W. Va. Code R. § 110-21H-3

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

Section 110-21H-3 - Motor Vehicle Property Tax Adjustment Credit

3.1. Eligible taxpayers -- for purposes of the motor vehicle property tax adjustment credit, the term "eligible taxpayer" has different definitions, depending on the ownership of the vehicle.

3.1.1. Vehicles owned by the taxpayer. In the case of a vehicle that is owned by the taxpayer, an "eligible taxpayer" is any person who owns a motor vehicle for which the ad valorem property tax has been timely paid during the corporation net income tax taxable year or the personal income tax taxable year, as applicable. For purposes of this definition, ownership of a motor vehicle includes ownership and possession of a motor vehicle for which a title has been issued by the Division of Motor Vehicles to the eligible taxpayer. For purposes of this definition, ownership of a motor vehicle also includes ownership and possession of a motor vehicle, subject to a purchase financing arrangement whereby a financial institution holds a lien on the motor vehicle, or for which ultimate issuance of title by the Division of Motor Vehicles to the taxpayer, as owner of the motor vehicle, is contingent upon payment in full of the purchase price of the motor vehicle pursuant to an installment payment financing arrangement.

3.1.2. Leased vehicles. In the case of a vehicle that is subject to lease agreement between the owner of the vehicle and the operator of the vehicle, an "eligible taxpayer" is the lessor of the motor vehicle, who owns the motor vehicle for which the ad valorem property tax has been timely paid during the corporation net income tax taxable year or the personal income tax taxable year, as applicable. The lessor must pass on to the lessee the value of the tax credit asserted by the lessor by causing a decreasing in the amount of rent or lease payment payable by the lessee on the leased motor vehicle.

3.1.3. Pass-through entities. The term "eligible taxpayer" includes any owner, interest holder, partner or S corporation shareholder that derives conduit income from a pass-through entity.

3.1.4. Motor vehicle dealers. The term "eligible taxpayer" does not include any motor vehicle dealer, motor vehicle dealership, retailer or any business that sells new or used motor vehicles at the retail level, other than a lessor of motor vehicles. In circumstances where any such motor vehicle dealer, motor vehicle dealership, retailer or business that sells new or used motor vehicles at the retail level is engaged in both retail sales of motor vehicles, and leasing of motor vehicles as lessor, the tax credit authorized by this article may only be asserted by such business based upon the ad valorem property tax paid on leased motor vehicles, and only to the extent that the lessor has passed on, to the lessee, the value of the tax credit asserted by the lessor by causing a decreasing in the amount of rent or lease payment payable by the lessee on the leased motor vehicle. No credit may be asserted or applied by the business based upon ad valorem property tax paid on motor vehicle retail inventories, not actively leased to lessees. To the extent that motor vehicle retail inventories may be held as both motor vehicle retail inventories, and as motor vehicles potentially subject to lease during the taxable year, ad valorem property tax paid on such motor vehicles is excluded from eligibility for the tax credit authorized by this rule.

3.2. Amount of credit. -- The amount of the credit is the amount of West Virginia ad valorem property tax timely paid on the value of a motor vehicle owned by the eligible taxpayer during the taxpayer's personal income tax taxable year or corporation net income tax taxable year, whichever is applicable. The payment must have been timely made, meaning that it must be received by the county sheriff on or before the due date for paying the tax. Payments made that are untimely, delinquent, or for "back taxes" are not allowed to be used for purposes of the credit.

3.3. Refundable nature of the credit. -- If the amount of the annual tax credit exceeds the amount of the applicable income tax, then the taxpayer may claim the excess amount as a refundable tax credit. A taxpayer must file a personal income tax return or corporation net income tax return to claim the refundable credit, even if the taxpayer owes no income tax for the relevant income tax year. However, any refundable tax credit amount is subject to offset, meaning that the amount refunded may be reduced by the amount of any other tax owed by the same taxpayer, pursuant to W. Va. Code §11-10-11(j).

3.4. Transfer or sale of the motor vehicle. -- When there is a sale or transfer of a motor vehicle from an eligible taxpayer to any other person or entity, the consequences are:

3.4.1. The transferor of the motor vehicle retains entitlement to the tax credit for the timely paid ad valorem property tax paid on the motor vehicle by the transferor during the transferor's applicable income tax year.

3.4.2. If the transferee of the motor vehicle qualifies as an eligible taxpayer for purposes of the motor vehicle property tax adjustment credit, then the transferee is entitled to the tax credit for the timely paid ad valorem property tax paid by the transferee on the motor vehicle during the transferee's applicable income tax year.

3.4.3. The transferor and transferee cannot both take the tax credit for the same taxable year.

3.5. For purposes of claiming the tax credit, the taxpayer is required to prepare and file an annual schedule in a form prescribed by the Tax Commissioner that shows:

(1) the amount of personal income tax or corporation net income tax for the taxpayer's taxable year,

(2) the amount of ad valorem property tax paid on the motor vehicle during the income taxable year, and

(3) the amount of credit allowed.

W. Va. Code R. § 110-21H-3