ADMINISTRATIVE NOTICE 2006-23

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SUBJECT:  BUSINESS INVESTMENT AND JOBS EXPANSION TAX CREDIT --- Small Business Investment and Jobs Expansion Tax Credit (Small Business Credit) - Notice of Inflation Adjustments for Tax Years Beginning in 2007

A "small business" may claim the small business investment and jobs expansion tax credit allowed under W. Va. Code § 11-13C-7a, when its qualified investment in real or tangible personal property purchased or leased for business expansion in this State, as defined in W. Va. Code § 11-13C-6, results in such small business hiring new employees to fill at least ten (10) "new jobs" it created in this State as a direct result of the purchase or lease of such qualified investment property.

 

The law defined "small business," as of March 10, 1990, to mean a "business which has an annual payroll [as defined in subsection 11-13C-14(e)(6)(A)] of one million seven hundred thousand dollars or less, and annual gross receipts [as defined in subsection 11-13C-14(e)(6)(B)] of not more than five million five hundred thousand dollars[.]" W. Va. Code § 11-13C-14(e)(6) (emphasis added).

 

"New job" was defined by incorporating the definition of "new job" in subsection 11-13C-3(b)(14), with the additional requirement that the median compensation of such new jobs cannot be less than eleven thousand dollars per year. W. Va. Code § 11-13C-7a(c).

 

Dollar amounts stated in these definitions of "small business" and "new job" are subject to annual adjustment for inflation. This adjustment is determined by the Tax Commissioner using the methodology described in subsection 11-13C-7a(1) through (4). The 2007 inflation adjustment factor is based on the percentage by which the Consumer Price Index (CPI) for calendar year 2006 exceeds the CPI for calendar year 1987. For this purpose, the CPI for any calendar year is the average of the Federal Consumer Price Index for the twelve-month period ending on August 31st of such calendar year. W. Va. Code § 11-13C-7a(A)(2). The CPI for 2006 is 200.292 and the CPI for 1987 is 111.9833333333. Based on these figures, the inflation adjustment factor, for purposes of W. Va. Code § 11-13C-7a, for tax years beginning in calendar year 2007, is 1.7885875874.

 

Accordingly, for tax years beginning during calendar year 2007:

 

 

"Small business" means a business which has an annual payroll of two million, six hundred eighty-two thousand, eight hundred fifty dollars ($2,682,850) or less, and annual gross receipts of not more than eight million, nine hundred forty-two thousand, nine hundred dollars ($8,942,900); and

 

"New job" means a "new job" as defined in W. Va. Code § 11‑13C‑3(b)(14): Provided, That the annualized median compensation of such new jobs shall not be less than nineteen thousand, six hundred fifty dollars ($19,650) per year.

 

A summary of the applicable inflation-adjusted Small Business Credit criteria, by calendar year, for tax years beginning in such years, follows:

 

CRITERIA

YEAR

 

       PAYROLL

 

 GROSS SALES

 

        MEDIAN
COMPENSATION

 

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

$1,500,000
$1,500,000
$1,562,050
 $1,700,000*
$1,716,300
$1,806,950
$1,862,200
$1,919,100
$1,969,150
$2,025,150
$2,081,100
$2,137,800
$2,174,050
$2,212.000
$2,280,800
  $2,355,800   $2,393,300 $2,447,900 $2,504,250

$2,582,050

$2,682,850

$5,000,000
$5,000,000
$5,206,850
$5,500,000*
$5,721,050
$6,023,200
$6,207,350
$6,397,150
$6,563,800
$6,750,600
$6,937,000
$7,126,050
$7,246,950
$7,373,450
$7,602,650
$7,852,700
$7,977,750
$8,159,650
$8,347,550
$8,606,950
$8,942,900

$11,000
$11,000
$11,450
$12,000
$12,550
$13,250
$13,650
$14,050
$14,400
$14,850
$15,250
$15,650
$15,900
$16,200
$16,700
$17,250
$17,550
$17,950
$18,350
$18,900
$19,650
 
*Amounts established by 1990 W.Va. Acts 176.

 

Notice of this determination will be filed in the West Virginia Register.

 

 

 

 

Issued: December 19, 2006                                    Christopher G. Morris

Deputy Tax Commissioner

 

 

State Tax Department                                                                             Operator on duty 8:30 am – 5:00 p.m.

Taxpayer Services Division                                                                    Monday through Friday

P.O. Box 3784                                                                                         Phone: (304) 558-3333 or 1-800-982-8297

Charleston, WV 25337-3784                                                                  Fax: (304) 558-3269

TDD Service/Hearing Impaired 1-800-282-9822