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The West Virginia High-Tech Research Zone tax incentives have been amended and re-enacted. Applicable to taxable years starting on or after January 1, 2005, any qualified educational institution or business in a designated high-tech research zone will be eligible for some non-sales and use tax incentives. These tax incentives include an opportunity tax credit for companies that create at least three new jobs in a research zone, a strategic research and development tax credit, a manufacturing investment tax credit if primarily engaged in research and development, and a refundable credit for small research and development companies. In addition, the government is authorized to provide low cost sharing of state equipment to qualified businesses in a research zone. (H.B. 2777, Enacted May 9th, 2005)


The West Virginia State Tax Department has issued a notice stating that receipts from the Federal Employees Health Benefits Program (FEHBP) will be taxable under the health care provider tax. This release is consistent with an August 7th decision by the United States Court of Appeals for the Fourth Circuit that found that health care providers were subject to the tax. FEHBP receipts are taxable for services rendered on or after March 1, 2004. (Notice, West Virginia State Tax Department, December 14, 2004)


The West Virginia amnesty program, “Pay the Tax or Pay the Max,” will be held from September 1, 2004 to November 1, 2004. All taxes, fees, and licenses accrued from January 1, 1986 through December 31, 2003 are eligible for the amnesty program, with the exception of property tax. Penalties and 50% of the interest will be waived but eligible taxpayers who do not participate will owe an additional 10% of the penalty as well as their current tax liability and interest. An installment plan will also be available for payment of back taxes with the greater of 25% of the liability or $1,000 due at the time of the agreement. Taxpayers who are being investigated in a civil or criminal proceeding for tax-related matters are not eligible to participate. Amnesty applications must be postmarked between September 1, 2004 and November 1, 2004. For more information, taxpayers can contact the State Tax Division at (800) 982-8297 or visit (Senate Bill No. 148, passed March 13, 2004)


To aid in the reconstruction of property damaged or destroyed in the flooding of Spring, 2004, West Virginia governor Bob Wise has signed an executive order exempting all construction materials directly consumed in the rebuilding of flood-damaged structures. This exemption applies to most permanent fixtures but does not include non-essential or luxury items such as swimming pools or hot tubs. The exemption also includes mobile homes purchased by a party rendered homeless by the flooding. The interested parties can apply for the exemption certificate at locations throughout the state, including some hardware stores. Purchases made between May 25th, 2004 and August 31st, 2004 are eligible for this exemption.(Executive Order 10-04; Special Notice 04-02, WV State Tax Dept., June 2004)


In a West Virginia Circuit Court, a petitioner, doing business selling and installing truck scales, was found liable for tax based on the definition of capital improvement and how it relates to this type of contract. "Capital Improvement" is defined as "improvements that are affixed to or attached to and become part of a building or structure or the real property, or any part thereof, and that last or are intended to be relatively permanent." The petitioner argued that, even though the scales were placed on real property (concrete slab), the scales could be removed and many of the parts of the scale were "free floating", making them tangible personal property. The court countered, stating that the removal of the scales would cause damage to the real property which is a critical part of the definition of "capital improvement". As for the "free floating" parts, the court felt it was impossible to determine every component of the scale to see what was free floating and what was not. (Brechbuhler Scales, Inc. v. Palmer, West Virginia Circuit Court of Kanawha County, No. 00-AA-172, December 5, 2003)



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