West Virginia was the first state to adopt this tax

CHARLESTON, WV (WOWK) — Gross receipts taxes are an important source of revenue for many places in America, but it got its start in the Mountain State.

West Virginia replaced its corporate excise tax and gas pipeline tax with the first gross receipts tax, or gross sales tax, on July 1, 1921 — later called the business and occupation (B&O) tax. The tax was set at a rate of 0.4 percent .

A gross sales tax applies to “a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation,” according to Tax Foundation .

The West Virginia Tax Division says a B&O tax applies to “any persons(s) engaging or continuing with the state in any public service or utility business, except railroad, railroad car, express, pipeline, telephone and telegraph companies, water carriers by steamboat or steamship and motor carriers.”

The new tax made its way throughout the country during 1930s Great Depression America. It remained a key source of tax revenue for West Virginia until 1987 when it was mostly replaced with a severance tax and a business franchise tax.

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