H. B. 2182
(By Delegates Skaff, D. Poling, Pasdon, Andes, Caputo,
Reynolds, Stowers and Morgan)
[Introduced February 13, 2013; referred to the
Committee on Energy, Industry and Labor, Economic
Development and Small Business then Finance.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §11-6L-1, §11-6L-2,
§11-6L-3, §11-6L-4, §11-6L-5, §11-6L-6 and §11-6L-7; and to
amend said code by adding thereto a new article, designated
§11-13DD-1, §11-13DD-2, §11-13DD-3, §11-13DD-4, §11-13DD-5,
§11-13DD-6, §11-13DD-7, §11-13DD-8, §11-13DD-9, §11-13DD-10,
§11-13DD-11, §11-13DD-12, §11-13DD-13, §11-13DD-14,
§11-13DD-15, §11-13DD-16, §11-13DD-17 and §11-13DD-18, all
relating to creating the West Virginia Innovation Free-Trade
Business Technology Property Valuation Act and the West
Virginia Innovation Free-Trade Tax Credit Act; defining terms;
specifying method for valuation of certain property; providing
for application to county assessors by specified date;
providing procedure for protest and appeal of determination by
county assessor; requiring the West Virginia Development
Office to report to the Joint Committee on Government and Finance on the economic impact; specifying effective date;
making legislative findings; allowing credits and exemptions
from certain taxes; providing for computation of credit,
application of credit and period for which credit is allowed;
requiring application to claim credit; requiring that new jobs
be good-paying jobs with health benefits; requiring
identification of investment credit property and recomputation
of credit in event of premature disposition of investment
property; providing for forfeiture of unused tax credits and
redetermination of credit allowed; imposing recapture tax
under specified circumstances to recover state taxes and
property taxes; allowing transfer of qualified investment to
successors; providing for tax credit review and
accountability; specifying effective date and termination
date; providing rule-making authority; and providing a
severability clause.
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 §11-6L-1, §11-6L-2,
§11-6L-3, §11-6L-4, §11-6L-5, §11-6L-6 and §11-6L-7; and that said
code be amended by adding thereto a new article, designated
§11-13DD-1, §11-13DD-2, §11-13DD-3, §11-13DD-4, §11-13DD-5,
§11-13DD-6, §11-13DD-7, §11-13DD-8, §11-13DD-9, §11-13DD-10,
§11-13DD-11, §11-13DD-12, §11-13DD-13, §11-13DD-14, §11-13DD-15, §11-13DD-16, §11-13DD-17 and §11-13DD-18, all to read as follows:
ARTICLE 6L. SPECIAL METHOD FOR APPRAISING WEST VIRGINIA
INNOVATION FREE-TRADE ACT BUSINESS TECHNOLOGY
PROPERTY.
§11-6L-1. Short title.
_____This article shall be known and cited as the "West Virginia
Innovation Free-Trade Business Technology Property Valuation Act".
§11-6L-2. Definitions.
_____For the purposes of this article:
_____(1) "Innovative business technologies" means "innovative
business technologies" as defined in section three, article
thirteen-dd of this chapter when the owner of the property
qualifies or qualified for the tax credit allowed by that article.
Qualifications for that tax credit and the special valuation
methodology provided in this article include, but are not limited
to, a minimum capital investment requirement, a minimum new jobs
creation requirement and a requirement that the new jobs created be
good paying jobs with health insurance benefits, all as defined in
article thirteen-dd of this chapter; and
_____(2) "Salvage value" means five percent of original cost.
§11-6L-3. Valuation of Innovation Free-Trade Act business
technology property.
__Notwithstanding any other provision of this code to the contrary, the value of tangible personal property and improvements
to real property placed in service or use on or after July 1, 2013,
and directly used in an innovative business technology as defined
in section two of this article shall, for the purpose of ad valorem
property taxation under this chapter and under Article X of the
Constitution of this state, be its salvage value.
§11-6L-4. Initial determination by county assessor.
__(a) On or before September 1 of the assessment year, the owner
of tangible personal property and improvements to real property
placed in service or use on or after July 1, 2013, directly used in
a new business, or in a new segment of an existing business, that
utilizes innovative business technology and qualifies for the tax
credit allowed by article thirteen-dd of this chapter may file a
report with the county assessor of the county in which the property
was located on July 1 of that assessment year, listing the tangible
personal property and improvements to real property placed in
service or use on or after July 1, 2013, that is qualified
investment for purposes of the credit allowed by article
thirteen-dd of this chapter. A taxpayer that fails to timely file
the report required by this subsection shall be deemed to have
waived valuation of the property as provided in this article for
that assessment year.
__(b) When the county assessor receives the report described in
subsection (a) of this section, the assessor shall review the report and make such inquiries as he or she deems necessary to
determine whether the tangible personal property and improvements
to real property placed in service or use on or after July 1, 2013,
listed in the report is eligible for valuation under this article.
The county assessor shall notify the taxpayer in writing of his or
her determination not later than January 15 of the assessment year.
__(c) Upon making a determination that a taxpayer owns tangible
personal property and improvements to real property placed in
service or use on or after July 1, 2013, directly used in an
innovative business technology that is eligible for valuation under
this article, the county assessor shall notify the Tax Commissioner
of that determination and shall provide information to the Tax
Commissioner as he or she requires relating to that determination.
§11-6L-5. Protest and appeal.
__(a) If the taxpayer disagrees with the county assessor's
determination under section four of this article or if the assessor
fails to notify the taxpayer of the assessor's determination on or
before the day specified in that section the taxpayer may file
objections in writing with the county assessor. The county assessor
shall decide the matter by either sustaining the protest and making
proper corrections, or by stating, in writing if requested, the
reasons for the county assessor's refusal. The county assessor may,
and if the taxpayer requests, the county assessor shall, before
February 1 of the assessment year, certify the question to the Tax Commissioner in a statement sworn to by both parties, or if the
parties are unable to agree, in separate sworn statements. The
sworn statement or statements shall contain a full description of
the property and any other information which the Tax Commissioner
may require.
__(b) The Tax Commissioner shall, as soon as possible on receipt
of the question, but in no case later than February 28 of the
assessment year, instruct the county assessor as to how the
property shall be treated. The instructions issued and forwarded by
mail to the county assessor are binding upon the county assessor,
but either the county assessor or the taxpayer may apply to the
circuit court of the county for review of the question of the
applicability of this article to the property in the same fashion
as is provided for appeals from the county commission in section
twenty-five, article three of this chapter. The Tax Commissioner
shall prescribe forms on which the questions under this section
shall be certified and the Tax Commissioner has the authority to
pursue any inquiry and procure any information necessary for
disposition of the matter.
§11-6L-6. Report on economic benefit.
__The West Virginia Development Office shall provide to the
Joint Committee on Government and Finance by March 1, 2018, and
again by March 1, 2021, a report detailing the economic benefit of
the valuation method specified in this article. The report shall include the number of new jobs created due to this article and the
ad valorem property tax impact.
§11-6L-7. Effective date.
__This article shall be effective on and after July 1, 2013, for
property placed in service or use on or after July 1, 2013, when
the property and its use meet the requirements of this article.
ARTICLE 13DD. WEST VIRGINIA INNOVATION FREE-TRADE TAX CREDIT ACT.
§11-13DD-1. Short title.
__This article may be cited as the "West Virginia Innovation
Free-Trade Tax Credit Act".
§11-13DD-2. Purpose and legislative findings.
__(a) Purpose. -- The purpose of this article is to encourage
economic opportunity, greater capital investment and development of
the use in this state of new innovative technologies by enacting
this innovation free-trade tax credit.
__(b) Legislative findings. --
__(1) Future expansion and development of the West Virginia
economy, job creation potential and the physical environment are
driven by the flow of energy and the nonstop emergence of new
technologies.
__(2) State-of-the-art technologies are being developed,
demonstrated and manufactured or used in manufacturing in other
states in order to support economic development by responding to the emergence of new technologies and the rapidly expanding
world-wide export market for such technologies.
__(3) West Virginia has been slow to recognize the potential
economic and technical benefits of these emerging technologies.
__(4) The Legislature finds that it is in the public interest of
the citizens of West Virginia to:
__(A) Establish a foothold in the West Virginia economy for
manufacturers of advanced products and the development of
businesses employing other emerging technologies that are magnets
for capital investment and produce new jobs that are
characteristically knowledge-based;
__(B) Encourage the application of nanotechnology and other
supporting technology to:
__(i) Aeronautics and space;
__(ii) Agriculture;
__(iii) Biotechnology;
__(iv) Environment;
__(v) Manufacturing and materials science;
__(vi) Medicine and health;
__(vii) Nanoelectronics and computer technology;
__(viii) National and homeland security; and
__(ix) Photonics.
__(C) Encourage the manufacture, sale and use of alternative
fuel vehicles fueled by natural gas, electricity, hydrogen or other alternative fuel and development of the infrastructure necessary to
the convenient and efficient refueling of such vehicles.
§11-13DD-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 either the
context in which the term is used, or by specific definition, in
this article.
__(b) Terms defined. --
__(1) "Advanced coal technology" includes, but is not limited
to, a technology that is used in a new or existing energy
generating facility to reduce airborne carbon emissions associated
with the combustion or use of coal and includes, but is not limited
to, carbon dioxide capture and sequestration technology,
supercritical technology, advanced supercritical technology as that
technology is determined by the West Virginia Public Service
Commission, ultrasupercritical technology and pressurized fluidized
bed technology and any other resource, method, project or
technology certified by the Public Service Commission as advanced
coal technology: Provided, That the technology was not in
commercial use anywhere in the United States before July 1, 2013.
__(2) "Advanced information technology" means the development,
installation and implementation of computer systems and applications that utilize cloud computing, quantum computing or the
next evolution beyond cloud and quantum computing: Provided, That
the technology was not in commercial use anywhere in the United
States before July 1, 2013.
__(3) "Advanced manufacturing" means the application of
state-of-the-art technologies, processes and methods to design and
manufacture tangible personal property for commercial or industrial
use or for use by consumers: Provided, That the technology was not
in commercial use anywhere in the United States before July 1,
2013.
__(4) "Bioinformatics" means the application of statistics and
computer science to the field of molecular biology and entails the
creation and advancement of databases, algorithms, computational
and statistical techniques and theory to solve formal and practical
problems arising from the management and analysis of biological
data. The primary goal of bioinformatics is to increase the
understanding of biological processes. What sets bioinformatics
apart from other approaches is its focus on developing and applying
computationally intensive techniques (e.g., pattern recognition,
data mining, machine learning algorithms and visualization) to
achieve this goal: Provided, That the technology was not in
commercial use anywhere in the United States before July 1, 2013.
__(5) "Bioscience" means the use of compositions, methods and
organisms in cellular and molecular research, development and manufacturing processes for such diverse areas as pharmaceuticals,
medical therapeutics, medical diagnostics, medical devices, medical
instruments, biochemistry, microbiology, veterinary medicine, plant
biology, agriculture and industrial, environmental, and homeland
security applications of bioscience, and future developments in the
biosciences. Bioscience includes biotechnology and life sciences:
Provided, That the technology was not in commercial use anywhere in
the United States before July 1, 2013.
__(6) "Bioscience company" means a corporation, limited
liability company, S corporation, partnership, registered limited
liability partnership, foundation, association, nonprofit entity,
business trust, group, or other entity that is engaged in the
business of bioscience in this state and has business operations in
this state, including, without limitation, research, development,
or production directed towards developing or providing bioscience
products or processes for specific commercial or public purposes
and are identified by the following NAICS codes: 325411, 325412,
325413, 325414, 325193, 325199, 325311, 32532, 334516, 339111,
339112, 339113, 334510, 334517, 339115, 621511, 621512, 541710,
541380, 541940, 622110. "Bioscience company" does not include a
sole proprietorship.
__(7) "Biotechnology" means those fields focusing on
technological developments in areas such as biocomputing,
biodefense, bioinformatics, genetic engineering, genomics, molecular biology, nanotechnology, proteomics and physiomics:
Provided, That the technology was not in commercial use anywhere in
the United States before July 1, 2013.
__(8) "Business" means any activity engaged in by any person in
this state that is taxable under article twenty-one, twenty-three
or twenty-four of this chapter (or any combination of those
articles of this chapter).
__(9) "Business segment" means a component or subset of a
business enterprise that: (A) Provides a single product or service
or a group of related products and services; (B) is subject to
risks and returns that are different from those of other business
segments; and (C) earns revenue for the business enterprise.
__(10) "Clean coal technology" means a technology first used
commercially in the United States on or after July 1, 2013, that
significantly reduces the environmental impact of coal usage
including, but not limited to, coal gasification and carbon capture
and storage: Provided, That the technology was not in commercial
use anywhere in the United States before July 1, 2013.
__(11) "Clean natural gas technology" means a technology first
used commercially in the United States on or after July 1, 2013,
that significantly reduces the environmental impact of natural gas:
Provided, That the technology was not in commercial use anywhere in
the United States before July 1, 2013.
__(12) "Commissioner" and "Tax Commissioner" are used interchangeably herein and mean the Tax Commissioner of the State
of West Virginia, or his or her designee.
__(13) "Compensation" means wages, salaries, commissions, the
cost of health insurance benefits and any other form of
remuneration paid to employees for personal services.
__(14) "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.
__(15) "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.
__(16) "Designee" in the phrase "or his or her designee", when
used in reference to the Tax Commissioner, means any officer or
employee of the Tax Division of the Department of Revenue duly
authorized by the commissioner directly, or indirectly by one or
more redelegations of authority, to perform the functions mentioned
or described in this article.
__(17) "Eligible taxpayer" means a new business or a new segment of a business that is primarily engaged in an emerging technology
industry or that is primarily utilizing new innovative business
technologies, that makes at least the minimum required qualified
investment in a new or expanded business facility located in this
state and creates the required number of new jobs that pay good
salaries and provide health insurance benefits, and that is subject
to any of the taxes imposed by articles twenty-one, twenty-three
and twenty-four of this chapter (or any one or any combination of
those articles).
__(18) "Emerging technologies" are technologies that are
currently being developed or will be developed over the next five
to ten years, that are significant technological developments that
broach new territory in some significant way in their field and
which will substantially alter the business and social environment.
Examples of currently emerging technologies include, but are not
limited to, advanced coal technologies, alternative fuel vehicles,
artificial intelligence, biotechnology, clean coal and clean
natural gas technologies, cognitive science, cloud computing,
quantum computing, man-machine communications, nanotechnology,
photonics, photovoltaic devices and advanced robotics. Whether a
technology is an emerging technology is determined as of the date
the new business or a new segment of an existing business is placed
in service or use in this state. Emerging technologies do not
include any technology that was in commercial use anywhere in the United States before July 1, 2013.
__(19) "Expanded business facility" means any business facility
(other than a new or replacement facility) resulting from the
acquisition, construction, reconstruction, installation or erection
of improvements or additions to existing property in this state
when the improvements or additions are purchased on or after July
1, 2013, but only to the extent of the taxpayer's qualified
investment in the improvements or additions and the extent to which
the expansion of the business facility is directly used in a new
segment of the taxpayer that primarily employs an emerging
innovative business technology.
__(20) "Health insurance benefits" means employer provided
coverage for medical expenses of the employee or the employee and
his or her family under a group accident or health plan, or
employer contributions to an Archer medical savings account, as
defined in Section 220 of the Internal Revenue Code of 1986, as
amended, or to a health savings account, as defined in Section 223
of the Internal Revenue Code, of the employee when the employer's
contribution to any such account is not less than fifty percent of
the maximum amount permitted for the year as employer-provided
coverage under Section 220 or 223 of the Internal Revenue Code,
whichever section is applicable.
__(21) "Includes" and "including", when used in a definition or
sentence contained in this article, shall not be considered to exclude other things otherwise within the meaning of the term being
defined or the sentence in which the word is used.
__(22) "Innovative business technologies" means and includes,
but is not limited to, emerging technologies and other business
technologies that primarily use state-of-the-art methodologies,
practices or techniques to manufacture, produce or provide its
primary goods or services. Innovative business technologies do not
include any technology that was in commercial use anywhere in the
United States prior to July 1, 2013.
__(23) "Internal Revenue Code of 1986, as amended", or "Internal
Revenue Code", means the United States Internal Revenue Code of
1986 as codified in Title 26 of the United States Code, as amended,
and as defined in section three, article twenty-four of this
chapter as last updated by the Legislature.
__(24) "Leased property" does not include property which the
taxpayer is required to show on its books and records as an asset
under generally accepted principles of financial accounting. If the
taxpayer is prohibited from expensing the lease payments for
federal income tax purposes, the property shall be treated as
purchased property under this section.
__(25) "Life science" means any of several branches of science,
such as biology, medicine, anthropology or ecology, that deal with
living organisms and their organization, life processes and
relationships to each other and their environment: Provided, That the technology was not in commercial use anywhere in the United
States before July 1, 2013.
__(26) "Nanotechnology" means the branch of engineering that
deals with things smaller than one hundred nanometers.
Nanotechnology includes the materials and systems whose structures
and components exhibit novel and significantly improved physical,
chemical, and biological properties, phenomena, and processes due
to their nanoscale size: Provided, That the technology was not in
commercial use anywhere in the United States before July 1, 2013.
__(27) "New business" means any business primarily employing
emerging technology or a twenty-first century business technology
whose ownership and activities are not closely related to a
preexisting business. A mere change in the stock ownership of a
corporation, or the equity ownership of a partnership or other
entity treated as a partnership for federal income tax purposes,
shall not affect its status as an existing business. Additionally,
a new business that acquires substantially all of the assets of a
corporation or other business entity or of a sole proprietorship
shall not be treated as a new business for purposes of this
article. In determining whether or not a new business is closely
related to a preexisting business, all facts and circumstances
shall be considered by the Tax Commissioner. The existence of a
majority of the following factors establish that a new business is
closely related to an existing business:
__(A) The new business's products or services are very similar
to the products or services provided by the preexisting business;
__(B) The new business markets products and services to the same
class of customers as that of the preexisting business;
__(C) The new business is conducted in the same general location
as the preexisting business;
__(D) The new business requires the use of the same or similar
operating assets as those used in the preexisting business;
__(E) The new business's economic success builds on, or depends
on, the success of the preexisting business;
__(F) The activity of the new business is of a type that would
normally be treated as a unit with the preexisting business in the
accounting records of the preexisting business;
__(G) If the new business and the preexisting business are
regulated or licensed, they are regulated or licensed by the same
or similar governmental authority; and
__(H) Twenty percent or more of the equity of the new business
is collectively owned by individuals and/or businesses that
collectively owned more than fifty percent of the equity of the
preexisting business.
__These eight listed factors are not the only ones that may be
considered by the Tax Commissioner. Others may also be taken into
account, in the discretion of the Tax Commissioner. However, this
definition shall not exclude the categorization of a business as a new business for the sole reason that the entity engaging in the
new business already does business in the State of West Virginia.
__(28) "New business facility" means a business facility located
in this state which satisfies all the requirements of paragraphs
(A), (B), (C) and (D) of this subdivision.
__(A) The facility is employed by the taxpayer in a new business
or in a new segment of an existing business the conduct of a
business the net income of which is or will be taxable under
article twenty-one or twenty-four of this chapter. The facility is
not considered a new business facility in the hands of the taxpayer
if the taxpayer's only activity with respect to the facility is to
lease it to another person or persons;
__(B) The facility is purchased by, or leased to, the taxpayer
on or after July 1, 2013;
__(C) The facility was not purchased or leased by the taxpayer
from a related person: Provided, That the Tax Commissioner may
waive this requirement if the facility was acquired from a related
person for its fair market value and the acquisition was not tax
motivated; and
__(D) The facility was not in service or use during the ninety
days immediately prior to transfer of the title to the facility, or
prior to the commencement of the term of the lease of the facility:
Provided, That this ninety-day period may be waived by the Tax
Commissioner if the commissioner determines that persons employed at the facility may be treated as "new employees" as that term is
defined in this subsection.
__(29) "New employee" means:
__(A) A person residing and domiciled in this state, hired by
the taxpayer to fill a position or a job in this state which
previously did not exist in the taxpayer's business enterprise in
this state prior to the date on which the taxpayer's qualified
investment is placed in service or use in this state. The term "new
employee" also includes a person employed by the taxpayer who works
outside this state who relocates in this state, becomes domiciled
in this state and is employed full-time at the new business
facility in this state. In no case may the number of new employees
directly attributable to the investment for purposes of this credit
exceed the total net increase in the taxpayer's employment in this
state: Provided, That the Tax Commissioner may require that the net
increase in the taxpayer's employment in this state be determined
and certified for the taxpayer's controlled group.
__(B) A person is considered to be a "new employee" only if the
person's duties in connection with the operation of the business
facility are on:
__(i) A regular, full-time and permanent basis:
__(I) "Full-time" means employment for at least one hundred
forty hours per month at a wage not less than the prevailing state
or federal minimum wage, depending on which minimum wage provision is applicable to the business;
__(II) "Permanent" does not include employment that is temporary
or seasonal and therefore the wages, salaries and other
compensation paid to the temporary or seasonal employees may not be
considered for purposes of sections five and seven of this article;
or
__(III) A regular, part-time and permanent basis: Provided,
That the person is customarily performing the duties at least
twenty hours per week for at least six months during the taxable
year.
__(30) "New job" means a job which did not exist in the business
of the taxpayer in this state prior to the taxpayer's qualified
investment being made, and which is filled by a new employee.
__(31) "New property" means:__
__(A) Property, the construction, reconstruction or erection of
which is completed on or after July 1, 2013, and placed in service
or use after that date; and
__(B) Property leased or acquired by the taxpayer that is placed
in service or use in this state on or after July 1, 2013, if the
original use of the property commences with the taxpayer and
commences after that date.
__(32) "NAICS" means the North American Industry Classification
System.
__(33) "Original use" means the first use to which the property is put, whether or not the use corresponds to the use of the
property by the taxpayer.
__(34) "Partnership" includes a syndicate, group, pool, joint
venture or other unincorporated organization through or by means of
which any business or venture is carried on, and which is not a
trust or estate, a corporation or a sole proprietorship and which
is treated as a partnership for tax purposes under the laws of this
state. The term "partner" includes a member in such a syndicate,
group, pool, joint venture or other organization.
__(35) "Person" includes any natural person, corporation or
partnership, and includes any entity that is treated like a
corporation or partnership for federal income tax purposes.
__(36) "Photonics" includes the generation, emission,
transmission, modulation, signal processing, switching,
amplification, detection and sensing of light: Provided, That the
technology was not in commercial use anywhere in the United States
before July 1, 2013.
__(37) "Photovoltaic devices" means those products designed,
manufactured and produced to convert sunlight directly into
electricity: Provided, That the technology was not in commercial
use anywhere in the United States before July 1, 2013.
__(38) "Property purchased or leased for business expansion"
means:
__(A) Included property. -- Except as provided in paragraph (B) of this subdivision, the term "property purchased or leased for
business expansion" means real property and improvements thereto,
and tangible personal property, but only if the real or personal
property was constructed, purchased, or leased and placed in
service or use by the taxpayer, for use as a component part of a
new business facility or expanded business facility as defined in
this section, which is located within the State of West Virginia.
This term includes only:
__(i) Real property and improvements thereto having a useful
life of four or more years, placed in service or use on or after
July 1, 2013, by the taxpayer;
__(ii) Real property and improvements thereto, acquired by
written lease having a primary term of ten or more years and placed
in service or use by the taxpayer on or after July 1, 2013;
__(iii) Tangible personal property placed in service or use by
the taxpayer on or after July 1, 2013, with respect to which
depreciation, or amortization in lieu of depreciation, is allowable
in determining the personal or corporation net income tax liability
of the business taxpayer under article twenty-one or twenty-four of
this chapter, and which has a useful life, at the time the property
is placed in service or use in the state, of four or more years;
__(iv) Tangible personal property acquired by written lease
having a primary term of four years or longer, that commenced and
was executed by the parties thereto on or after July 1, 2013, if used as a component part of a new or expanded business facility,
shall be included within this definition; and
__(v) Tangible personal property owned or leased, and used by
the taxpayer at a business location outside the state which is
moved into the State of West Virginia on or after July 1, 2013, for
use as a component part of a new or expanded business facility
located in the state: Provided, That if the property is owned, it
must be depreciable or amortizable personal property for income tax
purposes, and have a useful life of four or more years remaining at
the time it is placed in service or use in the state, and if the
property is leased, the primary term of the lease remaining at the
time the leased property is placed in service or use in the state,
must be four or more years;
__(B) Excluded property. -- The term "property purchased or
leased for business expansion" does not include:
__(i) Property owned or leased by the taxpayer and for which the
taxpayer was previously allowed tax credit under article
thirteen-c, thirteen-d, thirteen-e, thirteen-h, thirteen-q,
thirteen-r, thirteen-s, thirteen-t, thirteen-u, thirteen-aa or
thirteen-bb of this chapter, or the tax credits allowed by this
article;
__(ii) Property owned or leased by the taxpayer and for which
the seller, lessor, or other transferor, was previously allowed tax
credit under article thirteen-c, thirteen-d, thirteen-e, thirteen-h, thirteen-q, thirteen-r, thirteen-s, thirteen-t,
thirteen-u, thirteen-aa or thirteen-bb of this chapter, or the tax
credits allowed by this article;
__(iii) Property owned or leased by the taxpayer that is used to
qualify for any other credit against state taxes allowed by this
code;
__(iv) Repair costs, including materials used in the repair,
unless for federal income tax purposes the cost of the repair must
be capitalized and not expensed;
__(v) Airplanes;
__(vi) Property which is primarily used outside the state, with
use being determined based upon the amount of time the property is
actually used both within and outside the state;
__(vii) Property which is acquired incident to the purchase of
the stock or assets of the seller, unless for good cause shown, the
commissioner consents to waiving this requirement;
__(viii) Natural resources in place; or
__(ix) Purchased or leased property the cost or consideration
for which cannot be quantified with any reasonable degree of
accuracy at the time the property is placed in service or use:
Provided, That when the contract of purchase or lease specifies a
minimum purchase price or minimum annual rent the amount thereof
shall be used to determine the qualified investment in the property
under section eight of this article if the property otherwise qualifies as property purchased or leased for business expansion.
__(39) "Purchase" means any acquisition of property, but only
if:
__(A) The property is not acquired from a person whose
relationship to the person acquiring it would result in the
disallowance of deductions under Section 267 or 707(b) of the
United States Internal Revenue Code of 1986, as amended;
__(B) The property is not acquired by one component member of a
controlled group from another component member of the same
controlled group. The commissioner may waive this requirement if
the property was acquired from a related party for its then fair
market value; and
__(C) The basis of the property for federal income tax purposes,
in the hands of the person acquiring it, is not determined:
__(i) In whole or in part, by reference to the federal adjusted
basis of the property in the hands of the person from whom it was
acquired; or
__(ii) Under Section 1014(e) of the United States Internal
Revenue Code of 1986, as amended.
__(40) "Qualified activity" means any business or other activity
subject to any of the taxes imposed by article thirteen,
twenty-one, twenty-three or twenty-four of this chapter (or any
combination of those articles of this chapter), but does not
include the activity of severance or production of natural resources.
__(41) "Related person" means:
__(A) A corporation, partnership, association or trust
controlled by the taxpayer;
__(B) An individual, corporation, partnership, association or
trust that is in control of the taxpayer;
__(C) A corporation, partnership, association or trust
controlled by an individual, corporation, partnership, association
or trust that is in control of the taxpayer; or
__(D) A member of the same controlled group as the taxpayer.
__For purposes of this definition, "control", with respect to a
corporation, means ownership, directly or indirectly, of stock
possessing fifty percent or more of the total combined voting power
of all classes of the stock of the corporation entitled to vote.
"Control", with respect to a trust, means ownership, directly or
indirectly, of fifty percent or more of the beneficial interest in
the principal or income of the trust. The ownership of stock in a
corporation, of a capital or profits interest in a partnership or
association or of a beneficial interest in a trust is determined in
accordance with the rules for constructive ownership of stock
provided in Section 267(c) of the United States Internal Revenue
Code of 1986, as amended, other than paragraph (3) of that section.
__(42) "Replacement facility" means any property (other than an
expanded facility) that replaces or supersedes any other property located within this state that:
__(A) The taxpayer or a related person used in or in connection
with any activity for more than two years during the period of five
consecutive years ending on the date the replacement or superseding
property is placed in service by the taxpayer; or
__(B) Is not used by the taxpayer or a related person in or in
connection with any qualified activity for a continuous period of
one year or more commencing with the date the replacement or
superseding property is placed in service by the taxpayer.
__(43) "State-of-the-art technology" or "leading edge
technology" means the highest level of development, as of a device,
technique, or scientific field achieved at a particular time:
Provided, That the technology was not in commercial use anywhere in
the United States before July 1, 2013.
__(44) "Taxpayer" means any person subject to any of the taxes
imposed by article twenty-one, twenty-three or twenty-four of this
chapter (or any combination of those articles of this chapter).
__(45) "This code" means the Code of West Virginia, 1931, as
amended.
__(46) "This state" means the State of West Virginia.
__(47) "Used property" means property acquired after June 30,
2013, that is not "new property".
§11-13DD-4. Amount of credit allowed.
__(a) Credit allowed. -- Eligible taxpayers are allowed a credit against the portion of taxes imposed by this state that are
attributable to and the consequence of the taxpayer's qualified
investment, as described in section six of this article, in a new
business, or in a new segment of an existing business, in this
state that utilizes innovative business technology, which results
in the creation of new jobs. The amount of this credit is
determined and applied as provided in this article.
__(b) Amount of credit. -- When the eligible taxpayer creates
at least ten new jobs but less than fifteen new jobs in a new
business in this state that utilizes innovative business technology
and whose qualified investment in this state is at least $5 million
but is less than $10 million, the eligible taxpayer shall for the
tax year in which the ten employees are first employed by the
eligible taxpayer and for the next four tax years thereafter be
exempt from payment of the taxes imposed by articles twenty-three
and twenty-four of this chapter on the taxable capital attributable
to the emerging technology business activity in this state and West
Virginia taxable income attributable to the emerging technology
business activity in this state: Provided, That the eligible
taxpayer may elect to defer for one tax year the start of this
five-year period. When the eligible business is a partnership or
other entity treated as a partnership for federal income tax
purposes, the partners, S corporation shareholders or members of
the limited liability company shall be exempt from paying the tax imposed by article twenty-one of this chapter on his or her
distributive share attributable to the emerging technology business
activity in this state. The eligible business shall also be exempt
from paying the taxes imposed by articles fifteen and fifteen-a of
this chapter on tangible personal property and services purchased
for use or consumption by the eligible taxpayer in the emerging
technology business activity during the same five-year period,
except that this exemption shall not apply to the purchase of motor
fuel or alternative fuels to power a vehicle or to the purchase or
lease of motor vehicles, unless the vehicle is an alternative fuel
vehicle. The exemption from paying the taxes imposed by articles
fifteen and fifteen-a of this chapter on purchases for use in
business allowed by this subsection is in addition to any exemption
that might other otherwise be available to the taxpayer under
articles fifteen and fifteen-a of this chapter. When the taxpayer
qualifies for tax benefits under this subsection, these benefits
are not forfeited if during the applicable five-year period, the
new business creates additional new jobs or makes additional
capital investment at the new business facility or does both.
__(c) Amount of credit. -- When the eligible taxpayer does not
qualify for credit under subsection (b) of this section, either
because the qualified investment exceeds $10 million or the number
of new jobs created is fifteen or more, or for both reasons, the
amount of credit allowable is determined by multiplying the amount of the taxpayer's "qualified investment" (determined under section
six of this article) in "property purchased or leased for business
expansion" (as defined in section three of this article) using
innovative business technologies (as defined in section three of
this article) by the taxpayer's new jobs percentage (determined
under section seven of this article). The product of this
calculation establishes the maximum amount of credit allowable
under this article due to the qualified investment.
§11-13DD-5. Application of annual credit allowance.
__(a) In general. - When the credit is determined pursuant to
subsection (c), section four of this article, the aggregate annual
credit allowance for the current taxable year is an amount equal to
the sum of the following:
__(1) The one-tenth part allowed under subsection (c), section
four of this article for qualified investment placed into service
or use during a prior taxable year; plus
__(2) The one-tenth part allowed under subsection (c), section
four of this article for qualified investment placed into service
or use during the current taxable year.
__(b) Application of current year annual credit allowance. --
The amount determined under subsection (a) of this section is
allowed as a credit against one hundred percent of that portion of
the taxpayer's state tax liability which is attributable to and the
direct result of the taxpayer's qualified investment, and applied as provided in subsections (c) through (f), both inclusive, of this
section, and in that order.
__(c) Business and occupation taxes. -- That portion of the
allowable credit attributable to qualified investment in a business
or other activity subject to the taxes imposed by section two-o,
article thirteen of this chapter must first be applied to reduce
the taxes imposed or payable under that section two-o, for the
taxable year (determined before application of allowable credits
against tax and the annual exemption). In no case may the credit
allowed under this article be applied to reduce any tax imposed by
under any other section of article thirteen of this chapter except
section two-o of that article.
__(1) If the taxes due under section two-o, article thirteen of
this chapter are not solely attributable to and the direct result
of the taxpayer's qualified investment in a business or other
activity taxable under that section two-o, the amount of those
taxes that are attributable is determined by multiplying the amount
of taxes due under section two-o, article thirteen of this chapter,
for the taxable year (determined before application of any
allowable credits against tax and the annual exemption), by a
fraction, the numerator of which is all wages, salaries and other
compensation paid during the taxable year to all employees of the
taxpayer employed in this state, whose positions are directly
attributable to the qualified investment in a business or other activity taxable under section two-o, article thirteen of this
chapter. The denominator of the fraction shall be the wages,
salaries and other compensation paid during the taxable year to all
employees of the taxpayer employed in this state, whose positions
are directly attributable to the business or other activity of the
taxpayer that is taxable under article thirteen of this chapter.
__(2) The annual exemption allowed by section three, article
thirteen of this chapter, plus any credits allowable under articles
thirteen-d, thirteen-e, thirteen-q, thirteen-r and thirteen-s of
this chapter, shall be applied against and reduce only the portion
of article thirteen of this chapter taxes not apportioned to the
qualified investment under this article: Provided, That any excess
exemption or credits may be applied against the amount of article
thirteen taxes apportioned to the qualified investment under this
article, that is not offset by the amount of annual credit against
the taxes allowed under this article for the taxable year, unless
their application is otherwise prohibited by this chapter.
__(d) Business franchise tax. --
__(1) After application of subsection (c) of this section, any
unused allowable credit is next applied to reduce the taxes imposed
by article twenty-three of this chapter for the taxable year
(determined after application of the credits against tax provided
in section seventeen of article twenty-three of this chapter, but
before application of any other allowable credits against tax).
__(2) If the taxes due under article twenty-three of this
chapter are not solely attributable to and the direct result of the
taxpayer's qualified investment in a business or other activity
taxable under article twenty-three of this chapter for the taxable
year, the amount of the taxes which are so attributable are
determined by multiplying the amount of taxes due (determined after
application of the credits against tax as provided in section
seventeen, article twenty-three of this chapter, but before
application of any other allowable credits), by a fraction, the
numerator of which is all wages, salaries and other compensation
paid during the taxable year to all employees of the taxpayer
employed in this state, whose positions are directly attributable
to the qualified investment in a business or other activity taxable
under article twenty-three of this chapter. The denominator of the
fraction is wages, salaries and other compensation paid during the
taxable year to all employees of the taxpayer employed in this
state, whose positions are directly attributable to the business or
other activity of the taxpayer that is taxable under article
twenty-three of this chapter.
__(3) Any credits allowable under articles thirteen-d,
thirteen-e, thirteen-q, thirteen-r and thirteen-s of this chapter
are applied against and reduce only the portion of article
twenty-three of this chapter taxes not apportioned to the qualified
investment under this article: Provided, That any excess exemption or credits may be applied against the amount of those article
twenty-three taxes apportioned to the qualified investment under
this article that is not offset by the amount of annual credit
against those taxes allowed under this article for the taxable
year, unless their application is otherwise prohibited by this
chapter.
__(e) Corporation net income taxes. --
__(1) After application of subsections (c) and (d) of this
section, any unused credit is next applied to reduce the taxes
imposed by article twenty-four of this chapter for the taxable year
(determined before application of allowable credits against tax).
__(2) If the taxes due under article twenty-four of this chapter
(determined before application of allowable credits against tax)
are not solely attributable to and the direct result of the
taxpayer's qualified investment, the amount of the taxes that is
attributable are determined by multiplying the amount of taxes due
under article twenty-four of this chapter for the taxable year
(determined before application of allowable credits against tax),
by a fraction, the numerator of which is all wages, salaries and
other compensation paid during the taxable year to all employees of
the taxpayer employed in this state whose positions are directly
attributable to the qualified investment. The denominator of the
fraction is the wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer employed in this state.
__(3) Any credits allowable under article twenty-four of this
chapter are applied against and reduce only the amount of article
twenty-four of this chapter taxes not apportioned to the qualified
investment under this article: Provided, That any excess credits
may be applied against the amount of article twenty-four of this
chapter taxes apportioned to the qualified investment under this
article that is not offset by the amount of annual credit against
such taxes allowed under this article for the taxable year, unless
their application is otherwise prohibited by this chapter.
__(f) Personal income taxes. --
__(1) If the person making the qualified investment is an
electing small business corporation (as defined in Section 1361 of
the United States Internal Revenue Code of 1986 as amended), a
partnership, or a limited liability company that is treated as a
partnership for federal income tax purposes, then any unused credit
(after application of subsections (c), (d) and (e) of this section)
is allowed as a credit against the taxes imposed by article
twenty-one of this chapter on the income from business or other
activity subject to tax under article thirteen or twenty-three of
this chapter that is attributable to the business activity for
credit is allowed under this article.
__(2) Electing small business corporations, limited liability
companies, partnerships and other unincorporated organizations shall allocate the credit allowed by this article among its members
in the same manner as profits and losses are allocated for the
taxable year.
__(3) If the amount of taxes due under article twenty-one of
this chapter (determined before application of allowable credits
against tax) that is attributable to business, is not solely
attributable to and the direct result of the qualified investment
of the electing small business corporation, limited liability
company, partnership, other unincorporated organization or sole
proprietorship, the amount of the taxes that are so attributable
are determined by multiplying the amount of taxes due under article
twenty-one of this chapter (determined before application of
allowable credits against tax), that is attributable to business by
a fraction, the numerator of which is all wages, salaries and other
compensation paid during the taxable year to all employees of the
electing small business corporation, limited liability company,
partnership, other unincorporated organization or sole
proprietorship employed in this state, whose positions are directly
attributable to the qualified investment. The denominator of the
fraction is the wages, salaries and other compensation paid during
the taxable year to all employees of the taxpayer.
__(g) No credit is allowed under this section against any
employer withholding taxes imposed by article twenty-one of this
chapter.
__(h) If the wages, salaries and other compensation fraction
formula provisions of subsections (c) through (f) of this section,
inclusive, do not fairly represent the taxes solely attributable to
and the direct result of qualified investment of the taxpayer the
commissioner may require, in respect to all or any part of the
taxpayer's businesses or activities, if reasonable:
__(1) Separate accounting or identification;
__(2) Adjustment to the wages, salaries and other compensation
fraction formula to reflect all components of the tax liability;
__(3) The employment of any other method to effectuate an
equitable attribution of the taxes. In order to effectuate the
purposes of this subsection, the commissioner may propose for
promulgation rules, including emergency rules, in accordance with
article three, chapter twenty-nine-a of this code.
__(i) Unused credit. -- If any credit remains after application
of subsection (b) of this section, the amount thereof is carried
forward to each ensuing tax year until used or until the expiration
of the third taxable year subsequent to the end of the initial ten
year credit application period. If any unused credit remains after
the thirteenth year, the amount thereof is forfeited. No carryback
to a prior taxable year is allowed for the amount of any unused
portion of any annual credit allowance.
§11-13DD-6. Qualified investment.
__(a) General. -- The qualified investment in property purchased or leased for business expansion is the applicable percentage of
the cost of each property purchased or leased for the purpose of
business expansion which is placed in service or use in this state
by the taxpayer during the taxable year.
__(b) Applicable percentage. -- For the purpose of subsection
(a) of this section, the applicable percentage of any property is
determined under the following table:
__If useful life is:The applicable percentage is:
__Less than 4 years....................................0%
__4 years or more but less than 6 years ..........33 1/3%
__6 years or more but less than 8 years ..........66 2/3%
__8 years or more ...................................100%
The useful life of any property, for purposes of this section, is
determined as of the date the property is first placed in service
or use in this state by the taxpayer, determined in accordance with
rules and requirements the Tax Commissioner may proscribe.
__(c) Cost. -- For purposes of subsection (a) of this section,
the cost of each property purchased for business expansion is
determined under the following rules:
__(1) Trade-ins. - Cost does not include the value of property
given in trade or exchange for the property purchased for business
expansion.
__(2) Damaged, destroyed or stolen property. -- If property is
damaged or destroyed by fire, flood, storm or other casualty, or is stolen, then the cost of replacement property does not include any
insurance proceeds received in compensation for the loss.
__(3) Rental property. --
__(A) The cost of real property acquired by written lease for a
primary term of ten years or longer is one hundred percent of the
rent reserved for the primary term of the lease, not to exceed
twenty years.
__(B) The cost of tangible personal property acquired by written
lease for a primary term of:
__(i) Four years, or longer, is one third of the rent reserved
for the primary term of the lease;
__(ii) Six years, or longer, is two-thirds of the rent reserved
for the primary term of the lease; or
__(iii) Eight years, or longer, is one hundred percent of the
rent reserved for the primary term of the lease, not to exceed
twenty years: Provided, That in no event may rent reserved include
rent for any year subsequent to expiration of the book life of the
equipment, determined using the straight-line method of
depreciation.
__(4) Self-constructed property. -- In the case of
self-constructed property, the cost thereof is the amount properly
charged to the capital account for depreciation in accordance with
federal income tax law.
__(5) Transferred property. -- The cost of property used by the taxpayer out-of-state and then brought into this state, is
determined based on the remaining useful life of the property at
the time it is placed in service or use in this state, and the cost
is the original cost of the property to the taxpayer less straight
line depreciation allowable for the tax years or portions thereof
the taxpayer used the property outside this state. In the case of
leased tangible personal property, cost is based on the period
remaining in the primary term of the lease after the property is
brought into this state for use in a new or expanded business
facility of the taxpayer, and is the rent reserved for the
remaining period of the primary term of the lease, not to exceed
twenty years, or the remaining useful life of the property (as
determined by this section), whichever is less.
§11-13DD-7. New jobs; new jobs percentage.
__(a) In general. -- For purposes of this article, the new jobs
created by the taxpayer must be directly attributable to taxpayer's
qualified investment in this state, must be filled by new employees
as defined in section three of this article and the compensation of
new employees filling the new jobs must be equal to or exceed the
compensation and health insurance benefits set forth in section
eight of this article during the period for which the credit
allowed by this article may be taken.
__(b) When a job is attributable. -- An employee's position is
directly attributable to the qualified investment if:
__(1) The employee's service is performed or his or her base of
operations is at the new or expanded business facility;
__(2) The position did not exist prior to the construction,
renovation, expansion or acquisition of the business facility and
the making of the qualified investment; and
__(3) But for the qualified investment, the position would not
have existed.
__(c) Applicable percentage. -- The taxpayer's new jobs
percentage is determined under the following table:
__If number of new jobs The applicable percentage is:
is at least:
_____1515%
_____2020%
_____28030%
_____52040%
__(d) Certification of new jobs. -- With the annual return for
the applicable taxes filed for the taxable year in which the
qualified investment is first placed in service or use in this
state, the taxpayer shall estimate and certify the number of new
jobs reasonably projected to be created by it in this state within
the period prescribed in subsection (f) of this section that are,
or will be, directly attributable to the qualified investment of
the taxpayer. For purposes of this section, "applicable taxes"
means the taxes imposed by articles thirteen, twenty-one, twenty-three and twenty-four of this chapter against which this
credit is applied.
__(e) Equivalency of permanent employees. -- The hours of
part-time employees shall be aggregated to determine the number of
equivalent full-time employees for the purpose of this section.
__(f) Redetermination of new jobs percentage. -- With the annual
return for the applicable taxes imposed, filed for the third
taxable year in which the qualified investment is in service or
use, the taxpayer shall certify the actual number of new jobs
created by it in this state that are directly attributable to the
qualified investment of the taxpayer.
__(1) If the actual number of jobs created would result in a
higher new jobs percentage, the credit allowed under this article
shall be redetermined and amended returns filed for the first and
second taxable years that the qualified investment was in service
or use in this state.
__(2) If the actual number of jobs created would result in a
lower new jobs percentage, the credit previously allowed under this
article shall be redetermined and amended returns filed for the
first and second taxable years. In applying the amount of
redetermined credit allowable for the two preceding taxable years,
the redetermined credit shall first be applied to the extent it was
originally applied in the prior two years to personal income taxes,
then to corporation net income taxes, then to business franchise taxes and, lastly, to business and occupation taxes. Any
additional taxes due under this chapter shall be remitted with the
amended returns filed with the commissioner, along with interest,
as provided in section seventeen, article ten of this chapter, and
a ten-percent penalty determined on the amount of taxes due with
the amended return, which may be waived by the commissioner if the
taxpayer shows that the over-claimed amount of the new jobs
percentage was due to reasonable cause and not due to willful
neglect.
§11-13DD-8. New jobs compensation and benefits requirement.
__(a) Notwithstanding any provision of this article to the
contrary, no credit shall be allowed under this article unless the
following compensation requirements are met beginning with the tax
year when the new employee first begins working at the new or
expanded business facility and continuing through the period for
which credit is allowed under this article:
__(1) The median compensation paid to the employees filling the
new jobs must be at least $50,000 annually: Provided, That
beginning November 1, 2013, and on or before every November 1
thereafter, the Tax Commissioner shall adjust this minimum annual
compensation requirement in the manner provided in subsection (b)
of this section, which adjustment shall apply to compensation paid
for employee services during the next calendar year;
__(2) Health insurance benefits are provided to all full-time permanent employees working at the new or expanded business
facility in this state; and
__(3) Each new job is a full-time, permanent position, as those
terms are defined in section three of this article.
__Jobs that do not provide health insurance benefits do not
qualify as new jobs for purposes of the credit authorized by this
article. Additionally, jobs that are less than full-time,
permanent positions do not qualify as new jobs under this article.
__(b) Adjustment of annual compensation for inflation. -- The
compensation requirements for credit under this article shall be
adjusted for inflation by application of a cost-of-living
adjustment. The annual compensation amount shall be applicable, as
adjusted, each year throughout the ten-year credit period. Failure
of a taxpayer entitled to credit under this article to meet the
annual compensation requirement for any year shall result in
forfeiture of the credit for that year. However, if in any
succeeding year within the original ten-year credit period, the
taxpayer pays annual compensation to its employees which exceeds
the inflation adjusted annual compensation amount for that year,
the taxpayer shall regain entitlement to take the credit for that
year only. No credit forfeited in a prior year may be taken, and
the tax year or years to which the forfeited credit would have been
applied shall be forfeited and deducted from the remainder of the
years over which the credit can be taken.
__(1) Cost-of-living adjustment. -- For purposes 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
calendar year 2013.
__(2) Consumer price index for any calendar year. -- For
purposes of this section, 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 such
calendar year.
__(3) Consumer price index. -- For purposes of this section, the
term "Federal Consumer Price Index" means the last consumer price
index for all urban consumers published by the United States
Department of Labor.
__(4) Rounding. -- If any increase in the annual compensation
amount under this section is not a multiple of $50, such increase
shall be rounded to the next lowest multiple of $50.
__(c) Unused credit remaining in any tax year after application
against the taxes specified in section five 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.
__(d) 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 the remainder of the credit period allowed by either subsection (b) or (c), section four of
this article, 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
article 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.
§11-13DD-9. Application for credit required; failure to make
timely application; burden of proof.
__(a) Application for credit required. -- Notwithstanding any
provision of this article to the contrary, no credit is allowed or
may be applied under this article for any qualified investment
property placed in service or use until the person asserting a
claim for the allowance of credit under this article makes written
application to the Tax Commissioner for allowance of credit as
provided in this subsection. An application for credit shall be
filed, in the form prescribed by the Tax Commissioner, no later
than the last day for filing the tax returns, determined by
including any authorized extension of time for filing the return,
required under article twenty-one or twenty-four of this chapter
for the taxable year in which the property to which the credit
relates is placed in service or use and all information required by
the form shall be provided.
__(b) Failure to make timely application. -- The failure to
timely apply for the credit results in the forfeiture of fifty
percent of the annual credit allowance otherwise allowable under
this article. This penalty applies annually until the application
is filed.
__(c) The burden of proof is on the taxpayer to establish by
clear and convincing evidence that the taxpayer is entitled to the
benefits allowed by this article.
§11-13DD-10. Identification of investment credit property.
__Every taxpayer who claims credit under this article shall
maintain sufficient records to establish the following facts for
each item of qualified property:
__(1) Its identity;
__(2) Its actual or reasonably determined cost;
__(3) Its straight-line depreciation life;
__(4) The month and taxable year in which it was placed in
service;
__(5) The amount of credit taken; and
__(6) The date it was disposed of or otherwise ceased to be
qualified property.
§11-13DD-11. Forfeiture of unused tax credits; redetermination of
credit allowed.
_____(a) Disposition of property or cessation of use. -- If during any taxable year, property with respect to which a tax credit has
been allowed under this article:
_____(1) Is disposed of prior to the end of its useful life, as
determined under section eight of this article; or
_____(2) Ceases to be used in an eligible business of the taxpayer
in this state prior to the end of its useful life, as determined
under section eight of this article, then the unused portion of the
credit allowed for the property is forfeited for the taxable year
and all ensuing years. Additionally, except when the property is
damaged or destroyed by fire, flood, storm or other casualty, or is
stolen, the taxpayer shall redetermine the amount of credit allowed
in all earlier years by reducing the applicable percentage of cost
of the property allowed under section eight of this article, to
correspond with the percentage of cost allowable for the period of
time that the property was actually used in this state in the new
or expanded business of the taxpayer. The taxpayer shall then file
a reconciliation statement for the year in which the forfeiture
occurs and pay any additional taxes owed due to reduction of the
amount of credit allowable for the earlier years, plus interest and
any applicable penalties. The reconciliation statement shall be
filed with the annual return for the primary tax for which the
taxpayer is liable under article twenty-three of this chapter, or
under article twenty-one or twenty-four of this chapter.
_____(b) Cessation of operation of business facility. -- If during any taxable year the taxpayer ceases operation of a business
facility in this state for which credit was allowed under this
article, before expiration of the useful life of property with
respect to which tax credit has been allowed under this article,
then the unused portion of the allowed credit is forfeited for the
taxable year and for all ensuing years. Additionally, except when
the cessation is due to fire, flood, storm or other casualty, the
taxpayer shall redetermine the amount of credit allowed in earlier
years by reducing the applicable percentage of cost of the property
allowed under section eight of this article, to correspond with the
percentage of cost allowable for the period of time that the
property was actually used in this state in a business of the
taxpayer that is taxable under article twenty-three or twenty-four
of this chapter, or in the case of a partnership, the distributive
share of partnership items is taxable under article twenty-one of
this chapter. The taxpayer shall then file a reconciliation
statement with the annual return for the primary tax for which the
taxpayer is liable under article twenty-one, twenty-three or
twenty-four of this chapter, for the year in which the forfeiture
occurs, and pay any additional taxes owed due to the reduction of
the amount of credit allowable for the earlier years, plus interest
and any applicable penalties.
_____(c) Reduction in number of employees. -- If during any taxable
year subsequent to the taxable year in which the new jobs percentage is redetermined as provided in section seven of this
article, the average number of employees of the taxpayer, for the
then current taxable year, employed in positions created because of
and directly attributable to the qualified investment falls below
the minimum number of new jobs created upon which the taxpayer's
annual credit allowance is based, the taxpayer shall calculate what
his or her annual credit allowance would have been had his or her
new jobs percentage been determined based upon the average number
of employees, for the then current taxable year, employed in
positions created because of and directly attributable to the
qualified investment. The difference between the result of this
calculation and the taxpayer's annual credit allowance for the
qualified investment as determined under section four of this
article, is forfeited for the then current taxable year, and for
each succeeding taxable year unless for a succeeding taxable year
the taxpayer's average employment in positions directly
attributable to the qualified investment once again meets the level
required to enable the taxpayer to utilize its full annual credit
allowance for that taxable year.
§11-13DD-12. Recapture of credit; recapture tax imposed.
_____(a) When recapture tax applies. --
_____(1) Any person who places qualified investment property in
service or use and who fails to use the qualified investment
property for at least the period of its useful life (determined as of the time the property was placed in service or use), or the
period of time over which tax credits allowed under this article
with respect to the property are applied under this article,
whichever period is less, and who reduces the number of its
employees filling new jobs in its business in this state, which
were created and are directly attributable to the qualified
investment property, after the third taxable year in which the
qualified investment property was placed in service or use, or
fails to continue to employ individuals in all the new jobs created
as a direct result of the qualified investment property and used to
qualify for the credit allowed by this article, prior to the end of
the tenth taxable year after the qualified investment property was
placed in service or use, the person shall pay the recapture tax
imposed by subsection (b) of this section.
_____(2) This section does not apply when section thirteen of this
article applies. However, the successor, or the successors, and
the person, or persons, who previously claimed credit under this
article with respect to the qualified investment property and the
new jobs attributable thereto, are jointly and severally liable for
payment of any recapture tax subsequently imposed under this
section with respect to the qualified investment property and new
jobs.
_____(b) Recapture tax imposed. -- The recapture tax imposed by
this subsection is the amount determined as follows:
_____(1) Full recapture. -- If the taxpayer prematurely removes
qualified investment property placed in service (when considered as
a class) from economic service in the taxpayer's qualified
investment business activity in this state, and the number of
employees filling the new jobs created by the person falls below
the number of new jobs required to be created in order to qualify
for the amount of credit being claimed or the requirements of
section eight of this article are not satisfied, the taxpayer shall
recapture the amount of credit claimed under section four of this
article for the taxable year, and all preceding taxable years, on
qualified investment property which has been prematurely removed
from service. Additionally, the property tax benefit allowed under
article six-l of this chapter shall be recaptured for a like
period. The amount of tax due under this subdivision is an amount
equal to the amount of credit that is recaptured under this
subdivision plus the amount of the property tax benefit recaptured
under this section.
_____(2) Partial recapture. -- If the taxpayer prematurely removes
qualified investment property from economic service in the
taxpayer's qualified investment business activity in this state,
and the number of employees filling the new jobs created by the
person remains ten or more, but falls below the number necessary to
sustain continued application of credit determined by use of the
new job percentage upon which the taxpayer's one-tenth annual credit allowance was determined under section four or section ten
of this article, taxpayer shall recapture an amount of credit equal
to the difference between: (A) The amount of credit claimed under
section four of this article for the taxable year, and all
preceding taxable years; and (B) the amount of credit that would
have been claimed in those years if the amount of credit allowable
under section four of this article had been determined based on the
qualified investment property which remains in service using the
average number of new jobs filled by employees in the taxable year
for which recapture occurs. The amount of tax due under this
subdivision is an amount equal to the amount of credit that is
recaptured under this subdivision.
_____(3) Additional recapture. -- If after a partial recapture
under subdivision (2) of this subsection, the taxpayer further
reduces the number of employees filling new jobs, the taxpayer
shall recapture an additional amount determined as provided under
subdivision (1) of this subsection. The amount of tax due under
this subdivision is an amount equal to the amount of credit that is
recaptured under this subdivision.
_____(c) Payment of recapture tax. -- The amount of tax recaptured
under this section is due and payable on the day the person's
annual return is due for the taxable year in which this section
applies, under article twenty-one or twenty-four of this chapter.
When the employer is a partnership, limited liability company or Subchapter S corporation for federal income tax purposes, the
recapture tax shall be paid by those persons who are partners in
the partnership, members in the company, or shareholders in the
Subchapter S corporation, in the taxable year in which recapture
occurs under this section. The Tax Commissioner shall cause the
property tax benefit recaptured to be paid over to the sheriff of
the county in which the property is or was located within sixty
days after the recapture tax is paid to the Tax Commissioner.
_____(d) Rules. -- The Tax Commissioner may promulgate such rules
as may be useful or necessary to carry out the purpose of this
section and to implement the intent of the Legislature. Rules
shall be promulgated in accordance with the provisions of article
three, chapter twenty-nine-a of this code.
§11-13DD-13. Transfer of qualified investment to successors.
_____(a) Mere change in form of business. -- Property may not be
treated as disposed of under section eleven of this article, by
reason of a mere change in the form of conducting the business as
long as the property is retained in the successor business in this
state, and the transferor business retains a controlling interest
in the successor business. In this event, the successor business
is allowed to claim the amount of credit still available with
respect to the business facility or facilities transferred, and the
transferor business may not be required to redetermine the amount
of credit allowed in earlier years.
_____(b) Transfer or sale to successor. -- Property is not treated
as disposed of under section eleven of this article by reason of
any transfer or sale to a successor business which continues to
operate the business facility in this state. Upon transfer or
sale, the successor shall acquire the amount of credit that remains
available under this article for each subsequent taxable year and
the transferor business is not required to redetermine the amount
of credit allowed in earlier years.
§11-13DD-14. Failure to keep records of investment credit
property.
_____A taxpayer who does not keep the records required for
identification of investment credit property is subject to the
following rules:
_____(1) A taxpayer is treated as having disposed of, during the
taxable year, any investment credit property which the taxpayer
cannot establish was still on hand, in this state, at the end of
that year.
_____(2) If a taxpayer cannot establish when investment credit
property reported for purposes of claiming this credit returned
during the taxable year was placed in service, the taxpayer is
treated as having placed it in service in the most recent prior
year in which similar property was placed in service, unless the
taxpayer can establish that the property placed in service in the
most recent year is still on hand. In that event, the taxpayer will be treated as having placed the returned property in service
in the next most recent year.
§11-13DD-15. Interpretation and construction.
_____(a) No inference, implication or presumption of legislative
construction or intent may be drawn or made by reason of the
location or grouping of any particular section, provision or
portion of this article; and no legal effect may be given to any
descriptive matter or heading relating to any section, subsection
or paragraph of this article.
_____(b) This article shall be reasonably construed in order to
effectuate the legislative intent recited in section two of this
article.
_____(c) In no event may any property that is treated as qualified
investment property for purposes of this article be used to qualify
for credit under any other article of this chapter.
§11-13DD-16. Tax credit review and accountability.
_____(a) On or before February 1, 2018, and on or before February
1 of every third year thereafter, the Tax Commissioner shall submit
to the Governor, the President of the Senate and the Speaker of the
House of Delegates, a tax credit review and accountability report
evaluating the cost effectiveness of the credit allowed by this
article during the most recent three-year period for which
information is available. The criteria to be evaluated shall
include, but not be limited to, for each year of the three-year period:
_____(1) The numbers of taxpayers claiming the credit;
_____(2) The net number of new jobs created by all taxpayers
claiming the credit;
_____(3) The cost of the credit;
_____(4) The cost of the credit per new job created; and
_____(5) Comparison of employment trends for an industry and for
taxpayers within the industry that claim the credit.
_____(b) Taxpayers claiming the credit shall provide any
information the Tax Commissioner may require to prepare the report:
Provided, That the information provided is subject to the
confidentiality and disclosure provisions of sections five-d and
five-s, article ten of this chapter.
§11-13DD-17. Effective date; termination date.
_____(a) Effective date. - The credit allowed by this article is
allowed for qualified investment placed in service or use on or
after July 1, 2013, subject to the rules contained in this section.
_____(b) Termination date. - Unless extended by the Legislature,
this credit shall not be allowed for any qualified investment
property placed in service or use after December 31, 2021:
Provided, That when the qualified investment property was placed in
service or use prior to January 1, 2021, taxpayers shall be allowed
the tax benefits allowed by section four of this article for the
remainder of the credit period allowed by subsection (b) of that section, or the remainder of the credit period allowed under
subsection (c) of that section, depending upon which is applicable
to the taxpayer.
§11-13DD-18. Severability.
_____(a) If any provision of this article or the application
thereof is for any reason adjudged by any court of competent
jurisdiction to be invalid, the judgment may not affect, impair or
invalidate the remainder of the article, but shall be confined in
its operation to the provision thereof directly involved in the
controversy in which the judgment shall have been rendered, and the
applicability of the provision to other persons or circumstances
may not be affected thereby.
_____(b) If any provision of this article or the application
thereof is made invalid or inapplicable by reason of the repeal or
any other invalidation of any statute therein addressed or referred
to, such invalidation or inapplicability may not affect, impair or
invalidate the remainder of the article, but shall be confined in
its operation to the provision thereof directly involved with,
pertaining to, addressing or referring to the statute, and the
application of the provision with regard to other statutes or in
other instances not affected by any such repealed or invalid
statute may not be abrogated or diminished in any way.
NOTE:
The purpose of this bill is to enact the West Virginia
Innovation Free-Trade Act of 2013 consisting of West Virginia
Innovation Free-Trade Business Technology Property Valuation Act
and the West Virginia Innovation Free-Trade Tax Credit Act, the
purpose of which is to encourage the development and use in this
state of emerging technologies to create good jobs and grow West
Virginia's economy. The bill defines terms. The bill specifies the
method for valuation of certain property. The bill provides for
application to county assessors by specified date. The bill
provides a procedure for protest and appeal of determination by
county assessor. The bill requires the West Virginia Development
Office to report to the Joint Committee on Government and Finance
on the economic impact. The bill makes legislative findings. The
bill allows credit and exemption from certain taxes. The bill
provides for computation of credit, application of credit and
period for which credit is allowed. The bill requires an
application to claim the credit. The bill requires that new jobs be
good-paying jobs with health benefits. The bill requires
identification of investment credit property and recomputation of
credit in event of premature disposition of investment property.
The bill provides for forfeiture of unused tax credits and
redetermination of credit allowed. The bill imposes recapture tax
under specified circumstances to recover state taxes and property
taxes. The bill allows transfer of qualified investment to
successors. The bill provides rules for failure to keep records of
investment credit property. The bill provides rules for
interpretation and construction of act. The bill provides for tax
credit review and accountability. The bill specifies effective
dates and termination dates. The bill provides rule-making
authority. The bill provides a severability clause.
These articles are new, therefore they have been completely
underscored.