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| TAXES |
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Business and Occupation Tax
The business and occupation tax is an annual privilege tax levied on public utilities,
natural gas storage operators, electricity generators and synthetic fuel manufacturers
doing business in West Virginia. Utilities are taxed at varying rates depending on the
business activity or activities in which they are engaged. These rates vary from $.05
cents per kilowatt hour for bulk sales of electric power of at least 200,000 kw/hr/yr
to $4.40 per $100 of gross receipts for water utilities.
Business Franchise Tax
The measure of the business tax base is the net worth of the corporation or partnership
as determined for federal income tax purposes. The rate of tax if 0.55 percent of $50,
whichever is greater (will be phased out by 2009). In the case of a multistate business,
net worth is apportioned to this state using a four-factor formula comprised of a property
factor, a payroll factor and a double-weighted sales factor. Businesses also receive
credit for business franchise taxes paid by subsidiary corporations and by partnerships
in which they are an owner. The tax is remitted in monthly installments.
The annual return is due on or before the 15th day of the third month after the close of
the tax year for corporations and on or before the 15th day of the fourth month after
the close of the tax year for partnerships
Business Registration Tax
The rate of this tax is $30 biennially for each location in which business activity is conducted.
Businesses generating annual gross income of less than $4,000 are exempt from payment but still
must file to obtain the certificate. The license year is July 1 to June 30 of the succeeding
calendar year.
Consumers' Sales and Service Tax and Use Tax
West Virginia has a consumers' sales and service tax and a use tax. Sales of goods and service
to a manufacturer for direct use in manufacturing are exempt from CSST (for in-state purchases)
and from the use tax (for out-of-state purchases). The effects of these exemptions and others
are far-reaching.
Corporation Charter Tax
For West Virginia chartered corporations, the rates for this tax range from $20 annually on
authorized capital stock of $5,000 or less to $2,500 annually on values in excess of $15
million. For non-West Virginia chartered corporations, the rates of this tax are 1.75 times
the annual rate for West Virginia chartered firms. The rates are based on a proportion of
the value of shares of issued and outstanding capital stock, which is adjusted to reflect
the proportion of a company's property owned and used in West Virginia. Annual liability
for corporations not chartered in West Virginia cannot be less than $250.
Corporation Net Income Tax
The corporation net income tax is imposed annually at a rate of 8.75 percent. The starting point
for determining West Virginia taxable income is the federal taxable income of the corporation
for the year. Various increasing and decreasing modifications are required to determine West
Virginia taxable income. The method used for apportioning income is a four-factor formula
comprised of a property factor, a payroll factor and a double-weighted sales factor. Optional
special expensing treatment is available for expenditures for air and water pollution control
facilities. A West Virginia net operating loss may be carried back and carried forward for the
same time periods allowed for net operating loss carryovers under the Internal Revenue Code.
This typically means that they can be carried back up to two years and carried forward up to
20 tax years. There is an annual limitation of $300,000 for West Virginia net operating loss
carrybacks.
Personal Income Tax
A graduated scale of rates is applied to taxable income of all residents, individuals, estates
and trusts and on the West Virginia income of nonresidents. The starting point for computation
of the tax is federal adjusted gross income. Individuals are allowed a $2,000 deduction for each
exemption claimed on their federal return. Individuals older than 65 are allowed an additional
$8,000 income exemption. Tax rates range from 3 percent on the first $10,000 of taxable income
to 6.5 percent on income exceeding $60,000.
Property Tax
In West Virginia, ad valorem property taxes are local taxes. The assessed value of nonutility
property is set by locally elected county officials. Guidelines are provided by the state to
achieve equal and uniform assessed values for property throughout the state. The assessed value
of utility property is determined by the state. Public utility taxes are collected by the state
and remitted to county sheriffs for distribution to local levying bodies. County sheriffs collect
all other property taxes. Because of special valuation methodologies prescribed by law, pollution
abatement equipment, property subject to the "Five for Ten" program, and molds, jigs, dies, forms,
patterns and templates used in manufacturing are generally subject to an effective tax that is
1/20th of the tax paid on other property.
Severance Taxes
Severance taxes are levied on the production of natural resources including ordinary processing
commonly employed by the industry to obtain a salable natural resource product. The oil and gas
production privilege will end at the well-mouth; the timber production privilege ends once the
tree is severed, delimbed and topped; the limestone or sandstone production privilege ends immediately
after severance from the earth; and the coal production privilege includes certain coal processing
activities. The rate of tax on timber production is 3.22 percent and the tax rate on other natural
resources is generally 5 percent.
Telecommunications Tax
The telecommunications tax is levied at a rate of 4 percent. The measure of this tax is gross income
from the provision of telecommunication services. This does not include gross income from network
access, billing or similar services provided to end users and other telephone companies or communications
carriers. Any income derived from the provision of commodities or services determined by the Public Service
Commission of West Virginia to be subject to competition is excluded from the tax base. This exclusion
effectively limits the tax base to the provision of local exchange services only.
West Virginia Department of Tax and Revenue
1900 Kanawha Blvd. E.
Charleston, West Virginia 25305-0840
(304) 558-8500
http://www.state.wv.us/taxrev/
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