Jurisdiction To Impose A Municipal Business And Occupation Tax

12.1. Authority to impose tax. -- The governing body of a municipality shall have plenary power and authority to enact an ordinance imposing a municipal business and occupation tax upon any business activity or occupation for which the State imposed its business and occupation tax prior to July 1, 1987, which is engaged in or carried on within the corporate limits of the municipality pursuant to the provisions of W. Va. Code §8-13-5.

12.2. Nexus. -- Generally, for a municipality to impose its municipal business and occupation tax upon a particular taxpayer, that taxpayer must have sufficient contacts within the corporate limits of the municipality to sustain the municipality's taxing jurisdiction over the taxpayer.

For example, in instances where services are performed entirely within a municipality or where contracting activities are engaged in within a municipality sufficient nexus exists for a municipality to impose its municipal business and occupation tax.

12.3. Activity must take place inside municipality. -- In addition to the nexus requirement, the taxpayer must engage in the business activity within the municipal limits for the municipality to impose its municipal business and occupation tax.

12.3.1. Production of natural resources is deemed to occur in the municipality if the natural resource is severed within the municipal limits. Severance is deemed to occur as follows:

12.3.1.1. Coal being surface mined is severed at its physical location prior to removal.

12.3.1.2. Coal from an underground mine is severed at the portal where it is reduced to possession at the surface.

12.3.1.3. Limestone or sandstone which is quarried is severed at the physical location prior to removal.

12.3.1.4. Limestone or sandstone which is mined from underground is severed at the portal where it is reduced to possession at the surface.

12.3.1.5. Oil and gas are severed at the wellhead.

12.3.1.6. Timber, sand and gravel, and other natural resource products are severed at their physical location prior to removal, except in the case of underground mining in which circumstance severance occurs at the portal where it is reduced to possession at the surface.

12.3.2. Manufacturing occurs where activities of a commercial or industrial nature are undertaken which involve labor or skill being applied, by hand or machinery, to materials so that as a result thereof, a new, different or useful substance or article of tangible personal property is produced for sale, profit or commercial or industrial use. Where the manufacturing process occurs both within and without a municipality, the municipality may subject that portion of the value derived therefrom as provided in Sections 2.3 and 2b of these regulations.

12.3.3. Sales of tangible personal property are deemed to occur in the municipality where the sale is made. Whenever a customer physically enters a store within a municipality and makes a purchase or signs a contract for the purchase of tangible personal property such sales are subject to that municipality's business and occupation tax regardless of where that tangible personal property is delivered. Additionally, a municipality may impose its municipal business and occupation tax pursuant to W. Va. Code §8-13-5(e), if the sale of tangible personal property was directed from a business location within the municipality or if the business of making the sale of such tangible personal property has its principal office in the municipality and the sale was not directed from another business location. In no case shall the taxing authority extended under W. Va. Code §8-13-5(e) apply to sales of tangible personal property which is subject to municipal business and occupation tax in another municipality.

12.3.3.1. Where orders are placed by mail or by some form of telecommunication without the customer physically coming to a location within the municipality, or where orders are accepted by a representative traveling outside the municipality, the following rules shall apply:

12.3.3.1.a. If the sale is made conditioned upon delivery outside of West Virginia no municipal business and occupation tax may be imposed upon the sale.

12.3.3.1.b. If the order is placed based upon solicitation by a representative (regardless of whether there is an employment or agency relationship or whether acting as an independent contractor) who solicits orders within a municipality imposing a municipal business and occupation tax of its own, and the tangible personal property is to be delivered in that municipality, then that municipality and no other may tax the value of the sale.

12.3.3.1.c. Where the tangible personal property is delivered in West Virginia to a location which is not subject to a municipal business and occupation tax, the municipality may impose its municipal business and occupation tax upon such sale pursuant to W. Va. Code §8-13-5(e).

12.3.3.2. In those instances where orders for tangible personal property are filled from a truck or warehouse located within a municipality and those orders are placed with the truck driver or at the warehouse such sales are taxable entirely by that municipality and no other.

12.3.3.3. Where the tangible personal property is picked up by the customer at a store or warehouse in another municipality, the municipality in which the store or warehouse where the tangible personal property is picked up is entitled to tax the value of such sale.

12.3.4. Municipalities may tax public service or utility businesses upon sales of services to locations within the municipality.

12.3.5. Municipalities may tax contracting activities if the building or structure upon which contracting activities are being performed are located within the municipality. The place of business or office location from which a contractor operates is not entitled to any municipal business and occupation tax upon contracting receipts from projects located outside of that municipality. Where only a portion of the contract is performed within the municipality the taxpayer must apportion the receipts from that contract to reflect that portion of the work performed within the municipality. This may be done upon a reasonable basis such as a proportion based on square footage or actual cost at the option of the taxpayer provided accurate supporting documentation is maintained to demonstrate the reasonableness of the apportionment.

12.3.6. In those instances where a service business or calling is primarily engaged in within a municipality that municipality may impose its municipal business and occupation tax pursuant to W. Va. Code §8-13-5(e), if the provision of the service has its principal office in the municipality and the provision of the service was not directed from another business location. In no instance shall the taxing authority extended under W. Va. Code §8-13-5(e) apply to sales of services performed in another municipality which imposes a municipal business and occupation tax or performed outside of West Virginia unless such services are incidental to the basic provision of a service as indicated under Sections 11.3.3 and 11.3.4 of these regulations.

12.3.7. Amusements are subject to the municipal business and occupation tax in the municipality in which the amusement is located.

12.3.8. Rentals, royalties, fees or other gross receipts shall be subject to municipal business and occupation tax in the municipality in which the real or tangible personal property giving rise to a rental, royalty, fee or other gross receipts is located, or in the municipality in which the production of natural resources occur giving rise to the rental, royalty, fee or other gross receipts.

12.3.9. Banking and other financial business is subject to municipal business and occupation tax in the municipality in which the banking or other financial business has a business location. For purposes of these regulations a business location shall not include an automated teller machine.