Application for rebate required

7.1. Application for rebate required. -- Notwithstanding any provision of W. Va. Code §11-13EE-1, et seq., to the contrary, no rebate shall be paid under W. Va. Code §11-13EE-1, et seq., for any qualified investment property placed in service or use at a mine site until the person asserting a claim for the allowance of rebate under W. Va. Code §11-13EE-1, et seq., makes written application to the Tax Commissioner for allowance of rebate as provided in W. Va. Code §11-13EE-7 and this rule. The application for rebate must be filed using MYTAXES, which is available at the Tax Department’s webpage.

7.2. Due date and contents of application. -- An application for rebate shall be filed, in the form prescribed by the Tax Commissioner, no later than the last day for filing the annual severance tax return under W. Va. Code §11-13A-1, et seq., determined by including any authorized extension of time for filing the return, for the taxable year in which the qualified investment property to which the rebate relates is placed in service or use and all information required by the form is provided.

7.3. Separate application required for each taxable year in which qualified investment property is placed in service or use. -- A separate application for rebate is required for each taxable year during which the taxpayer places a new qualified investment into service or use in this state.

7.4. When amended return filed. -- When the taxpayer files an amended severance tax return for a tax year for which a rebate was allowed, or a rebate carry forward was allowed, the taxpayer must file an amended application for rebate, or an amended application for rebate carried forward, and provide the information required by the Tax Commissioner.

7.5. The Tax Commissioner will issue a form 1099 showing the amount of the Coal Severance Tax Rebate paid to a taxpayer during a taxable year.

7.6. Rebate carry forward. -- When the amount of rebate claimed exceeds 80 percent of the additional state severance tax payable, the unused portion of the rebate amount may be carried forward and rebated by the Tax Commissioner after severance taxes due in subsequent years are paid and the taxpayer files a claim for the rebate carry forward amount, or a portion thereof, and provides the information required by the Tax Commissioner.

7.6.1. In order for a rebate carry forward to be allowed, the qualified investment property that is the basis of the rebate must result in an increase in the number of tons of coal produced in the rebate carry forward year from the base year as well as an increase in the taxpayer’s workforce.

7.6.2. There must also 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 state portion of severance taxes payable, before credit for payment of the minimum severance tax, that is attributable to the increase in coal production. This provision also applies in cases where the taxpayer is claiming rebate as well as rebate carry forward. When there are two or more base period amounts at issue, the highest will be used to determine the increase in severance tax paid.

7.6.3. 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 from the base year. 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 from the base period determination.

7.6.4. The number of full-time equivalent employees must also increase in order to claim carry forward rebate in accordance with section heading 3.

7.6.5. However, the rebate amount cannot be carried forward for a period that exceeds 10 years from the date the qualified investment property is first placed in service or use in this state by the taxpayer applying for the rebate.

7.7. Application for rebate carried forward. -- When an eligible taxpayer carries forward unused rebate, and then seeks to claim the rebate carried forward, an application for rebate carried forward shall be filed, in the form prescribed by the Tax Commissioner, no later than the last day for filing the severance tax return under W. Va. Code §11-13A-1, et seq., determined by including any authorized extension of time for filing the return for that taxable year. Rebate carried forward may not be claimed as a credit against severance taxes on any periodic estimate of severance tax liability or on the annual severance tax return.

7.8. Failure to make timely application. -- The failure to timely apply for the rebate results in the forfeiture of 25 percent of the rebate amount otherwise allowable under W. Va. Code §11-13EE-1, et seq., for the taxable year. This 25 percent penalty applies each year until the application is filed.

7.8.1. The late filing of the required application does not cure the failure to timely file the application and the 25 percent penalty still applies.

7.8.2. Due to the retroactive application of these rules due to changes made by the Legislature during the 2021 regular session, the failure to make timely application will not apply to rebate applications due on January 31, 2021. Instead, those applications are due 60 days after the effective date of this rule.

§ 110-21F- 8. Records Required for capital investment property.

8.1. Records required. -- Every taxpayer who claims a rebate pursuant to W. Va. Code §11-13EE-1, et seq., and this rule shall maintain adequate records establishing the following facts for each item of qualified investment property:

8.1.1. The property’s identity;

8.1.2. The property’s actual cost, or reasonably determined cost in the absence of actual cost;

8.1.3. Whether the machinery or equipment are new or refurbished property as defined in subsection 2.2.23 of this rule;

8.1.4. The property’s useful life for federal income tax purposes;

8.1.5. The month and taxable year in which the property was placed in service or use;

8.1.6. The amount of rebate claimed; and

8.1.7. The date the property was disposed of, or otherwise ceased to be used at the mine or coal preparation and processing plant at which it was first placed in service or use.

8.2. Burden of proof. -- The burden of proof is on the taxpayer to establish by clear and convincing evidence that the taxpayer is entitled to the benefits allowed by W. Va. Code §11-13EE-1, et seq.

8.3. A taxpayer who does not keep the records required by this rule for identification of the qualified investment property is subject to the following rules:

8.3.1. A taxpayer is treated as having disposed of, during the taxable year, any qualified investment property that the taxpayer cannot establish was still in use at the mine or coal preparation and processing plant at which it was first placed in use in this state, at the end of that taxable year.

8.3.2. If a taxpayer cannot establish when qualified investment property was placed in service or use for purposes of claiming this rebate, the taxpayer is treated as having placed the property in service or use in the most recent taxable year in which similar property was placed in service or use at the mine or coal preparation and processing plant.

8.4. A taxpayer placing qualified investment property in service or use at a coal mining operation in this state is required to keep the property in service or use for five years after the property is placed in service or use at that coal mining operation. If in any year the taxpayer cannot establish that qualified investment property is still in service or use at the coal mining operation at which it was first placed in service or use and used to qualify for the rebate under W. Va. Code §11-13EE-1, et seq., and this rule, the property will be treated as having been taken out of service during that taxable year and the recapture tax may apply.

8.5. Recapture tax. -- Failure to maintain adequate records may result in imposition of the recapture tax imposed in W. Va. Code §11-13EE-11.