The Register-Herald, Beckley, West Virginia

Money

May 22, 2014

Contractors now subject to city’s B&O taxes

LEWISBURG — Remodeling or building a home will be a tad more expensive in Lewisburg after July 1.

Citing such expensive projects as property acquisition and construction of a new fire station now looming on the horizon, council unanimously approved extending the reach of the city’s business and occupation tax to include contractors, effective with the beginning of the upcoming fiscal year.

The vote came at the end of a lengthy but cordial airing of concerns and questions by a handful of interested people who attended Tuesday evening’s city council meeting.

B&O taxes are assessed on gross revenue rather than net. Lewisburg’s B&O tax rate for contractors will be 2 percent. The city already imposes B&O taxes on utilities and on businesses with retail sales that exceed $15 million annually.

Building contractor Randy Workman asked what, if anything, Lewisburg’s regulations would do to prevent the double-taxation he said companies had to deal with when the state imposed a B&O tax several years ago. Workman said the state tax had been “a pass-along thing,” with the general contractor and several subcontractors on most jobs each ending up paying the tax on the same work.

Mayor John Manchester said it is up to the general contractor to “build the subcontractors’ 2 percent into the contract,” along with the contractor’s own 2 percent B&O tax.

Council member Mark Etten added that a contractor seeking a building permit for a project inside the city limits will have to pay an estimated B&O tax up-front. If the project ends up costing more than the original estimate, a balance will then have to be paid, either by the contractor or the property owner.

Under the provisions of city ordinances, the property owner bears the responsibility for seeing to it that building permits are in place prior to construction and, beginning July 1, that B&O taxes are paid in full.

Officials distributed a fact sheet including frequently asked questions about the B&O tax prior to the start of the council session.

According to the fact sheet, 161 of West Virginia’s 232 cities impose a B&O tax. Lewisburg is a Class III city (based on population), and most of the Class III cities that have a B&O tax impose that tax on contractors, the sheet showed.

Workman’s wife, Anna Workman, asked officials to define the city’s geographical boundaries, saying it is often difficult to tell if a proposed project will be sited in town or outside of its limits.

“It’s a bizarre set of boundaries,” Manchester acknowledged, referring specifically to the meandering line that runs through neighborhoods on Lewisburg’s northern edge.

Generally speaking, the boundaries are more easily defined as radiating from points on U.S. 219 and 60, which run north-south and east-west, respectively, intersecting in the center of town.

The northern boundary is signified by a roadside sign on Rt. 219 just beyond Fire Station No. 2, while to the south, Holt Lane’s intersection with 219 marks the spot where Lewisburg ends and the unincorporated community of Fairlea begins.

Lewisburg’s eastern border is near the cemetery road off of U.S. 60, just about at the leading edge of what is commonly known as “Caldwell Hill.” To the west, the Rt. 60/McElhenny Road intersection is the approximate boundary.

It was pointed out, however, that an easier way for a contractor to know if he or she is bidding on a project inside or outside the city limits would be to ask to see either a tax ticket or a water bill. The tax ticket will specify either “Lewisburg District” or “Lewisburg Municipality” and include an excess levy amount, if the latter, while a city resident’s water bill will include a municipal fee.

Responding to concerns about the potential negative impact B&O taxes could have on home improvements and new construction in his town, the mayor said he finds it “hard to believe this will be the straw that broke the camel’s back.”

Council also unanimously approved final readings of ordinances that will establish a new building fee schedule, simplify the city’s business license schedule and authorize the mayor to submit an application to the state for Lewisburg to be included in the next phase of the Home Rule Pilot Project.

— E-mail: talvey@register-herald.com

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