W. Va. Code R. § 110-13AC-6

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-13AC-6 - Records

6.1. Any person having a right or claim to the reduced rate on thermal or steam coal must maintain adequate records to show that the coal was ultimately sold to an electric power company for the purpose of generating or producing electricity. On audit, the taxpayer should be able to provide invoices, sales contracts, and bills of receipt documenting the vendor name, purchaser's name, the invoice date, and invoice amount. For purposes of determining whether certain coal is "thermal or steam coal" within the meaning of W.Va. Code § 11-13A-3, the taxpayer is not required to submit documentation with its severance tax return regarding sulfur content, ash content, or British thermal unit value, etc., for specific coal sales.

6.1.1. Where coal is sold directly to an electric power company for purposes of generating or producing electricity, the taxpayer must retain in its records the bill of sale or invoice showing the tons sold and the sale price of the coal sold for the purpose of generating electricity.

6.1.2. Where coal is sold to an electric power company for purposes of generating or producing electricity by using the services of a broker or another entity and there has been an intermediary sale, the taxpayer must retain in its records:

(1) the bill of sale or invoice showing the tons sold to the broker or intermediary, and the sale price of tons sold to the broker or intermediary; and

(2) an attestation from the broker or intermediary stating the number of tons sold to an electric power company or, in the case of successive sales, the number of tons sold to another broker or intermediary. The attestation should state the cost of those specific tons paid by the broker or intermediary to the producer or taxpayer for the purchase of those specific tons for which the reduced severance tax rate is claimed; and

(3) an attestation from the broker or end user of the taxpayer's coal that the specific batch of coal for which the reduced severance rate is claimed was sold to an electric power company and consumed in the generation or production of electricity. In the event the broker or intermediary and coal producer are affiliates, the broker must also provide documentation that the end user is in fact consuming the coal for the purposes of generating or producing electricity.

6.1.3. In the case of successive sales, or multiple successive sales, between one broker or intermediary and another broker or intermediary where the ultimate sale to the consumer of the coal is a sale to an electric power company for purposes of generating or producing electricity, each party in the series of sales must provide the verifications and information described in this subsection. Failure to provide such verifications and information will result in denial of the special tax rate.

6.2. In order that the Tax Department may verify that the taxpayer was eligible for the reduced rate for steam or thermal coal upon audit, a taxpayer claiming a reduced rate must retain the appropriate books and records supporting its claim for at least three (3) years, or for so long as the taxable period remains open for assessment or refund, whichever is greater.

6.3. Taxpayer's failure, upon request of the Tax Department, to produce records showing that coal upon which the reduced severance tax rate imposed by § 11-13A-3 was used to generate or produce electricity, may result in the coal being taxed at the 5% rate.

W. Va. Code R. § 110-13AC-6