W. Va. Code R. § 110-15-9d

Current through Register Vol. XLI, No. 45, November 8, 2024

Section 110-15-9d - Apportionment of Purchase Price

9d.1. Whenever a purchaser will use tangible personal property or a service or the results of a service for both exempt and nonexempt purposes, the gross proceeds paid to the vendor of such property or service shall be apportioned between the exempt and nonexempt uses in a reasonable manner acceptable to the Tax Commissioner. In the absence of books and records documenting how gross proceeds were apportioned and how the property or service or the results of a service were actually used by the purchaser, that portion of the gross proceeds for which exemption is claimed shall be disallowed and the tax due thereon shall be paid by the purchaser. In those instances where apportionment of the purchase price is difficult to calculate and therefore assure taxpayer compliance, the Tax Commissioner may establish safe harbors which will assist in the development of uniform apportionment calculations for similarly situated taxpayers. Appropriate administrative notice must be filed in the State Register at least thirty (30) days prior to the effective date of the subject matter of the safe harbor being established.

9d.1.1. Persons engaged in multiple business activities will pay tax on their purchases for use in their overall business operation on an apportionment basis.

9d.1.1.1. A person engaged in the business of selling tangible personal property is subject to tax on all purchases except purchases for resale in the form of tangible personal property. A person engaged in the business of manufacturing is subject to tax on all purchases except purchases of tangible personal property and services directly used in the manufacturing activity. Therefore, a person engaged in both business activities who purchases equipment which is used in the sale of such property and directly used in the manufacturing activity may exempt from tax the amount of the purchase price apportioned to manufacturing activity use.

9d.1.1.2. If purchases for use in business can be identified as being used exclusively in one or the other business activities, the purchase price may be totally taxable or totally exempt. Any method of apportionment may be used as long as it is appropriate and reasonable for the situation.

9d.1.2. Persons who must pay tax on their purchases on an apportionment basis must either pay the total tax on the purchase (and claim a refund or credit) or use a direct pay permit under rules set forth in Section 9c of these rules. A direct pay permit may be used to purchase goods for resale without imposition of the tax, at the time of sale. By the fifteenth (15th) of each month, or as otherwise provided in Section 9c.7 of these regulations, a direct pay permit consumers sales and service tax and use tax return must be filed by the direct pay permit user, together with the tax due on taxable purchases made using the direct pay permit during the previous month.

9d.2. Whenever the vendor and purchaser are related persons or the sale is under other circumstances where the relation between the vendor and purchaser is such that the gross proceeds may not be indicative of the true value of the tangible personal property or services purchased, the Tax Commissioner shall revalue the transaction whenever he believes that the gross proceeds thereof are not indicative of the true value of the transaction. Adjusted gross proceeds shall correspond as nearly as possible to the gross proceeds derived in this State from the sale of similar tangible personal property or services of like quality or character where no common interest exists between the vendor and purchaser but the circumstances and conditions are otherwise similar.

W. Va. Code R. § 110-15-9d