Bill Text: WV SB2004 | 2017 | 2nd Special Session | Introduced


Bill Title: Relating to tax credits for rehabilitation of historic buildings and structures

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2017-10-17 - To Finance [SB2004 Detail]

Download: West_Virginia-2017-SB2004-Introduced.html

WEST virginia Legislature

2017 SECOND EXTRAORDINARY session

FISCAL NOTE

 
Introduced

Senate Bill 2004

By Senators Carmichael (Mr. President) and Prezioso

(By Request of the Executive)

[Introduced October 17, 2017; Referred to the Committee on Finance]

A BILL to amend and reenact §11-21-8a and §11-21-8e of the Code of West Virginia, 1931, as amended; and to amend and reenact §11-24-23a and §11-24-23e of said code, all relating generally to tax credits for rehabilitation of historic buildings and structures; increasing the amount of tax credit against personal and corporate net income taxes from ten percent to twenty-five percent for expenditures made on or after December 31, 2017; providing for the use of tax credit on or after January 1, 2020; prohibiting eligibility for credit if the taxpayer is in arrears on certain tax payments; providing rule-making authority to the Tax Commissioner; amending carry back and carry forward provisions for tax credit; limiting the maximum amount available for tax credit per project and in the aggregate per West Virginia state fiscal year; requiring the state Historic Preservation Officer to reserve a certain amount of available tax credits for projects where proposed tax credits will not exceed $500,000 per project; authorizing the state Historic Preservation Officer to reallocate unused credits reserved for certain projects; providing procedures for the issuance of tax credit reservations and certificates by the state Historic Preservation Officer; requiring the state Historic Preservation Officer to prescribe and publish a form and instructions for applications for credits; providing for an application fee payable to the state Historic Preservation Officer; requiring the state Historic Preservation Officer to review and act upon applications within thirty days of receipt; and providing a sunset provision.

Be it enacted by the Legislature of West Virginia:


That §11-21-8a and §11-21-8e of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that §11-24-23a and §11-24-23e of said code be amended and reenacted, all to read as follows:


ARTICLE 21. PERSONAL INCOME TAX.

§11-21-8a. Credit for qualified rehabilitated buildings investment.

A credit against the tax imposed by the provisions of this article shall be is allowed as follows:

(a) Certified historic structures. – For certified historic structures, the credit is equal to ten percent of qualified rehabilitation expenditures as defined in §47(c)(2), Title 26 of the United States Code, as amended: Provided, That for qualified rehabilitation expenditures made after December 31, 2017, pursuant to an historic preservation certification application, Part 2 – Description of Rehabilitation, received by the state historic preservation office after December 31, 2017, the credit allowed by this section is equal to twenty-five percent of the qualified rehabilitation expenditure: Provided, however, That the credit authorized by this section for qualified rehabilitation expenditures made after December 31, 2017, may not be used to offset tax liabilities of the taxpayer prior to the tax year beginning on or after January 1, 2020: Provided further, That the taxpayer is not entitled to this credit if, when the applicant begins to claim the credit and throughout the time period within which the credit is claimed, the taxpayer is in arrears in the payment of any tax administered by the Tax Division or the taxpayer is delinquent in the payment of property taxes on the property containing the certified historic tax structure when the applicant begins to claim the credit and throughout the time period within which the credit is claimed. The Tax Commissioner shall promulgate procedural rules in accordance with article three, chapter twenty-nine-a of this code that provide what information must accompany any claim for the tax credit for the determination that the taxpayer is not in arrears in the payment of any tax administered by the Tax Division nor is the taxpayer delinquent in the payment of property taxes on the property containing the certified historic tax structure, and such other administrative requirements as the Tax Commissioner may specify. This credit is available for both residential and nonresidential buildings located in this state, that are reviewed by the West Virginia Division of Culture and History and designated by the National Park Service, United States Department of the Interior as “certified historic structures,” and further defined as a “qualified rehabilitated building,” as defined under §47(c)(1), Title 26 of the United States Code, as amended.

(b) Unless extended by action of the Legislature, the provisions of this section will terminate and have no more effect on or after December 31, 2022.

§11-21-8e. Carryback, carryforward.


(a) Any unused portion of the credit for qualified rehabilitated buildings investment authorized by section eight-a of this article which may not be taken in the taxable year to which the credit applies qualifies for carryback and carryforward treatment subject to the identical general provisions under §39, Title 26 of the United States Code, as amended: Provided, That the amount of the credit taken in a taxable year shall in no event exceed the tax liability due for the taxable year: Provided, however, That for tax years beginning on and after January 1, 2020, any unused portion of the credit authorized by section eight-a of this article, may not be carried back to any prior taxable year: Provided further, That for tax years beginning on and after January 1, 2020, any unused portion of the credit authorized by section eight-a of this article may be carried over to each of the next ten tax years following the first tax year for which the credit entitlement is authorized under this article for a specific qualified rehabilitation buildings investment until used to exhaustion or forfeited due to lapse of time.

(b) Effective for taxable years beginning on and after January 1, 2001, credits granted to an electing small business corporation (S corporation), limited partnership, general partnership, limited liability company or multiple owners of property shall be passed through to the shareholders, partners, members or owners, either pro rata or pursuant to an agreement among the shareholders, partners, members or owners documenting an alternative distribution method. The Tax Commissioner shall promulgate procedural rules in accordance with article three, chapter twenty-nine-a of this code that provide the method of reporting the alternative method of distribution authorized by this section.

ARTICLE 24. CORPORATION NET INCOME TAX.

§11-24-23a. Credit for qualified rehabilitated buildings investment.


(a) A credit against the tax imposed by the provisions of this article shall be allowed as follows:

Certified historic structures. – For certified historic structures, the credit is equal to ten percent of qualified rehabilitation expenditures as defined in §47(c)(2), Title 26 of the United States Code, as amended: Provided, That for qualified rehabilitation expenditures made after December 31, 2017, pursuant to an historic preservation certification application, Part 2 – Description of Rehabilitation, received by the state historic preservation office after December 31, 2017, the credit allowed by this section is equal to twenty-five percent of the qualified rehabilitation expenditure: Provided, however, That the credit authorized by this section for qualified rehabilitation expenditures made after December 31, 2017, may not be used to offset tax liabilities of the taxpayer prior to the tax year beginning on or after January 1, 2020: Provided further, That the taxpayer is not entitled to this credit if, when the applicant begins to claim the credit and throughout the time period within which the credit is claimed, the taxpayer is in arrears in the payment of any tax administered by the Tax Division or the taxpayer is delinquent in the payment of any local or municipal tax, or the taxpayer is delinquent in the payment of property taxes on the property containing the certified historic tax structure when the applicant begins to claim the credit and throughout the time period within which the credit is claimed. The Tax Commissioner shall promulgate procedural rules in accordance with article three, chapter twenty-nine-a of this code that provide what information must accompany any claim for the tax credit for the determination that the taxpayer is not in arrears in the payment of any tax administered by the Tax Division nor is the taxpayer delinquent in the payment of property taxes on the property containing the certified historic tax structure, and such other administrative requirements as the Tax Commissioner may specify. This credit is available for both residential and nonresidential buildings located in this state that are reviewed by the West Virginia Division of Culture and History and designated by the National Park Service, United States Department of the Interior as "certified historic building", and further defined as a "qualified rehabilitated building", as defined under §47(c)(1), Title 26, of the United States Code, as amended.

(b) Allocations and maximum amounts of tax credits per project and per fiscal year -

(1) No more than $10 million of the tax credits authorized by this section and section eight-a, article twenty-one of this chapter may be allocated, reserved or issued by the state historic preservation officer to any single certified rehabilitation.

(2) No more than $30 million of the tax credits authorized by this section and section eight-a, article twenty-one of this chapter cumulatively may be issued by the state historic preservation officer for use in any given West Virginia state fiscal year, and any amount remaining up to $30 million may not be carried over to a subsequent West Virginia state fiscal year.

(3) No less than $5 million of the tax credits authorized by this section and section eight-a, article twenty-one of this chapter shall be allocated to and reserved by the state historic preservation officer in any West Virginia state fiscal year for certified rehabilitation projects with proposed tax credits of $500,000 or less. If after the end of each West Virginia state fiscal year, the state historic preservation officer has not issued to applicants for which reservations have been made tax credit certificates cumulatively equal to $5 million, then the state historic preservation officer shall reallocate the unused tax credits to other applicants in the order that their applications were received irrespective of the amounts of the tax credits requested.

(c) Procedure for issuance of tax credits reservations and certificates by the state historic preservation officer –

(1) Any claim for the tax credit authorized pursuant to this section and section eight-a, article twenty-one of this chapter shall be accompanied by a tax credit certificate issued by the state historic preservation officer.

(2) The tax credits will be awarded on a first come, first served basis. At the time the historic preservation certification application, Part 2 – Description of Rehabilitation, is received by the state historic preservation office, the project will be placed on a reservation list, which will reserve the tax credit amount listed on the application. The historic preservation certification application, Part 2 – Description of Rehabilitation, will be reviewed by the state historic preservation office for completion and submitted to the National Park Service for full review. At the time the historic preservation certification application, Part 2 – Description of Rehabilitation, is submitted to the National Park Service, a fee request will be sent to the property owner. Upon approval of the historic preservation certification application, Part 2 – Description of Rehabilitation, from the National Park Service, including approval with conditions, that the project will meet the Secretary of the Interior’s standards for rehabilitation, the owner of the building will receive guarantee of the tax credits from the state historic preservation office.

(3) The state historic preservation officer shall issue tax credit certificates for certified rehabilitation projects that the National Park Service has determined have met the Secretary of the Interior standards for rehabilitation based on the issuance of an approved historic preservation certification application, Part 3 – Request for Certification of Completed Work.

(4) Once the state historic preservation officer has allocated and reserved the maximum tax credits authorized for any given West Virginia state fiscal year, the state historic preservation officer then shall allocate and reserve tax credits against the maximum tax credits authorized for use in the succeeding West Virginia state fiscal year.

(5) If an applicant for tax credits that receives a reservation for tax credits for any given West Virginia state fiscal year fails to submit an approved historic preservation certification application, Part 3 – Request for Certification of Completed Work in the instance of a certified rehabilitation within thirty-six (36) months of the date of the approved historic preservation certification application, Part 2 – Description of Rehabilitation, therefor or in the instance of a phased project as determined by the National Park Service within sixty (60) months of the date of the advisory determination by the National Park Service therefor that such phase has been completed in accordance with the Secretary of the Interior standards for rehabilitation then the state historic preservation officer may reallocate part or all of the tax credits reserved therefor to other applicants in the order their applications were received.

(d) The state historic preservation officer shall prescribe and publish a form and instructions for an application for reservation and issuance of the tax credits authorized by this section and section eight-a, article twenty-one of this chapter.

(e) Application fee - Each application for tax credits authorized pursuant to this section shall be accompanied by a fee payable to the state historic preservation officer equal to the lesser of (1) 0.5% of the amount of the tax credits requested for in such application and (2) $10,000. The state historic preservation officer shall review and act on all such applications within thirty days of receipt.

(f) Unless extended by action of the Legislature, the provisions of this section will terminate and have no more effect on or after December 31, 2022.

§11-24-23e. Carryback, carryforward.


Any unused portion of the credit for qualified rehabilitated buildings investment authorized by section twenty-three-a of this article which may not be taken in the taxable year to which the credit applies shall qualify for carryback and carryforward treatment subject to the identical general provisions under §39, Title 26 of the United States Code, as amended: Provided, That the amount of such credit taken in a taxable year shall in no event exceed the tax liability due for the taxable year: Provided, however, That for tax years beginning on and after January 1, 2020, any unused portion of the credit authorized by section twenty-three a of this article, may not be carried back to any prior taxable year: Provided further, That for tax years beginning on and after January 1, 2020, any unused portion of the credit authorized by section twenty-three-a of this article may be carried over to each of the next ten tax years following the first tax year for which the credit entitlement is authorized under this article for a specific qualified rehabilitation buildings investment until used to exhaustion or forfeited due to lapse of time.

NOTE: The purpose of this bill is to increase the amount of tax credit for qualified rehabilitation expenditures on historic structures to be used against personal and corporate net income taxes from 10 percent to 25 percent for expenditures made on or after December 31, 2017, to provide for use of the tax credit on or after January 1, 2020, and to make these changes subject to certain annual and per-project caps. Also, this bill provides for a five-year sunset period on the historic tax credit.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.

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