West Virginia Code of State Rules
Agency 110 - Tax
Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT
Series 110-12A - Annual Tax On Incomes Of Certain Carriers
Section 110-12A-4 - Imposition of Annual Tax on Net Income
Universal Citation: 110 WV Code of State Rules 110-12A-4
Current through Register Vol. XLI, No. 38, September 20, 2024
4.1. Persons subject to tax.
(a) In addition to the annual tax imposed on
gross income, (See Section 3 of these rules and regulations) every carrier
doing business in this State shall pay an annual tax on its net income earned
within this State.
(b) The annual
tax on net income shall apply to carriers who have income from transportation
activities beginning and ending (two-point business) within this State, and who
also have one-point or pass-through business in this State. The annual tax on
net income also applies to persons who have no two (2) point business in West
Virginia but have one (1) point business or pass-through business in West
Virginia and who also have minimal connection within this State. The annual tax
on net income also applies to persons who have no two-point business in West
Virginia, but have one-point business or pass-through business in West Virginia
and who have minimal connection within this State. For Example: A trucking
company with its home offices in Covington, Virginia, transports goods from
Virginia to Elkins, West Virginia. On its return trips from Elkins to Virginia,
said carrier transports goods that were taken aboard in Elkins. In Elkins, the
carrier owns a terminal, maintains a small office and employs several persons.
The activities mentioned in the preceding sentence are sufficient to subject
the trucking company to the tax on net income, even though the trucker has no
transportation activities which begin and end in the state and is not subject
to the tax on gross income. Therefore, the trucker must compute his motor
vehicle miles within West Virginia (from the border to Elkins and return) and
compute his tax liability on net income by the formula method set forth in
Section 3.3(a) of this rule.
(c)
Types of carriers subject to the tax on net income are the same as those
carriers listed in Section 3.1 of these rules and regulations and also in
Section 4.2.
4.2. Tax rates. -- The rates of tax to be applied against net income earned within West Virginia are set forth below for each type of carrier. (See Table 110-12AB found at the end of this regulation)
4.3. Determination of net income. The net income earned within this State against which the tax rate is to be applied shall be determined as follows:
(a) Motor
vehicles.
(1) Net income of motor vehicles
shall be determined by reducing the total net income of the carrier by an
amount bearing the proportion to such total net income that its West Virginia
gross income bears to its total gross income from all business done
everywhere.
(2) This reduced amount
of net income is then reduced further to an amount bearing the proportion to
such reduced net income of the carrier that its business done in this State in
motor vehicle miles bears to all business done everywhere in motor vehicle
miles.
(3) To illustrate: A
trucking company has total net income of one thousand dollars ($1,000). Said
company has total gross income for the taxable year of twenty-five thousand
dollars ($25,000) and has West Virginia gross income (beginning and ending) of
ten thousand dollars ($10,000). Therefore, West Virginia gross income is forty
percent (40%) of total gross income. This forty percent (40%) (West Virginia
gross as compared to total gross) is applied against the carrier's total net
income of one thousand dollars ($1,000) and reduces said income to six hundred
dollars ($600), which is to be further apportioned and reduced by the mileage
factor.
(4) The trucker, in this
illustration, had total mileage, in all states, of 5,000 miles. His mileage in
West Virginia, both intrastate and interstate, was 1,000 miles. Therefore, his
West Virginia mileage factor is twenty percent (20%) of his total mileage
(1,000 miles divided by 5,000 miles = 20%). This West Virginia mileage factor
of twenty percent (20%) is applied against the reduced net income of six
hundred dollars ($600) and results in West Virginia taxable income of one
hundred twenty dollars ($120).
(b) Railroad carriers.
(1) Net income of railroad carriers shall be
determined by reducing the total net income of the carrier by an amount bearing
the proportion to such total net income that its West Virginia gross income
bears to its total gross income from all business done everywhere.
(2) This reduced amount of net income is then
reduce further to an amount bearing the proportion to such reduced net income
of the carrier that its business done in this State in ton-miles bears to all
business done everywhere in ton-miles.
(3) In computing the annual tax on the net
income of a railroad carrier, passenger-miles within or without West Virginia
are not to be considered.
(c) Railroad car carriers and express
companies.
(1) Net income of railroad car
carriers and express companies shall be determined by reducing the total net
income of the carrier by an amount bearing the proportion to such total net
income that its West Virginia gross income bears to its total gross income from
all business done everywhere.
(2)
This reduced amount of net income is then reduced further to an amount bearing
the proportion to such reduced net income of the carrier that its business done
in this State in car-miles bears to all business done everywhere in
car-miles.
(d) Pipeline
companies.
(1) Net income of pipeline
companies shall be determined by reducing the total net income of the company
by an amount bearing the proportion to such total net income that its West
Virginia gross income bears to its total gross income from all business done
everywhere.
(2) This reduced amount
of net income is then reduced further to an amount bearing the proportion to
such reduced net income of the company that is business done in this State in
barrel-miles in the case of oil and liquid coal or slurry and of thousand cubic
feet-miles in the case of gas, bears to all business done, measured in like
fashion.
(e) Airline
companies and steamboat or other watercraft.
(1) Net income of airlines, steamboats or
other watercraft shall be determined by reducing the total net income of the
carrier by an amount bearing the proportion to such total net income that its
West Virginia gross income bears to its gross income from all business done
everywhere.
(2) This reduced amount
of net income is then reduced further to an amount bearing the proportion to
such reduced net income that its business done in West Virginia, measured in
passenger-miles in the case of airline companies and ton-miles in the case of
any person operating a steamboat or other watercraft, bears to all business
done, measured in like fashion.
(3)
Airline companies, in computing the mileage factor, are to use only
passenger-miles.
(f)
Telephone and telegraph companies.
(1) Net
income of telephone and telegraph companies shall be determined by reducing the
total net income of the company by a amount bearing the proportion to such
total net income that its West Virginia gross income bears to its total gross
income from all business done everywhere.
(2) This reduced amount of net income is then
reduced further to an amount bearing the proportion to such reduced net income
of the company that its business done in this State in wire-miles bears to all
business done everywhere in wire-miles.
4.4. Exclusions from income.
(a) For the purpose of computing the amount
of annual tax on net income, the taxpayer must exclude all nontransportation
income. Therefore, the amounts employed in the formula which are designated
total gross income and West Virginia gross income must contain only items of
income from transportation activities. See Section 3.3(a) of these rules and
regulations as to nontransportation income.
(b) Total net income as used in the preceding
paragraph shall mean net transportation income of the business. Net
transportation income may be determined by employing those rules that are used
to compute net income tax due the federal government. However, in determining
total net income, the taxpayer may exclude all items of nontransportation
income (See Section 3.3(a) of these rules) and must exclude any expenses
incurred in relation to the nontransportation income. In other words, net
transportation income is that income computed by federal guidelines without
items of nontransportation income or expenses reflected therein.
4.5. Persons not subject to tax on net income. -- Any person who engages in business within West Virginia only (has only two-point business in West Virginia) is not subject to the annual tax on net income. Such person is, of course, subject to the annual tax on gross income and must report the entire amount of his gross income from transportation activities thereunder.
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