Wv/bcs-Small - West Virginia Small Business Investment And Jobs Expansion Tax Credit

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WV/BCS-SMALL
Rev. April, 2002
WEST VIRGINIA SMALL BUSINESS INVESTMENT AND
JOBS EXPANSION TAX CREDIT
INSTRUCTIONS AND FORMS
The following information, instructions and form are not a substitute for tax laws and regulations.
GENERAL INFORMATION
A Small Business Investment and Jobs Expansion Credit was enacted by the 1987 West Virginia Legislature as an extension to the
Business Investment and Jobs Expansion Credit (Super Credit). The purpose of the Small Business Investment and Jobs Expansion Credit
is to promote net employment growth within West Virginia. In return for net employment (e.g. new jobs) through capital investment, credit
is claimed against a portion of certain taxes imposed by this State that are attributable to the qualified investment. The credit is available to
an eligible small business taxpayer making a qualified investment in a new or expanded business facility in the State which resulted in the
creation of new jobs. (The amount of the qualified investment is determined by the cost, or other basis, and the useful life of the property.)
LEGISLATIVE CHANGES
The Super Credit was expanded in 1986 to include certified projects and relocation of corporate headquarters to the State. In 1987, the
Small Business Credit was added. Additional changes involving credit restrictions and new filing requirements were added in 1990.
In 1993 and 1994, the following major revisions were made to restrict the use of the credit:
·
The credit may not be applied against the Consumers Sales and Service Tax and Use Tax for purchases made on or after July 1,
1993.
·
There is a suspension of new credit entitlement for property placed into service or use after April 10, 1993. The suspension does
not apply to manufacturing; information processing; warehousing; goods distribution; destination-oriented recreation and tourism;
or to qualified investments for which credit applications were filed before April 10, 1993.
·
New language in the law strengthened the Tax Commissioner's authority to use alternate procedures when the payroll fraction for
determining tax attributable to qualified investment method does not fairly represent the tax liability directly attributable to the qualified
investment.
·
For tax years ending after May 31, 1993, all taxpayers claiming the Business Investments and Jobs Expansion Tax Credit (Super
Credit) must now defer 20% of the value of their annual credit until the tenth, eleventh, and twelfth tax years subsequent to the year
investment is placed in service or use.
·
Certain taxpayers also may claim an additional amount of credit to "free-up" super credit value lost as a result of the increase in the
minimum coal severance tax rate. This free-up credit may be used against Business Franchise, Corporation Net Income Tax and
Personal Income Tax.
·
Special recapture tax provisions may apply to taxpayers who place qualified investment property into service on or after March 12,
1994.
ELIGIBLE TAXPAYERS
Small business taxpayers which make qualified investment shall be allowed credit for the qualified investment placed in service
or use over three hundred sixty-five (365) consecutive days without regard to when the end of the taxpayer’s taxable year occurs. The
determination of the number of new jobs created for the first taxable year and the determination of median compensation shall be made at
the end of the three hundred sixty-five (365) day period. The annual gross receipts determination shall equal the highest annual gross
revenues of the business (including domestic and foreign affiliates, if the investment was placed into service after 3/9/90) from among the
past three tax years. If the business has been in business for less than three full tax years, then the annual gross receipts determination
shall equal the total receipts for the period in business, divided by the number of weeks in business, and multiplied by 52. The annual payroll
determination shall equal the payroll of employees of the business (including domestic and foreign affiliates, if the investment was placed
into service after 3/9/90) during the preceding 12 months, divided by the number of weeks in business, and multiplied by 52. Such
determinations shall be made for the next succeeding tax year and subsequent years based upon the taxpayer’s actual tax year.
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