Doing Business in West Virginia

All construction contractors doing business in West Virginia must obtain a license from the West Virginia Contractors Licensing Board. Application for a license must be filed and a license issued prior to bidding work.

 

 

To obtain a license, a contractor must receive a passing score of 70% or more on the examination and have filed with the West Virginia Department of Tax and Revenue for a tax identification number.

 

The West Virginia Contractor Licensing Test Agent is Prov, Inc. For additional information on taking the test, visit http://www.2prove.com or call 866-720-PROV (7768) or 801-733-4455 ext.4.

 

The West Virginia Department of Tax and Revenue is available at www.wvrevenue.gov or 304-558-3333. Contractors must also file with the West Virginia Secretary of State (www.sos.wv.gov) and the WV Bureau of Employment Programs (www.wvbep.org).

 

There are nine categories of contractors in West Virginia:

 

General Building

General Engineering

Electrical

Heating, Ventilating and Cooling

Piping

Plumbing

Residential

Multi-Family

Specialty

 

Prevailing Wage Rates are available through the WV Secretary of State and can be accessed by clicking here: http://www.sos.wv.gov/administrative-law/wagerates/Pages/2010BuildingConstruction.aspx 

ADMISSION OF FOREIGN CORPORATIONS: Filing fee of $10 for certificate of authority, plus $5 for certificate for Brickstreet, plus pro rata share of annual license tax, of $250, and attorney fee of $10. Pro-rated fees effective October 1 through June 30 (Secretary of State).

 

            ANNUAL CORPORATE LICENSE TAX: The State’s Corporate License Tax was repealed as of July 1, 2008. While corporations are no longer taxed for a corporate license, the Secretary of State’s Office requires a $25 annual fee for the office’s annual report. This fee was formerly called the Attorney-In-Fact Fee.

 

            SALES AND USE TAX: Contractors making capital improvements are required to pay sales tax on purchases of machinery, equipment, tools and materials for use in their contracting activity. Persons making repairs or alterations not considered capital improvements are providing a taxable service. Taxable service providers may claim an exemption for items which are to be resold and physically transferred to the customer in conjunction with providing the taxable service. This exemption is claimed by using a tax exemption certificate rather than a direct pay permit.

            Contractors performing capital improvements for the State of West Virginia or its political subdivisions must pay tax on materials which will be installed in, affixed to or incorporated into the building (State Tax Department).

            A contractor performing construction contracting for the following qualified businesses may assert the exemption for qualified purchases of services, machinery, supplies and materials for use or consumption in the performance of the construction contracting service:

 

(1) Business of manufacturing,

(2) Business of transportation,

(3) Business of transmission of liquid, natural gas or electricity by pipes or wires,

(4) Business of communication,

(5) Business of production of natural resources,

(6) Business of gas storage,

(7) Business of generation or production or selling electric power,

(8) Business of provision of a public utility service, or

(9) Business of operation of a utility service or the operation of a utility business.

 

            With relation to purchases of tangible personal property, the exemption applies to purchases of tangible personal property that remains on the construction site after the construction activity is completed. It does not apply to purchases of tools, bulldozers, cranes, etc. that become the property of the construction contractor and removed from the site after construction is completed. However, rentals of cranes, bull dozers, and other equipment specifically for use on the specifically identified job by the contractor, or the hiring of a subcontractor to provide bulldozer services, crane services, etc., with an operator of the machine qualify for the exemption. Purchases by a subcontractor who is working for a prime contractor, where the prime contractor is entitled to the Senate Bill 631 exemption, are also exempt in the same manner and with the same restrictions as are applicable to the prime contractor.

 

This exemption may be claimed by one of two methods:

 

(1) The contractor may pay the appropriate amount of Sales Tax and claim a refund from the Tax Department; or

 

(2) If the Principal has a direct pay permit, the contractor may use the Special Contractors Exempt Purchases Certificate issued by the Tax Department – form WV/CST-286.

 

For further information see West Virginia Tax Department Administrative Notice 2007-19.

 

            FUEL TAX: Gasoline and diesel fuel, 32.2 cents per gallon with a 20.5 cents per gallon partial exemption available for non-highway uses claimed in statutorily specified minimum quantities.

 

            BUSINESS REGISTRATION TAX: As of July 1, 2010, businesses will no longer have to periodically renew their business registration certificate. If a business registers after July 1, 2008 the business registration certificate issued will be permanent. Prior to July 1, 2010, there is a $30 fee for those renewing their business registration certificate or applying for a new registration certificate.

 

            CORPORATION NET INCOME TAX: The corporate net income tax rate for 2008 is 8.75% of federal taxable income allocated and apportioned to West Virginia. Effective for tax years beginning on or after January 1, 2009, the Corporate Net Income Tax rate will decrease to 8.5%. The rate is scheduled to phase down to 6.5% in 2014 based on the following reductions.

Calendar year	2010	2011	2012	2013	2014
Rate: % of federal taxable income with certain modifications	8.5%	8.5%	7.75%	7.0%	6.5%

            BUSINESS FRANCHISE TAX: All corporations and partnerships are subject to the business franchise tax which is a tax on the privilege of engaging in business in West Virginia. The measure of the tax is the capital of corporations and partnerships. Multi-state businesses apportion an amount of capital to West Virginia using a three factor formula consisting of payroll, property and double weighted sales factors. For taxable years beginning on or after January 1, 2008, the tax rate is .55 cents per $100 of taxable capital. Further reductions are as follows. Complete phase out occurs in 2015.

 

 

            MUNICIPAL TAX: Municipalities are empowered to levy municipal business and occupation taxes upon the business of contracting up to a maximum of $2 per $100. Also, many municipalities require building permit fees and licenses, and most cities have sewer and water fees, inspection fees, city licenses, etc. These generally are modest but vary in amounts.

 

It is recommended that contractors working in municipalities investigate these charges when bidding.