W. Va. Code R. § 110-21H-5

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

Section 110-21H-5 - Small Business Property Tax Adjustment Credit

5.1. Definitions. For the purposes of the small business property tax adjustment credit, the following terms are defined:

5.1.1. "Aggregate appraised value" means the true and actual value of all property in the state owned by the eligible taxpayer including the true and actual value of all property in the state owned by any related entity. For the purpose of this definition, all appraised property will be included into the appraised value including all real property and all personal property, including all property eligible for the credits granted under subsection 3.2 of this rule;

5.1.2. "Related entity" means:

5.1.2.a. An individual, corporation, partnership, affiliate, association or trust or any combination or group thereof controlled by the taxpayer;

5.1.2.b. An individual, corporation, partnership, affiliate, association or trust or any combination or group thereof that is in control of the taxpayer;

5.1.2.c. An individual, corporation, partnership, affiliate, association or trust or any combination or group thereof controlled by an individual, corporation, partnership, affiliate, association or trust or any combination or group thereof that is in control of the taxpayer; or

5.1.2.d. A member of the same controlled group as the taxpayer.

5.1.3. For purposes of this rule, "control," with respect to a corporation, means ownership, directly or indirectly, of stock possessing 50 percent or more of the total combined voting power of all classes of the stock of the corporation which entitles its owner to vote. "Control", with respect to a trust, means ownership, directly or indirectly, of 50 percent or more of the beneficial interest in the principal or income of the trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in section 267(c) of the United States Internal Revenue Code, as amended: Provided, That paragraph (3) of section 267(c) of the United States Internal Revenue Code shall not apply.

5.1.4. "Small business" means a business with personal property located in this state with an aggregate appraised value of $1 million or less. For the purposes of this rule, "small business" does not include any person holding a working interest in any oil, natural gas, or natural gas liquid producing property or any public service company that is centrally assessed by the state for property tax purposes.

5.2. Amount of credit. A small business is allowed a tax credit in the amount of 50 percent of the amount of West Virginia ad valorem personal property tax timely paid during its applicable income tax year, less the amount of any credit granted under subsection 3.2 of this rule. 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 small business property tax adjustment credit.

5.3. Application of credit.

5.3.1. If the small business taxpayer is subject to the corporation net income tax imposed in W. Va. Code §11-24-1et seq., then the amount of the credit may be taken against the corporation net income tax liability of the small business for the current corporation net income tax taxable year.

5.3.2. If the small business taxpayer is (1) an electing small business corporation as defined in 26 U.S.C. §1361, (2) a partnership, (3) a limited liability company that is treated as a partnership for federal income purposes, or (4) a sole proprietorship, then the amount of the credit may be taken against the personal income tax liability imposed under W. Va. Code §11-21-1et seq.

5.3.3. Electing small business corporations, limited liability companies treated as partnerships for federal income tax purposes, partnerships, and other unincorporated organizations shall allocate the small business property tax adjustment credit among its members in the same manner as profits and losses are allocated for the taxable year.

5.4. 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).

5.5. Annual schedule. Taxpayers claiming the small business property tax adjustment credit must prepare and file with the Tax Division an annual schedule showing:

(1) the aggregate appraised value of all property in the state owned by the eligible taxpayer and of any related entity,

(2) the amount of the applicable income tax paid for the taxable year,

(3) the amount of West Virginia ad valorem personal property tax paid during the taxable year, and

(4) the amount of small business property tax adjustment credit allowed for the taxable year.

W. Va. Code R. § 110-21H-5