MORGANTOWN – Have businesses across West Virginia been collecting sales taxes for municipalities they’re not located in?
The answer to that question is almost certainly yes.
Evidence shows it’s been happening here.
During a recent presentation of the city’s proposed $45.4 million fiscal year 2025-26 budget, Morgantown Finance Director Jon Ferguson said the city’s revenues are expected to stay relatively flat, with a notable exception.
He said the city has been notified by the state that it could see up to a 10% reduction in sales tax revenue.
The proposed budget conservatively anticipates just over $9 million in sales taxes. If that number holds, it would be the lowest full-year collection, by a considerable margin, since the city implemented the tax. Morgantown realized just over $9.8 million in sales tax revenue in 2024. It’s currently sitting on just over $9.7 million in collections so far in the current fiscal year.
“This is actually due to a change resulting from our neighboring municipalities that are actually establishing home rule, either have or will be establishing home rule, so they will be receiving that additional municipal sales tax,” Ferguson said, referencing Westover, which implemented a sales tax that took effect July 2024, and Granville, which is currently in the Home Rule approval process and plans to put a tax in place.
He went on to note the real issue comes down to the state implementing a more precise method of determining what businesses are located within a municipality.
“So, what the state of West Virginia did is that instead of basing our boundaries for sales tax purposes on the zip code plus four, they are now using more precise GIS data, which we have provided,” he said. “And we have been told to expect a potential decrease of up to 10% of municipal sales taxes.”
In other words, there have been businesses located on the periphery of the city that have been collecting Morgantown sales taxes and remitting them to the state for distribution despite the fact that they’ve never been within the city’s footprint.
Ferguson is quick to note this is through no fault of the city as all those determinations are made in Charleston. Morgantown Communications Director Brad Riffee said the city is not provided a list of businesses collecting the tax.
According to the West Virginia Tax Division, there are 95 municipalities statewide with a sales tax in place.
The Dominion Post reached out to the state to ask how many municipalities have been notified of impending adjustments to their sales tax revenue and approximately how much money would be redirected statewide as a result.
Stacy Acree, director of tax account administration with the West Virginia Tax Department, responded simply, “We cannot comment on this.”
The fact that this has been occurring shouldn’t really come as a surprise.
On July 2, 2020 – the day after Morgantown’s sales tax took effect, The Dominion Post reported that numerous businesses located in Granville had been told to start collecting the tax.
Granville Mayor Patty Lewis reached out to then Morgantown Mayor Bill Kawecki about the issue and Granville officials went door-to-door passing out informational fliers to businesses.
Lewis said she knows there were Westover businesses that were caught up as well because she was charged the extra tax at two Westover locations, one near the Morgantown Mall and one in The Gateway.
Monongalia County Commissioner Tom Bloom said he reached out to Morgantown officials a short time later after he was charged the tax by Primanti Brothers, in Suncrest Towne Centre. He still has the receipt.
Lewis said she believes the sorting process using the old nine-digit zip code method was severely impacted by so many businesses outside the city having Morgantown addresses.
Back in 2020, former Morgantown Finance Director Jim Goff told The Dominion Post that he and Geospatial Services Manager Marvin Davis, along with other city staff, spent months going back and forth with the state using the state’s mandated procedure — nine-digit zip codes — to pick through which businesses were in and out.
Once the city got the all clear from the state, there was no additional communication regarding which businesses would receive notice to begin charging the tax, he explained.
At the time, Davis indicated there were more than 5,900 nine-digit zip codes in the city and that any codes that straddled the city’s boundary were to be considered out per the state’s instruction.
