SB 448 — Creating credit against severance tax for certain infrastructure improvements

WEST VIRGINIA LEGISLATURE REGULAR SESSION IntroducedCommittee Substitute for Senate Bill 448 By Senator Phillips [Introduced[Reported February 13,25, 2025;2025, from the Committee on Energy, Industry, and Mining] CS for SB 448 A BILL to amend the Code of West Virginia, 1931, as amended, by adding a new article, designated §11-13NN-1, §11-13NN-2, §11-13NN-3, §11-13NN-4, §11-13NN-5, §11-13NN- 6, §11-13NN-7, §11-13NN-8, §11-13NN-9, §11-13NN-10, and §11-13NN-11, relating to establishing a road or highway infrastructure improvement project or coal or natural gas production and processing facilities tax credit for taxpayers subject to the tax imposed by West Virginia Code;

referred to the Committee on Energy, Industry, and Mining;

and then to the Committee on Finance] Intr SB 448 2025R2970 A BILL to amend the Code of West Virginia, 1931, as amended, by adding a new article, designated §11-13NN-1, §11-13NN-2, §11-13NN-3, §11-13NN-4, §11-13NN-5, §11-13NN- 6, §11-13NN-7, §11-13NN-8, §11-13NN-9, §11-13NN-10, and §11-13NN-11, relating to establishing a road or highway infrastructure improvement project or coal production and processing facilities tax credit for taxpayers subject to the tax imposed by West Virginia Code;

requiring filing of application for road or highway infrastructure improvement project credit as condition precedent to claiming credit,credit; specifying procedure for application for certification, contents of application and limitation on maximum amount of credits which can be approved;

specifying computationprocedure offor qualifiedapplication investmentfor incertification, coalcontents productionof application, and processinglimitation facilities;on maximum amount of credits which can be approved;

specifying computation of qualified investment in coal or natural gas production and processing facilities;

TAX CREDIT FOR ROAD AND HIGHWAY INFRASTRUCTURE IMPROVEMENTS AND COAL OR NATURAL GAS PRODUCTION AND PROCESSING FACILITIES.

This article may be cited as the "West Virginia Road and Highways Infrastructure Improvements and Coal or Natural Gas Production and Processing Facilities Tax Credit Act".

The Legislature finds that the establishment and maintenance of infrastructure projects, including a system of good roads and highways in this state, and making of capital investments by 1 CS for SB 448 taxpayers subject to the tax imposed by §11-13A-1 et seq., is in the public interest, encourages Intr SB 448 2025R2970 greater capital investment by other businesses in the coal and natural gas producing areas of this state, increases economic opportunity in this state and thereby promotes the general welfare of the people of this state.

In order to promote the private investment in infrastructure improvements to roads and highways in this state, and capital investment by coal and natural gas severance tax taxpayers there is hereby enacted a road and highways infrastructure improvements and coal and natural gas production and processing facilities tax credit.

-- The term "designee" in the phrase "or his or her designee", when used in reference to the Transportation Secretary, means any officer or employee of the Department of Transportation duly authorized by the Transportation Secretary directly, or indirectlyindirectly, by one or more delegations of authority, to perform the functions mentioned or described in this article.

-- The term "eligible taxpayer" means any person who makes a qualified expenditure in a certified road or highway infrastructure improvement project or coal or natural gas production and processing facility and who is subject to the tax imposed by chapter§11-13A-3 three,or article§11-13A-3a. thirteen-a of this chapter.

"Eligible taxpayer" shall also include an affiliated group of taxpayers if the group elects to file a consolidated severance tax return under article thirteen-a13A of this chapter.

(4) Expenditures for road or highway infrastructure improvement projects or coal 2 CS for SB 448 production and processing facilities.

Intr SB 448 2025R2970 (A) Included expenditures for road or highway infrastructure improvement projects.

(B) Included expenditures for coal or natural gas production and processing facilities.

-- The--  The term "expenditures for coal production and processing facilities" includes payments made by an eligible taxpayer for labor done, tangible personal property, materials, services, or supplies furnished in furtherance of the construction, installation, or fabrication of haulroads,haul roads, ventilation structures, mine shafts, slopes, boreholes, dewatering structures, preparation plants, loadouts, including associated facilities and apparatus, by the producer or others, including contractors and subcontractors at a coal mine or coal production or processing facility.

In addition, the term "expenditures for coal or natural gas production and processing facilities" includes the cost of the real property, improvements thereto, and the cost of machinery and equipment, including the cost of repairs, upgrades, or refurbishments of the machinery and equipment, purchased or leased by an eligible taxpayer and directly used as part of a coal or natural gas production or processing facility.

Examples of machinery and equipment that qualify as "expenditures for coal or natural gas production" include, but are not limited toto, the cost to purchase, lease, or repair items such as:

continuous miners, longwall miners (including repair, refurbishment, or replacement of associated shears, shields, or hydraulics), highwall miners, augers, roof bolters, excavators, dozers, haulage vehicles, equipment used in blasting related to surface mining, conveyor belts, car-dumps, chain 3 CS for SB 448 conveyors, ventilation fans, man trips, roof trusses, and shuttle cars.

Intr SB 448 2025R2970 (C) Excluded expenditures.

-- The terms "expenditures for road or highway infrastructure improvement projects" and "expenditures for coal or natural gas production and processing facilities" exclude purchases of property and services acquired:

(i)  From a person whose relationship to the person making the expenditure would result in the disallowance of deductions under sectionsections 267 or 707707(b) (b) of the United States Internal Revenue Code of 1986, as amended, and in effect on the first day of January 2004.

For purposes of this subdivision, "control", with respect to a corporation, means ownership, directly or indirectly, of stock50 possessingpercent 50% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote.

"Control", with respect to a trust, means ownership, directly or indirectly, of 50%50 percent or more of the beneficial interest in the principal or income of the trust.

-- The terms "includes" and "including", when used in a 4 CS for SB 448 definition contained in this article, shall not be deemed to exclude other things otherwise within the Intr SB 448 2025R2970 meaning of the term defined.

--The term "taxpayer" means any person subject to the tax imposed by section§11- three,13A-3 articleor thirteen-a§11-13A-3a. of this chapter.

carry forward of unused 5 CS for SB 448 credit for 10 years.

Intr SB 448 2025R2970 (a) Credit allowed.

-- 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), plus the amount of the taxpayer's qualified investment in coal or natural gas production and processing facilities, by 50%.50 percent.

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

Where the expenditure involves coal or natural gas 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 aggregate annual credit allowance may be claimed by taxpayer against its severance tax liability shown on its monthly tax returns at the rate of one-twelfthone twelfth of the annual credit allowance per month.

6 CS for SB 448 (1) The taxable year in which, under the taxpayer's depreciation practice, the period for Intr SB 448 2025R2970 depreciation with respect to the property begins;

Once a complete application has been filed, the Transportation Secretary shall review it to determine whether the 7 CS for SB 448 project should be certified as eligible for credit under this article.

Intr SB 448 2025R2970 (d) Limitation on total credits authorized.

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

-- The qualified investment in coal or natural gas 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.

                               The                                 The    applicable percentage applicable percentage is:

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