Tax Bills Passed By West Virginia Legislature during 2010 Regular Session

The 60-day regular session of the West Virginia Legislature concluded at midnight March 13, 2010. During the session, 2,079 bills were introduced. Of this number, 219 passed – 98 House bills and 121 Senate bills. This document identifies the tax bills that were enacted. Only a few of these bills are presently available in enrolled form, and none of them have been presented to the Governor for signing.

Legislative Rules

Committee Substitute for S. B. 407 authorizes agencies in the Department of Revenue to promulgate certain proposed legislative rules. S. B. 407 passed the Legislature on March 13, 2010, and took effect upon its passage. This bill authorizes the State Tax Department to promulgate the following proposed legislative rules:

(1) The proposed rule relating to the consumers sales and service tax exemption for drugs, durable medical goods, mobility-enhancing equipment and prosthetic devices;

(2) The proposed legislative rule relating to the corporation net income tax;

(3) The proposed legislative rule relating to the film industry tax credit; and

(4) The proposed legislative rule relating to the residential solar energy tax credit.

Municipal Economic Opportunity Development District Act

S. B. 42 amends and reenacts Sections 8-38-3, 8-38-4, 8-38-5, 8-38-7, 8-38-10, 8-38-12, 8-38-15, 8-38-16, 8-38-17 and 8-38-20 of the Municipal Economic Opportunity Development Act. This bill revises the Municipal Economic Opportunity Development District Act to enhance the Act’s ability to generate economic development in West Virginia. These revisions include: defining the term “affordable housing”; allowing all municipalities to be eligible to create such districts, including the remediation of former coal mining sites as permissible development expenditures; allowing a municipality to establish reserves related to its financing plans that are consistent with prevailing capital market conditions as opposed to ordinary capital market conditions; requiring the Development Office to determine whether the development enabled by such districts should include a component of affordable housing; allowing the Development Office to decrease the minimum percentage of tax increment revenue deposited into the General Revenue Fund from 20% to 10% in certain specified circumstances; and revising the act to correct errors and inconsistencies contained therein. This bill passed the Legislature on March 11, 2010, and takes effect June 9, 2010.

Property Tax

Committee Substitute for S. B. 397 requires the Tax Commissioner to annually create a single dwelling residential housing index which contains the cost of all single dwelling residential housing in the State. This index must list the average and median cost of single dwelling residential housing by county, commencing with the most expensive to the least expensive. The Tax Commissioner must also develop annually (1) a single dwelling residential housing index multiplier; (2) the average and median cost of single dwelling residential housing in the State; (3) the multiplier needed to equal the housing cost in the least expensive county to the most expensive county; (4) identify whether the average and median cost of single dwelling residential housing in a county is above or below the average and median cost for the entire State; and (5) a table indicating: (A) the average and median cost of single dwelling residential housing in the State; and (B) the multiplier for each county, comparing the statewide average and median cost of single dwelling residential housing with a multiplier calculated in relation to the average value. This information must annually be reported to the Joint Committee on Government and Finance and made public. S. B. 397 passed the Legislature March 13, 2010, and takes effect June 11, 2010.

Committee Substitute for S. B. 401 amends and reenacts various sections of the property tax law relating to the assessment of property for ad valorem property tax purposes. Sections amended include Sections 11-3-1, 11-3-2a, 11-3-10, 11-3-12, 11-3-15, 11-3-19, 11-3-24, 11-3-24a, 11-3-25 and 18-9A-12. It adds a number of new sections relating to how taxpayers may appeal assessed values. These new sections include Sections 11-3-15a, 11-3-15b, 11-3-15c, 11-3-15d, 11-3-15e, 11-3-15f, 11-3-15g, 11-3-15h, 11-3-15i, 11-3-23a, 11-3-24b, 11-3-25a, 11-3-32 and 11-3-33. Finally, the bill adds a new article 11-6K, which provides procedures for assessing industrial and natural resource properties. This bill passed the Legislature on March 13, 2010, and takes effect on June 11, 2010. However, internal effective dates in the bill provide for it to apply to taxes levied after June 30, 2011.

Committee Substitute for S. B. 232 transfers certain filing and notice requirements for redeeming delinquent lands after tax sales from the county clerks to the State Auditor’s office. The bill also increases certain filing fees. This bill adds new sections 11A-3-5a and 11A-3-5b and amends and reenacts sections 6, 8, 9, 11, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 and 32. This bill passed the Legislature March 13, 2010, and takes effect June 11, 2010.

Committee Substitute for H. B. 4486 also relates to sales of tax liens for delinquent property taxes. It amends and reenacts Sections 11A-3-52 and 11A-3-55 to require the purchaser of a tax lien on Class II property to also provide the deputy commissioner with the actual mailing address of the property and to require the deputy commissioner to send by regular mail addressed to “Occupant” a copy of the required notice sent by certified mail. This bill passed the Legislature March 13, 2010, and takes effect June 11, 2010.

Tax Procedure and Administration

Committee Substitute for H. B. 4035 pertains to the electronic filing of tax returns and electronic funds transfers in payment of taxes. This bill provides a uniform threshold of $10,000 of annual tax liability before a taxpayer is required to file returns electronically; requires certain taxpayers to pay by electronic funds transfer; requires a tax return preparer who prepares at least 25 returns to file the returns electronically; and requires employers with 50 or more employees to file withholding returns electronically. It amends and reenacts Sections 11-10-5t, 11-10-5v, 11-21-54 and 11-21-74. H. B. 4035 passed the Legislature on March 10, 2010, and takes effect June 8, 2010.

H. B. 4312 amends Section 11-10-18, which imposes additions to tax, by adding the word “not” to impose a penalty of five percent of the amount of tax, if the failure to file a tax return is for not more than one month. This restores original language inadvertently omitted in a prior enactment. H. B. 4312 passed the Legislature on March 10, 2010, and takes effect June 8, 2010.

 Business Registration Tax

Committee Substitute for H. B. 4335 amends and reenacts Section 11-12-5 to clarify that the Section 11-12-3 requirements, exemptions and exceptions apply to the business registration tax and the business registration certificate; and to clarify that, subject to the requirements, exemptions and exceptions of Section 11-12-3, the tax is imposed for each and every issuance, reissuance or reinstatement of a business registration certificate. H. B. 4335 passed the Legislature on March 11, 2010, and takes effect June 9, 2010.

Severance and Business Privilege Tax Act

H. B. 4177 amends and reenacts Section 11-13A-5a relating to distribution of coal, gas and oil severance taxes to counties and municipalities. This bill dedicates five percent of the coal severance tax collections to the counties where the coal was located at time it was removed from the ground. This amount will be distributed to the county commissions of these counties, who may use the funds only for economic development, infrastructure job creation, and road repair. This five percent distribution will be phased in over a period of five years. H. B. 4177 passed the Legislature on March 13, 2010, and takes effect June 11, 2010.

Telecommunications Tax

Committee Substitute for S. B. 345 adds a new Section 19 to the Telecommunications Tax Act. This new section requires the Tax Commissioner to undertake a study of the telecommunications industry for the purpose of making recommendations with respect to amendments to the telecommunications tax. The bill authorizes the Tax Commissioner to order persons engaged in the telecommunications service business or a related business to disclose certain information to the Commissioner and includes confidentiality protections for any information so disclosed. The Tax Commissioner must provide the results of this study to the Governor and the Legislature by July 1, 2011. S. B. 345 passed the Legislature on March 9, 2010, and takes effect June 7, 2010.

Commercial Patent Incentives Tax Act

Committee Substitute for S. B. 185 creates a new tax credit. The bill allows manufacturers a credit against their business franchise and corporation net income tax liabilities for a percentage of the net profits attributable to a patent used in manufacturing processes in this State. It allows developers of a patent used in manufacturing processes and products a credit against their business franchise and corporation net income tax liabilities for the consideration received as a result of developing the patent. When the manufacturer is a partnership, limited liability company or other pass-through entity, any credit remaining after application against business franchise tax liability flows through to the owners of the pass-through entity. This bill passed the Legislature on March 11, 2010, and takes effect June 9, 2010. However, internal effective date provides that the credit is first available for patents developed after December 31, 2010, but before January 1, 2016, and for patents used in this State after December 31, 2010, but before January 1, 2016.

West Virginia Innovative Mine Safety Technology Tax Credit Act

Committee Substitute for S. B. 507 adds a new tax credit for coal companies that purchase innovative safety technology that is identified by the Mine Safety Technology Task Force and approved by the Director of the West Virginia Office of Miners’ Health, Safety and Training. The bill (1) makes legislative findings and purpose and defines terms; (2) sets forth requirements for a list of approved innovative mine safety technology; (3) limits the amount of tax credit allowed per year to $2 million; (4) establishes the criteria for qualified investments; (5) provides for forfeiture of unused tax credits; (6) allows transfer of certified eligible safety property to successors; (7) sets forth requirements for identification of investment credit property; (8) prescribes treatment for failure to keep records of certified eligible safety property; (9) sets forth tax credit review and accountability requirements and specifies the requirements for disclosure of tax credits; (10) grants rule-making authority; (11) provides that no credit is allowed after December 31, 2013; (12) amends the duties of the Director of the West Virginia Office of Miners’ Health, Safety and Training; and (13) amends the duties of the Mine Safety Technology Task Force. This bill passed the Legislature on March 13, 2010, and takes effect June 11, 2010.

Consumers Sales and Service Tax

H. B. 4521 exempts from the six percent consumers sales and service tax the purchase of firearms during the first weekend of October each year. This bill passed the Legislature on March 13, 2010, and takes effect June 11, 2010.

S. B. 461 conforms the Sales and Use Tax Administration Act, W. Va. Code § 11-15B-1 et seq., with requirements of the Streamlined Sales and Use Tax Agreement. This bill amends Sections 2 (definitions), 2a (updates definition of Streamlined Sales and Use Tax Agreement), 11 (seller registration requirements), 17 (direct mail sourcing rules), 25 (uniform tax return requirements), 26 (uniform rules for remittance of funds) and 32 (effective date). S. B. 461 was passed by the Legislature on March 10, 2010, and takes effect June 8, 2010. However, the internal effective date section provides that the bill applies to all sales made on or after March 10, 2010, and to all returns and payments due on or after that date.

West Virginia Personal Income Tax

S. B. 216 updates the meaning of “federal adjusted gross income” used in the West Virginia Personal Income Tax Act to bring its meaning into conformity with its meaning for federal income tax purposes for tax years beginning after December 31, 2008. The amendment to W. Va. Code § 11-21-8 incorporates changes in federal income tax law made before January 1, 2010. These changes are retroactive to tax years beginning after December 31, 2008, and to the extent any changes in federal income tax law were retroactive to prior years. S. B. 216 was passed by the Legislature on March 9, 2010, and took effect upon its passage.

West Virginia Corporation Net Income Tax

S. B. 214 updates the meaning of “federal taxable income” used in the West Virginia Corporation Net Income Tax Act to bring its meaning into conformity with its meaning for federal income tax purposes for tax years beginning after December 31, 2008. The amendment to W. Va. Code § 11-24-3 incorporates changes in federal income tax law made before January 1, 2010. These changes are retroactive to tax years beginning after December 31, 2008, and to the extent any changes in federal income tax law were retroactive to prior years. S. B. 214 passed the Legislature on March 9, 2010, and took effect upon its passage.

For additional information about any of these bills, please contact your Spilman attorney or one of the following members of our State and Local Tax Practice Group:

Dale W. Steager
Charleston, WV
304.340.1692
dsteager@spilmanlaw.com

Brian C. Helmick
Charleston, WV
304.340.3826
bhelmick@spilmanlaw.com

David R. Croft
Wheeling, WV
304.230.6952
dcroft@spilmanlaw.com

W. Eric Gadd
Wheeling, WV
304.230.6965
egadd@spilmanlaw.com

Please be aware that news update is published with the understanding that the author, publisher and distributor are not rendering legal or other professional advice on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use.

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Spilman Thomas & Battle is a full-service law firm with more than 100 attorneys. Founded in 1864, Spilman has offices in Charleston, Morgantown and Wheeling, West Virginia; Pittsburgh, Pennsylvania; Winston-Salem, North Carolina and Roanoke, Virginia.