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April 15, 2021

West Virginia law enacts single sales factor apportionment and market-based sourcing, repeals throw-out rule, adopts mobile workforce provisions

On April 9, 2021, West Virginia Governor Justice signed HB 2026, modifying the state's corporate income apportionment and sourcing provisions. The law also modifies the mobile workforce provisions so that compensation of certain temporary nonresident employees is not subject to West Virginia personal income tax. This law comes as part of West Virginia's new initiative to make the state more attractive for remote workers.

Apportionment and sourcing changes

Effective for tax years beginning on or after January 1, 2022, West Virginia:

  • Adopts a single sales factor formula
  • Adopts market-based sourcing for sales of services and intangible property
  • Repeals the sales factor throw-out rule

Under the market-based sourcing method, sales of services are sourced to West Virginia to the extent the service is delivered to a customer/location in the state.

Sales of intangible property that is rented, leased or licensed are sourced to West Virginia if and to the extent the property is used in the state. Intangible property used to market a good or service to a consumer is considered used in the state if the good or service is purchased by an in-state consumer.

Intangible property that is sold is sourced to West Virginia to the extent the property is used in the state, provided that:

  • A contract right, government license or similar intangible property that permits the holder to conduct business activity in a specific geographic area includes West Virginia as all or part of that area
  • Receipts that are contingent on the intangible property's productivity, use or disposition are sourced in the same manner as intangible property that is rented, leased or licensed
  • All other receipts from the sales of intangible property are excluded from the sales factor

Mobile workforce

Effective January 1, 2022, compensation paid to a nonresident individual is exempt from West Virginia personal income tax if all of the following apply:

  • The compensation is paid for employment duties performed by the individual in West Virginia for 30 days or less in the calendar year
  • The individual has no other income from West Virginia sources
  • The individual performed employment duties in more than one state during the calendar year
  • The compensation is not paid for employment duties performed by an individual in his/her capacity as a professional athlete, professional entertainer or public figure who performs for compensation on a per-event basis
  • The nonresident individual's state of residence provides a substantially similar exclusion, does not impose an individual income tax, or the individual's income is exempt from tax under the US Constitution or federal law

An employer is not required to withhold tax on compensation paid to employees meeting these conditions. If, however, an employee exceeds the 30-day threshold during the calendar year, the employer will be required to withhold and remit tax for each day in the calendar year the employee performs employment duties in West Virginia.

The law includes special rules for determining liability, including the employer maintaining a time and attendance system that tracks where employees perform services on a daily basis. If this system is not used, the employer must obtain a written statement from the employee with the number of days he or she reasonably expects to perform services in West Virginia during the tax year.

For purposes of the 30-day threshold, an employee will be considered to have been present and performed employment duties in West Virginia for a day if the employee performs more of the employment duties in West Virginia than any other state during the day. The portion of the day the employee is in transit will not be considered in determining the location where the employment duties where performed.


Corporations doing business in West Virginia should consider modeling the impact the changes to the apportionment and sourcing rules will have on their businesses starting in 2022.

Employers with nonresident employees working in West Virginia should review the new mobile workforce provisions and determine whether they will need to withhold West Virginia income tax for them. Further, employers will need to consider how they will monitor and track days worked within the state.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Katie Zippel (
   • Ken Hausser (
   • Kristie Lowery (