(a) Purpose: In order to encourage the location of new industry and business within this City and the expansion of existing industry and business within this City and thereby increase employment and create jobs, there is hereby provided a new business, business expansion and job creation related tax credit for business expansion resulting in new jobs within the City limits.
(b) Definitions: When used in this section:
(1) "Employees" means any person or persons other than the principle(s), managing member(s), owner(s), or officer(s), constructively working for wage, salary or commission at or based out of the Fairmont business site.
(2) "Full-time" means one person employed at least forty hours per week; provided however, full time equivalent shall be three persons each working at least twenty hours per week shall constitute one person working full time.
(3) "New Business" means a commercial entity which has not previously conducted business within the corporate limits of the City. No commercial entity which changes its name and/or changes its business structure shall be considered a new business under this section. Additionally, the acquisition and continued operation of an existing commercial entity by another entity subject to the business and occupation tax of the City, whether such acquisition is by purchase or lease, shall not be considered a new business.
(4) "Payroll Costs" means wages, tips and other compensation reported for a 12 month period to the United States Internal Revenue Service on line two of Form 941 or similar form used to report wages and approved by the Collector. Payroll costs as used in this subsection do not include benefits paid to or on behalf of employees.
(5) Any other term used in this sub-section shall have the same meaning as when used in comparable context in this article, unless a different meaning is clearly required by the context or by definition in this section.
(c) Amount of Credit Allowed: There shall be allowed to taxpayers a credit against the business and occupation tax imposed by this Article for business expansion and job creation. The allowable credit will be measured by the number of new and additional full time jobs provided in the City.
(1) Prerequisite. The following prerequisites must be met before a credit will be allowed: The taxpayer must apply for the credit on forms provided by the Collector together with all necessary documentation to support the credit and to permit the Collector to make a determination that all prerequisites have been satisfied; The taxpayer must be current in the payment of all municipal fees, charges, and taxes; The taxpayer must demonstrate that all necessary permits and licenses have been issued and are current.
(2) Amount of the Credit. The amount of the credit will be a set percentage of the taxpayer's total City tax obligation under this article provided as follows:
A. That for new businesses the total credits allowed, however, for a single year or cumulatively, shall not exceed the total cost of the taxpayer's qualified investment or the tax obligation for that year.
B. That for existing businesses the total credits allowed, however, for a single year or cumulatively, shall not exceed the total cost of the taxpayer's qualified investment or the tax obligation due on the revenues deemed generated by the qualified investment for that year, whichever is less. The revenues deemed generated by the qualified investment will be the increase in revenues above the average of the taxable revenues for the three years immediately preceding the year of the qualified investment or for all years the business has been located within the City, if less than three years.
Credit excess of tax liability in one estimate period may be applied to the tax liabilities in other estimate periods in the same taxable year. The life or length of the credit and the percentage of credit received by the taxpayer or allowable is based upon the number of jobs created or provided as defined by Section (c)(3) hereof.
(3) Measuring the Credit. The length of time that the credit is to be allowed and the percentages of the credit and therefore the total credit allowable is to be measured by the minimum number of new and additional full time jobs provided in the corporate city limits. As set forth below, the period of years and percentages for which a credit will be allowed is directly related to the minimum number of said jobs guaranteed by the taxpayer. The period of the credit will not be extended if the taxpayer hires more employees than he has guaranteed the City unless there is an additional qualified investment to expand the business. The extension of time granted for such an expansion will be based only on the number of new and additional full-time jobs created by the expansion, not by the total number of employees.
NEW JOBS CREATED | PERIOD OF B&O TAX CREDIT | PERCENTAGE OF CREDIT |
2-10 | 1 year | 100% |
11-20 | 2 years | Year 1 100% Year 2 50% |
21-50 | 4 years | Year 1 100% Year 2-4 50% |
51-99 | 5 years | Year 1 100% Year 2-5 50% |
100 and over | 10 years | Year 1 100% Year 2 100% Year 3 75% Year 4 50% Year 5 50% Year 6 40% Year 7 30% Year 8 20% Year 9 10% Year 10 10% |
The allowable tax credit year(s) are calculated upon the business's operational year(s), beginning with the first taxable period after the commencement or expansion of business operations.
If a taxpayer should expand operations and provide at least two new jobs while operating under a pre-existing credit period there is no carryover of the new credit allowance to the expiration date of the existing credit. It is possible for two or more credits to operate concurrently; however, any credit in excess of the tax liability is not refundable and cannot be carried over into the next tax year.
(d) Qualified Investments:
(1) "Qualified Investments" with respect to any taxable year means the greater of either: (1) The aggregate of the applicable percentage of the cost of each property purchased for the purpose of a new business or business expansion, as defined in subsection (d)(2) hereof in the City, which is placed in service or use in this City by a taxpayer during such taxable year; or (2) Payroll costs related to each new job created and payable in the first twelve month period from the date the new jobs were created.
(2) "Property purchased for the purpose of a new business or business expansion" means real property and improvements thereto and tangible personal property but only if such property is constructed or purchased for use as a component part of a new or expanded business of a taxpayer and such property is located within the City. The term does not include replacement property, motor vehicles licensed by the West Virginia Department of Motor Vehicles, airplanes, off-premises transportation
equipment or property that is used primarily for business outside this City, property purchased or contracted for prior to the operative date of this section as defined in subsection 761.12.5(a) hereof, property acquired or purchased incident to the purchase of the stock or assets of a taxpayer which had been used by the transferor or seller in such business in this City, nor such property which had previously designated property purchased for expansion and so used to qualify for the tax credit provided by this section.
(3) "Cost" when used in relationship to property shall not include the value of any property given in trade or exchange for such new property purchased for expansion.
(4) Property acquired by capital lease, as that term is defined by the Internal Revenue Code, if used as a component part of a new or expanded business of a taxpayer shall be considered property purchased for expansion and the cost of such property shall be one hundred percent (100%) of the rent reserved for the primary term of the lease not to exceed seven years. Lease renewals subleases, or assignments shall not be considered property purchased for expansion.
(5) The cost of property purchased for multiple business use including use as a component part of a new or expanded business of a taxpayer together with some other business or occupation not qualifying under this section shall be apportioned between such business and occupations and the proportion shall be allocated to qualifying businesses shall be considered a qualified investment subject to the conditions and limitations of subsection (d)(1) and (2) hereof. The allocations shall be based on the percentage of square feet of the total available space allocated to each business in the case of real property and buildings. In the case of tangible personal property, the allocation should be based on the amount of time of actual use devoted to each business.
(e) Forfeiture of Credit: If during any taxable year, property with respect to which a tax credit has been allowed is disposed of or ceases to be used in a business of a taxpayer in this City, or if the taxpayer ceases operation of such business before expiration of the period of the credit, then the unused portion of such credit shall be forfeited for the taxable year in which such event occurs and all ensuing taxable years. The employment of fewer workers than guaranteed to the City will cause the credit period, dating from the first day property was placed in service, to be shortened in relation to the lowest level of employment maintained, or terminated if the applicable credit period for the decreased employment level has run out . Work stoppage and lay-offs approved by the Collector and caused by forces majeure or severe economic depressions which last less that three months will not affect the taxpayer's credit periods. However, systematic lay-offs by any taxpayer that for all essential purposes result in employment below the guaranteed level, as determined by the City Collector, will result in termination of all credit periods for that taxpayer.
(Ord. 1654. Passed 9-8-15.)