W. Va. Code R. § 110-15-110

Current through Register Vol. XLI, No. 19, May 10, 2024

Section 110-15-110 - Nonresident Contractors

110.1. Use tax is levied upon the use in this State of tangible personal property purchased or leased in another state and brought, imported or caused to be brought into this state after February 28, 1989 for use in contracting activity. Excluded from tax are the following:

110.1.1. Tangible personal property directly used in the activity of contracting that was purchased by the contractor prior to March 1, 1989. See the Transition Rules in Section 108 of these regulations for discussion of the scope of this exception.

110.1.2. Tangible personal property not directly used in the activity of contracting that was purchased or leased by the contractor prior to July 1, 1987. See the Transition Rules in Section 108 of these regulations for a discussion of the scope of this exception.

110.1.3. The use in this State of any tangible personal property purchased or leased by a person for use in another state which was actually placed into substantial use in another state before being brought, imported or caused to be brought into this State by such person for use in constructing or repairing its own buildings, structures or real property. "Substantial use in another state" means that the property was used by the taxpayer outside this State for a period of time equal to or greater than seventy-five percent of the useful economic life of the determined at the time such property was first purchased or leased by the taxpayer.

110.2. Contractors (both resident and nonresident) shall compute West Virginia Use tax on tangible personal property which they purchased and used outside this State before such property is brought, imported or caused to be brought into this state for use in their contracting activity. The measure of tax shall be that proportion of the original purchase price of tangible personal property paid by the taxpayer as the duration of time such property is used in this State bears to its total useful life. For purposes of this rule, the word "use" means and includes use, storage, consumption and stand-by time occasioned by weather conditions, controversies or other causes, it being the intention of this rule that the tax shall be computed upon the basis of the relative time each item of tangible personal property is in this State for use, rather than upon the basis of its actual use by the taxpayer. In the case of leased tangible personal property, the measure of tax is the amount of the lease payments attributed to the duration of time such leased property was used in this State.

110.2.1. Example. - Contractor X is a nonresident contractor who had been recently awarded a contract in West Virginia. Contractor X must bring a bulldozer from out-of-state into West Virginia. The job in West Virginia is estimated to take one year. The useful life of the bulldozer when purchased by Contractor X was ten years and its cost to Contractor X was $20,000. The use tax liability of Contractor X on the bulldozer is computed as follows:

A X B X C = D

A - purchase price of the tangible personal property

B - duration of time property is in WV useful life of property

C - 6%

D - Use tax due

E X F X G= H

E - $20,000

F -

10 Yr.

G - 6%

H - Use tax

J X K X L =M

J - $20,000

K - .10

L - .06

M - $120

110.2.2. Example. - To compute the use tax due in the case of leased property was used in West Virginia is multiplied by the use tax rate (6%). Contractor Y, a nonresident contractor, leases a bulldozer to use on a contracting site in West Virginia at a cost of $1,500 a month for six months. The use tax liability of Contractor Y is calculated as follows:

A X B = C

A - Amount of Lease Payments for Period of Time Property is in West Virginia

B - 6%

C - Use Tax Due

D X E = F

D - ($1,500 X 6)

E - 6%

F - Use Tax Due

G X H = J

G - $9,000

H - 6%

J - $540

110.3. Before any property subject to the use tax is brought into this State for use as provided above, the owner, or if the property is leased, the lessee shall register with the Accounting Division of the West Virginia Tax Department. After registering, the taxpayer shall file quarterly reports on forms furnished by the State Tax Commissioner reporting such property bought, imported or caused to be brought into this State during the preceding calendar quarter, together with remittance of the amount of tax due. Such reports are to be filed on or before the twentieth day of the month following the calendar quarter in which such property was brought into this State.

110.4. Reports filed pursuant to this rule shall be accompanied by a schedule listing the property included in the report and showing the original cost price, duration of time of use in this State, total useful life, and the taxable amount for each item.

110.5. In the absence of satisfactory evidence as to the period of use intended in this State, it will be presumed that such property will remain in this State for the remainder of its useful life, which shall be determined in accordance with the experiences and practices of the building and construction trades. Any taxpayer who claims a greater estimated useful life for a given piece of equipment than its economic useful life shall set forth his reasons therefore.

W. Va. Code R. § 110-15-110