Known for its mountainous landscape and rolling hills, this month we travel north to West Virginia. The state has a rich history and is embedded in the Appalachian Mountains.
West Virginia is known for a wide range of outdoor recreational activities, such as skiing, whitewater rafting, fishing, hiking, backpacking, mountain biking and hunting. The state offers many golf courses as well.
It is also one of the most densely Karstic areas in the world, making it a choice area for recreational caving and scientific research. Karstic topography is a landscape formed from the dissolution of soluble rocks such as limestone, dolomite, and gypsum. It is characterized by underground drainage systems with sinkholes and caves. These underground hydrology systems contribute to much of the state’s cool trout waters.
West Virginia also offers a number of historical and cultural attractions. Harpers Ferry National Historical Park is a historic town and was the site of John Brown’s 1859 slave revolt and raid on the US Armory and Arsenal. Harpers Ferry is also the midpoint of the Appalachian Trail, which runs from Maine to Georgia.
Business Climate
West Virginia is known for its mining industries. One of the major resources in West Virginia’s economy is coal. The state is one of the top coal producers in the country, second to Wyoming. West Virginia also produces large amounts of natural gas and oil. The state is located in the heart of the Marcellus Shale Natural Gas Bed, which stretches from Tennessee north to New York. Logging is also popular in the state due to the overpopulation of deciduous forests in the state. Oak, cherry, poplar, maple and pine are just a few of the various trees often harvested.
Farming is also practiced in West Virginia, but on a limited basis due to the mountainous terrain over much of the state.
Tourism contributed 4.27 billion dollars to the state’s economy and employed 44,400 people in 2010, making it one of the state’s largest industries. Seneca Rocks is one of the premier rock climbing destinations in the eastern U.S. Canaan Valley is a popular winter sports destination.
Tax Climate
The top individual income tax rate is 6.5% and the top corporate income tax rate is also 6.5%.
Apportionment: West Virginia taxpayers apportion income using a double weighted sales factor formula.
West Virginia had long used the cost-of-performance rule for sourcing receipts. Under the new law, sales, other than sales of tangible personal property, made on or after Jan. 1, 2022 will be sourced to West Virginia if and to the extent the service is delivered to a location in the state.
Sales Tax Structure
The state sales tax rate is 6%. However, like many states, West Virginia’s counties and cities also add onto the sales tax rate. As such, the rate can be as high as 6.5%.
Sellers who lack physical presence in West Virginia and have sales into the state that exceed $100,000 or who have more than 200 transactions in the previous or current calendar year must register and remit sales tax to the state. Gross sales of tangible personal property of services are included in the threshold. Exempt sales and exempt services are also included in the threshold. This legislation went into effect on January 1, 2019.
A remote marketplace facilitator with more than $100,000 in gross revenue from West Virginia sales or 200 or more transactions in the state in the current or preceding calendar year must collect and remit sales tax on all sales made or facilitated in the state. This legislation went into effect on July 1, 2019.
All digital books, digital audio works and digital audio-visual works are not subject to taxation. Prewritten software which is electronically downloaded is taxable and it is also taxable if sold in a tangible medium. Custom software that is downloaded electronically is also taxable. Software-as-a-Service is taxable. How products are produced, sold and delivered is critical to determining the tax status.
Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. West Virginia, however, does not currently have any scheduled sales tax holidays.
Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in West Virginia or other U.S. States, and help you navigate the complex tax structures arising from multistate operations. Call us to help you achieve the best tax efficiencies.
Random Facts
- West Virginia is the 41st largest state by area and is the 38th most populous state.
- The average elevation of West Virginia is approximately 1,500 feet above sea level, which is the highest of any U.S. state east of the Mississippi River.
- The Greenbrier hotel and resort, originally built in 1778, has long been considered a premier hotel frequented by numerous world leaders and U.S. Presidents over the years.
- The Jones Diamond, at 34.48 carats, discovered in 1928 in the state, is one of the largest diamonds ever discovered in North America.
- The state motto is Montani Semper Liberi, which means “Mountaineers are always free”
