§5B-2E-7b. Credit against taxes


Published: 2015

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WVC 5 B- 2 E- 7 B

§5B-2E-7b. Credit against taxes.

     (a) General. - When a qualified professional services

destination facility is located at or adjacent to an existing

historic resort hotel with at least five hundred rooms and the

qualified professional services destination facility eligible for

credit under this section is primarily engaged in furnishing

services that are not subject to the tax imposed by article

fifteen, chapter eleven of this code, then in lieu of the credits

that otherwise would be allowable under section seven or seven-a of

this article, the eligible company that complies with the

requirements of this section may claim the credit provided in this

section: Provided, That the maximum amount of credit allowable

under this section is equal to twenty-five percent of the eligible

company's qualified investment, as defined in this section.

     (b) Definitions. - The following words and phrases when used

in this section have the meanings given to them in this subsection

unless the context in which used clearly indicates that a different

meaning was intended by the Legislature.

     (1) "Agreement" means an agreement entered into under

subsection (g) of this section.

     (2) "Compensation" means wages, salaries, commissions and any

other form of remuneration paid to employees for personal services.

     (3) "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 the calendar year 2015.

     (4) "Consumer price index" for any calendar year means the

average of the federal consumer price index as of the close of the

twelve-month period ending on August 31 of that calendar year.

     (5) "Eligible company" for purposes of this section means any

corporation, limited liability company, partnership, limited

liability partnership, sole proprietorship, business trust, joint

venture or any other entity operating a qualified professional

services destination facility, whether owned or leased, within the

state that: (A) creates at least one hundred twenty-five new jobs

in this state within thirty-six months after the date the qualified

investment is placed into service or use, and maintains those jobs

for the entire ten year life of the tax credit specified in this

section, (B) makes available to its full-time employees health

insurance coverage and pays at least fifty percent of the premium

for the health insurance, (C) generates, within thirty-six months

after the date the qualified investment is placed into service or

use, not less than $10 million of gross receipts upon which the

taxes imposed under article twenty-seven, chapter eleven of this

code are paid, and (D) meets the standards, limitations and

requirements of this section and of the development office. An

eligible company may operate or intend to operate directly or

indirectly through a lessee or a contract operator.

     (6) "Federal consumer price index" means the most recent

consumer price index as of August 31 each year for all urban consumers published by the United States Department of Labor.

     (7) "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.

     (8) "Historic resort hotel" means a resort hotel registered

with the United States Department of the Interior on the effective

date of this amendment as a national historic landmark in its

National Registry of Historic Places having not fewer than five

hundred guest rooms.

     (9) "New employee" means 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 the application

was filed under subsection (c) of this section. In no event may the

number of new employees exceed the total net increase in the

employer'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 as defined in article twenty-four of

this chapter. In addition, a person is a "new employee" only if the

person's duties are on a regular, full-time and permanent basis:

     (A) "Full-time employment" means employment for at least

eighty hours per month at a wage not less than the amount specified

in subdivision (1), subsection (d) of this section; and

     (B) "Permanent employment" does not include employment that is

temporary or seasonal and therefore the wages, salaries and other

compensation paid to the temporary or seasonal employees will not

be considered for purposes of this section even if the compensation

paid to the temporary or seasonal employee equals or exceeds the

amount specified in paragraph (A) of this subdivision.

     (10) "New job" means a job which did not exist in the business

of the taxpayer in this state prior to filing the application for

benefits under this section, and which is filled by a new employee.

     (11) "Professional services" means only those services

provided directly by: a physician licensed to practice in this

State, a surgeon licensed to practice in this State, a dentist

licensed to practice in this State, a podiatrist licensed to

practice in this State, an osteopathic physician licensed to

practice in this State, a psychologist licensed to practice in this

State, an optometrist licensed to practice in this State, a

registered nurse licensed to practice in this State, a physician

assistant licensed to practice in this State, a licensed practical nurse licensed to practice in this State, a dental hygienist

licensed to practice in this State, a social worker licensed to

practice in this State, or any other health care professional

licensed to practice in this State;

     (12) "Qualified investment" means one-hundred percent of the

cost of property purchased or leased for the construction and

equipping of a qualified professional services destination facility

which is placed in service or use in this State by an eligible

company.

     (A) The cost of property purchased for a qualified

professional services destination facility is determined under the

following rules:

     (i) Cost does not include the value of property given in trade

or exchange for the property purchased for business expansion.

     (ii) 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.

     (iii) 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 ten

years.

     (iv) The cost of tangible personal property acquired by

written lease for a primary term of not less than four years.

     (v) 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.

     (vi) 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 ten years, or the

remaining useful life of the property, determined as aforesaid,

whichever is less.

     (c) Credit against taxes. - The credit allowed by this section

shall be equal to twenty-five percent of the eligible company's

qualified investment in the qualified professional services

destination facility and shall be taken and applied as provided in

this subsection (c). Notwithstanding any other provision of this

article to the contrary, no taxpayer or group of taxpayers may gain

entitlement to more than $37.5 million total aggregate tax credit

under this section and no taxpayer, or group of taxpayers, in the

aggregate may apply more than $2.5 million of annual credit in any tax year under this section, either in the form of a refund or

directly against a tax liability or in any combination thereof.

This limitation applies to initial tax credit attributable to

qualified investment in a qualified professional services

destination facility, and to qualified investment in a follow-up

project expansion, so that credit attributable additively and in

the aggregate to both may not be applied to exceed $2.5 million

annual credit in any tax year.

     (1) Application of credit. - The amount of credit allowable

under this subsection shall be taken over a ten-year period, at the

rate of one tenth of the amount thereof per taxable year, beginning

with the taxable year in which the eligible company places the

qualified professional services destination facility, or part

thereof, in service or use in this state, unless the eligible

company elected to delay the beginning of the ten-year period until

the next succeeding taxable year. This election shall be made in

the annual income tax return filed under chapter eleven of this

code for the taxable year in which the qualified professional

services destination facility is first placed into service or use

by the taxpayer. Once made, the election may not be revoked. The

annual credit allowance is taken in the manner prescribed in

subdivision (3) of this subsection (c): Provided, That if any

credit remains after the initial ten year credit application

period, the amount of remaining credit is carried forward to each

ensuing tax year until used or until the expiration of the fifth taxable year subsequent to the end of the initial ten year credit

application period. If any unused credit remains after expiration

of the fifth taxable year subsequent to the end of the initial ten

year credit application period, 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.

          (2) Placed in service or use. - For purposes of the credit

allowed by this subsection (c), qualified investment or qualified

investment property is considered placed in service or use in the

earlier of the following taxable years:

          (A) The taxable year in which, under the eligible company's

depreciation practice, the period for depreciation with respect to

the property begins; or

          (B) The taxable year in which the property is placed in a

condition or state of readiness and availability for a specifically

assigned function.

          (3) Application of annual credit allowance.

          (A) In general.- The aggregate annual credit allowance for the

current taxable year is an amount equal to the one-tenth part

allowed under subdivision (1) of this subsection for qualified

investment placed into service or use.

          (B) Application of current year annual credit allowance. - The

amount determined under this subsection (c) is allowed as a credit

against one hundred percent of the eligible company's state tax

liabilities applied as provided in paragraphs (C) and (D) of this subdivision (3), and in that order:

          (C) Corporation net income taxes. - The amount of allowable

tax credit for the year determined under paragraph (A) of this

subdivision (3) shall first be applied to reduce the taxes imposed

by article twenty-four, chapter eleven of this code, for the

taxable year determined before application of allowable credits

against tax.

          (D) Personal income taxes. -

          (i) If the eligible company is an electing small business

corporation, as defined in section 1361 of the United States

Internal Revenue Code of 1986, as amended, a partnership, a limited

liability company that is treated as a partnership for federal

income tax purposes or a sole proprietorship, then any unused

credit after application of paragraph (C) of this subdivision (3)

is allowed as a credit against the taxes imposed by article twenty-

one, chapter eleven of this code on the members, owners, partners

or interest holders in the eligible company.

          (ii) Electing small business corporations, limited liability

companies, partnerships and other unincorporated organizations

shall allocate the credit allowed by this article among their

members in the same manner as profits and losses are allocated for

the taxable year.

          (E) No credit is allowed under this subdivision (3) against

any employer withholding taxes imposed by article twenty-one,

chapter eleven of this code.

          (F) The tax credits allowed under articles thirteen-j,

thirteen-q, thirteen-s, thirteen-r, thirteen-w, and thirteen-aa of

this code may not be applied to offset any tax against which the

tax credit allowed under this article is allowed or authorized. No

person, entity, company, or eligible company authorized or entitled

to any tax credit allowed under this section or any member of the

unitary group or any member of the controlled group of which the

taxpayer is a member, may gain entitlement to any other economic

development tax credit or economic development tax incentive which

relates to the investment or activity upon which the credit

authorized under this section is based.

          (G) (i) In order to effectuate the purposes of this

subdivision (3), the Tax Commissioner may propose for promulgation

rules, including emergency rules, in accordance with article three,

chapter twenty-nine-a of this code.

          (ii) The Tax Commissioner may apply any amount of the tax

credit otherwise available to a Taxpayer under this article, to pay

any delinquent West Virginia state tax liability of the taxpayer,

and interest and penalties as applicable.

          (iii) Any amount of the tax credit otherwise available to a

taxpayer under this article may be applied by the applicable

administering agency to pay any outstanding obligation to a

Workers' Compensation Fund, as defined in article two-c of chapter

twenty-three of this code, or any outstanding obligation under the

West Virginia Unemployment Compensation Act.

          (iv) Any amount of the tax credit otherwise available to a

taxpayer under this article, may be applied by the applicable

administering agency to pay any delinquent or unpaid assessment,

fee, fine, civil penalty or monetary imposition imposed by the West

Virginia Division of Environmental Protection or the United States

Environmental Protection Agency, or any agency charged with

enforcing federal, state or local environmental or hazardous waste

regulations.

          (H) Unused credit, refundable credit. - If any annual credit

remains after application of preceding paragraphs of this

subdivision (3), the amount thereof shall be refunded annually to

the eligible company, and distributed in accordance with the credit

distribution specified in this subdivision (3): Provided, That the

amount thereof may not exceed the limitation on annual tax credit

or the limitation on total aggregate tax credit specified in this

section.

          (I) Forfeiture of credit. - If any credit remains after

expiration of the fifth taxable year subsequent to the end of the

initial ten year credit application period, such credit is

forfeited, and may not be used to offset any West Virginia tax

liability.

          (d) Compensation of employees filling new jobs.

          (1) The new jobs and new employee criteria which count toward

qualification of a taxpayer as an eligible company for purposes of

the tax credit allowed by this section shall be subject to the following limitations and requirements. A job counts toward

qualification of a taxpayer as an eligible company if the job is a

new job, as defined in this section, held by a new employee, as

defined in this section, and the new job:

          (A) Pays a median wage of at least $37,000 annually. Beginning

January 1, 2015, and on January 1 of each year thereafter, the Tax

Commissioner shall prescribe an amount that shall apply in lieu of

the $37,000 amount for new jobs filled during that calendar year.

This amount is prescribed by increasing the $37,000 figure by the

cost-of-living adjustment for that calendar year. If any increase

under this subdivision is not a multiple of $50, the increase shall

be rounded to the next lowest multiple of $50;

          (B) Provides health insurance. The employer may, in addition,

offer benefits including child care, retirement and other benefits;

and

          (C) Is a full-time, permanent position, as those terms are

defined in this section.

          (D) Jobs that pay less than the statewide average nonfarm

payroll wage, as determined annually by the West Virginia Bureau of

Employment Programs, or that pay that salary, but do not also

provide health benefits in addition to the salary, do not count

toward qualification of a taxpayer as an eligible company under

this section. Jobs that are less than full-time, permanent

positions do not count toward qualification of a taxpayer as an

eligible company under this section.

          (E) The employer having obtained qualification as an eligible

company under this section for the year in which the new job is

filled is not required to raise wages of the employees currently

employed in the new jobs upon which the initial qualification as an

eligible company under this section was based by reason of the

cost-of-living adjustment for new jobs filled in subsequent years

provided the employer continues to provide healthcare.

          (e) Application and review.

          (1) Application. - An eligible company that meets the

requirements of this section may apply to the Development Office

for entitlement to the tax credit authorized under this section.

The application shall be on a form prescribed by the Development

Office and shall include all of the following:

          (A) The name and address of the applicant;

          (B) Documentation that the applicant is a eligible company;

          (C) Documentation that the applicant meets the requirements of

this section;

          (D) Documentation that the applicant does not owe any

delinquent taxes or any other amounts to the federal government,

this state or any political subdivision of this state;

          (E) An affidavit that the applicant has not filed for or

publicly announced its intention to file for bankruptcy protection

and that the company will not seek bankruptcy protection within the

next six calendar months following the date of the application;

          (F) A waiver of confidentiality under section five-d, article ten, chapter eleven of this code for information provided in the

application; and

          (G) Any other information required by the Development Office.

          (f) Credit allowable.

          (1) Certified multiple year projects.

          (A) In general. - A multiple year qualified professional

services destination facility project certified by the West

Virginia Development Office is eligible for the credit allowable by

this article. A project eligible for certification under this

section is one where the qualified investment under this article

creates at least the required minimum number of new jobs but the

qualified investment is placed in service or use over a period of

up to three successive tax years: Provided, That the qualified

investment is made pursuant to a written business facility

development plan of the taxpayer providing for an integrated

project for investment at one or more new or expanded business

facilities, a copy of which must be attached to the taxpayer's

application for project certification and approved by the West

Virginia Development Office, and the qualified investment placed in

service or use during the first tax year would not have been made

without the expectation of making the qualified investment placed

in service or use during the next two succeeding tax years.

          (B) Application for certification. - The application for

certification of a project under this section shall be filed with

and approved by the West Virginia Development Office prior to any credit being claimed or allowed for the project's qualified

investment and new jobs created as a direct result of the qualified

investment. This application shall be approved in writing and

contain the information as the West Virginia Development Office may

require to determine whether the project should be certified as

eligible for credit under this article.

          (C) Review. - Within thirty days of receipt of a complete

application, the Development Office, in conjunction with the Tax

Division of the Department of Revenue, shall review the application

and determine if the applicant is an eligible company and that the

requirements of this section have been met. Applications not

approved within the thirty days specified in this subdivision are

hereby deemed denied.

          (D) Approval. - The Development Office may approve or deny the

application. Upon approval of an application, the Development

Office shall notify the applicant in writing and enter into an

agreement with the eligible company for benefits under this

section.

          (2) Certified follow-up project expansions.

          (A) An eligible company that intends to undertake a follow-up

project expansion, may apply to the West Virginia Development

Office for certification of a single, one-time, follow-up project

expansion, and entitlement to an additional tax credit under this

section in an amount which is the lesser of twenty-five percent of

qualified investment in the follow-up project expansion or $12.5 million. No taxpayer, or group of taxpayers, in the aggregate may

apply more than $2.5 million of annual credit in any tax year under

this section, either in the form of a refund or directly against a

tax liability or in any combination thereof. This limitation

applies to initial tax credit attributable to qualified investment

in a qualified professional services destination facility, and to

qualified investment in a follow-up project expansion, so that

credit attributable additively and in the aggregate to both may not

be applied to exceed $2.5 million annual credit in any tax year.

          (B) The requirements, limitations and qualifications

applicable to qualified professional services destination facility

projects under this section apply to follow-up project expansions,

except for those requirements, limitations and qualifications

expressly specified in this subdivision (2).

          (C) Requirements for certification of a follow-up project

expansion are as follows:

          (i) The eligible company, pursuant to certification and

authorization for entitlement to tax credit under subsection (1) of

this section (f), has placed qualified investment of not less than

$80 million into service in a qualified professional services

destination facility within an initial period of not more than

three tax years;

          (ii) The eligible company intends to place additional

qualified investment in service or use in the previously certified

qualified professional services destination facility project, or an expansion or extension thereof. In no case shall a follow-up

project expansion be certified if the follow-up project expansion

property is not contiguous to, or within not more than one mile of,

the initial qualified professional services destination facility;

          (iii) The eligible company proposes to place the qualified

investment in the follow-up project expansion in service or use in

the fourth tax year subsequent to the tax year in which qualified

investment was first placed into service or use in the initial

qualified professional services destination facility project, or

under a multiple year project certification, in the fourth, fifth

and sixth tax year subsequent to the tax year in which qualified

investment was first placed into service or use in the initial

qualified professional services destination facility project;

          (iv) The follow-up project expansion must create and maintain

at least twenty-five net new jobs held by new employees, in

addition to the new jobs created by the initial qualified

professional services destination facility project. The loss of any

West Virginia job at the eligible company will be subtracted from

the count of new jobs attributable to the follow-up project

expansion;

          (v) The West Virginia Development Office shall not issue more

than one certification for any follow-up project expansion; and

          (vi) The West Virginia Development Office shall not issue

certification of a follow-up project expansion unless the applicant

provides convincing evidence to show that the follow-up project expansion will result in jobs creation specified in this

subdivision, that such jobs will remain and be maintained in West

Virginia for at least ten years subsequent to the placement of

qualified investment into service or use in the follow-up project

expansion, that the follow-up project expansion will not operate to

the detriment of other West Virginia businesses or to the detriment

of the economy, public welfare or moral character of West Virginia

or its people.

          (g) Agreement.

          (1) The agreement between the eligible company and the

Development Office shall be entered into before any benefits may be

provided under this section.

          (2) The agreement shall do all of the following:

          (A) Specify the terms and conditions the eligible company must

comply with in order to receive benefits under this section, other

than those terms, limitations and conditions specified and mandated

by statute or regulation; and

          (B) Require the Development Office to certify all of the

following to the Tax Division of the Department of Revenue each

taxable year an agreement under this section is in effect:

          (i) That the eligible company is eligible to receive benefits

under this section;

          (ii) The number of new jobs created by the company during each

taxable year;

          (iii) The amount of gross wages, as determined for purposes of Form W2, as filed with the Internal Revenue Service, being paid to

each individual employed in a new job;

          (iv) The amount of an eligible company's qualified investment;

          (v) The maximum amount of credit allowable to the eligible

company under this section; and

          (vi) Any other information deemed necessary by the Development

Office.

          (h) Filing and contents.

          (1) Filing. - On or before the due date of the income tax

return for each tax year in which the agreement is in effect, an

eligible company shall file with the Tax Division of the Department

of Revenue a form prescribed by the Tax Commissioner.

          (2) Contents. - The form specified under subdivision (1) of

this subsection (h) shall request the following information:

          (A) The name and Employer Identification Number of the

eligible company;

          (B) The effective date of the agreement;

          (C) The reporting period end date;

          (D) Information relating to each individual employed in a new

job as required by the Tax Commissioner;

          (E) Aggregate gross receipts for the tax period and gross

receipts on which tax has been paid under article twenty-seven,

chapter eleven of this code for the tax period; and

          (F) Any other information required by the Tax Commissioner.

          (3) Taking of credit. - The taxpayer, participant or participants claiming the credit for qualified investments in a

certified project shall annually file with their income tax returns

filed under chapter eleven of this code:

          (A) Certification that the taxpayer's or participant's

qualified investment property continues to be used in the project

and if disposed of during the tax year, was not disposed of prior

to expiration of its useful life;

          (B) Certification that the new jobs created by the project's

qualified investment continue to exist and are filled by persons

who are residents of this State; and

          (C) Any other information the Tax Commissioner requires to

determine continuing eligibility to claim the annual credit

allowance for the project's qualified investment.

          (4) Confidentiality.- The contents of the completed form shall

be subject to the confidentiality rules set forth in section five-

d, article ten, chapter eleven of this code: Provided, That

notwithstanding the provisions of section five-d, article ten,

chapter eleven of this code, or any other provision of this code,

tax returns, tax return information and such other information as

may be necessary to administer the tax credits and programs

authorized and specified by this article and in this section may be

exchanged between the Tax Commissioner and the West Virginia

Development Office without restriction.





Note: WV Code updated with legislation passed through the 2015 Regular Session

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