Current through Register Vol. XLI, No. 38, September 20, 2024
4.1. The coal severance tax rebate is
available to taxpayers that meet every requirement as set forth in W. Va. Code
§
11-13EE-1,
et. seq., any other controlling section of the W. Va. Code and
W. Va. Code of State Rules, and any other recognized legal authority including
controlling decisions rendered by courts of competent jurisdiction.
4.2. In order to qualify for the coal
severance tax rebate, each of the following criteria must be met. Even if every
requirement has been met, the rebate may be denied, limited, suspended or
forfeited for any lawful reason.
4.2.1. The
taxpayer must be an eligible taxpayer, which means that the taxpayer was
engaged in the business of producing coal for sale, profit or commercial use,
as defined by W. Va. Code §
11-13EE-2(b)(19),
for at least two years in the State of West Virginia before the qualified
investment property is placed in service or use in this state.
See W. Va. Code §
11-13EE-2(b)(15).
4.2.2. However, a mere change in the form of
doing business, from one business form to another, or a mere change in
ownership, does not disqualify an otherwise eligible taxpayer as long as the
transferor produced coal in this state and paid the tax imposed by W. Va. Code
§
11-13A-3(a),
for at least two years prior to placing the qualified investment in service or
use. See W. Va. Code §
11-13EE-2(b)(15)(B)
and section heading 9 of this rule.
4.2.3. When changes in business composition
result in a new entity, at least 50 percent of the new entity's business assets
must have been actively and directly used in coal production activity in this
state for a two-year period, in order for the resulting taxpayer to be eligible
to claim the rebate for qualified investments made during the current tax year.
See W. Va. Code §
11-13EE-2(b)(15)(B).
4.2.4. The taxpayer must purchase or lease
the qualified purchase property on or after July 1, 2019 and place it into
service or use at the coal mining operation in the State of West
Virginia.
4.2.5. The qualified
investment property must result in an increase in the number of tons of coal
produced as well as increase in the taxpayer's workforce. Additionally, there
must be an increase in the state portion of the severance taxes paid. The
rebate paid in any year may not exceed 80 percent of the additional severance
taxes payable, before credit for payment of the minimum severance tax, that is
attributable to the increase in coal production. When the taxpayer operates
more than one mine in West Virginia, the production from all mines is
considered when determining whether there is an increase in the taxpayer's
production of coal due to placing qualified investment property into service or
use. Additionally, when the taxpayer is a member of a controlled or affiliated
group that has other members that produce coal in West Virginia, tons of coal
produced by all members of the controlled or affiliated group, including the
taxpayer, are used to determine whether the qualified investment property has
resulted in an increase in the number of tons of coal produced.
4.2.6. The qualified investment property must
be directly used at the coal mining operation at which it is placed in service
or use for at least five years after it is placed in service or use by the
taxpayer. If it is not directly used for at least five years after it is placed
in service or use by the taxpayer, the taxpayer is subject to recapture of the
rebate granted as described in section heading 13 of these rules.
4.2.7. No credit shall be allowed unless the
aggregate total coal production tonnage from all mines operated by the eligible
taxpayer in this state during the year for which the rebate or rebate carryover
is claimed has increased above the annual average aggregate total coal
production tonnage from all mines operated by the eligible taxpayer during the
base period.
4.2.8. No rebate shall
be allowed unless the aggregate total number of full-time employees along with
full-time equivalent employees, at all mines operated by the eligible taxpayer
in this state during the rebate year has increased above the annual average
aggregate total number of full-time employees, along with full-time equivalent
employees at all mines operated by the eligible taxpayer in this state during
the base period.
Example 1: Taxpayer company owns three mines,
Mine A, Mine B, and Mine C. The base tonnage produced at Mine A and Mine B was
200,000, which is 100,000 tons each. Mine C subsequently opens during 2021.
Each of the three mines produced 150,000 tons during the claim year. Therefore,
production increased for the aggregate group from 200,000 tons to 450,000
tons.
Example 2: Taxpayer company owns three mines,
Mine A, Mine B, and Mine C. The base number of aggregate full-time employees
for both Mine A and Mine B was 200, which is 100 each. Mine C subsequently
opens during 2021. Each of the three mines had 100 aggregate full-time
employees during the claim year. Therefore, the employment increased from 200
to 300 aggregate full-time employees.
4.2.9. No rebate shall be allowed under W.
Va. Code §
11-13EE-1,
et seq., when credit is claimed under any other article of
Chapter 11 of the W. Va. Code for capital investment in the new machinery and
equipment. No credit shall be allowed under any other article of Chapter 11 of
the W. Va. Code when a rebate is allowed under W. Va. Code §
11-13EE-1,
et seq., for the capital investment in new machinery and
equipment.
