Technical Assistance Advisory No. 88-010 Re: A Mathematical Procedure To Be Used In Business Investment And Jobs Expansion Tax Credit Computations For Determining The Section 11-13C-4b(c)(3) And Section 11-13C-5(c)(2), (d)(2),(e)(2), (f)(2), (g)(2), (h)(2) And (i)(3) Payroll Based Tax Liability Apportionment Fraction For Multiple Project Project Participants Or Multiple Business Investment And Jobs Expansion Tax Credit Taxpayers And Entities Participating In Projects Where One Or More Participants Are Multiple Project Project Participants Or Multiple Business Investment And Jobs Expansion Tax Credit Taxpayers._________________________________________________________________ Certain taxpayers have implemented more than one investment program subject to business investment and jobs expansion tax credit or are participants in more than one business investment and jobs expansion tax credit project. This presents a problem in calculating what the tax liability apportionment fraction should be. The business investment and jobs expansion tax credit statute requires that a taxpayer determine what portion of its tax liability is attributable to qualified investment, and therefore subject to the business investment and jobs expansion tax credit, by multiplying the total tax liability for each tax against which the credit can be taken, except for sales tax and the payroll and property taxes, by a fraction consisting of payroll attributable to qualified investment over total West Virginia payroll. For project participants, the statute requires that the fraction be total payroll of all project participants attributable to new investment over total West Virginia payroll of all participants. The statutory formulas are adequate in the situation where taxpayers have only one nonproject business investment and jobs expansion tax credit available to them or where all participants in a project have only that project business investment and jobs expansion tax credit available to them. However, when the taxpayer has more than one nonproject or project business investment and jobs expansion tax credit available, there is no statutory prescription as to how the payroll fraction is to be computed, and the computation and simple addition of two or more statutory fractions may result in a fraction which is more than 100%. It was not the intention of the Legislature to allow taxpayers to take the business investment and jobs expansion tax credit against more than 100% of business taxes in any given year. In the case of a project where one project participant is a participant in other projects, or has a nonproject business investment and jobs expansion tax credit available in addition to the project business investment and jobs expansion tax credit, use of such a computation could result in a decrease of the fraction used by the other project participants and could unfairly deprive them of credit to which they should be entitled. For taxpayers which are multiple project participants, or which have any combination of multiple project and nonproject business investment and jobs expansion tax credits available, the numerator of the payroll fraction should be all payroll attributable to new investment of all participants in all projects in which the taxpayer is a participant, plus any payroll attributable to qualified investment for any nonproject business investment and jobs expansion tax credit available to the taxpayer. It should not include any payroll attributable to nonproject business investment and jobs expansion tax credit qualified investment for other project participants. The denominator should be total payroll of all West Virginia jobs of all participants in all projects in which the taxpayer is a participant. It should not include West Virginia payroll of other participants attributable to nonproject business investment and jobs expansion tax credit qualified investment. For taxpayers who are participants in only one project where one or more of the other participants in that project is also a participant in one or more other projects or has business investment and jobs expansion tax credit available from one or more other project or nonproject business investment and jobs expansion tax credit investments: The numerator should be all payroll attributable to qualified investment of all project participants in the particular project in which the taxpayer is involved plus payroll attributable to any nonproject business investment and jobs expansion tax credit investment available to the taxpayer. It should not include payroll attributable to any nonproject business investment and jobs expansion tax credit investment of any other project participants. The denominator should be all West Virginia payroll of all participants in the particular project in which the taxpayer is a participant less the West Virginia payroll of participants in that project other than the taxpayer attributable to nonproject business investment and jobs expansion tax credit qualified investment. ______________________________ Michael E. Caryl State Tax Commissioner Date: November 9, 1988