W. Va. Code R. § 110-21F-13

Current through Register Vol. XLI, No. 48, November 27, 2024

Section 110-21F-13 - Recapture of rebate; recapture tax imposed

13.1.When recapture tax applies. --

13.1.1. Any person who places qualified investment property in service or use for purposes of this rebate and who fails to use the qualified investment property or any portion thereof for at least five years in the production of coal in this state at the coal mining operation where it was placed in service or use shall pay the recapture tax imposed by W. Va. Code § 11-13EE-11(b). No temporary downtime can exceed 30 consecutive days.

13.1.2. This section does not apply when section heading 9 of this rule, relating to transfer of qualified investment property, applies. However, the successor(s) may be subject to a recapture tax in the event they prematurely dispose of the qualified investment property or any portion thereof.

13.1.3. When the severance tax return filed by the taxpayer, or taxpayer's controlled or affiliated group, as applicable, is audited and the amount of severance tax rebate allowable is redetermined, resulting in less rebate being allowable, then if the rebate amount has already been paid by the Tax Commissioner, the recapture tax will be assessed to recover the amount of rebate that was erroneously paid.

13.1.4. When the taxpayer's books and records, or the books and records of taxpayer's controlled or affiliated group, as applicable, are audited and the amount of severance tax rebate allowable is redetermined, resulting in less rebate being allowable, then if the rebate amount has already been paid by the Tax Commissioner, the recapture tax will be assessed to recover the amount of rebate that was erroneously paid.

13.2.Recapture tax imposed. --

If the taxpayer prematurely removes from service qualified investment property at the coal mining operation in this state where it was first placed in service or use prior to its fifth anniversary after being placed in service or use, the Tax Commissioner shall recapture the amount of rebate claimed under W. Va. Code § 11-13EE-1, et seq., for the current taxable year, and all preceding taxable years, attributable to qualified investment property that was prematurely removed from service at the coal mining operation in this state at which the qualified investment property was first placed in service or use.

13.3.Payment of recapture tax.

13.3.1. The recapture tax is due and payable on the day the taxpayer's annual severance tax return is due under W. Va. Code § 11-13A-1, et seq., including any authorized extension of time for filing the return, for the taxable year in which there was a premature removal of qualified investment property from service or use at the coal mining operation at which it was first placed in service or use and qualified for the rebate allowed by W. Va. Code § 11-13EE-1, et seq.

13.3.2. The recapture tax shall be paid by the taxpayer subject to the recapture tax. However, if the taxpayer does not pay the recapture tax and the taxpayer is a partnership, limited liability company, an S corporation, or other flow-through entity, for federal income tax purposes, then the recapture tax shall be paid by those persons who are equity owners of the partnership, limited liability company, S corporation, or other flow-through entity, in the taxable year in which recapture tax is imposed under W. Va. Code § 11-13EE-11. The equity owners are liable for their respective proportionate shares of the recapture tax, determined in accordance with how income, gain, loss, deductions and other items are distributable for the taxable year among the equity owners.

W. Va. Code R. § 110-21F-13