ELKINS — The Elkins City Council approved the final reading of an ordinance that would incorporate a “de minimis” exemption for certain small businesses and independent contractors, a change now required by state law with West Virginia House Bill (HB) 2451.

All eight present members of council approved the final reading of Ordinance 344 during their June 26 meeting. Ordinance 344, in compliance with HB 2451, will amend §110.055 of the Elkins City Code to allow certain exemptions for “independent contractors and sole proprietors from business licenses under certain requirements.” Fourth Ward Council Member Nanci Bross-Fregonara and Fifth Ward Council Member David Parker were absent from the meeting.

The purpose of HB 2451 was to facilitate the creation of home-based businesses, with certain conditions. According to Chapter 8, Article 13 of the bill, “a municipality shall not impose its business and occupation or privilege tax (B&O Tax) on any business with a gross revenue below $2,500 annually.” HB 2451 requires compliance from the state municipalities by July 11.

“During the regular session that ended April 12, the legislature passed House Bill 2451,” Elkins City Attorney Geraldine Roberts told the council before the first reading on June 12. “I’m not sure what exactly prompted these changes, but in light of the fact that you need to make the changes in your city code to comply with this bill, which will be effective July 11, we have put together, as you can see, just the sections that are going to be changed.”

According to the new city ordinance, “no tax shall be imposed… for any tax year in which the taxpayer’s gross income is less than two thousand five hundred dollars ($2,500).”

“Effective July 1, 2025, a person engaging in business within the municipality shall not be subject to the municipal business and occupation or privilege tax imposed by this article for any tax year in which the taxpayer’s gross income, as defined in § 3.4 of this article, is less than two thousand five hundred dollars ($2,500.00),” Ordinance 344 states. “This exemption shall apply on a prospective basis only and shall not affect liability for any tax periods ending prior to July 1, 2025.”

During council’s June 12 meeting, before they approved the first reading of the ordinance, Roberts explained to the council she had been told that the tax provision in HB 2451 came about for those who are paid to officiate sporting events, such as high school games, and who “didn’t like the idea of having to pay that amount of tax.” While Roberts admitted she wasn’t sure how accurate that was, Elkins Mayor Jerry Marco remarked that it was accurate.

“As I said, there have been a lot of anecdotal bills passed this last time,” Roberts said. “I believe this might be one of them. So, I think we’ve done our best. Most of the municipal attorneys have worked hard to figure out how to make sure their codes match what’s going on.”

Roberts also stated that people who fit in the $2,500 threshold and wish to be exempt from the B&O Tax will have to provide evidence to Elkins City Treasurer Tracy Judy. It will be at Judy’s discretion as to what is needed to prove the exemption, Roberts explained.

“If you want to say, ‘I don’t have to pay B&O Tax,’ you’re going to have to prove it,” Roberts said. “I mean, the burden should be on the person to be exempted. It’s not up to Tracy to go track him down.”

During the June 12 meeting, when questioned by Fourth Ward Council Member Andrew Carroll as to how the exemption would impact the staff work hours at the Treasury Office, Judy admitted that it was going to add extra time to an already busy workload.

Before the council approved the first reading, Marco added that the $2,500 threshold in HB 2451 was “a blessing” because the state legislature originally had the threshold at $25,000.

Roberts said that the West Virginia Municipal League believed that tweaks will eventually have to be made to HB 2451 during the next legislative session, as some of the bill “doesn’t make sense.”