Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
                  Introduced House Bill 4705                            FISCAL
                                                       NOTE
                By Delegate Linville [[Introduced January 15, 2024; Referred to the Committee on Technology and Infrastructure then Finance]
     Intr HB                                                                                      2024R1521
  A BILL to amend and reenact §11-15-9 of the Code of West Virginia, 1931, as amended, relating to
            the consumers sales and service tax, and returning the refundable exemption for sales of
            construction and maintenance materials acquired by a second party for use in Division of
            Highways projects; specifying duties of Tax Commissioner and Division of Highways;
            specifying procedure of the exemption; and setting forth calculation of reimbursement.
     Be it enacted by the Legislature of West Virginia:
     ARTICLE            15.        CONSUMERS              SALES           AND         SERVICE           TAX.
     §11-15-9. Exemptions.
            (a) Exemptions for which exemption certificate may be issued. — A person having a right
  or claim to any exemption set forth in this subsection may, in lieu of paying the tax imposed by this
  article and filing a claim for refund, execute a certificate of exemption, in the form required by the
  Tax Commissioner, and deliver it to the vendor of the property or service in the manner required by
  the Tax Commissioner. However, the Tax Commissioner may, by rule, specify those exemptions
  authorized in this subsection for which exemption certificates are not required. The following sales
  of tangible personal property and services are exempt as provided in this subsection:
            (1) Sales of gas, steam, and water delivered to consumers through mains or pipes and
  sales of electricity;
           (2) Sales of textbooks required to be used in any of the schools of this state or in any
 institution in this state which qualifies as a nonprofit or educational institution subject to the West
 Virginia Department of Education and the Arts, the Higher Education Policy Commission, or the
 Council for Community and Technical College Education for universities and colleges located in
 this state;
           (3) Sales of property or services to this state, its institutions or subdivisions, governmental
 units, institutions, or subdivisions of other states: Provided, That the law of the other state provides
 the same exemption to governmental units or subdivisions of this state and to the United States,
 including agencies of federal, state, or local governments for distribution in public welfare or relief
                                                     1   1
     Intr HB                                                                                   2024R1521
 work;
           (4) Sales of vehicles which are titled by the Division of Motor Vehicles and which are
 subject to the tax imposed by §11-15-3c of this code or like tax;
           (5) Sales of property or services to churches which make no charge whatsoever for the
 services they render: Provided, That the exemption granted in this subdivision applies only to
 services, equipment, supplies, food for meals, and materials directly used or consumed by these
 organizations and does not apply to purchases of gasoline or special fuel;
           (6) Sales of tangible personal property or services to a corporation or organization which
 has a current registration certificate issued under §11-12-1 et seq. of this code, which is exempt
 from federal income taxes under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of 1986,
 as amended, and which is:
           (A) A church or a convention or association of churches as defined in Section 170 of the
 Internal Revenue Code of 1986, as amended;
           (B) An elementary or secondary school which maintains a regular faculty and curriculum
 and has a regularly enrolled body of pupils or students in attendance at the place in this state
 where its educational activities are regularly carried on;
           (C) A corporation or organization which annually receives more than one half of its support
 from any combination of gifts, grants, direct or indirect charitable contributions, or membership
 fees;
           (D) An organization which has no paid employees and its gross income from fundraisers,
 less reasonable and necessary expenses incurred to raise the gross income (or the tangible
 personal property or services purchased with the net income), is donated to an organization which
 is exempt from income taxes under Section 501(c)(3) or (c)(4) of the Internal Revenue Code of
 1986, as amended;
           (E) A youth organization, such as the Girl Scouts of the United States of America, the Boy
 Scouts of America, or the YMCA Indian Guide/Princess Program and the local affiliates thereof,
                                                   1    2
     Intr HB                                                                                        2024R1521
 which is organized and operated exclusively for charitable purposes and has as its primary
 purpose the nonsectarian character development and citizenship training of its members;
           (F) For purposes of this subsection:
           (i) The term "support" includes, but is not limited to:
           (I) Gifts, grants, contributions, or membership fees;
           (II) Gross receipts from fundraisers which include receipts from admissions, sales of
 merchandise, performance of services, or furnishing of facilities in any activity which is not an
 unrelated trade or business within the meaning of Section 513 of the Internal Revenue Code of
 1986, as amended;
           (III) Net income from unrelated business activities, whether or not the activities are carried
 on regularly as a trade or business;
           (IV) Gross investment income as defined in Section 509(e) of the Internal Revenue Code
 of 1986, as amended;
           (V) Tax revenues levied for the benefit of a corporation or organization either paid to or
 expended on behalf of the organization; and
           (VI) The value of services or facilities (exclusive of services or facilities generally furnished
 to the public without charge) furnished by a governmental unit referred to in Section 170(c)(1) of
 the Internal Revenue Code of 1986, as amended, to an organization without charge. This term
 does not include any gain from the sale or other disposition of property which would be considered
 as gain from the sale or exchange of a capital asset or the value of an exemption from any federal,
 state, or local tax or any similar benefit;
           (ii) The term "charitable contribution" means a contribution or gift to or for the use of a
 corporation or organization, described in Section 170(c)(2) of the Internal Revenue Code of 1986,
 as amended; and
           (iii) The term "membership fee" does not include any amounts paid for tangible personal
 property or specific services rendered to members by the corporation or organization;
                                                      1   3
     Intr HB                                                                                    2024R1521
           (G) The exemption allowed by this subdivision does not apply to sales of gasoline or
 special fuel or to sales of tangible personal property or services to be used or consumed in the
 generation of unrelated business income as defined in Section 513 of the Internal Revenue Code
 of 1986, as amended. The exemption granted in this subdivision applies only to services,
 equipment, supplies, and materials used or consumed in the activities for which the organizations
 qualify as tax-exempt organizations under the Internal Revenue Code and does not apply to
 purchases of gasoline or special fuel which are taxable as provided in §11-14C-1 et seq. of this
 code;
           (7) An isolated transaction in which any taxable service or any tangible personal property is
 sold, transferred, offered for sale, or delivered by the owner of the property or by his or her
 representative for the owner’s account, the sale, transfer, offer for sale, or delivery not being made
 in the ordinary course of repeated and successive transactions of like character by the owner or on
 his or her account by the representative: Provided, That nothing contained in this subdivision may
 be construed to prevent an owner who sells, transfers, or offers for sale tangible personal property
 in an isolated transaction through an auctioneer from availing himself or herself of the exemption
 provided in this subdivision, regardless of where the isolated sale takes place. The Tax
 Commissioner may propose a legislative rule for promulgation pursuant to §29A-3-1 et seq. of this
 code which he or she considers necessary for the efficient administration of this exemption;
           (8) Sales of tangible personal property or of any taxable services rendered for use or
 consumption in connection with the commercial production of an agricultural product the ultimate
 sale of which is subject to the tax imposed by this article or which would have been subject to tax
 under this article: Provided, That sales of tangible personal property and services to be used or
 consumed in the construction of or permanent improvement to real property and sales of gasoline
 and special fuel are not exempt: Provided, however, That nails and fencing may not be considered
 as improvements to real property;
           (9) Sales of tangible personal property to a person for the purpose of resale in the form of
                                                    1   4
      Intr HB                                                                                  2024R1521
  tangible personal property: Provided, That sales of gasoline and special fuel by distributors and
  importers is taxable except when the sale is to another distributor for resale: Provided, however,
  That sales of building materials or building supplies or other property to any person engaging in
 the activity of contracting, as defined in this article, which is to be installed in, affixed to or
 incorporated by that person or his or her agent into any real property, building, or structure is not
 exempt under this subdivision;
           (10) Sales of newspapers when delivered to consumers by route carriers;
           (11) Sales of drugs, durable medical goods, mobility-enhancing equipment, and prosthetic
 devices dispensed upon prescription and sales of insulin to consumers for medical purposes;
           (12) Sales of radio and television broadcasting time, preprinted advertising circulars and
 newspaper, and outdoor advertising space for the advertisement of goods or services;
           (13) Sales and services performed by day care centers;
           (14) Casual and occasional sales of property or services not conducted in a repeated
 manner or in the ordinary course of repetitive and successive transactions of like character by a
 corporation or organization which is exempt from tax under subdivision (6) of this subsection on its
 purchases of tangible personal property or services. For purposes of this subdivision, the term
 "casual and occasional sales not conducted in a repeated manner or in the ordinary course of
 repetitive and successive transactions of like character" means sales of tangible personal property
 or services at fundraisers sponsored by a corporation or organization which is exempt, under
 subdivision (6) of this subsection, from payment of the tax imposed by this article on its purchases
 when the fundraisers are of limited duration and are held no more than six times during any 12-
 month period and "limited duration" means no more than 84 consecutive hours: Provided, That
 sales for volunteer fire departments and volunteer school support groups, with duration of events
 being no more than 84 consecutive hours at a time, which are held no more than 18 times in a 12-
 month period for the purposes of this subdivision are considered "casual and occasional sales not
 conducted in a repeated manner or in the ordinary course of repetitive and successive
                                                    1   5
      Intr HB                                                                                   2024R1521
 transactions of a like character";
           (15) Sales of property or services to a school which has approval from the Higher
 Education Policy Commission or the Council for Community and Technical College Education to
 award degrees, which has its principal campus in this state and which is exempt from federal and
 state income taxes under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended:
 Provided, That sales of gasoline and special fuel are taxable as provided in §11-15-18, §11-15-
 18b, and §11-14C-1 et seq. of this code;
           (16) Sales of lottery tickets and materials by licensed lottery sales agents and lottery
 retailers authorized by the State Lottery Commission, under the provisions of §29-22-1 et seq. of
 this code;
           (17) Leases of motor vehicles titled pursuant to the provisions of §17A-3-1 et seq. of this
 code to lessees for a period of 30 or more consecutive days;
           (18) Notwithstanding the provisions of §11-15-18 or §11-15-18b of this code or any other
 provision of this article to the contrary, sales of propane to consumers for poultry house heating
 purposes, with any seller to the consumer who may have prior paid the tax in his or her price, to not
 pass on the same to the consumer, but to make application and receive refund of the tax from the
 Tax Commissioner pursuant to rules which are promulgated after being proposed for legislative
 approval in accordance with chapter 29A of this code by the Tax Commissioner;
           (19) Any sales of tangible personal property or services purchased and lawfully paid for
 with food stamps pursuant to the federal food stamp program codified in 7 U. S. C. §2011, et seq.,
 as amended, or with drafts issued through the West Virginia special supplement food program for
 women, infants, and children codified in 42 U. S. C. §1786;
           (20) Sales of tickets for activities sponsored by elementary and secondary schools located
 within this state;
           (21) Sales of electronic data processing services and related software: Provided, That, for
 the purposes of this subdivision, "electronic data processing services" means:
                                                    1    6
      Intr HB                                                                                    2024R1521
           (A) The processing of another’s data, including all processes incident to processing of data
 such as keypunching, keystroke verification, rearranging, or sorting of previously documented
 data for the purpose of data entry or automatic processing and changing the medium on which
 data is sorted, whether these processes are done by the same person or several persons; and
           (B) Providing access to computer equipment for the purpose of processing data or
 examining or acquiring data stored in or accessible to the computer equipment;
           (22) Tuition charged for attending educational summer camps;
           (23) (A) Dispensing of services performed by one corporation, partnership, or limited
 liability company for another corporation, partnership, or limited liability company when the entities
 are members of the same controlled group or are related taxpayers as defined in Section 267 of
 the Internal Revenue Code, as amended. For purposes of this subdivision, "cControl" means
 ownership, directly or indirectly, of stock, equity interests, or membership interests possessing 50
 percent or more of the total combined voting power of all classes of the stock of a corporation,
 equity interests of a partnership or membership interests of a limited liability company entitled to
 vote or ownership, directly or indirectly, of stock, equity interests or membership interests
 possessing 50 percent or more of the value of the corporation, partnership, or limited liability
 company;
           (B) Leases of heavy equipment or machinery among corporations, partnerships, or limited
 liability companies when the entities are members of the same control group or are related
 taxpayers as defined in Section 267 of the Internal Revenue Code of 1986, as amended;
           (24) Food for the following are is exempt:
           (A) Food purchased or sold by a public or private school, school-sponsored student
 organizations, or school-sponsored parent-teacher associations to students enrolled in the school
 or to employees of the school during normal school hours; but not those sales of food made to the
 general public;
           (B) Food purchased or sold by a public or private college or university or by a student
                                                     1   7
      Intr HB                                                                                    2024R1521
 organization officially recognized by the college or university to students enrolled at the college or
 university when the sales are made on a contract basis so that a fixed price is paid for consumption
 of food products for a specific period of time without respect to the amount of food product actually
 consumed by the particular individual contracting for the sale and no money is paid at the time the
 food product is served or consumed;
           (C) Food purchased or sold by a charitable or private nonprofit organization, a nonprofit
 organization, or a governmental agency under a program to provide food to low-income persons at