TECHNICAL ASSISTANCE ADVISORY
No. 86-002
This technical assistance advisory, issued pursuant to W. Va.Code § 11-10-5r, is in response to a written requests forrulings which state that bonds issued pursuant to W. Va. Code§§ 8-19-4, 8&endash;20-5, 16&endash;13&endash;10 and16-13A-21 are exempt from state income taxation.
The West Virginia personal income tax is based upon federaladjusted gross income. W. Va. Code § 11-21-12. There arecertain modifications increasing federal adjusted gross income andmodifications reducing federal adjusted gross income. See W.Va. Code § 11-21-12.
The West Virginia corporation net income tax is based uponfederal taxable income. W. Va. Code § 11-24-6. There arecertain modifications increasing federal taxable income andmodifications reducing federal taxable income. See W. Va. Code§ 11-24-6.
Appended to this Advisory and incorporated herein is a list ofthirty-nine sections of the West Virginia Code which authorize theissuance of bonds. Although the language used varies, most of thesesections provide that the bonds or the bonds and interest thereon areexempt from taxation. Some of the sections merely provide the bondsare exempt from taxation, some of the sections provide the bonds andinterest thereon are exempt from taxation, some provide that thebonds and notes and all interest and income thereon are exempt fromall taxation, and some provide an exemption from all taxation exceptinheritance taxes or inheritance, estate and transfer taxes. A briefsummary of the language used is also found in the list of codesections defining tax exempt bonds.
While the language used in the statutes authorizing variousbond issues differs, the legislative intent is clear: the bonds andthe interest thereon are exempt from taxation in West Virginia. Forinstance, W. Va. Code § 8-19-4 provides for revenue bondfinancing for municipal waterworks and electric power systems. Thatsection provides in part:
All such bonds and the interest thereon, and properties andrevenues and income derived from such waterworks or electric powersystem, shall be exempt from all taxation by this state, or anycounty, municipality, political subdivision or agency thereof.
The interest on the bonds in question, in certaincircumstances, may not be exempt from federal income taxation. Ifthat is the case, interest from these bonds will be included infederal adjusted gross income and in federal taxable income. Forpersonal income tax, W. Va. Code § 11-21-12 does not provide anymodification decreasing federal adjusted gross income by the amountof such interest. Likewise, W. Va. Code § 11-24-6 does notprovide any modification decreasing federal taxable income by theamount of such interest. However, the interest on such bonds isstatutorily exempt from state income taxes.
The purpose of this taxpayer assistance advisory is to informtaxpayers that the interest income from all bonds authorized andissued pursuant to the code sections appended hereto, and any otherbonds which are similarly issued under authority provided by the WestVirginia Legislature, unless otherwise provided in the specific codesection authorizing the bonds, is exempt from the state personalincome tax, the state corporate net income tax, and where providedthe municipal and state business and occupation taxes. Taxpayersreceiving interest income from such bonds may make the appropriatemodification reducing federal adjusted gross income on Schedule M ofthe personal income tax on the line marked "other", listing theamount of the adjustment, the code section(s) relied upon, and thetype of bonds. Corporate taxpayers would make this modification onSchedule A and likewise describe the applicable code section(s)relied upon, the type of bonds, and the amount of the adjustment.
This Technical Assistance Advisory may be relied upon by alltaxpayers holding such bonds and receiving interest income thereon.
The conclusions reached herein are based upon current statutorylaw. Any change in the law may cause this Technical AssistanceAdvisory to no longer be applicable.
Michael E. Caryl
State Tax Commissioner
Date: February 5, 1987
MEC:dss
APPENDIX TAA 86-002R
| | | | |
| 5-6-8 | State Building Revenue Bonds | State Building Commission | Bonds and interest thereon exempt from taxation |
| 5B-1-13c | Park Development Revenue Bonds | State Department of Commerce | Bonds and notes and all interest and income thereon exempt from all taxation by state, county, municipalities, political subdivisions or agency thereof except inheritance taxes |
| 5B-3-13 | Revenue Bonds | State Export Development Authority | Bonds and income exempt except inheritance, estate, transfer taxes |
| 5D-1-14 | Revenue Bonds | Public Energy Authority | Bonds and notes and all interest and income thereon exempt except for inheritance taxes |
| 7-3-7 | To Purchase Real Estate and Public Buildings | County Commissions | Bonds exempt from taxation |
| 7-3-14 | County Revenue Bonds to acquire and operate hospitals | County Commissions | Bonds exempt from taxation |
| 7-11-2 | Revenue Bonds | County Parks and Recreation Commissions | Bonds and interest exempt from taxation |
| 7-12-10 | County Development Bonds | County Development Authorities | Bond exempt from taxes |
| 7-15-13 | Revenue Bonds | County Ambulance Authorities | Interest and evidences of obligation exempt from taxation, except inheritance and transfer taxes |
| 8-16-11 | Revenue Bonds - Municipal Public Works | Municipalities | Bonds and interest exempt from all taxation |
APPENDIX TAA 86-002R
| | | | |
| 8-19-4 | Revenue Bonds - Municipal Waterworks and Electric Power Systems | Municipalities | Bonds and interest thereon exempt from taxation |
| 8-20-5 | Combined Waterworks and Sewerage System | Municipalities | Bonds and interest thereon exempt from taxation |
| 8-29-13 | Bonds for Regional Public Airports | Regional Airport Authorities | Bonds and interest thereon exempt from taxation |
| 8-29A-13 | Bonds for County Airport | County Airport Authorities | Bonds and interest thereon exempt from taxation |
| 8-27-20 | Revenue Bonds for Urban Mass Trans System | Urban Mass Transportation Authority | Bonds and interest exempt from taxation except inheritance and transfer taxes |
| 8-33-7 | Revenue Bonds for Buildings | Municipal Building Commissions | Bonds and interest thereon exempt from taxation |
| 10-2A-10 | Revenue Bonds for Athletic Facilities | County Commission; Municipal Corp.; or County Board of Education | Bonds exempt |
| 13-1-33 | Public Purposes Generally | Bonds of Political Divisions and State Public Bonded Indebtedness | Bonds exempt |
| 13-2-8 | Refunding Bonds Generally | Bonds of Political Divisions and State Public Bonded Indebtedness | Bonds exempt |
APPENDIX TAA 86-002R
| | | | |
| 13-2A-10 | Revenue Bonds Refinancing | Bonds of Political Divisions and State Public Bonded Indebtedness | Bonds exempt |
| 13-2C-15 | Industrial/Comm./Develop-ment Bonds | Counties and Municipalities | Bonds and income exempt except inheritance, estate and transfer |
| 13-2D-12 | Airport Development | County Commissions | Bonds and income exempt except inheritance, estate and transfer |
| 13-2E-12 | Revenue Bonds Refunding Bonds | Any Public Body That Issued Revenue Bonds | Bonds and income exempt except inheritance, estate and transfer |
| 15-6-18 | Revenue Bonds for Armory Projects | State Armory Board | Bonds, income and gain on sale exempt |
| 16-13-10,22f | Sewage Works | Municipal corporation or Sanitary District | Bonds and interest exempt |
| 16-13A-21 | Revenue Bonds - Public Service Properties | Public Service Districts | Bonds exempt |
| 16-15-14 | Housing Projects | City and County Housing Authority | Bonds and interest exempt |
| 16-18-10 | Income Bonds | Slum Clearance and Redevelopment Authorities | Bonds and interest exempt from all taxes |
| 16-26-19 | Waste and Waste Recovery Systems | WV Resource Recovery - Solid Waste Recovery Authority | Bonds, interest and income thereon exempt except inheritance |
APPENDIX TAA 86-002R
| | | | |
| 16-29A-19 | Hospitals | WV Hospital Finance Authority | Bonds, interest and income thereon exempt except inheritance |
| 17-16A-14 | Turnpike Revenue Bonds | Turnpike Commission | Bonds and income therefrom exempt |
| 17-17-19 | Bridge Revenue Bonds | West Virginia Department of Highways | Bonds exempt |
| 17-17A-7 | Surface Transportation Improvements | West Virginia Department of Highways | Notes and income exempt except death and gift; transfer |
| 18-11-25 | Bonds for Parking Facilities | Board of Regents | Bonds and interest thereon exempt |
| 18-11-39 | West Virginia University | West Virginia University | Sales; real property; business and occupation taxes |
| 18-11A-7 | Revenue Bonds for University Capital Improvements | Board of Regents | Bonds exempt |
| 18-11B-11 | Revenue Bonds for University Facilities, Buildings and Structure | Board of Regents | Bonds and interest thereon exempt |
| 18-11D-13 | Revenue Bonds for Athletic Facilities | Board of Regents | Bonds, interest and income thereon exempt inheritance taxes |
| 18-11E-13 | Revenue Bonds for Marshall University Athletic Facilities | Board of Regents | Bonds, interest and income thereon exempt except inheritance |
APPENDIX TAA 86-002R
| | | | |
| 18-12A-7 | Revenue Bonds for Marshall University Capital Improvements | Board of Regents | Bonds exempt from taxation |
| 18-12B-4 | Capital Improvements State Institutions of Higher Education | Board of Regents | Bonds and interest exempt |
| 18-23-16 | Revenue Bonds for Dormitories, etc. | Governing Boards of State Institutions of Higher Education | Bonds exempt from taxation |
| 18-24-4 | Higher Education Bonds | Board of Regents | Bonds and interest thereon exempt |
| 18-27-22 | Revenue Bonds for Student Loans | Board of Regents | Bond income exempt from taxation |
| 20-5C-17 | Revenue Bonds | Water Development Authority | Bonds, notes and all interest and income thereon exempt |
| 21-8A-3 | Revenue Bonds | Employment Security | To fund unemployment debt to federal government |
| 29-8-10 | Revenue Bonds | Blennerhassett Historical Park Commission | Bonds exempt from taxation |
| 29-18-19 | Revenue Bonds | Railroad Maintenance Authority | Bonds, notes, interest and income thereon exempt from taxation except inheritance taxes |
APPENDIX TAA 86-002R
| | | | |
| 31-19-17 | Community Infrastructure Projects | West Virginia Community Infrastructure | Bonds interest and income exempt except from inheritance |
| 31-18-18 | Housing Money | West Virginia Housing Development Fund | Bonds and interest therefrom exempt except for death and gift taxes, transfer taxes, sales taxes, real property taxes and business and occupation taxes |
| 31-20-19 | Jails | Regional Jail and Prison Authority | Bonds, notes, interest and income exempt except inheritance |