) Contributions from any source to a medical savings account
established by or for the individual pursuant to section twenty, article fifteen, chapter thirty-three of this code or section
fifteen, article sixteen of said chapter, plus interest earned on
the account, to the extent includable in federal adjusted gross
income for federal tax purposes:
Provided, That the amount
subtracted pursuant to this subdivision for any one taxable year may
not exceed $2,000 plus interest earned on the account. For married
individuals filing a joint return, the maximum deduction is computed
separately for each individual;
(11) For the 2006 taxable year only, severance wages received
by a taxpayer from an employer as the result of the taxpayer's
permanent termination from employment through a reduction in force
and through no fault of the employee, not to exceed $30,000. For
purposes of this subdivision:
(i) The term "severance wages" means any monetary compensation
paid by the employer in the taxable year as a result of permanent
termination from employment in excess of regular annual wages or
regular annual salary;
(ii) The term "reduction in force" means a net reduction in the
number of employees employed by the employer in West Virginia,
determined based on total West Virginia employment of the employer's
controlled group;
(iii) The term "controlled group" means one or more chains of
corporations connected through stock ownership with a common parent
corporation if stock possessing at least fifty percent of the voting power of all classes of stock of each of the corporations is owned
directly or indirectly by one or more of the corporations and the
common parent owns directly stock possessing at least fifty percent
of the voting power of all classes of stock of at least one of the
other corporations;
(iv) The term "corporation" means any corporation, joint-stock
company or association and any business conducted by a trustee or
trustees wherein interest or ownership is evidenced by a certificate
of interest or ownership or similar written instrument;
and
(12) Any other income which this state is prohibited from
taxing under the laws of the United States;
and
(13) Federal adjusted gross income in the amount of $30,000
received from any source after December 31, 2010, by a taxpayer who
has yet to attain the age of forty by December 31 of the tax year
for which the taxpayer is filing and has graduated from a higher
education institution, as that term as defined in section two,
article thirteen-aa chapter eleven of this code, with a two-year,
four-year or advanced degree in a tax year which is not more than
five years prior to the year which the taxpayer is filing; Provided,
That a taxpayer is only eligible to take such a modification once:
Provided however, That such modification is permanently revoked upon
establishing residency outside of West Virginia: Provided further,
That the State Tax Commissioner shall promulgate legislative rules pursuant to the provisions of chapter twenty-nine-a of this code
regarding the documentation necessary to claim such a modification.
(d)
Modification for West Virginia fiduciary adjustment. --
There shall be added to or subtracted from federal adjusted gross
income, as the case may be, the taxpayer's share, as beneficiary of
an estate or trust, of the West Virginia fiduciary adjustment
determined under section nineteen of this article.
(e)
Partners and S corporation shareholders. -- The amounts of
modifications required to be made under this section by a partner or
an S corporation shareholder, which relate to items of income, gain,
loss or deduction of a partnership or an S corporation, shall be
determined under section seventeen of this article.
(f)
Husband and wife. -- If husband and wife determine their
federal income tax on a joint return but determine their West
Virginia income taxes separately, they shall determine their West
Virginia adjusted gross incomes separately as if their federal
adjusted gross incomes had been determined separately.
(g)
Effective date. -- (1) Changes in the language of this
section enacted in the year 2000 shall apply to taxable years
beginning after December 31, 2000.
(2) Changes in the language of this section enacted in the year
2002 shall apply to taxable years beginning after December 31, 2002.
NOTE: The purpose of this bill is to establish the "Stay Home
and Work Income Tax Incentive Act"; providing a tax credit for
graduates of a higher education institution for a portion of the
interest paid on student loans; establishing a one-time modification
reducing federal adjusted gross income for recent graduates of
higher education institutions up to the first $30,000.00 with a five
year eligibility for such modification; providing that such
modification be revoked if the eligible taxpayer establishes
residency outside of West Virginia; and the promulgation of rules by
the State Tax Commissioner.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.