Form SEV-401T
                 West Virginia Annual Timber Severance Tax Return Instructions

theWest Virginia severance tax is imposed on the privilege  following before engaging in timber production in West 
of engaging in or continuing, within West Virginia, the activity Virginia:  (1)  obtain  a  business  registration  certificate;(2) 
of severing, extracting, reducing to possession and producing    obtain a forestry license;(3) give the tax Commissioner 
for sale, profit or commercial use, any natural resource  written  notice  of  intent  to  sever  timber  identified  in  the 
product or products. the amount of tax is determined by the  notice between thirty and ninety days before the timbering 
application of a tax rate, to the gross value of each of the  operation begins; and (4) at the time of the notice, prepay 
natural resource classifications.                                severance tax or post a cash bond or surety bond equal to 
                                                                 four percent of the estimated gross value of the timber to be 
Accounting Periods and Methods of Accounting:      the           severed. this value may not be less than stumpage value.  
taxable year and method of accounting are the same as that       Forms and information can be found at www.tax.wv.gov.
used for federal tax purposes.
                                                                 Underpayment of Estimated Tax Penalty:       any person 
Due Date: the annual tax return is due on or before the          required to make monthly or quarterly payments of an annual 
expiration of one (1) month after the end of the taxable year.  tax who fails to make a timely payment or remits less than the 
The filing of this return is required whether or not any tax is  required amount is subject to additions to tax as calculated 
due. If you are no longer in business, you must file a final     on the underpayment of estimated  tax penalty worksheet. 
annual return through the last date of business.                 No additions are imposed if a quarterly taxpayer pays timely 
                                                                 estimated tax equal to three-fourths (75%) or more of the 
Extension of Time to File:    the tax Commissioner may,  actual tax liability. no additions are imposed if a monthly 
upon written request received on or before the due date of the  taxpayer timely pays estimated tax equal to eleven-twelfths 
return, grant a reasonable extension of time for filing the tax  (92%) of the actual tax liability. The amount of underpayment 
return, if good cause satisfactory to the tax Commissioner  is determined to be the difference between the amount that 
is provided. An extension of time to file does not extend        should have been paid and that which was actually paid. 
the time to pay taxes.                                           the period of underpayment of an installment is from the 
                                                                 due date of the installment payment to the earlier of either 
Periodic Installment Payments: if the estimated tax liability    the due date of the annual return for that taxable year or the 
exceeds one thousand dollars ($1,000.00) per month, the          date upon which such portion is paid. the underpayment 
tax is due on or before the last day of the month following the  of estimated tax penalty worksheet and instructions may be 
month in which the severance activity took place, except the     obtained from our website www.tax.wv.gov.
installment for may, which is due on or before the fifteenth 
of June each year. if the estimated liability is less than one   Completion, Signatures, and Dates: all applicable sections 
thousand dollars ($1,000.00), but more than fifty dollars        of the tax return must be completed and substantiating 
($50.00) per month the tax is due in quarterly installments      documents attached. the timber severance tax return of a 
on or before the last day of the month following the quarter     corporation must be signed and dated by the president, vice 
in which the severance activity took place. no installment  president, treasurer, assistant treasurer, chief accounting 
payments are required if the annual remittance is less than  officer, or any other officer authorized to act on behalf of 
$600.                                                            the corporation. the timber severance tax return of a 
                                                                 partnership must be signed and dated by one of the partners. 
Nonresidents: every nonresident person who either directly       an individual’s name signed on the return is prima facie 
or through the activity of others severs West Virginia timber    evidence that the individual is authorized to sign the return.
which that person owns at the time that it is severed must 
give the tax Commissioner written notice of intent to sever 
                                                                 For additional information, please contact: 
the WV timber identified in the notice. nonresident is 
defined as either: (1) An individual who is a nonresident of     West Virginia State Tax Department 
this state for purpose of the WV personal income tax; or (2)     Taxpayer Services Division
a person or corporation that does not have its commercial        PO Box 3784
domicile in this State or did not have a permanent office in     Charleston, WV 25337-3784
WV during the three months preceding the date of application     (304) 558-3333 or toll free 1-800-982-8297
for business registration.                                       www.tax.wv.gov
the  nonresident timber operators must comply with the 

West Virginia state tax Department
seV-401t instructions — rev. 5/16                                                                            page 1 of 3

Who Pays the Severance Tax on Timber?                           Annual Credit: Every taxpayer is allowed an annual credit 
                                                                of five hundred dollars ($500.00) against the tax due. The 
a person who has title to or an “economic interest” in the      annual credit is applied at the rate of forty-one dollars 
timber is responsible for paying the severance tax on timber.   and sixty seven cents ($41.67) per month for each month 
even when the timber is cut or processed by someone other       engaged in the business activity within the reporting period. 
than the person who has title to the timber, such as by a       Only one credit may be claimed by each business entity, and 
contract cutter, the person who has an “economic interest”      cannot exceed $500.
is responsible for paying the tax. the person who has the 
right to depletion, pays royalties to the landowner and has             Manufacturing Investment Tax Credit
control over the sale of the timber is typically considered to 
                                                                All taxpayers wishing to qualify for the Manufacturing 
have “economic interest” in the timber and is the person who 
                                                                Investment Tax Credit must file an application for such 
is responsible for the severance tax. a person who is merely 
                                                                credit (form WV/MITC-A) on or before the due date of the 
providing cutting services for another is not responsible for 
                                                                Personal Income Tax return or Corporation Net Income 
the severance tax.
                                                                Tax return filed for the tax year the investment was 
How is the Tax Calculated?                                      placed in service or use.

severance tax on timber is imposed on the “gross value” of      Manufacturers that make qualified investments for industrial 
the timber at the point the tree is cut and delimbed. effective expansion or industrial revitalization in WV may be eligible 
July 1, 2016, the tax rate is calculated by multiplying by the  for the manufacturing investment tax Credit. the term 
“gross value” by the tax rate of 1.50%. “Gross value” in        “manufacturing” means any business activity classified as 
the case of timber, means the gross proceeds of the sale        having a sector identifier, consisting of the first two digits of 
if it is sold at the point it is cut and delimbed. in many      the six-digit North American Industry Classification System 
instances there is not a sale of the timber at the point of     code number, of thirty-one, thirty-two or thirty-three. eligible 
cutting and delimbing. in these instances, the “gross value”    investments include real property and improvements thereto 
can be determined in one of three ways:                         and tangible personal property constructed or purchased for 
                                                                use as a part of a new or expanded or revitalized business 
1.  Use of a value that corresponds closely as possible to      facility of a qualified industrial taxpayer.
the gross proceeds from the sale of similar products of 
like quality and character.                                     eligible investments may also include replaced or refurbished 
                                                                buildings, equipment, machinery and other tangible personal 
2.  in the absence of such sales, the “gross value” may         property used in the operation of a qualified facility located 
be determined using a cost basis. the value of the              in West Virginia. eligible investment may also include real 
timber would be the sum of all costs attributable to            or tangible personal property acquired by written lease for a 
the production of timber, including direct and indirect         primary term of ten years or longer, if used as a component 
overhead costs and a reasonable mark-up on the                  part of a new, expanded or revitalized industrial facility. The 
timber.                                                         credit is equal to 5% of the taxpayer’s qualified investment 
3.  Use of the percentage method. to apply the percentage       pro-rated over a ten-year period at a rate of 10% per year.
method in determining the “gross value” subject to 
tax, the timber producer must find the activity that is         manufacturing investment tax Credit may be used to offset 
similar to their situation, and apply the appropriate           up to 50% of the taxpayer’s annual liability for, Severance 
percentages to their gross proceeds of the sales.               tax and Corporation net income tax for a period of 10 
                                                                years. any portion of a particular year’s annual credit that 
        ACTIVITy                   PERCENTAGES                  remains after application against these taxes for the taxable 
a person who sells timber at the                                year is forfeited. 
                                        100%
point where it is cut and delimbed.
                                                                ANNUAl TIMBER SEVERANCE TAx RETURN
a person who cuts timber and takes 
                                        75%
to collection point in woods.                                           TO COMPlETE THE RETURN:
a person who cuts timber and                                    PlEASE NOTE:  THESE INSTRUCTIONS ARE TO ASSIST yOU 
                                        50%
delivers to sawmill for sale.                                   IN THE PREPARATION OF THE TAX RETURN.  THEY ARE 
a person who cuts timber and pro-                               NOT A SUBSTITUTE FOR TAX LAW AND REGULATIONS.
                                        25%
cesses into other products.
                                                                                   SCHEDUlE A
        CREDITS AVAIlABlE
                                                                enter the amounts of timber harvested for the entire taxable 
NOTE: Appropriate credit forms and documentation                year.
must be attached for processing of return. Forms may            line 1  enter the total amount of sawed timber in 
be obtained from our website at www.tax.wv.gov.                         board feet and the total gross proceeds of 
                                                                        sale in dollars for the entire taxable year.
West Virginia state tax Department
seV-401t instructions — rev. 5/16                                                                           page 2 of 3

line 2     enter the total tons of harvested pulp wood                   Column 4. this is the taxable amount. then 
           and the total gross proceeds of the sale in                   multiply column 4 by the tax rate and enter 
           dollars for the entire taxable year.                          amount in column 6.)

line 3     enter the total amount of other timber products  line 5       sum Column 6, lines 1 through 4
           and the gross proceeds of the sale in dollars 
           for the entire taxable year. specify the type of line 6       enter amount from schedule tC, line 3.
           product.
                                                            line 7       Line 5 minus Line 6. (if line 6 is greater than 
           Schedule TC – Tax Credits                                     line 5, enter 0)

line 1     enter the amount of Credit ($500 per year or     line 8       enter total payments made in the period 
           $41.67 per each month engaged in business                     covered by this return and any credit from 
           in West Virginia). Only one credit may be                     prior year overpayments.
           claimed by each business entity and must not 
           exceed $500.                                     line 9       Line 7 minus line 8. If line 8 is greater than line 
                                                                         7, enter 0 and skip to line 13.
line 2     enter the amount of manufacturing investment 
           Credit (mitC-1 must be attached).                lines 10 – 12   internal Use Only

line 3     enter total here and on Line 6 on page 1.        line 13      Line 8 minus line 7. If line 7 is greater than line 
                                                                         8, enter 0.
           Tax Computations
                                                            line 14      amount of Line 13 to be applied to next year’s 
lines 1 – 4  enter the gross value of timber or the gross 
                                                                         return.
           proceeds of your sales for the entire taxable 
           year under the proper class code. (multiply      line 15      amount of Line 13 to be refunded. (Line 13 
           column 2 by column 3. enter amount in                         minus line 14.)

West Virginia state tax Department
seV-401t instructions — rev. 5/16                                                                       page 3 of 3