W. Va. Code R. § 110-15-3

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

Section 110-15-3 - Imposition of Tax; Rates; Tax Base

3.1. Consumers Sales and Service Tax. - The consumers sales and service tax is levied and imposed upon sales of tangible personal property and upon the dispensing of certain selected services. The amount of consumers sales and service tax shall be computed as follows:

3.1.1. On each sale where the monetary consideration is five cents or less, no tax.

3.1.2. On each sale where the monetary consideration is from six cents to sixteen cents, both inclusive, one cent.

3.1.3. On each sale where the monetary consideration is from seventeen cents to thirty-three cents, both inclusive, two cents.

3.1.4. On each sale where the monetary consideration is from thirty-four cents to fifty cents, both inclusive, three cents.

3.1.5. On each sale where the monetary consideration is from fifty-one cents to sixty-seven cents, both inclusive, four cents.

3.1.6. On each sale where the monetary consideration is from sixty-eight cents to eighty-four cents both inclusive, five cents.

3.1.7. On each sale where the monetary consideration is from eighty-five cents to one dollar, both inclusive, six cents.

3.1.8. If the monetary consideration on a sale is in excess of one dollar, six cents on each whole dollar of sale price, and upon any fractional part of a dollar in excess of whole dollars, as follows: one cent on the fractional part of the dollar if less than seventeen cents; two cents on the fractional part of the dollar if in excess of sixteen cents but less than thirty-four cents; three cents on the fractional part of the dollar if in excess of thirty-three cents but less than fifty-one cents; four cents on the fractional part of the dollar if in excess of fifty cents but less than sixty-eight cents; and five cents on the fractional part of the dollar if in excess of sixty-seven cents but less than eighty-five cents; and six cents on the fractional part of the dollar if in excess of eighty-four cents. For example, the tax on sales from one dollar and one cent to one dollar and sixteen cents, both inclusive, seven cents; on sales from one dollar and seventeen cents to one dollar and thirty-four cents, both inclusive, eight cents; on sales from one dollar and thirty-four cents to one dollar and fifty cents, both inclusive, nine cents; on sales from one dollar and fifty-one cents to one dollar and sixty-seven cents, both inclusive, ten cents; on sales from one dollar and sixty-eight cents to one dollar and eighty-four cents, both inclusive, eleven cents; and on sales from one dollar and eighty-five cents to two dollars, both inclusive, twelve cents.

3.2. Separate Sales. - Separate sales, such as daily or weekly deliveries, shall not be aggregated for the purpose of computation of the consumers sales and service tax even though such sales are aggregated in the billing or payment therefor. However, when several items are purchased by the same vendee simultaneously, the consumers sales and service tax may be computed upon the total monetary consideration of the items so purchased. Notwithstanding any other provision of these regulations, coin-operated amusement and vending machine sales shall be aggregated for the purpose of computation of the consumers sales and service tax.

3.2.1. Example: If merchandise is purchased at a West Virginia department store's cosmetic counter, delivered to the purchaser and monetary consideration of sixty cents is paid, this is a complete sale and four cents tax must be collected. If the same purchaser goes to the candy counter and makes a ten-cent purchase, there is a new sale and one cent tax must be collected thereon. The cosmetic sale and the candy sale may not be aggregated so as to decrease the amount of tax otherwise due. However, if the cosmetic item and candy were purchased simultaneously by the same purchaser at the same counter, the consumers sales and service tax may be computed upon the aggregate monetary consideration of both items.

3.3. Use Tax. - The use tax is levied and imposed upon the use in this State of tangible personal property or taxable services at a rate of six percent (6%) of the purchase price of such tangible personal property and taxable services. The amount of use tax imposed is reduced, but not below zero with respect to a particular item, by the amount (if any) of sales tax lawfully paid to another state for the acquisition of that particular item of property or service.

3.4. Tax Base.

3.4.1. In General. - The consumers sales and service tax is based upon "monetary consideration" and the use tax is based upon "purchase price." See Section 2 of these regulations for definitions. In certain circumstances where a natural resource producer or manufacturer uses or consumes natural resources produced or items manufactured, the tax is based upon the gross value of the product used or consumed. The following provisions in this Section 3.4 illustrate the application of these terms.

3.4.1.1. Apportionment of sales price. - In instances where a transaction involves the sale of taxable personal property or taxable services, and the sale of nontaxable property or services, and the method of billing does not delineate what portion of the sales price is taxable, the Tax Commissioner may establish safe harbors which will assist in the development of uniform apportionment calculations for similarly situated taxpayers. The Tax Commissioner must file appropriate administrative 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.

3.4.2. Finance and Carrying Charges. - Monetary consideration or purchase price upon which the consumers sales and service tax or use tax is imposed shall not include carrying charges, late payment charges, finance charges or similar items. Example: a sewing machine priced at $80.00 is sold under a conditional sales contract which provides for deferred monthly payments. A separate charge of $5.00 is added to the sale price to cover finance charges, thus making the total cost to the purchaser $85.00. The tax is to be computed upon $80.00.

3.4.3. Discounts. - Any cash discount allowed at the time of delivery which establishes the final selling price for the article at that time shall not be included in arriving at the monetary consideration or purchase price subject to the tax. Discounts which are allowed after delivery or upon conditions or events happening at some future time, such as a certain percentage discount being allowed if paid within a specified period, are not deductible in determining the tax base for the consumers sales and service tax or use tax liability.

3.4.4. Exchanged Merchandise. - When merchandise, the sale of which has been taxed under the consumers sales and service tax or use tax, is exchanged, the purchase price plus applicable tax paid for the merchandise exchanged shall not be included in determining monetary consideration or purchase price of the article purchased in exchange.

3.4.5. Rebates and Trade-ins. - When merchandise is taken as a trade-in for the purpose of reducing the price the purchaser must pay, the value of the trade-in shall not be included in the monetary consideration or purchase price. However, the amount of any manufacturer's rebate available to entice the purchase of the item shall not decrease or otherwise affect monetary consideration or purchase price. In other words, the monetary consideration or purchase price shall not include the value of any item traded-in but monetary consideration or purchase price shall not be reduced by the amount of any manufacturer's rebate.

3.4.5.1. Example 1: A person owns a diamond ring with a value of $2,500.00, and seeks to purchase a second diamond ring which will sell for $10,000.00. The $2,500.00 value of the trade-in may be applied to reduce the amount of the monetary consideration upon which consumers sales and service tax is based. Therefore, $7,500.00 will be subject to tax.

3.4.5.2. Example 2. - In order to increase sales, a manufacturer offers a $10.00 rebate on the purchase of a $50.00 power saw. Customer purchases a saw and applies for the rebate. The entire $50.00 will be subject to tax. However, a rebate offered by a retailer to his customer is treated as a cash discount under Section 3.4.3 of these regulations.

3.4.6. Sales of Products Produced by Persons Producing Natural Resources, Products or Manufactured Products. - Commercial producers of natural resources, products or manufactured products who sell such resources or products in circumstances where no exception or exemption from the consumers sales and service tax or use tax applies, shall constitute sellers or vendors of such products, and shall collect the tax and make returns of such tax on the basis of the gross proceeds of such sales. Upon failure of the seller to collect or remit such tax, the seller shall be liable, in accordance with W. Va. Code '11-15-7 and '11-15A-2a, for payment of such tax and any applicable interest, additions to tax and penalties and shall be subject to applicable criminal sanctions for such failure to collect or remit such tax in accordance with the provisions of W. Va. Code ''11-9-1 et seq., 11-10-1 et seq., 11-15-1 et seq. and 11-15A-1 et seq. and these regulations, and as otherwise provided by law.

3.4.7. Use of Products Produced by Persons Producing Natural Resources, Products or Manufactured Products. - Effective May 1, 1989, commercial producers of natural resources, products or manufactured products who use or consume such natural resources, products or manufactured products, in circumstances where no exception or exemption from the consumers sales and service tax or use tax applies, shall pay and make returns of such tax as applicable based upon the gross value of the natural resource product or manufactured product so used or consumed in accordance with W. Va. Code '11-15-7 or 11-15A-2a. Upon failure of the natural resource producer or manufacturer to pay or remit such tax, the natural resource producer or manufacturer shall be liable for payment of such tax and any applicable interest, additions to tax and penalties and shall be subject to applicable criminal sanctions for such failure to pay or remit tax, interest, additions or penalties in accordance with the provisions of W. Va. Code ''11-9-1 et seq., 11-10-1 et seq., 11-15-1 et seq. and 11-15A-1 et seq. and these regulations, and as otherwise provided by law.

3.4.7.1. Gross Value of Natural Resources, Products or Manufactured Products Used or Consumed by the Producer Thereof.

3.4.7.1.a. General Rule. - Gross value shall correspond as nearly as possible to the gross proceeds which would have been received from the sale of such natural resources, products or manufactured products to another person in an arms-length transaction, as that term is generally defined. There shall not be allowed a deduction or credit for production expenses when determining such gross proceeds.

3.4.7.1.b. Natural Resource Products. - Whenever natural resource products produced within or without this State are used or consumed by the producer in his business, within this State, the value of such products shall be determined by the following rules in the order stated. In all instances where natural resources are consumed by the producer at a point distant from the place of production, no freight charges paid by the producer will be allowed as a deduction in determining value under these rules, unless due consideration has been given such charges in the method by which the values were determined.

3.4.7.1.b.1. The value of the natural resource product consumed or used shall be equal to the selling price at the place of use or consumption of similar products of like quality and character offered for sale in similar quantities by persons unrelated to the taxpayer.

3.4.7.1.b.2. In the absence of sales of similar natural resource products by other persons as a guide to value, value shall be equal to the average price at which sales of the same or a similar product are made during the taxable year to customers of the producer.

3.4.7.1.b.3. In the absence of sales to customers of the taxpayer as a guide to value, such value may be determined upon cost basis, in which case there shall be included every item of cost attributable to that particular natural resource product, including all direct or indirect overhead costs and by adding thereto the average markup realized by the producer on his natural resource products.

3.4.7.1.c. Manufactured Products. - In those cases where a person partially or wholly consumes or makes use of his final completed manufactured, compounded or prepared products, a value must be placed on such products, in accordance with the following rules in the order stated. In all instances where products or articles are consumed by the manufacturer and are consumed at a point distant from the place of manufacturing, no freight charges paid by the manufacturer will be allowed as a deduction in determining value under these rules, unless consideration has been given such charges in the method by which the values were determined.

3.4.7.1.c.1. The value of the article consumed or used shall be equal to the selling price at the place of use or consumption of similar products of like quality or character offered for sale in similar quantities by persons unrelated to the taxpayer.

3.4.7.1.c.2. In absence of sales of similar products by other persons as a guide to value, value shall be equal to the average price at which sales of the same or a similar product are made during the taxable year to customers of the manufacturer.

3.4.7.1.c.3. In the absence of sales to customers of the taxpayer as a guide to value, such value may be determined upon a cost basis, in which case there shall be included every item of cost attributable to that particular article, including all direct and indirect overhead costs and by adding thereto the average markup realized by the manufacturer on his products.

W. Va. Code R. § 110-15-3