Current through Register Vol. XLI, No. 50, December 13, 2024
Section 110-6-5 - Allocation or Separation of Values5.1. The value of a pollution control facility first placed in operation subsequent to July 1, 1973 is, for the purpose of ad valorem taxation, considered to be its salvage value.5.2. When allocating value to a coal waste disposal power project, the salvage value shall be accorded to a portion of the total personal property at the project. That portion shall be equal to the ratio of tons of West Virginia coal waste burned and disposed of at the project to the total tons of coal and coal waste burned and disposed of at the project during the immediately preceding calendar year. 5.2.1. For a project placed in service prior to March 11, 1995 at which the ratio for the calendar year ending December 31, 1994 was less than 70%, the salvage value shall be accorded to 63% of the total personal property at the project for tax years beginning after March 11, 1995, regardless of the actual ratio for any calendar year. The remaining portion of the personal property at the project, but in no event less than 25% of the total personal property at the project, shall be accorded full value, that is value without reference to salvage value.5.3. A facility will not qualify as a pollution control facility under W. Va. Code § 11-6A-5(b) if it burns coal, coal waste or fuel waste obtained from outside West Virginia after March 11, 1995.5.4. Where the pollution control facility produces a profitable by-product or where a part of the facility is required for the operation of the business without regard to the requirements of state or federal air or water qualify standards, the tax commissioner shall allocate or separate that portion of value attributable to the pollution control activity. Two (2) methods have been developed whereby the Tax Commissioner may accomplish that activity: 5.4.1. Component Method. 5.4.1.1. The component method shall receive primary consideration as a method of allocation or separation of values of a pollution control facility. The component method of allocation or separation of values requires the identification of the specific item or component of machinery and/or equipment which is used for the purpose of pollution abatement control but which is also an integral part of the production process and the identification of the acquisition cost of the specific item or component. The component thus identified shall be appraised at five percent (5%) of the acquisition cost. (For example, a conveyor belt system is used to transport fuel to a boiler to produce energy. The conveyor belt line, while not a pollution abatement control device, contains water sprays and is totally enclosed to retard dust during the transportation process. While the belt line is not a pollution abatement control device but an integral part of the production process, the dust conveyors and the water sprays are eligible pollution abatement facilities. The acquisition costs of these items eligible for salvage value treatment are readily discernible and shall receive salvage value treatment.)5.4.1.2. If an item or the cost associated with an item is not discernible, the alternative substitution method shall be used.5.4.2. Substitution Method. 5.4.2.1. When acquisition costs for eligible pollution abatement control items or components are not discernible or the items' or components' use or purpose are such an integral part of the production process that the specific use or task is not clearly ascertainable, the substitution method shall be applied.5.4.2.2. The substitution method of allocation or separation of valuation is based on the assumption that the value attributable to pollution control is the difference between the value of a similar facility which has the same utility without the pollution abatement attributes and the value of the subject property being appraised which has pollution abatement attributes. (For example, a double-walled pipe used for the transportation of a product from the manufacturing area of the plant to the loading area. A single-walled pipe or other means of transportation is required for the operation of the business whereas the cost of the double-walled pipe is twenty-five percent (25%) higher than single wall.) The additional cost of the twenty-five percent (25%) would represent the value attributable to pollution abatement control for the purposes of ad valorem taxation.