Bill Text: WV SB507 | 2022 | Regular Session | Introduced
Bill Title: Authorizing consumers sales and service and use tax exemptions for certain qualified purchases
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2022-01-31 - To Finance [SB507 Detail]
Download: West_Virginia-2022-SB507-Introduced.html
WEST virginia legislature
2022 regular session
Introduced
Senate Bill 507
By Senators Swope and Sypolt
[Introduced January 31, 2022;
referred
to the Committee on Finance]
A BILL to amend and reenact §11-15-9n of the Code of West Virginia, 1931, as amended, relating to the consumers sales and service tax and use tax exemption for qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems and components, building materials, and certain tangible personal property to be incorporated into a qualified, new, or expanded warehouse or distribution facility; changing threshold jobs creation number from 300 to 50; and making stylistic changes.
Be it enacted by the Legislature of West Virginia:
ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.
§11-15-9n. Exemption of qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems, and components, building materials and certain tangible personal property.
(a) Definitions. — For purposes of this section:
(1) “Building materials” means all tangible personal property, including any device or appliance used by builders, contractors or landowners in making improvements, additions, or alterations to a building or other structure or to real property in such a way that such tangible personal property becomes a part of the building or other structure or the realty, which is installed into or directly used or consumed in the construction, addition, alteration, repair or improvement of a qualified, new or expanded warehouse or distribution facility. “Building materials” does not include tools, construction equipment or any property or device which does not become a permanent part of the realty when construction is completed. A device or appliance becomes a fixture and a part of the building or other structure or the real property to which it is connected when it is built into or is attached to the property in such a way that its removal would substantially damage or deface such property.
(2) “Computers and
computer software” as defined in section two, article fifteen-b of this
chapter §11-15B-2 of this code means computer
equipment and related software directly and primarily used to control automated
machinery in the facility and the movement of goods within the facility, to
facilitate customer delivery operations including shipment, preparation for
shipment, order tracking and delivery inventory control, printing of packing
lists and labels and any other customer order fulfillment functions.
(3) “Distribution facility” means a warehouse, facility, structure, or enclosed area which is used primarily for the storage, shipment, preparation for shipment, or any combination of such activities, of finished goods, consumer ready wares, and consumer ready merchandise.
(4) “Expansion period”
means the period of time beginning one 1 year prior to the start
of the construction or expansion of the qualified, new or expanded warehouse or
distribution facility, and ending one 1 year after the
substantial completion of the construction or expansion of the facility. In no
event shall the expansion period exceed five 5 years.
(5) “Full-time employment”
for purposes of determining a full-time employee or a full-time equivalent
employee, means employment for at least one hundred forty 140
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.
(A) For purposes of this
definition, any employee paid less than state or federal minimum wage,
depending on which minimum wage provision is applicable, shall be excluded from
the count of employees for the purpose of determining the three hundred 50
jobs requirement of this section.
(B) For purposes of this
definition, seasonal employees and part-time employees may be converted into
full-time equivalent employees if the part-time or seasonal employee is
customarily performing job duties not less than twenty 20 hours
per week for at least six 6 months during the tax year. Persons
who have worked less than twenty 20 hours per week or who have
worked less than six 6 months during the tax year do not qualify
as part-time employees or as seasonal employees.
(6) “Primary material handling equipment” means the principal machinery and equipment used directly and primarily for the handling and movement of tangible personal property in a qualified, new or expanded warehouse or distribution facility.
(A) The following items may be considered primary material handling equipment:
(i) Conveyers, carousels, lifts, positioners, pick-up-and-place units, cranes, hoists, mechanical arms and robots;
(ii) Mechanized systems, including containers which are an integral part thereof, whose purpose is to lift or move tangible personal property;
(iii) Automated storage and retrieval systems, including computers and software which control them, whose purpose is to lift or move tangible personal property; and
(iv) Forklifts and other off-the-road vehicles which are used to lift or move tangible personal property and which cannot be legally operated on roads and streets.
(B) “Primary material handling equipment” does not include:
(i) Motor vehicles licensed for operation on the roads and highways of this state or any other state of the United States or any other political jurisdiction;
(ii) Parts or equipment used to repair, refurbish, or recondition other equipment; or
(iii) Equipment which replaces, in whole or in part, primary material handling equipment.
(7) “Qualified, new or expanded warehouse or distribution facility” means a new or expanded facility, subject to the following:
(A) Qualification
criteria. “Qualified, new or expanded warehouse or distribution facility” means
a new or expanded facility located in this state, that is a warehouse or
distribution facility that will employ three hundred 50 or more
West Virginia domiciled, West Virginia residents, as full-time employees in the
warehouse or distribution facility once the expansion period is complete and
which is either:
(i) An existing warehouse or distribution facility that will be expanded over the expansion period where the total value of all real and personal property purchased or acquired over the expansion period as direct investment in the facility is $50 million or more; or
(ii) A new warehouse or distribution facility where the total value of all real and personal property purchased or acquired over the expansion period as direct investment in the facility is $50 million or more.
(B) Exclusions and disqualifications.
(i) Subject to the limitations and restrictions set forth in this section, “qualified, new or expanded warehouse or distribution facility” does not include a building or facility where tangible personal property is manufactured, fabricated or assembled.
(ii) Subject to the
limitations and restrictions set forth in this section, “qualified, new or
expanded warehouse or distribution facility” does not include a building or
facility where annual calendar year retail sales of tangible personal property
are made over-the-counter from such building or facility to the general public,
if such sales exceed five percent 5% of the total annual calendar
year revenues of the warehouse or distribution facility during the same
calendar year.
(iii) Subject to the
limitations and restrictions set forth in this section, “qualified, new or
expanded warehouse or distribution facility” does not include a building or
facility where the average monthly full-time employment (determined by
including full-time equivalent employees) for each calendar year at the
facility is less than three hundred 50 West Virginia domiciled,
West Virginia residents. For purposes of determining average monthly employment
for the calendar year, the taxpayer shall divide the sum of the twelve 12
monthly averages of qualified full-time and full-time equivalent West Virginia
employees at the qualified, new or expanded warehouse or distribution facility
by twelve 12. Each monthly average is computed as the average of
West Virginia employment at the beginning of each calendar month and at the end
of each calendar month. Provided, That the State Tax Commissioner may
specify a different method for computation of average monthly full-time
employment, on a state-wide basis or on a case-by-case basis, or both, as the
State Tax Commissioner may prescribe.
(8) “Qualified West Virginia employee” means a full-time employee or full-time equivalent employee who is a West Virginia domiciled West Virginia resident.
(9) “Racking and racking systems” means any system of machinery, equipment, fixtures, or portable devices whose function is to store, organize, or move tangible personal property within a warehouse or distribution facility, including, but not limited to, conveying systems, chutes, shelves, racks, bins, drawers, pallets, and other containers and storage devices which form a necessary part of the facility’s storage system, and which is used directly and primarily for the storage, handling and movement of tangible personal property in a qualified, new or expanded warehouse or distribution facility.
(10) “Tangible personal
property” means tangible personal property as defined in section two,
article fifteen-b §11-15B-2 et seq. of this chapter.
(11) “Warehouse” means a facility, structure, or enclosed area which is used primarily for the storage of finished goods, consumer ready wares, and consumer ready merchandise.
(b) Exemption. — Qualified
purchases of computers and computer software, primary material handling equipment,
racking and racking systems, and components thereof, building materials and
tangible personal property installed into or directly used or consumed in the
construction, addition, alteration or improvement of a qualified, new or
expanded warehouse or distribution facility, as such terms are defined in this
section, purchased during the expansion period are exempt from the tax imposed
by this article and article fifteen-a of this chapter §11-15A-1
et seq. of this code. This exemption may apply either to qualified
purchases made by a person or entity which will be the owner and operator of
the qualified, new or expanded warehouse or distribution facility or to
qualified purchases made by a lessor or lessee of the qualified, new or
expanded warehouse or distribution facility. A purchase of computers and
computer software, primary material handling equipment, racking and racking
systems, and components thereof, building materials and tangible personal
property is a qualified purchase if all requirements for exemption set forth in
this section are met with relation to the purchase.
(c) Application for certification of exemption and plan describing investment to be made.
(1) In order to qualify for the exemption authorized by this section, a taxpayer must submit an application for certification of the exemption to the State Tax Commissioner, together with a plan describing the investment to be made in the qualified, new or expanded warehouse or distribution facility. The application and plan shall be submitted on forms prescribed by the State Tax Commissioner. The plan shall demonstrate that the requirements of the law will be met.
(2) Filing date. The application for certification of the exemption and plan describing the investment to be made must be filed on or before the start of the construction or expansion of the proposed qualified, new or expanded warehouse or distribution facility.
(3) Late filing. If the taxpayer fails to timely file the application for certification of the exemption with the State Tax Commissioner, together with a plan describing the investment to be made, on or before the start of the construction or expansion of the proposed qualified, new or expanded warehouse or distribution facility, the exemption allowed by this section shall not be available for any purchases of computer and computer software, primary material handling equipment, racking and racking systems, and components thereof, building materials and tangible personal property otherwise exempt under this section that were made prior to the filing date of the application for certification of the exemption, and no refund shall be issued for any such purchase.
(4) Exemption in cases of untimely filing. Notwithstanding the untimely filing of the application for certification of the exemption and plan describing the investment to be made, if certification of the exemption and plan is issued by the State Tax Commissioner of an untimely filed application and plan, the exemption shall be available for qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems, and components thereof, building materials and tangible personal property made subsequent to the filing date of the application and plan and before the end of the expansion period.
(5) Exemption limited to expansion period purchases.
(A) Upon approval of the application and certification of the exemption, qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems, and components thereof, building materials and tangible personal property shall be exempt from the tax imposed by this article and article fifteen-a of this chapter. However, if the requisite investment is not made within the expansion period, or if the terms and requirements of this section are not satisfied, the taxpayer shall be subject to assessment for any tax, penalty or interest that would otherwise have been due.
(B) Limitations. Any
statute of limitations set forth in article ten of this chapter §11-10-1
et seq. of this code for assessment made under this subsection for
any such tax, penalty or interest shall not close until five years subsequent
to the end of the expansion period.
(d) Any person having a
right or claim to any exemption set forth in this section shall first pay to
the vendor the tax imposed by this article and then apply to the State Tax
Commissioner for a refund or credit or, as provided in section nine-d §11-15-9d
of this article, give to the vendor his or her West Virginia direct pay permit
number.
(e) Additional Restrictions, Assessments and Statutes of Limitations. —
(1) Over-the-counter sales restrictions.
(A) If within ten 10
years after the end of the expansion period, over-the-counter sales are made in
any one 1 calendar year, from a warehouse or distribution
facility for which qualification for exemption under this section was
originally established, which over-the-counter sales, in the aggregate, exceed five
percent 5% of the total revenues of the warehouse or distribution
facility during the same calendar year, the taxpayer will be disqualified from
receiving the exemption under this section as of the close of the calendar year
in which over-the-counter sales first exceed five percent 5% of
the total revenues of the warehouse or distribution facility during the same
calendar year; and the taxpayer shall be subject to assessment for any tax,
penalty or interest that would otherwise have been due had the exemption set
forth in this section never been applied. This over-the-counter sales
restriction shall not apply to any year subsequent to the end of the tenth
10th year after the end of the expansion period.
(B) Limitations.
Notwithstanding any other provision of this code pertaining to statute of
limitations to the contrary, any statute of limitations set forth in article
ten of this chapter for assessment for any such tax, penalty or interest shall
not close until five 5 years subsequent to the end of the
calendar year in which over-the-counter sales first exceed five percent 5%
of the total revenues of the warehouse or distribution facility during the
same period.
(2) Fabrication and Assembly Restriction.
(A) Subject to the
restriction and limitations set forth in this subsection, a qualified new or
expanded warehouse or distribution facility does not include a building or
facility where tangible personal property is manufactured, fabricated or
assembled. If during any calendar year within ten 10 years after
the end of the expansion period, the building or facility for which
qualification for exemption under this section was originally established, is
used for manufacturing, fabrication or assembly of tangible personal property,
the taxpayer will be disqualified from receiving the exemption set forth in
this section as of the date such manufacturing, fabrication or assembly first
occurs, and the taxpayer shall be subject to assessment for any tax, penalty or
interest that would otherwise have been due had the exemption set forth in this
section never been applied. This restriction against manufacturing, fabrication
and assembly shall not apply to any year subsequent to the tenth 10th
year after the end of the expansion period.
(B) Limitations. Notwithstanding any other provision of this code pertaining to statute of limitations to the contrary, any statute of limitations set forth in article ten of this chapter for assessment for any such tax, penalty or interest shall not close until five years subsequent to the end of the calendar year during which such manufacturing, fabrication or assembly first occurs.
(3) Minimum employment restriction.
(A) Subject to the
limitations and restrictions set forth in this section, “qualified, new or
expanded warehouse or distribution facility” does not include a building or
facility where the average monthly full-time employment (determined including
full-time equivalent employees) for each calendar year at the facility is less
than three hundred 50 West Virginia domiciled, West Virginia
residents. If during any calendar year within ten years after the end of the
expansion period, the average monthly full-time employment at the building or
facility for which qualification for exemption under this section was
originally established, is fewer than three hundred 50 qualified
West Virginia employees, then the taxpayer will be disqualified from receiving
the exemption under this section as of the close of the first calendar year in
which the average monthly full-time employment at the facility is less than three
hundred 50 West Virginia domiciled, West Virginia residents, and the
taxpayer shall be subject to assessment for any tax, penalty or interest that
would otherwise have been due had the exemption set forth in this section never
been applied. This restriction against having fewer than three hundred 50
qualified West Virginia employees shall not apply to any year subsequent to the
tenth year after the end of the expansion period.
(B) Limitations.
Notwithstanding any other provision of this code pertaining to statute of
limitations to the contrary, any statute of limitations set forth in article
ten of this chapter for assessment for any such tax, penalty or interest shall
not close until five 5 years subsequent to the end of the first
calendar year in which the average monthly full-time employment at the facility
is less than three hundred 50 qualified West Virginia employees.
(f) Assessments Against
Taxpayer. — In circumstances where the exemption authorized under this section
has been asserted by a contractor pursuant to the provisions of section
eight-d §11-15-8d of this article for purchases of computers and
computer software, primary material handling equipment, racking and racking
systems, and components thereof, building materials and tangible personal
property, the assessment of such tax, interest and penalties shall issue
against, and liability is hereby imposed upon, the purchaser of the contracting
services, which is the taxpayer entitled to the exemption set forth in this
section, and not against the contractor who relied in good faith upon the
validity of the exemption available under this section to the purchaser of the
contracting services.
(g) The amendments made to this section in the 2022 Regular Legislative Session are effective for purchases of tangible personal property and services made in taxable years beginning on and after January 1, 2023.
NOTE: The purpose of this bill is to change the threshold jobs creation number from 300 to 50; and to making stylistic changes to the language of W. Va. Code §11-15-9n, which authorizes an exemption for qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems, and components, building materials and certain tangible personal property to be incorporated into a qualified, new or expanded warehouse or distribution facility.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
