The West Virginia Municipal Business and Occupation Tax (B&O Tax) is an annual privilege tax imposed on all persons and entities doing business in West Virginia municipalities that impose the tax. The amount of tax is determined by the application of rates against values or gross income. The rates and tax base are determined by specified classifications based upon the nature of the business or other activity in which the taxpayer is engaged.
Overview of the Five Key B&O Tax Classifications
B&O Tax rates vary depending upon the business or other activity giving rise to the gross receipts or value subject to tax. Following is a brief explanation of the five most common B&O Tax classifications.
Wholesale sales. Sales of any tangible personal property for the purpose of resale in the form of tangible personal property; sales of machinery, supplies or materials to be directly used or consumed by the purchaser in the conduct of any business or activity which is subject to the B&O Tax; and sales of tangible personal property to the United States, its agencies and instrumentalities, or to the State, its institutions or its political subdivisions.
Retail sales. This includes any transfer of ownership or title to tangible property other than wholesale sales, including sales to consumers or others. Sales to charities that do not pay B&O Tax on gross receipts are generally retail sales. Sales of real property are retail sales.
Contracting. The furnishing of work, or both materials and work, in the fulfillment of a contract for the construction, alteration, repair, decoration or improvement of a new or existing building or structure, or any part thereof, or for the alteration, improvement or development of real property.
Service. All activities engaged in by a person for other persons for a consideration, which involve the rendering of a service as distinguished from the sale of tangible property, but not including services rendered by an employee to his or her employer. This generally includes professional and non-professional services of all kinds.
Lease, Rent and Royalty. Payments derived from furnishing real or tangible personal property for hire, loan lease or otherwise are subject to B&O Tax as a separate classification.
Several other business classifications under the B&O Tax outside these five main classifications include manufacturing, banking, production of natural resources, public utility business and operating amusements.
Who Must File?
Each separate person (individual, firm, partnership, joint venture, association, corporation, trust, estate or other group or combination acting as a unit) doing business in West Virginia municipalities, other than exempt persons, must file B&O Tax returns. Each separate entity in an affiliated group subject to the B&O Tax must file a separate return.