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Nevada Enacts New Tax Regime Effective July 1


Businesses have historically escaped a business income or gross receipts tax in Nevada, but that changed earlier this month when Nevada Governor Brian Sandoval signed Senate Bill 483 (SB483) into law. The bill creates a new gross receipts tax, the Commerce Tax, that will have a significant impact on both in-state and out-of-state businesses. Starting July 1, 2015, the annual tax will apply to business entities with Nevada-sourced adjusted revenue in excess of $4,000,000. The adjusted revenue calculation starts with gross revenue and then provides for various exclusions and deductions to determine the tax base. Regardless of the actual accounting year end used by a business, the tax is based on a July 1 – June 30 accounting year for all taxpayers.

The sourcing of gross revenues is accomplished by a specific allocation method in which each type of receipt must be analyzed using specific allocation rules provided by the state. Once the tax base is determined, taxpayers must use their North American Industry Classification System (NAICS) category to determine which tax rate is applicable to them. Tax rates range from 0.051% for mining and oil and gas extraction to 0.331% for rail transportation, with the average rate being around 0.13%. The tax return is due 45 days after the end of the tax year (June 30 for all taxpayers), making the first required tax return to be filed by August 14th of 2016.

Additionally, the bill increases the quarterly Modified Business Tax rate (a type of payroll excise tax) to 1.475% and lowers the taxability threshold from $85,000 to $50,000. The bill also increases the annual Business License Fee to $500 per year for Nevada corporations and non-Nevada corporations registered with the Secretary of State, and $200 for all other businesses.

If your business may be affected by these changes, or you have questions as to how to minimize the tax effect of these changes, please contact Geoff Fischback, Tax Manager, at 425-454-7990 or gfischback@bpcpa.com.