Current through Register Vol. XLI, No. 38, September 20, 2024
12.1. Authority to
impose tax. -- The governing body of a municipality shall have plenary power
and authority to enact an ordinance imposing a municipal business and
occupation tax upon any business activity or occupation for which the State
imposed its business and occupation tax prior to July 1, 1987, which is engaged
in or carried on within the corporate limits of the municipality pursuant to
the provisions of W. Va. Code '8-13-5.
12.2. Nexus. -- Generally, for a municipality
to impose its municipal business and occupation tax upon a particular taxpayer,
that taxpayer must have sufficient contacts within the corporate limits of the
municipality to sustain the municipality's taxing jurisdiction over the
taxpayer.
For example, in instances where services are performed
entirely within a municipality or where contracting activities are engaged in
within a municipality sufficient nexus exists for a municipality to impose its
municipal business and occupation tax.
12.3. Activity must take place inside
municipality. -- In addition to the nexus requirement, the taxpayer must engage
in the business activity within the municipal limits for the municipality to
impose its municipal business and occupation tax.
12.3.1. Production of natural resources is
deemed to occur in the municipality if the natural resource is severed within
the municipal limits. Severance is deemed to occur as follows:
12.3.1.1. Coal being surface mined is severed
at its physical location prior to removal.
12.3.1.2. Coal from an underground mine is
severed at the portal where it is reduced to possession at the
surface.
12.3.1.3. Limestone or
sandstone which is quarried is severed at the physical location prior to
removal.
12.3.1.4. Limestone or
sandstone which is mined from underground is severed at the portal where it is
reduced to possession at the surface.
12.3.1.5. Oil and gas are severed at the
wellhead.
12.3.1.6. Timber, sand
and gravel, and other natural resource products are severed at their physical
location prior to removal, except in the case of underground mining in which
circumstance severance occurs at the portal where it is reduced to possession
at the surface.
12.3.2.
Manufacturing occurs where activities of a commercial or industrial nature are
undertaken which involve labor or skill being applied, by hand or machinery, to
materials so that as a result thereof, a new, different or useful substance or
article of tangible personal property is produced for sale, profit or
commercial or industrial use. Where the manufacturing process occurs both
within and without a municipality, the municipality may subject that portion of
the value derived therefrom as provided in Sections 2.3 and 2b of these
regulations.
12.3.3. Sales of
tangible personal property are deemed to occur in the municipality where the
sale is made. Whenever a customer physically enters a store within a
municipality and makes a purchase or signs a contract for the purchase of
tangible personal property such sales are subject to that municipality's
business and occupation tax regardless of where that tangible personal property
is delivered. Additionally, a municipality may impose its municipal business
and occupation tax pursuant to W. Va. Code '8-13-5(e),
if the sale of tangible personal property was directed from a business location
within the municipality or if the business of making the sale of such tangible
personal property has its principal office in the municipality and the sale was
not directed from another business location. In no case shall the taxing
authority extended under W. Va. Code '8-13-5(e)
apply to sales of tangible personal property which is subject to municipal
business and occupation tax in another municipality.
12.3.3.1. Where orders are placed by mail or
by some form of telecommunication without the customer physically coming to a
location within the municipality, or where orders are accepted by a
representative traveling outside the municipality, the following rules shall
apply:
12.3.3.1.a. If the sale is made
conditioned upon delivery outside of West Virginia no municipal business and
occupation tax may be imposed upon the sale.
12.3.3.1.b. If the order is placed based upon
solicitation by a representative (regardless of whether there is an employment
or agency relationship or whether acting as an independent contractor) who
solicits orders within a municipality imposing a municipal business and
occupation tax of its own, and the tangible personal property is to be
delivered in that municipality, then that municipality and no other may tax the
value of the sale.
12.3.3.1.c.
Where the tangible personal property is delivered in West Virginia to a
location which is not subject to a municipal business and occupation tax, the
municipality may impose its municipal business and occupation tax upon such
sale pursuant to W. Va. Code '8-13-5(e).
12.3.3.2. In those instances where
orders for tangible personal property are filled from a truck or warehouse
located within a municipality and those orders are placed with the truck driver
or at the warehouse such sales are taxable entirely by that municipality and no
other.
12.3.3.3. Where the tangible
personal property is picked up by the customer at a store or warehouse in
another municipality, the municipality in which the store or warehouse where
the tangible personal property is picked up is entitled to tax the value of
such sale.
12.3.4.
Municipalities may tax public service or utility businesses upon sales of
services to locations within the municipality.
12.3.5. Municipalities may tax contracting
activities if the building or structure upon which contracting activities are
being performed are located within the municipality. The place of business or
office location from which a contractor operates is not entitled to any
municipal business and occupation tax upon contracting receipts from projects
located outside of that municipality. Where only a portion of the contract is
performed within the municipality the taxpayer must apportion the receipts from
that contract to reflect that portion of the work performed within the
municipality. This may be done upon a reasonable basis such as a proportion
based on square footage or actual cost at the option of the taxpayer provided
accurate supporting documentation is maintained to demonstrate the
reasonableness of the apportionment.
12.3.6. In those instances where a service
business or calling is primarily engaged in within a municipality that
municipality may impose its municipal business and occupation tax pursuant to
W. Va. Code '8-13-5(e),
if the provision of the service has its principal office in the municipality
and the provision of the service was not directed from another business
location. In no instance shall the taxing authority extended under W. Va. Code
'8-13-5(e)
apply to sales of services performed in another municipality which imposes a
municipal business and occupation tax or performed outside of West Virginia
unless such services are incidental to the basic provision of a service as
indicated under Sections 11.3.3 and 11.3.4 of these regulations.
12.3.7. Amusements are subject to the
municipal business and occupation tax in the municipality in which the
amusement is located.
12.3.8.
Rentals, royalties, fees or other gross receipts shall be subject to municipal
business and occupation tax in the municipality in which the real or tangible
personal property giving rise to a rental, royalty, fee or other gross receipts
is located, or in the municipality in which the production of natural resources
occur giving rise to the rental, royalty, fee or other gross
receipts.
12.3.9. Banking and other
financial business is subject to municipal business and occupation tax in the
municipality in which the banking or other financial business has a business
location. For purposes of these regulations a business location shall not
include an automated teller machine.