West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-21F - The Coal Severance Tax Rebate › Section 110-21F-3 - Rebate allowable

Current through Register Vol. XLI, No. 28, July 12, 2024
3.1.
Rebate allowable
. Eligible taxpayers shall be allowed a rebate
				against a portion of severance taxes imposed by W. Va. Code §
									11-13A-3
				on the privilege of engaging in the production of coal in an amount not to
				exceed 35 percent of the eligible taxpayer's qualified investment in tangible
				personal property purchased or leased for business expansion, subject to the
				limitations in section 3.2. of this rule.
Example.
If the taxpayer makes a $1,000,000
				  qualified investment, the amount of the potential rebate is $350,000.
3.2.
Limitations on the
				rebate.
--
3.2.1.
Maximum
				rebate limited to 80 percent of increase above base period
severance
				taxes. The maximum amount of rebate allowable for any given tax year is limited
				to an amount not to exceed 80 percent of the increase in the state portion of
				severance taxes paid for coal mined at the specific mine where the qualified
				investment is made when compared to the average annual state portion of
				severance taxes paid for coal mined at the specific mine where the qualified
				investment is made during the base period.
3.2.1.a. "Base period annual average
				severance taxes" means the annual average of the state portion of severance
				taxes under W. Va. Code §
											11-13A-3
				during the five-year period directly preceding the year the qualifying capital
				investment in new machinery and equipment was placed into service. The annual
				average of the state portion of severance taxes is found by taking the
				cumulative total of the state portion of severance taxes paid from all mines
				operated within the state by the eligible taxpayer and dividing the aggregate
				cumulative total of the state portion of severance taxes by five.
Example.
Taxpayer's base period amount at the
				  investment mine is $1,000,000, which is the annual average of the five-year
				  base period. Taxpayer paid $1,500,000 severance tax in the claim year from
				  production at the investment mine. The difference is $500,000. The taxpayer can
				  claim the rebate against $400,000 of severance taxes paid during the claim
				  year, which is 80 percent of the difference.
3.2.1.b. When the eligible taxpayer has
				produced coal in this state for two years before making the capital investment
				in new machinery and equipment but was not in business during a full five-year
				base period, then the eligible taxpayer's base severance tax amount shall be
				the amount of state severance tax due under W. Va. Code §
											11-13A-3
				on coal produced in this state during the most recent tax year prior to making
				the investment.
Example 1
: Taxpayer company has three mines,
				  Mine A, Mine B, and Mine C. Mine A has been in operation for five years. Mine B
				  has been in operation for three years. Mine C goes into production during the
				  current year. The base severance tax amount for this taxpayer is the average
				  annual production of all mines during the past five years.
Example 2
: Taxpayer company has three mines,
				  Mine A, Mine B, Mine C. Mine A went into production two years ago, while Mine B
				  and Mine C go into production during the current year. The taxpayer's base
				  severance tax production is the average production for all three mines during
				  the prior year.
Example 3
: Taxpayer company has three mines,
				  Mine A, Mine B, and Mine C. All three mines go into production in West Virginia
				  during the current year. The taxpayer is not eligible to claim the rebate until
				  it has been in business in the State of West Virginia for at least two
				  years.