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-4 - Eligibility to claim the coal severance tax rebate

Current through Register Vol. XLI, No. 28, July 12, 2024
4.1. The coal severance tax rebate is
				available to taxpayers that meet every requirement as set forth in W. Va. Code
				§
									11-13EE-1,
et. seq
., any other controlling section of the W. Va. Code and
				W. Va. Code of State Rules, and any other recognized legal authority including
				controlling decisions rendered by courts of competent jurisdiction.
4.2. In order to qualify for the coal
				severance tax rebate, each of the following criteria must be met. Even if every
				requirement has been met, the rebate may be denied, limited, suspended or
				forfeited for any lawful reason.
4.2.1. The
				taxpayer must be an eligible taxpayer, which means that the taxpayer was
				engaged in the business of producing coal for sale, profit or commercial use,
				as defined by W. Va. Code §
										11-13EE-2(b)(19),
				for at least two years in the State of West Virginia before the qualified
				investment property is placed in service or use in this state.
See
W. Va. Code §
										11-13EE-2(b)(15).
4.2.2. However, a mere change in the form of
				doing business, from one business form to another, or a mere change in
				ownership, does not disqualify an otherwise eligible taxpayer as long as the
				transferor produced coal in this state and paid the tax imposed by W. Va. Code
				§
										11-13A-3(a),
				for at least two years prior to placing the qualified investment in service or
				use.
See
W. Va. Code §
										11-13EE-2(b)(15)(B)
				and section heading 9 of this rule.
4.2.3. When changes in business composition
				result in a new entity, at least 50 percent of the new entity's business assets
				must have been actively and directly used in coal production activity in this
				state for a two-year period, in order for the resulting taxpayer to be eligible
				to claim the rebate for qualified investments made during the current tax year.
See
W. Va. Code §
										11-13EE-2(b)(15)(B).
4.2.4. The taxpayer must purchase or lease
				the qualified purchase property on or after July 1, 2019 and place it into
				service or use at the coal mining operation in the State of West
				Virginia.
4.2.5. The qualified
				investment property must result in an increase in the number of tons of coal
				produced as well as increase in the taxpayer's workforce. Additionally, there
				must be an increase in the state portion of the severance taxes paid. The
				rebate paid in any year may not exceed 80 percent of the additional severance
				taxes payable, before credit for payment of the minimum severance tax, that is
				attributable to the increase in coal production. When the taxpayer operates
				more than one mine in West Virginia, the production from all mines is
				considered when determining whether there is an increase in the taxpayer's
				production of coal due to placing qualified investment property into service or
				use. Additionally, when the taxpayer is a member of a controlled or affiliated
				group that has other members that produce coal in West Virginia, tons of coal
				produced by all members of the controlled or affiliated group, including the
				taxpayer, are used to determine whether the qualified investment property has
				resulted in an increase in the number of tons of coal produced.
4.2.6. The qualified investment property must
				be directly used at the coal mining operation at which it is placed in service
				or use for at least five years after it is placed in service or use by the
				taxpayer. If it is not directly used for at least five years after it is placed
				in service or use by the taxpayer, the taxpayer is subject to recapture of the
				rebate granted as described in section heading 13 of these rules.
4.2.7. No credit shall be allowed unless the
				aggregate total coal production tonnage from all mines operated by the eligible
				taxpayer in this state during the year for which the rebate or rebate carryover
				is claimed has increased above the annual average aggregate total coal
				production tonnage from all mines operated by the eligible taxpayer during the
				base period.
4.2.8. No rebate shall
				be allowed unless the aggregate total number of full-time employees along with
				full-time equivalent employees, at all mines operated by the eligible taxpayer
				in this state during the rebate year has increased above the annual average
				aggregate total number of full-time employees, along with full-time equivalent
				employees at all mines operated by the eligible taxpayer in this state during
				the base period.
Example 1
: Taxpayer company owns three mines,
				  Mine A, Mine B, and Mine C. The base tonnage produced at Mine A and Mine B was
				  200,000, which is 100,000 tons each. Mine C subsequently opens during 2021.
				  Each of the three mines produced 150,000 tons during the claim year. Therefore,
				  production increased for the aggregate group from 200,000 tons to 450,000
				  tons.
Example 2
: Taxpayer company owns three mines,
				  Mine A, Mine B, and Mine C. The base number of aggregate full-time employees
				  for both Mine A and Mine B was 200, which is 100 each. Mine C subsequently
				  opens during 2021. Each of the three mines had 100 aggregate full-time
				  employees during the claim year. Therefore, the employment increased from 200
				  to 300 aggregate full-time employees.
4.2.9. No rebate shall be allowed under W.
				Va. Code §
										11-13EE-1,
et seq.
, when credit is claimed under any other article of
				Chapter 11 of the W. Va. Code for capital investment in the new machinery and
				equipment. No credit shall be allowed under any other article of Chapter 11 of
				the W. Va. Code when a rebate is allowed under W. Va. Code §
										11-13EE-1,
et seq.
, for the capital investment in new machinery and
				equipment.