The most debated topic during the West Virginia legislature in 2021 was the proposed waiver of income tax. Governor Jim Justice introduced a bill that would have cut tax rates by 60% from tax year 2022, but with various corresponding tax increases to offset lost revenue. The House of Delegates introduced its own bill that would have completely abolished income tax for several years with no revenue measures taken to account for an estimated $ 3 billion decline in general revenue.
The Senate Finance Committee offered a strike-and-insert version of the bill passed by the House of Representatives that incorporated concepts from the Governor's Bill, including a move to replace lost personal income tax revenue with increases in other types of taxes, primarily sales, including VAT amending the Act von Strike and Supplement was passed by the Senate after further amendments, but with a short gap of 18 to 16 years. The House declined to approve the Senate's amendments with a narrow margin of 0 to 100.
While efforts to phase out or repeal income tax have been unsuccessful, the following tax legislation has been passed by lawmakers. Invoices have not been signed by Governor Justice unless otherwise noted and it is possible that the Governor may choose to veto some of the following invoices.
value added tax
- SB 34: Exemption for certain equipment leases
Offers sales and use tax exemption for leasing heavy machinery and equipment from frequently controlled companies. The jointly controlled companies must be at least 50% jointly owned.
- SB305: Exception for certain aircraft maintenance
Offers sales and use tax exemptions for the sale of repair, conversion, and maintenance services for aircraft or to an engine or other part of the aircraft. The exception also applies to material personal property that is permanently attached or attached as part of an aircraft as part of a repair, conversion or maintenance service, as well as to the sale of machines, tools or equipment that is directly used for repairs, conversions or maintenance. The exemption can be requested by providing the seller with a direct payment authorization number.
This bill was signed by the governor on April 2nd.
- SB661: Permission for retailers to pay sales or use taxes levied on tangible personal property
Allows retailers to collect or pay sales or use taxes that are levied on tangible personal property.
- HB2581: Providing Natural Resource Ownership Appraisal and an Alternative Method to Appeal Proposed Natural Resource Ownership Appraisal and criminal penalties for unauthorized disclosure
This bill would lead to a significant change in the evaluation of the production of oil and natural gas wells. The Tax Commissioner must propose an urgency rule by July 1, 2021 to determine fair value based on the application of an income capitalization model to net proceeds for a given well. The net proceeds are the actual gross proceeds based on the sales volume resulting from the actual price of the taxpayer minus the license fees and minus the actual annual operating costs stated in the tax return. Actual annual operating costs include leasing operating costs, lifting costs, collecting, compressing, processing, separating, fractionating and transportation costs.
The bill deals directly with the decision of the West Virginia Supreme Court in Steager v Consol Energy, Inc., 242 W. Va. 209, 832 SE2d 135 (2019), in which the Court set the law for evaluating the The wells did not address the costs of collecting, compressing, processing and transporting natural gas, and the tax authority's finding that these costs were not "directly related to the" maintenance and production "of natural gas" was not arbitrary, capricious or obviously contradicted the allowance of the tax law.
The invoice contains a major change in the property tax complaint procedure. Under the bill, taxpayers could choose to have a hearing before an equalization and review agency made up of the county commissioners of the county where the property is located or the Office of Tax Appeals and an independent tribunal that virtually heard everyone West Virginia tax disputes since 2002, with the exception of property tax appeals. The ability to appeal property taxes in an independent court has been advocated for years by commercial, industrial and natural resource companies.
- HB3010: Extension of the special assessment for cell towers by people who are not subject to regulation by the public works authority
Cell towers that are valued by the Public Works Authority for property tax purposes are currently valued at residual value or 5% of original cost. This invoice extends the special assessment to cell towers that have not been assessed by the public works authority.
- HB3301: Districts to finance property tax increases
This bill changes the definition of “payment instead of tax” within the meaning of the Tax Increased Financing Act and clarifies the treatment of payment in lieu of tax agreements for real estate in a tax increase financing district.
The bill also allows county commissions or municipalities to extend the termination dates of certain districts.
- HJR3: Change in property tax modernization
This resolution puts a proposed amendment to the West Virginia Constitution on the ballot for the 2022 general election that would give lawmakers the power to use tangible machinery and equipment that is directly used in doing business and tangible inventory that is directly used in doing business Used to be exempt from property tax in business and motor vehicles.
Income taxation and credits
- HB2359: Updated the meaning of federal taxable income under the Corporate Income Tax Act
This bill fully complies with any changes made to the Internal Revenue Code in 2020 to define West Virginia as “federal taxable income,” which is the starting point for corporate income tax purposes in West Virginia.
Includes changes to the Internal Revenue Code in 2020 through the Coronavirus Aid, Relief and Economic Security Act; First Coronavirus Response Act for Families; Set up each community for the Retirement Improvement Act; and the Consolidated Funds Act.
Has been signed by the governor.
- HB693: Update of certain definitions and terms of the Income Tax Act (replaces HB2358)
This bill fully complies with any changes made to the Internal Revenue Code in 2020 and January 1, 2021 through March 12, 2021 to use West Virginia's definition of “federal taxable income” as the starting point for West Income Tax purposes Virginia.
Includes changes to the Internal Revenue Code in 2020 through the Coronavirus Aid, Relief and Economic Security Act; First Coronavirus Response Act for Families; Set up each community for the Retirement Improvement Act; and the Consolidated Funds Act. In addition, HB693 is adopting changes resulting from the American bailout plan, including waiving the first $ 10,200 in unemployment benefits.
Legislators had originally enacted HB2358 to cover changes in 2020. It was necessary to pass a subsequent bill to replace HB2358 to accommodate changes to the American rescue plan.
- SB344: Credit for qualified investments in refurbished buildings
The invoice eliminates the expiration date on this balance, which should be eliminated after December 31, 2022.
- HB2001: Creation of the West Virginia Jumpstart Savings Program
Creates a new program that allows residents to save money and invest to cover the cost of running a trade or employment. A decreasing change in personal income tax of up to a $ 25,000 per year contribution to a startup savings account could be made in a single tax year, and the excess can be carried over into the following five tax years. Employers can request a non-refundable income tax or corporate tax credit for a corresponding contribution to a Jumpstart savings account of up to $ 5,000 per employee.
- HB2026: Modernize income tax collection by adopting uniform rules for mobile workers
This bill modernizes withholding tax requirements for mobile workers and excludes non-resident mobile workers from state income for withholding tax on personal income in West Virginia when compensation is paid for employment duties performed in West Virginia for a period of 30 days or less Calendar year; The person performed employment duties in more than one state during the calendar year. Compensation does not relate to employment duties performed by a professional athlete, professional entertainer or public figure. and the foreigner's country of residence provides for a similar exclusion or does not levy individual income tax.
The bill also removes the West Virginia “throw away” rule used in the state apportionment formula, changes West Virginia apportionment procurement from source procurement to market procurement for services and intangible real estate, and takes on the procurement of individual sales factors and instead of real estate and payroll a double-weighted revenue sharing formula previously required in West Virginia.
All changes are effective from tax year 2022. The bill was signed by the governor on April 9th.
- HB2760: Economic Development Tax Credits
This law changes the business opportunity tax credit by adding a new tier for a 10% credit if between 10 and 19 new jobs are created over a three year period, and the more restrictive small business credit from Jan. January 2022 to be eliminated The economic opportunity tax credit provisions relating to high-tech manufacturers will also be amended to produce drones, autonomous automobiles, robots or robotic medical machines, artificial intelligence machines and equipment, biotechnology products and medical devices.
Tax on health care providers
- SB397: Tax on healthcare providers in general
It is clarified that a hospital with critical access in an urban area cannot be regarded as an “eligible acute hospital” within the meaning of the tax levied on health care providers under W. Va. Code § 11-27-39, which is the date on which the tax came into effect is changed and removes the tax expiration date. Hospitals that are designated as hospitals with critical access after they have met the federal approval criteria are already exempt from this tax under current law. The W. Va. Code Section 11-27-39 imposes an additional 0.13% tax on gross receipts received or received from an eligible acute hospital providing inpatient or outpatient hospital services in West Virginia.
- SB437: Conditional tax rate increase for certain eligible acute hospitals
It is made clear that a hospital with critical access in an urban area cannot be considered an “eligible acute hospital” for the purposes of the health care provider's tax. W. Va. Code § 11-27-38, changes the effective date of the tax and removes the expiry date of the tax. Hospitals that are designated as hospitals with critical access after they have met the federal approval criteria are already exempt from this tax under current law. Code Section 11-27-38 of W. Va. Levies an additional 0.75% tax on gross receipts received or received from an eligible acute hospital providing inpatient or outpatient hospital services in West Virginia through a directed payment program under 42 CFR 438.6.
Hotel and motel taxes
- SB270: Tax collection by hotel market brokers
Allows hotel occupancy tax to be collected by marketplace intermediaries who have gross revenues of $ 100,000 or more, or who are involved in 200 or more separate transactions, as of January 1, 2022. The tax must be transferred to the local tax authority.
The tax must be shown separately on invoices, invoices, accounts, business books and records relating to the consideration paid for the occupancy or use of the hotel room.
This bill was signed by the governor on March 18 and comes into force on June 7, 2021.
Severance pay tax
- SB718: Tax Refund for Coal Severance Pay
This law further improves the tax break for the settlement of coal, which was passed in 2019 (changes were also made in 2020).
The changes in this bill include defining certain terms and providing a severance tax deduction when a capital investment is made in new machinery and equipment used directly in coal compensation or in coal processing and processing operations. Repair costs for tangible personal property used for coal production can now be part of the qualified investment, as can infrastructure upgrades for real estate, including building beltlines for access roads and ventilation fans. The base period for calculating the discount has also been changed and is now based on a five-year average of the government's share of the tax liability of the eligible taxpayer. To qualify for the rebate, the taxpayer must increase production over the base period during the base period and increase employment in the claim year over the base period.
- HB2808: Remove salt from definition of “mineral” for severance tax purposes
Exempts salt made for human consumption from severance taxes.
- SB263: Allow online raffles to benefit nonprofit organizations
Enables nonprofit and nonprofit organizations to raise funds by running nonprofit raffles and bingo virtually over the internet.
- SB532: Limitation of Government Tax Credit and Discount Eligibility
Limits entitlements to government tax credits based on capital investment to avoid duplicate entitlements. This invoice is essentially a clarification of existing law, and the tax department is already monitoring tax credit claims to ensure that multiple tax credits are not being claimed on the same capital investment.
- HB2499: Tax reduction for arms and ammunition production
This bill provides for several tax changes for small arms and ammunition manufacturers. It extends the special valuation program for qualified capital additions for property tax purposes to gun and ammunition manufacturers when the facility will cost $ 2 million or more. extends manufacturing investment tax credit to such manufacturers, increasing the loan amount from 5% for other manufacturers to 50%; and creates a new income tax credit for federal excise taxes imposed on small arms and ammunition manufacturers.
The bill also exempts the purchase of small arms and ammunition from consumer sales, service and use taxes.
Signed by the governor on April 8th.
- HB2794: Extension of Neighborhood Investment Program and Increase in Allowable Loan Amount
This law extends the neighborhood investment program, which should expire on July 1, 2021, until July 1, 2026. Annual tax credits of $ 3 million are granted to individuals or businesses that make eligible contributions to community-level nonprofits.
- SB160: Tax Department Bill
This bill approves the latest West Virginia State Department of Taxation laws, including regulations for the tax credit for the provision of vehicles to low-income workers, the tax credit for investments in downstream natural gas manufacturing, and the tax credit for high wage growth companies. It also instructs the Tax Department to amend the rule for the valuation of arable land and structures for property tax purposes, particularly with regard to the tax liability of "elevated tunnels".
This bill was signed by the governor on March 31st.