W E S T V I R G I N I A STATE TAX DEPARTMENT...SB 433 –Excise Tax -- Permits county commissioners to increase county excise tax imposed on privilege of transferring real property

ACTING DEPUTY TAX COMMISSIONER LYDIA S. MCKEE

W E S T V I R G I N I A

STATE TAX DEPARTMENT


SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS A N N U A L M E E T I N G

CHARLESTON, WV JUNE 6, 2017

This presentation is meant to be a source of generalinformation and not as a substitute for tax laws, rules, orregulations and may not be relied upon as legal or taxadvice or to support specific instances not addressed.

The material presented may contain simplifiedexplanations of potentially complex legal and tax conceptsso as to apply generally across broad areas of tax practice,both legal and accounting, and is intended for generaloverview and application.

Individual comments by presenters are meant to beillustrative in nature and are not intended as official TaxDepartment policy.

Before we get started

WEST VIRGINIA STATE TAX DEPARTMENT


Changes in Tax’s Website.

You’ll find these changes at the Tax Department’s website

www.tax.wv.gov

The Department's’ website continues to be a work in progress.

• Join the Tax Commissioner’s Office Mailing List

• Report Tax Fraud Link

• Municipal Sales and Use Tax

• Municipal Sales and Use Tax Guidelines

• Property Tax

• Business Registration

http://www.tax.wv.gov/

Click here to “Join the

Tax Commissioner’s

Office Mailing List”.



Subscribe to Current Developments and Recent Website Updates


Mailing List Subscription Confirmation


Report Tax Fraud

Tax

mobile

version

made

simple.





Information

collected here

will be used for

purposes of a

fraud

investigation.


Municipal Sales and Use Taxhttp://tax.wv.gov/Business/SalesAndUseTax/MunicipalSalesAndUseTax/Pages/MunicipalSalesAndUseTax.aspx

http://tax.wv.gov/Business/SalesAndUseTax/MunicipalSalesAndUseTax/Pages/MunicipalSalesAndUseTax.aspx


Municipal Sales and Use Tax Guidelineshttp://tax.wv.gov/Business/SalesAndUseTax/MunicipalSalesAndUseTax/Pages/MunicipalSalesAndUseTaxGuidelines.aspx

http://tax.wv.gov/Business/SalesAndUseTax/MunicipalSalesAndUseTax/Pages/MunicipalSalesAndUseTaxGuidelines.aspx


Property Taxhttp://tax.wv.gov/Business/PropertyTax/Pages/PropertyTax.aspx

http://tax.wv.gov/Business/PropertyTax/Pages/PropertyTax.aspx


Business Registrationhttp://tax.wv.gov/Business/BusinessRegistration/Pages/BusinessRegistration.aspx

http://tax.wv.gov/Business/BusinessRegistration/Pages/BusinessRegistration.aspx


Enacted

Legislation:

• House Bills

• Senate Bills

• Special Session Legislation

HB 2555 – Tax Credits -- Removes requirement that apprenticeship programs

be jointly administered by labor and management. Credit is allowed for wages

paid to apprentices in the construction trades who are registered with the

United States Department of Labor, Office of Apprenticeship, West Virginia

State Office. Passed March 14, 2017; effective from passage.

HB 2590 – WVCNIT -- Updates the meaning of “federal taxable income” for

corporation net income tax purposes. Passed March 14, 2017; effective from

passage; retroactive to January 1, 2017.

HB 2594 – WVPIT -- Updates meaning of “federal adjusted gross income” for

personal income tax purposes. Passed March 14, 2017; effective from

passage; retroactive to January 1, 2017.

HB 2709 – Special District Excise Tax – Authorizes the City of South

Charleston to impose a special district excise tax. Bill takes effect July 5, 2017.

House Bills


HB 2734 – Property Tax – Provides a special method for collection and

remittance of property tax on heavy equipment rented by certain heavy

equipment rental dealers. Bill takes effect July 5, 2017.

HB 2962 – Administration – Allows Tax Commissioner to perform background

investigations of current employees and contractors. Bill takes effect July 7,

2017.

HB 2963 – Estate Tax – Eliminates provision that allows the domiciliary

personal representative of a nonresident decedent to request a certificate of

lien waiver from the Tax Commissioner. Bill takes effect July 4, 2017.

HB 2967 – Estate and Trusts – Bill transfers the duty to train fiduciary

supervisors who are not attorneys from the Tax Commissioner to the State

Auditor. The bill also waives surety requirements for administrators of estates

where a grantee is sole beneficiary or sole distributee of the decedent; and

makes certain other changes to bond and surety requirements. Bill takes effect

July 7, 2017.


House Bills

SB 433 – Excise Tax -- Permits county commissioners to increase county

excise tax imposed on privilege of transferring real property to $1.65 per $500

of consideration. Bill takes effect July 6, 2017.

SB 486 – Health Care Provider Tax -- Increases rates of health care provider

taxes paid by certain acute care hospitals to 3.25% beginning July 1, 2017.

SB 533 – Excise Tax -- W. Va. Code § 60-3-9d imposes a 5% excise tax on

both wholesale sales and retail sales of wine and intoxicating liquors in sealed

containers outside of a municipality. W. Va. Code § 8-13-7 allows municipalities

to impose a 5% excise tax on both wholesale and retail sales of wine and

intoxicating liquors within a municipality. SB 533 amends these code section to

essentially provide that the tax does not apply at the wholesale level when the

retail sale is subject to the 5% tax. Bill takes effect July 6, 2017.

SB 588 – Property Tax -- Bill relates to the reproduction, distribution and sale of

property tax maps. Bill takes effect July 6, 2017.

Senate Bills


HB 102 – State Road Fund -- This bill would increase funding for the State

Road Fund by increasing Division of Motor Vehicles administrative fees and

motor fuel excise taxes. See also, HB 108 and SB 1002 and SB 1006.

HB 103 – Parkways Authority – This bill would allow the Parkways Authority to

issue revenue bonds and refunding bonds for the purpose of financing parkway

projects within the state constructed or improved by the Department of

Transportation or the Authority. See also, SB 1003.

HB 104 – Relating generally to taxation. See also, SB 1004.

HB 106 – Furlough of Public Employees – This bill, which passed the House of

Delegates and is in the Senate authorizes the provision of essential

government services after June 30, 2017, in the event there is not budget on

July 1, 2017. See also, SB 1005.

Special Session Legislation


HB 107 – Tax Reform Act of 2017. See also, HB 104 and SB 1004 and SB

1007.

HB 108 – State Road Fund – Increasing funding for State Road Fund.

HB 109 – Sales Tax – Making medical cannabis subject to consumers sales

and service tax.

HB110 – Relating to taxation.

HB 111 – Tax Procedure and Administration – This bill amends W. Va. Code §

11-10-12 and § 38-10C-2 relating to liens for taxes other than ad valorem

property taxes. It gives the Tax Commissioner greater flexibility to withdraw

liens under certain circumstances and requires that liens be released after they

are no longer enforceable. During the regular session, SB 622 was passed

doing the same thing. SB 622 was vetoed due to a defective title. See also, SB

1009.

HB 115 – Budget Bill. See also SB 1013.

Special Session Legislation



LegislationEmployer withholding tax annual return. – HB 3091 (2017) would have changed the

due date for employers to file their annual reconciliation and withholding statements with

the Tax Commissioner to January 31, which date is consistent with the date by which

employers must file their annual employer withholding reconciliation statements with the

Internal Revenue Service; and to require more employers to file W-2 information

electronically with the Tax Commissioner. Additionally, certain obsolete language would

be deleted from the current law. We will ask for this legislation to be considered in 2018.

Federal partnership audit regime. The Bipartisan BBA of 2015 (the “BBA”) established

new rules for federal partnership audits and assessment of tax (the “New Rules”). The

New Rules change the way partnerships are audited for federal tax purposes and, for the

first time, make a partnership liable for tax resulting from an IRS adjustment. The New

Rules are generally effective for partnership returns filed for tax years beginning after

December 31, 2017. However, partnerships may elect (at such time and in such form and

manner as Secretary may prescribe) to apply the New Rules to returns filed for tax years

beginning after November 2, 2015.


The New Rules necessitate that all states that impose an income tax on partners and members of other pass-through entities amend their income tax laws to address state issue raised by enactment of the new Federal Partnership Audit Regime. For example:

Under the New Rules, the partnership may be liable for payment of the additional federal income taxes. Will West Virginia similarly amend its law?

Under the New Rules, the partnership may push out to its partners payment of the additional federal income tax. Will West Virginia similarly amend it law and/or will West Virginia allow the partnership to pay the additional WVPIT even though the partnership has elected to push payment of the federal income tax out to its partners?

Adding to state complexity is the fact that while both resident and nonresident partners pay WVPIT on income sourced to West Virginia, resident partners are allowed credit against their WVPIT liabilities for income taxes they pay to another state.

The Multistate Tax Commission has formed a workgroup made up of representatives from both the public and private sectors to draft model legislation for states to consider.


West Virginia

State Tax Budget

Questions

➢ Acting Deputy Commissioner Lydia S. McKee

➢ Legal Director and General Counsel Mark S. Morton

➢ Auditing Director Dana K. Angell

➢ Revenue Division Assistant Director Kym D. Lowers

➢ Tax Account Administration Director Matthew R. Irby

➢ Taxpayer Services Director Shella R. Hogg


1. Please discuss the impact of recent budget cuts on the Department's ability to

provide taxpayer service, conduct audits, etc.

Lydia McKee

Budget cuts continue to restrict the ability of the State Tax Department to effectively carry

out its mission. We have too few taxpayer service representatives, field auditors and

compliance agents. We have approximately 88 of 433 positions vacant, or 20.36% of our

authorized staffing. Finding qualified candidates is a challenge but even more of a

challenge is finding candidates that will come for our starting salaries. An entrance level

field auditor position, which requires a college degree in accounting has a starting salary

of $29,400. Because we cannot give pay raises, it is difficult to keep good employees.


2. What, if any, taxpayer service does the Department foresee being reduced due to

the State's budget woes?

Lydia McKee

We have a number of taxpayer service representative vacancies. This affects the number

of phone calls we can handle including answering the tax practitioner hotline. Our new

employees have a sharp learning curve because of the numerous and diverse duties of

the State Tax Department.


3. Is the tax practitioner hotline expected to be kept intact? We appreciate the

hotline and have had great success resolving issues quickly using it.

Shella Hogg

For now, we intend to keep the tax practitioner hotline. However, keeping the hotline

depends upon our having a sufficient number of qualified taxpayer service representative

to answer the hotline. Due to budget constraints, we may be forced in the future to

reduce the hours during which tax practitioner hotline calls will be answered, or possibly

even ending the tax practitioner hotline.


4. Will the state continue to follow the practice of the Tax Practitioner Hotline only

speaking to the paid preparer listed on the return?

Shella Hogg

Protecting the confidentiality of taxpayer and tax return information is a daily priority item

for employees of the State Tax Department. For this reason, the practice will continue.


5. What is the average time to process individual and business refunds? If any

delays are they associated with budgetary constraints?

Matthew Irby

Nearly 85% of personal income tax refunds are paid within 3 weeks after the return is

filed. The remaining 15% are generally paid (or more information is requested) within 8

to 10 weeks after the return is filed.

Business tax refunds generally take anywhere between 3 to 6 months to process after

the return is filed due to the complexity of the return.


6. Please address the challenges and the Department's success in addressing

taxpayer identity theft.

Matthew Irby

The Department has invested significant resources in development of a fraud

management system within the integrated tax system. This fraud management system is

managed by a subunit of our personal income tax unit who have had specific training in

the areas of fraud detection.

Many of these upgrades have led to a small delay in the processing of refunds while we

run data analytics on return filings to ensure we are not paying refunds to those

attempting to commit fraud. Additionally, we have requested more personal information

from taxpayers.

Finally, we have improved our data matching on W-2 information (which will be

addressed more later).


7. The IRS is moving to private collection efforts in some cases. Is the State Tax

Dept. thinking about taking that route as well?

Lydia McKee

Before going this route, the Tax Commissioner would like to have a statutory amendment

specifically allowing us to go in this direction.


8. What does the Dept. anticipate being the focus (foci) of the Dept.'s efforts on

audit/assessment for 2017?

Dana Angell

The Tax Department’s Auditing Division continues to monitor for compliance with

municipal sales and use tax ordinances to ensure that vendors are properly collecting

and reporting municipal tax. Every State consumer sales and use tax audit includes a

municipal sales and use tax audit. The Auditing Division reviews the combined sales and

use tax returns for accuracy in reporting; there are still a few taxpayers that are not in full

compliance. Tax generally reviews prior audit results to determine the issues to focus on

when selecting future audits. The Auditing Division also has several vacant tax examiner

positions. This, coupled with reduction of Tax’s travel budget is affecting the auditing

program.


9. There seems to be an increasing number of individuals receiving "summary of

changes" tax notices for their WV Personal Income Tax returns - the changes are

for withholding tax that the taxpayer is not being given credit for by the WV State

Tax Department. The taxpayers are asked to provide a copy of the W-2. Is this a

trend you are aware of? Is the root of the problem at the employer level, with the

employer not filing their WV/IT-103 and W-2s timely? One case I saw recently

involved WV withholding from WV Lottery winnings.

Matthew Irby

The department has increased its efforts to match W-2 information as a part of our fraud

management plan. However, there recently was an issue where we were unable to

properly match all withholding information, and this issue was not discovered until

recently. Unfortunately, this led to increased requests to provide backup documentation.

This issue has been resolved and those requests should now come back down to normal

levels.


10. Business & Occupation taxes constitute the primary funding source for many

of our municipalities, yet regulations have not been updated since the repeal of

state-wide B&O. Since that time, there have been fundamental changes in the way

organizations transact business. Will the Department consider

revising/modernizing new regulations?

Lydia McKee

Like many or our rules, the municipal business and occupation tax rules were

promulgated many years ago and probably need some technical changes. However,

given the State Tax Department’s workload and the limitations on resources, this is not a

high priority item for the Tax Commissioner.


11. During the 2017 Legislative session there was considerable discussion

regarding elimination of personal property tax. What would be required to make

such a change? Constitutional amendment?

Mark Morton

Prior to the 2017 Legislative session there was considerable discussion about eliminating

the personal property tax on some or all tangible personal property. To exempt some or

all tangible personal property from ad valorem property taxation would take a

constitutional amendment. County commissions and municipalities want to be made

whole in the event some or all tangible personal property becomes exempt from tax.

Depending upon the scope of the exemption, this can be expensive. In some counties,

the assessed value of tangible personal property is approaching 50% of the total

assessed value of all taxable property in the county. If the local levying bodies are to be

held harmless by the State, how will this expense be funded? Another approach, which

would not require a constitutional amendment, would be to allow tangible personal

property taxes to be claimed as a credit against other taxes collected by the State. Two

problems with this approach are: First how will the State pay for this, and second, unless

the business is subject to State severances taxes or business and occupations taxes, the

business may not pay sufficient state taxes to be able to utilize the credits. During the

recent discussion about tax reform, exempting tangible personal property from taxation

has not been part of the discussion.


12. Is it safe to assume that WV adopts the Federal due date for Income Tax

returns? Such as the 2016 federal returns that were due 4/18/2017.

The West Virginia Code established the due dates of the various tax returns. Under the

Code the personal income tax returns and estimated tax payments were due Saturday,

April 15, 2017. However, the Code also provides that when a return or payment is due on

a Saturday, Sunday, or legal holiday in this State, the return or payment is timely if filed or

paid on the next day that is not a Saturday, Sunday or legal holiday in this State. Because

the West Virginia personal income tax liability computation begins with federal adjusted

gross income and that is determined when the federal return is prepared, the Tax

Commission granted an extension of time to file and pay until the due date of the federal

return, both the federal 1040 and the federal declaration of estimated tax.


13. The WV/IT-103 form shows a due date of February 28th. Please confirm that

this is the due date for next year's WV/IT-103 form and W-2s (for the 2017 tax year).

The Social Security Administration advanced the due date for W-3/W-2 forms by

one month, to January 31, starting with the 2016 tax year forms. Are there plans

for WV to adopt the SSA's January 31st due date for employers to submit their

state copies of the W-2s?

Lydia McKee

A bill was introduced during the 2017 regular session of the Legislature to move the due

date to January 31st. While this bill passed the House, it died in the Senate. For 2018,

the return will still be due on February 28, 2018. We intend to ask for this bill to be

reintroduced during the 2018 regular session of the Legislature.


14. Two individual taxpayers have overpayments applied to the next tax year (and

perhaps make one or more estimated tax payments individually) - The two

taxpayers get married before the end of the next tax year and file a joint return.

What is the best way to ensure that the overpayments and estimated tax payments

get properly credited by the WV State Tax department to the joint return? Or

should we expect a tax notice?

Matthew Irby

When we process a joint return and systematically validate the estimated payments

claimed, the process only looks at the primary taxpayer because that is the account

where the return is posted. We are investigating ways to pull payments directly from a

spouse (or on a deceased taxpayer that is no longer a part of the return) where payments

may have been made.


15. I've been wondering when the State Tax Department is going to update the

NIPA-2 form. It appears that charities aren't providing their NIPA Project number

on the NIPA-1 form because the state removed the line. However, the NIPA-2 asks

for the project number. They should either remove the line on the NIPA-2 asking

for the project number, or add back the line on the initial NIPA-1 form. Also, it

would be nice if they made this form a fill-in form.

Matthew Irby

It is anticipated that there will be changes to the NIPA form in the upcoming tax year. We

are looking at better ways to validate the information provided by the taxpayer.

Inconsistencies in the way the information is reported will also be examined.


16. Each year, our clients who claim the apprenticeship credit receive notices that

the form required to receive the credit was not filed with the return, and the state

initially disallows the credit. However, our software will not allow us to claim the

credit and electronically file the return without the form being attached in a PDF

format, which we do. Why is this PDF form that has been attached not reviewed by

the state when return is e-filed? This causes us to responded to a notice and send

the information a second time. Is there a plan to address this issue, or something

we as tax return preparers should do differently?

Matthew Irby

We will work with software vendors to ensure we are receiving all attachments made on

those submissions. Without looking at a particular instance, we cannot say whether we

received the attachment through the MEF system.

17. There is a lot of confusion about what forms need attached to claim credits,

such as Neighborhood Investment Tax Credit, Senior Citizen Property Tax Credit,

Homestead Property Tax Credit, credit for taxes paid to other states (composite

returns), etc.

Matthew Irby

A compiled list of all forms and documentation for each credit will soon be available on

our website at: www.tax.wv.gov




Credit for Income Tax Paid to another State (Schedule

E)

(11-21-20)

• Separate Schedule E must be completed for each state

for which credit is claimed.

• Other states’ returns may be requested at the auditor’s

discretion

Non-Family Adoption Credit (WV/NFA-1)

(11-21-10a)

• Court order for the adoption may be requested at the

auditor’s discretion

General Economic Opportunity Tax Credit (WV/EOTC-

PIT) (11-13Q)

• WV/EOTC-1 completed by the pass-through entity

providing the Personal Income Tax credit.

• Copy of Federal Form 1120S, Schedule K-1

Strategic Research and Development Tax Credit

(WV/SRDTC-1) (11-13R)

Schedule only

WV Environmental Agricultural Equipment Credit

(WV/AG-1) (11-13K)

• Proof of purchase and installation

• Written certification from the appropriate office (see AG-1

instructions)

WV Military Incentive Credit (SCHEDULE J)

(11-21-42)

• This tax credit can ONLY be taken by employing

business or passed through to the partners.

Neighborhood Investment Program Credit (NIPA-2)

(11-13J)

• NIPA-1 certificates and NIPA-2 schedule may be

requested at the auditor’s discretion

Historic Rehabilitated Buildings Investment Credit

(RBIC)

(11-21-8A)

• Final National Park Service certification (NPS Form 10-

168c) is required.

Qualified Rehabilitated Buildings Investment Credit

(RBIC-A) (11-21-8g)

• Final West Virginia Department of Culture and History

certification (Form 10-168c)

• The residential certified historic structure must be

classified as class 2 no later than July 1st of the following

year in which the rehabilitation expenses are incurred.

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=21&section=20#21

http://tax.wv.gov/Documents/TaxForms/nfa1.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=21&section=10A#21

http://tax.wv.gov/Documents/TaxForms/eotcpit.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13Q

http://tax.wv.gov/Documents/TaxForms/srdtc1.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13R

http://tax.wv.gov/Documents/TaxForms/ag1.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13K

http://tax.wv.gov/Documents/TaxForms/schedule-J.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=21&section=42#21

http://tax.wv.gov/Documents/TaxForms/nipa2.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13J

http://tax.wv.gov/Documents/TaxForms/sch_rbic.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=21&section=8A#21

http://tax.wv.gov/Documents/TaxForms/schedule-RBIC-A.pdf

WV Film Industry Investment Tax Credit (WV/FIIA-TCS)

(11-13X)

• Schedule and certificate must be attached

Apprenticeship Training Tax Credit (WV/ATTC-1)

(11-13W-1)

• Schedule only

Solar Energy Tax Credit (WV/SETC)

(11-13Z)

• Receipts for solar equipment and installation must be

included

• If any unused credit remains after July 1, 2014, the

amount thereof is forfeited.

• No taxpayer shall take a credit pursuant to this article for

a solar energy system installed after July 1, 2013.

Commercial Patent Incentive Tax Credit (CPITC-1)

(11-13AA)

• Schedule only

Concealed Carry Gun Permit Training Credit (CCGP-1)

(61-7-4r)

• Receipts showing date and dollar amount paid for

training class/application fee

• Dates for application and training classes

• Certificates showing successful completion of training

Alternative-Fuel Tax Credit (AFTC-1)

(11-6D)

The following information must also be included

•Purchase agreement / bill of sale must be attached

•Vehicle Registration card

Other Credits

Senior Citizen’s Tax Credit (SCTC-1)

(11-21-21)

•Schedule only

Homestead Excess Property Tax Credit (HEPTC-1)

(11-21-23)

•Schedule must include non-taxable social security and

some other types of income not included in FAGI (see

schedule HEPTC-1)

• Property Tax receipts or 1098’s may be

requested at the auditor’s discretion

Family Tax Credit (FTC-1)

(11-21-22)

•Schedule only

All schedules can be located on WV website

(except SCTC-1 which is mailed to the taxpayer)

www.tax.wv.gov


http://tax.wv.gov/Documents/TaxForms/fiiatcs.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13X

http://tax.wv.gov/Documents/TaxForms/2012/attc1.pdf

http://tax.wv.gov/Documents/TaxForms/setc.pdf

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=11&art=13Z

http://tax.wv.gov/Documents/TaxForms/cpitc1.pdf

http://tax.wv.gov/document/taxforms/ccgp1.pdf

http://www.legis.state.wv.us/wvcode/ChapterEntire.cfm?chap=61&art=7


18. Have you ever considered moving the filing and paying of the WV State

Unemployment taxes to WV MyTaxes? These can be filed paid online through

another website, but other states have all state tax payments through a single

website.

Matthew Irby

Unemployment taxes are paid to Workforce West Virginia and not to the State Tax

Department. Payment of unemployment taxes cannot be integrated into the MyTaxes

site.


19. Have you considered allowing individuals to set up "accounts" with WV

MyTaxes, so they have access to the history of their tax payments in one place like

businesses do? Currently estimated individual tax payments can be made through

WV MyTaxes without logging in, and they can be looked up later one by one using

the confirmation number. It would be helpful to be able to log in and run a report

showing all of the estimated tax payments for the year.

Matthew Irby

The Department is currently considering allowing log on functionality to personal income

tax. There are infrastructure and security issues that have to be considered, along with

determining the amount and type of information available.



20. Does the state have any plans to provide a consolidated tax form to software

providers instead of requiring excel attachments for the WV UB-4CR? The excel

file is cumbersome and adds unnecessary preparation time.

Lydia McKee

We understand that the UB-4CR is difficult to complete within the excel file. When the

return components for the combined report were designed, the most consistent way to

get the information reported was through the excel form. However, after a few years of

experience, we are now considering designing a UB-4CR as a part of the MeF return

schema for software providers.


21. With all the pipelines being constructed in WV a common financing structure is

for the pipeline to charge a reservation fee to pay for their pipeline and then also

charge an additional fee for transporting natural gas based on volume. Are both of

these charges by the pipelines deductible from the sales price of natural gas in

addition to the natural gas producer's cost of transportation from the well head to

the point of sale?

Lydia McKee

Transportation costs are deductible to arrive at the well-mouth value of the gas on which

severance tax is imposed. Generally, producers may choose to take either actual

transportation costs or fifteen percent of the sales price of the natural gas as a deduction

to arrive at the well mount value of the gas. (WV CSR §110-13A-4.8)

If a producer sells natural gas to a pipeline, they may deduct the cost of transportation to

the point of sale and the transportation costs charged by the pipeline, including the

reservation fee.


22. Is a separate business registration required by oil and gas producers for each

separate well owned within WV?

Kym Lowers

The Tax Commissioner has changed Department policy. On a going forward basis, a

separate business registration certificate is not required for each oil well and each gas

well.


23. Will the property tax division accept actual operating costs for horizontal wells

instead of a formula amount for property tax valuation?

Lydia McKee

No. The legislative rule for determining the appraised value of producing oil and gas wells

requires the State Tax Department to periodically survey producers of oil and gas to

determine their operating expenses. The current survey is to be completed and returned

to the Department by June 15, 2017. At the end of June, tentative variables for valuing

different types of natural resource properties will be published in the State Register for

public comment.


24. As of July 1, 2017, there are 38 WV Cities imposing a 1% Municipal Sales Tax -

is there a map, or list of zip codes available that define these City Limits to assist

businesses with identifying when their sales are within one of these Cities and

subject to Municipal Sales Tax?

Matthew Irby

The State Tax Department’s website includes an excel spreadsheet listing the 9-digit zip

codes for all municipalities that currently impose a municipal sales and use tax. A

limitation is that neither the 5-digit zip codes nor the 9-digit zip codes respect geographic

boundaries. The Department would like to transition to an address-based system or a

GIS system. However, the Tax Department does not have the resources to do this and to

date municipalities have not been willing to pay for development of an address-based

system.

We are working on a few applications that may assist taxpayers in determining the sales

tax rates for locations within this state, but have no rollout date at this point due to lack of

resources.

Questions?Lydia S. McKee

Acting Deputy Tax Commissioner

[email protected] 304-558-0751

W E S T V I R G I N I A STATE TAX DEPARTMENT


SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS A N N U A L M E E T I N G