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Tax Law

West Virginia Adopts Affiliate Nexus Standard for Sales & Use Taxes

The Governor of West Virginia recently signed legislation (2013 Bill Text WV H.B. 2754, signed into law 4/30/13) which goes into effect January 1, 2014 and adopts an expanded definition of a 'retailer engaging in business in this state' for purposes of the West Virginia sales and use tax system. Under this new definition, the key determination is whether "any retailer that is related to, or part of a unitary business with, a person, entity or business that ... is a subsidiary of the retailer, or is related to, or unitary with, the retailer as a related entity, a related member or part of a unitary business."

There are various ways by which such relationships can be established. A retailer may:

  • maintain an office, distribution house, sales house, warehouse, or other place of business in West Virginia pursuant to an agreement with, or in cooperation with, the related retailer;
  • perform services in West Virginia (including services performed by any agent, representative or employee) in connection with tangible personal property or services sold by the retailer, or any related entity, related member, or part of the unitary business; or
  • solicit business in West Virginia for or on behalf of the retailer, or any related entity, related member, or part of the unitary business, either directly or through an agent, representative or employee in West Virginia

The new law also provides that the definition of services includes: customer support services; help desk services; call center services; repair services; engineering services; installation services; the service of operating a website or internet based business from an in-state location; and the service of operating a telephone; internet; or other remote order business from an in-state facility.

Tax professionals with clients in West Virginia should closely review this new law and take any appropriate steps to either prepare to comply in 2014 or evaluate the costs and benefits of restructuring business relationships in anticipation of the new law and obligations.


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