West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-06F - Property Tax Valuation Of Certain Manufacturing Property › Section 110-6F-5 - The Point in Time When Entitlement to Special Property Tax Valuation Accrues

Current through Register Vol. XLI, No. 28, July 12, 2024
A Taxpayer is entitled to the special valuation allowed under
				  the Act when at least $50 million of qualified capital addition property has
				  been enrolled in the name of the Taxpayer. The special valuation shall be
				  granted for the tax year when the aggregate total value of enrolled qualified
				  capital addition property enrolled in the name of the Taxpayer has exceeded $50
				  million and for succeeding years in accordance with W. Va. Code '11-6F-3
				  and 4.
5.1. Qualified capital addition
				property enrolled in the name of the Taxpayer before the $50 million threshold
				has been exceeded shall not be treated as having been placed in service for
				purposes of the Act. When the first $50 million of the qualified capital
				addition property has been enrolled in the name of the Taxpayer, that $50
				million threshold investment in the property is considered to be placed in
				service on the date of enrollment of the property. Qualified capital addition
				property in excess of $50 million that is enrolled in the name of the Taxpayer
				on or after the date of enrollment of property representing the $50 million
				threshold amount shall be treated as having been placed in service when
				enrolled in the name of the Taxpayer.
5.2. The qualified capital addition property
				as well as the initial $50 million investment in property constitutes a
				"qualified capital addition to a manufacturing facility" and "certified capital
				addition property," and shall be valued in accordance with W Va. Code
				'11-6F-3
				beginning in the tax year for which the amount of the original cost of the
				investment in new qualified capital addition property in place first exceeds
				$50 million on the July 1 assessment day.
5.3. Example:
Construction of a capital addition to an existing eligible
				  manufacturing facility begins on April 1, 1997. The construction shall be
				  accomplished over a period of 24 months. It shall be completed on April 1,
				  1999, and the capital addition shall be placed in operation on June 1,
				  1999.
On July1, 1997, three months of construction have been
				  completed. On July 1,1998, 15 months of construction have been completed, and
				  more that $50 million of qualified capital addition property is in
				  place.
Construction is completed April 1, 1999. The plant is placed
				  in operation on June1, 1999, and as of July 1
,
1999 is assessed as
				  a completed qualified capital addition to a manufacturing facility for tax year
				  2000.
5.3.1. The addition is assessed
				as follows for the tax years 1998, 1999 and 2000:
5.3.1.1. On July 1, 1997, 3 months of
				construction in progress is enrolled in the name of the Taxpayer with an
				appraised value equal to the fair market value of the materials in place in the
				construction. The $50 million threshold has not yet been reached. Therefore,
				for purposes of the Act, the property is not treated as having been placed in
				service, and the construction in progress is valued and taxed for the 1998 tax
				year without applying the special property tax valuation. The 1998 tax year is
				the January 1 to December 31 calendar year next succeeding the July 1, 1997
				assessment date.
5.3.1.2. The Act
				does not yet apply because the $50 million threshold has not been reached. For
				the 1998 tax year, the assessed value is 60% of the appraised value. Typically
				the appraised value of construction in progress is set at the value of the
				materials in place without any cost of labor component.
5.3.1.3. On July 1, 1998, fifteen months of
				construction have been completed, and more than $50 million of construction
				materials have been incorporated into the construction in progress and are
				assessed on July 1. The $50 million threshold has now been exceeded. The
				property having a cost of more than $50 million, even though it has not yet
				been placed into operation, shall be treated as having been placed in service
				on July 1, 1998 for purposes of the Act. This is the date when the cost of the
				property enrolled in the name of the Taxpayer attributable to the project
				exceeds $50 million.
5.3.1.4. The
				physical placement of property into operation and the placement of property
				into service for purposes of the Act are not related concepts, and these events
				do not typically occur simultaneously. The term "placed in service" is defined
				in Section 2 of this rule. Property is placed into service for purposes of the
				Act when the criteria set forth in that definition have been satisfied. W. Va.
				Code '11-6F-4
				states that the certified capital addition property receives special property
				tax valuation beginning at the point in time when the qualified capital
				addition property is "placed in service." The Taxpayer's entitlement to special
				property tax valuation accrues only when qualified capital addition property is
				"placed in service."
5.3.1.5. For
				the 1999 tax year (the tax year following July 1, 1998), the assessed value is
				the appraised value multiplied by 5% multiplied by 60%. Again, for construction
				in progress, the materials cost is counted in the appraised value, but not the
				labor cost component.
5.3.1.6.
				Construction is completed on April 1, 1999. The plant goes into operation on
				June 1, 1999. The placement of property in service for purposes of the Act
				bears no relationship to the date when property is placed into operation as a
				functioning part of the manufacturing facility.
5.3.1.7. On July 1, 1999, the construction
				has been completed for about 3 months. The qualified capital addition property
				enrolled for the first time in the name of the Taxpayer on July 1, 1999 shall
				be treated as having been placed in service immediately upon enrollment because
				the $50 million threshold was reached on July 1
,
1998. New
				qualified capital addition property enrolled in the name of the Taxpayer after
				the $50 million threshold has been exceeded is treated as having been placed in
				service for purposes of the Act when enrolled in the name of the Taxpayer. The
				plant's appraised value shall now include not only the cost of the materials
				incorporated into the plant, but also the value of the labor for the
				construction. Appraised value shall increase significantly for the 2000 tax
				year (the calendar year after July 1, 1999).