Form Wv/bcs-Small - West Virginia Small Business Investment And Jobs Expansion Tax Credit Page 6
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28EXAMPLE:
A part-time employee of a business works 27 hours per week, 50 weeks per year, and is not entitled to paid vacation.
The normal work week of a full-time employee of the business is 40 hours per week, and full-time employees are paid for
52 weeks per year, including 2 weeks paid vacation. The part-time employee makes $6.00 per hour. The number of hours
in a normal work year for full-time employees is:
40 Hours/Week x 52 Weeks Per Year = 2080 Hours/Year
Although the part-time employee works only 1350 hours per year for total annual gross compensation of $8,100, the
annualized compensation of the part-time employee would be 2080 Hours/Year x $6.00 Per Hour = $12,480.
The figure to be used in the range of numbers determining median compensation is $12,480, and not $8,100. However,
for purposes of finding annual gross payroll for the determination of whether a business has annual gross receipts and annual
gross payroll in amounts which are less than the threshold amounts specified, the actual payroll, which would include only
$8,100 for this employee, would be used.
The term new employee means a person residing and domiciled in this State, hired by the taxpayer to fill a position or a job in this State
which previously did not exist in taxpayer’s business enterprise in this State prior to the date on which the taxpayer’s qualified investment is
placed in service or use in this State. In no case shall the number of new employees directly attributable to such investment for purposes
of this credit exceed the total net increase in the taxpayer’s employment in this State.
A person shall be deemed to be a new employee only if such person’s duties in connection with the operation of the business facility
are on a regular, full-time and permanent basis.
Full-time employment means employment for at least one hundred forty hours per month at a wage not less than the prevailing state
or federal minimum wage, depending on which minimum wage provision is applicable to the business.
Regular and part-time employment provides that such person is customarily performing their duties at least twenty hours per week
for at least six months during the taxable year.
Permanent employment does not include employment that is temporary or seasonal and therefore the wages, salaries and other
compensation paid to such temporary or seasonal employees will not be considered for purposes of the job creation criteria.
FORFEITURE AND REDETERMINATION
If, during any taxable year, property used as a qualified investment for this credit is disposed of prior to the end of its useful life, or ceases
to be used in an eligible business of the taxpayer in this State prior to the end of its useful life, any unused portion of the credit attributable
to that investment is forfeited for the taxable year and subsequent years.
The amount of credit allowed in all earlier years must be redetermined by reducing the percentage of cost of the property to the percentage
applicable to the period of time the property was actually used in the new or expanded business facility. The redetermination is not required
for the earlier years if the forfeiture occurs because the property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen.
The forfeiture and redetermination provisions also apply if, during any taxable year, the taxpayer ceases operation of a business facility
in this State, for which credit was allowed, before expiration of the useful life of the qualified investment property.
If the average number of employees employed in positions created because of and directly attributable to the qualified investment falls
below the minimum number of new jobs created upon which the taxpayer’s annual credit allowance is based, the taxpayer shall calculate what
the annual credit allowance would have been had the new jobs percentage been determined based upon the average number of employees,
for the then current taxable year, employed in positions created because of and directly attributable to the qualified investment. The difference
between the result of this calculation and the taxpayer’s annual credit allowance for the qualified investment shall be forfeited for the then
current taxable year, and for each succeeding taxable year, unless the taxpayer’s average employment in positions directly attributable to
the qualified investment once again meets the level required to enable the taxpayer to utilize its full annual credit allowance for that taxable
year.
In the event of forfeiture and redetermination, the taxpayer must file a reconciliation statement with the annual return for the year in which
the forfeiture occurs and pay any additional taxes owed due to the reduction of the credit for the earlier year, plus interest and applicable
penalties. For investments placed into service on or after March 12, 1994, a recapture tax may apply in lieu of the reconciliation procedure.
A mere change in the form of conducting business, as long as the property is retained in a business in this State and the taxpayer retains
a controlling interest in the successor business will not activate the forfeiture and redetermination provisions.
If the business is transferred or sold to a successor business which continues to operate the business facility in this State, any available
credit remaining is allocated to the successor for subsequent tax years and redetermination for earlier years is not required.
New Jobs percentage
- The annual new jobs percentage is based on the number of new jobs created in this State by the taxpayer
that is directly attributable to taxpayer’s qualified investment.
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