Current through Register Vol. XLI, No. 38, September 20, 2024
5.1. Definitions. For the purposes of the
small business property tax adjustment credit, the following terms are defined:
5.1.1. "Aggregate appraised value" means the
true and actual value of all property in the state owned by the eligible
taxpayer including the true and actual value of all property in the state owned
by any related entity. For the purpose of this definition, all appraised
property will be included into the appraised value including all real property
and all personal property, including all property eligible for the credits
granted under subsection 3.2 of this rule;
5.1.2. "Related entity" means:
5.1.2.a. An individual, corporation,
partnership, affiliate, association or trust or any combination or group
thereof controlled by the taxpayer;
5.1.2.b. An individual, corporation,
partnership, affiliate, association or trust or any combination or group
thereof that is in control of the taxpayer;
5.1.2.c. An individual, corporation,
partnership, affiliate, association or trust or any combination or group
thereof controlled by an individual, corporation, partnership, affiliate,
association or trust or any combination or group thereof that is in control of
the taxpayer; or
5.1.2.d. A member
of the same controlled group as the taxpayer.
5.1.3. For purposes of this rule, "control,"
with respect to a corporation, means ownership, directly or indirectly, of
stock possessing 50 percent or more of the total combined voting power of all
classes of the stock of the corporation which entitles its owner to vote.
"Control", with respect to a trust, means ownership, directly or indirectly, of
50 percent or more of the beneficial interest in the principal or income of the
trust. The ownership of stock in a corporation, of a capital or profits
interest in a partnership or association or of a beneficial interest in a trust
shall be determined in accordance with the rules for constructive ownership of
stock provided in section 267(c) of the United States Internal Revenue Code, as
amended: Provided, That paragraph (3) of section 267(c) of the United States
Internal Revenue Code shall not apply.
5.1.4. "Small business" means a business with
personal property located in this state with an aggregate appraised value of $1
million or less. For the purposes of this rule, "small business" does not
include any person holding a working interest in any oil, natural gas, or
natural gas liquid producing property or any public service company that is
centrally assessed by the state for property tax purposes.
5.2. Amount of credit. A small business is
allowed a tax credit in the amount of 50 percent of the amount of West Virginia
ad valorem personal property tax timely paid during its
applicable income tax year, less the amount of any credit granted under
subsection 3.2 of this rule. The payment must have been timely made, meaning
that it must be received by the county sheriff on or before the due date for
paying the tax. Payments made that are untimely, delinquent, or for "back
taxes" are not allowed to be used for purposes of the small business property
tax adjustment credit.
5.3.
Application of credit.
5.3.1. If the small
business taxpayer is subject to the corporation net income tax imposed in W.
Va. Code §11-24-1
et
seq., then the amount of the credit may be taken against the
corporation net income tax liability of the small business for the current
corporation net income tax taxable year.
5.3.2. If the small business taxpayer is (1)
an electing small business corporation as defined in
26 U.S.C.
§1361, (2) a partnership, (3) a limited
liability company that is treated as a partnership for federal income purposes,
or (4) a sole proprietorship, then the amount of the credit may be taken
against the personal income tax liability imposed under W. Va. Code
§11-21-1
et
seq.
5.3.3. Electing small
business corporations, limited liability companies treated as partnerships for
federal income tax purposes, partnerships, and other unincorporated
organizations shall allocate the small business property tax adjustment credit
among its members in the same manner as profits and losses are allocated for
the taxable year.
5.4.
Refundable nature of the credit. If the amount of the annual tax credit exceeds
the amount of the applicable income tax, then the taxpayer may claim the excess
amount as a refundable tax credit. A taxpayer must file a personal income tax
return or corporation net income tax return to claim the refundable credit,
even if the taxpayer owes no income tax for the relevant income tax year.
However, any refundable tax credit amount is subject to offset, meaning that
the amount refunded may be reduced by the amount of any other tax owed by the
same taxpayer, pursuant to W. Va. Code §11-10-11(j).
5.5. Annual schedule. Taxpayers claiming the
small business property tax adjustment credit must prepare and file with the
Tax Division an annual schedule showing:
(1)
the aggregate appraised value of all property in the state owned by the
eligible taxpayer and of any related entity,
(2) the amount of the applicable income tax
paid for the taxable year,
(3) the
amount of West Virginia ad valorem personal property tax paid
during the taxable year, and
(4) the
amount of small business property tax adjustment credit allowed for the taxable
year.
