Bulletin: WV2007001

Date:
December 17, 2007
To:
All Issuing Offices in West Virginia
RE:
Withholding Tax on Sales by Non-Residents

Dear Associates:

West Virginia Code §11-21-71b was enacted during the 2007 legislative session.  It requires the real estate reporting person (the settlement agent) to withhold tax from the proceeds from the sale of real property owned by a non-resident person or entity, and to pay the tax over to the Tax Commissioner within 30 days of the date the amount was withheld.  "Date withheld" is not defined within the section, but it can be presumed to be the settlement date.

The amount of tax to be withheld is 2 ½% of the net proceeds of sale, or, in the alternative, 6 ½% of the estimated capital gain derived from the sale (or exchange).

The effective date of this statute is January 1, 2008.

There are exemptions from the requirement.  If the transferor certifies under penalty of perjury that he/she/they/it are exempt, no tax need be withheld.  The certification may be set forth in recitals in the deed or in an affidavit recorded with the deed.

Exemptions include:

  1. Transfers by residents;

  2. Transfers pursuant to a foreclosure or deed in lieu of foreclosure, including the resale by the mortgagee to a subsequent purchaser;

  3. Transfers by the USA, the State of WV, or any political subdivision;

  4. Transfers of the principal residence of the transferor(s);

  5. Transfers for zero consideration.

The statute is attached for reference.  You should begin incorporating the certification in all deeds beginning January 1.

The Tax Commissioner is, by statute, to provide forms for reporting the amount of tax withheld as well as forms for certifying the seller is not subject to taxation.  At this time, however, the Tax Commissioner has not published the forms to be used.  We will advise you further as soon as the forms become available.  Until that time, we recommend that if a transaction is subject to the withholding tax, you should collect it and retain it in a separate account. 

West Virginia Code §11-21-71b  (Click Here to View)

For on-line viewing of this and other bulletins, log onto: http://www.vuwriter.com

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None