HB 4722 — Create a credit against the severance tax to encourage private companies to make infrastructure improvements to highways, roads and bridges in this state

4 CS for HB 4722 (j) Transportation Secretary or Secretary of Transportation.

-- The— The terms "Transportation Secretary" and "Secretary of Transportation" are used interchangeably herein and mean the Secretary of the Department of Transportation of the State of West Virginia.

Intr.(a) Credit allowed.

HB— An 2024R1035eligible (a) Credittaxpayer allowed.shall be allowed a credit against a portion of its annual severance tax liability.

-- An eligible taxpayer shall be allowed a credit against a portion of its annual severance tax liability.

-- The— The amount of credit allowable is determined by multiplying the amount of the taxpayer’s expenditures for road or highway infrastructure improvement projects (as determined and certified by the Secretary of Transportation),Transportation) plus the amount of the taxpayer’s qualified investment in coal production and processing facilities, by 50 percent.

-- The— The amount of credit allowable may be taken against up to 20 percent of taxpayer’s annual severance tax liability imposed by section§11-13A-3 three, article thirteen-a of this chapter.code:

Provided, That the gross amount of tax on coal collected, reallocated and dedicated under §11-13A-6 of this code and the gross amount of tax on coal collected, reallocated and dedicated under §11-13A-6a of this code shall be paid over and distributed as provided in those sections without the application of any credits against the tax allowed by this section.

Where the expenditure involves coal production and processing facilities, the credit may be taken in the year the property is first placed into service or use by the taxpayer.

The annual credit allowance shall be taken in the manner prescribed in section six of this article.

-- If— If any credit remains after application of subsection (c) of this section, the amount thereof may be carried forward to each ensuing tax year until used or until the expiration of the ninth taxable year subsequent to the year in which the credit was first available.

If 5 CS for HB 4722 any unused credit remains after the 10th year, the amount thereof is forfeited.

-- For— For purposes of the credit allowed by this section, property is considered placed in service or use in the earlier of the following taxable years:

(1) The taxable year in which, under the taxpayer’s depreciation practice, the period for Intr.depreciation with respect to the property begins;

HB 2024R1035 depreciation with respect to the property begins;

-- Notwithstanding— Notwithstanding any provision of this article to the contrary, no credit shall be allowed or applied under this article for any expenditure for road or highway infrastructure improvements until the person asserting a claim for the allowance of credit receives certification of the project from the Transportation Secretary, as provided in this section.

-- Applications for— Applications for certification of a road or highway infrastructure improvement project shall contain a detailed description of the project, all engineering drawings required to construct the infrastructure improvements contemplated by the project application, a list of contractors who will work on the project, a description of the work each contractor will perform, the project timetable, a detailed breakdown of the cost of the project, the amount of credit requested and any other information which the Transportation Secretary or his or her designee require.

6 CS for HB 4722 (c) Review of application.

-- Once— Once a project application is filed, the Transportation Secretary shall work with taxpayer to ensure that the application contains all of the information required by this section.

Applications for credit may be supplemented or amended at any time after filing until all of the information required by subsection (b) of this section has been provided.

Intr.(d) Limitation on total credits authorized.

HB— The 2024R1035Secretary (d) Limitationis onauthorized totalto creditscertify authorized.no more than $100,000 of expenditures for each road or highway infrastructure improvements project as eligible for the credit provided in this article.

-- The Secretary is authorized to certify no more than $100,000 of expenditures for road or highway infrastructure improvements as eligible for the credit provided in this article.

-- The— The eligible taxpayer claiming the credit for certified expenditures for road or highway infrastructure improvements shall include information supporting the computation of the credit and any other information the Transportation Secretary requires with its severance tax returns filed under this chapter.

§11-13NN-6. Qualified§11-13NN-6. investment in coal production and processing facilities.

(a) General.

-- The qualified investment in coal production and processing facilities is the applicable percentage of the cost of each expenditure for coal production and processing facilities which is placed in service or use in this state by the taxpayer during the taxable year.

(b) Applicable percentage.

-- For the purpose of subsection (a), the applicable percentage of any property is determined under the following table:

lf useful life is:

                               The applicable percentage is:

Less than 4 years:

                                                         0%                 4 years or more but less than 6 years:

33 1/3% 6 years or more but less than 8 years:                                  66 2/3%    8 years or more:

                                                        100%                        The useful life of any property, for purposes of this section, is determined as of the date the property is first placed in service or use in this state by the taxpayer, determined in accordance with such rules and requirements the Tax Commissioner may prescribe.

(c) Cost. -- For purposes of subsection (a), the cost of each property purchased for business expansion is determined under the following rules:

(1) Trade-ins.

-- Cost does not include the value of property given in trade or exchange for the property purchased for business expansion.

Intr.

HB 2024R1035 (2) Damaged, destroyed or stolen property.

-- If property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen, then the cost of replacement property does not include any insurance proceeds received in compensation for the loss.

(3) Rental property.

--   (A) The cost of real property acquired by written lease for a primary term of 10 years or longer is 100 percent of the rent reserved for the primary term of the lease, not to exceed 20 years.

(B) The cost of tangible personal property acquired by written lease for a primary term of:

(i) Four years, or longer, is one third of the rent reserved for the primary term of the lease;

(ii) Six years, or longer, is two thirds of the rent reserved for the primary term of the lease;

or (iii) Eight years, or longer, is 100 percent of the rent reserved for the primary term of the lease, not to exceed 20 years: Provided, That in no event may rent reserved include rent for any year subsequent to expiration of the book life of the equipment, determined using the straight-line method of depreciation.

(4) Self-constructed property.

-- In the case of self-constructed property, the cost thereof is the amount properly charged to the capital account for depreciation in accordance with federal income tax law.

§11-13NN-7.

-- The— The tax credit allowed in this article shall not be lost by reason of a mere change in the form of conducting the business in this state, if the transferor business retains a controlling interest in the successor business.

-- The— The tax credit allowed in this article shall not be lost by reason of any transfer or sale of the stock or assets of the eligible taxpayer to a successor business which continues to operate in this state.

Intr.7 CS for HB 4722 §11-13NN-7.

HB 2024R1035 §11-13NN-8.

(a) DispositionDisposition of property or cessation of use.

-- If— If during any taxable year, property with respect to which a tax credit has been allowed under this article:

(1) Is disposed of prior to the end of its useful life, as determined under section eight of this article;section;

or (2) Ceases to be used in an eligible business of the taxpayer in this state prior to the end of its useful life, as determined under section six of this article, then the unused portion of the credit allowed for the property is forfeited for the taxable year and all ensuing years.

Additionally,§11-13NN-8. except when the property is damaged or destroyed by fire, flood, storm, or other casualty, or is stolen, the taxpayer shall redetermine the amount of credit allowed in all earlier years by reducing the applicable percentage of cost of the property allowed under section six of this article, to correspond with the percentage of cost allowable for the period of time that the property was actually used in this state in the business of the taxpayer.

The taxpayer shall then file a reconciliation statement for the year in which the forfeiture occurs and pay any additional taxes owed due to reduction of the amount of credit allowable for the earlier years, plus interest and any applicable penalties.

The reconciliation statement shall be filed with taxpayer’s annual severance tax return.

(b) Cessation of operation of coal production or processing facility.

- If during any taxable year the taxpayer ceases operation of a coal production or processing facility in this state for which credit was allowed under this article, before expiration of the useful life of property with respect to which tax credit has been allowed under this article, then the unused portion of the credit is forfeited.

Additionally, except when the cessation is due to fire, flood, storm, or other casualty, the taxpayer shall redetermine the amount of credit allowed by reducing the applicable percentage of cost of the property allowed under section six of this article, to correspond with the percentage of cost allowable for the period of time that the property was actually used in this state in a business of the taxpayer.

The taxpayer shall then file a reconciliation statement with its annual severance Intr.

HB 2024R1035 tax return, for the year in which the forfeiture occurs, and pay any additional taxes owed due to the reduction of the amount of credit allowable for the earlier years, plus interest and any applicable penalties.

§11-13NN-9.

§11-13NN-10.§11-13NN-9.

§11-13NN-11. Effective8 CS for HB 4722 §11-13NN-10. Effective date.

Intr.

HB 2024R1035 NOTE:

The purpose of this bill is to create a credit against the severance tax to encourage private companies to make infrastructure improvements to highways, roads and bridges in this state.

The bill limits the total amount of road and highway infrastructure improvement credits which can be certified by the Secretary of Transportation.

The bill seeks to encourage greater capital investment in coal production and processing facilities.

The bill will increase economic opportunity in this state.

The bill authorizes the claiming of the credits.

Finally, the bill provides for an effective date.

Strike-throughs indicate language that would be stricken from a heading or the present law, and underscoring indicates new language that would be added.

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