Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update
1. Basis for taxation:
Utilities, including railroads, pay an ad valorem property tax. Telecommunications companies also pay a four percent tax on their gross receipts.
2. Property subject to taxation:
Taxable: Real property; personal property, including intangible property.
Exempt: Intangible property.
3. Classification (if applicable):
All property is assessed at 60 percent of market value. However, West Virginia does have a classified tax rate system, with classes defined as: (1) intangible property, (2) owner-occupied residential and farm property, (3) other real property located in areas outside incorporated municipalities, and (4) other real property located within incorporated municipalities. Tax rates for the four classes are constitutionally limited to: $0.50/$100 (Class 1); $1.00/$100 (Class 2); $2.00/$100 (Class 3); and $2.50/$100 (Class 4).
4. Level of government which determines basis for tax liability - ad valorem property tax:
The State Board of Public Works has the legal responsibility for assessment all utility property. Staff work is carried out by the Department of Revenue.
5. Report filing and valuation method(s) required by statute for ad valorem taxation:
Companies are required to file "returns" annually with the Board of Public Works. The information to be supplied by each type of utility is specified in law, and ft includes such data as property inventories, values of stock and debt, original cost of property, etc.
No specific method of valuation is required. Section 11-6-11 of Article 6 of the West Virginia Code states that the "...board shall consider the return, if any, made by the owner or operator, and any return which may have been previously made by such owner or operator, the work sheets and tentative assessment made by the tax commissioner, such evidence or information as may be offered by such owner or operator...".
6. Practical application of valuation method(s):
All three approaches are considered, but typically a combination of capitalized net utility operating income and original cost less depreciation is utilized. For car line companies, only the cost approach is used.
7. Valuation treatment of large facilities such as power plants, dams, or rail yards:
Power plants are included in the utility assessment if owned by utility companies. Otherwise, they are valued as industrial facilities.
8. Apportionment method(s) required by statute:
To the state -- No statutory requirement.
Among local units -- "According to" such factors as the (state) auditor shall deem proper" (S.11-6-13)
9. Practical application or apportionment requirements:
Railroads: Based on a formula which includes "fixed" property, track miles, ton miles, locomotive miles, and operating revenues.
Other Utilities: Generally based on an average of original cost and net cost, but mileage is used for car lines and a combination of flight hours and originating revenues are used for airlines.
10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:
See #7 and #9.
11. Description of assessment appeals system:
Owners may appeal to the Board of Public Works. Once decision has been made, owners have 15 days to appeal to Circuit Court.
12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:
Only preliminary action has been taken on deregulation/ restructuring; valuation and apportionment methods used have not been affected so far.
13. State Government Staffing:
Staff consists of three employees (full-time equivalent basis).
Law Source(s): Chapter 11, Article 6, West Virginia Code