2015 Legislative Session: Significant Changes Made to Business Tax Structure

2015 Legislative Session: Significant changes made to business tax structure

On July 1, the tax landscape for Nevada’s businesses changed. The biggest change was implemented by Senate Bill 483, which will impose a so-called ”Commerce Tax” and raises State business license fees for certain business filings, among other changes. It is important for all businesses, regardless of size to become familiar with these changes to ensure compliance.

As with any major legislation impacting business, we recommend consulting with a professional that can help navigate the potential complexity inherent with changes in the tax code. Commerce Tax1 (SB 483) The Commerce Tax is a revenue tax on each business in Nevada whose gross revenue in a fiscal year exceeds $4 million. The fiscal year for purposes of this tax calculation begins July 1, 2015 (fiscal year 2016).

The tax is collected annually with the first return and payment due on August 15, 2016. The tax is calculated on gross revenue, which is defined in specific sections of the bill. The tax rate is specific to industry as defined by a company’s NAICS code. For example, the rate for companies falling under Finance and Insurance (NAICS 52) is ,111%; Real Estate Rental and Leasing (NAICS 53), ,25%, Companies with multiple NAICS codes will be required to designate which generates its highest percentage of gross revenue upon initial filing, Businesses subject to the Commerce Tax will be entitled to a credit toward their Modified Business Tax (MBT) liability equal to 50 percent of their Commerce Tax liability beginning the first quarter after the first payment of the Commerce Tax, Modified Business Tax1 (SB 483)

Changes were made to Modified Business Tax rates effective July 1 and should be used during filing the first quarter return of fiscal year 2016, i.e. quarter end September 30, 2015 due October 31, 2015. The rate for general business is 1.475%, and reduces the wage- threshold exemption to $50,000 per quarter. For financial institutions and any entity subject to the Net Proceeds of Minerals Tax, the rate is 2%. Cigarette Tax1 (SB 483) The cigarette tax was increased from $1,00 to $1,80 per pack of 20 cigarettes, a $.80 increase, effective July 1, Cigarette stamps purchased prior to July 1, 2015, but not affixed prior to that date will be subject to the additional tax. State Business License Fee (SB 483)

State business license fees will increase from $200 to $500 for the following entity types: For profit Corporations formed under Chapters 78, 78A, 78B and 80. The fee for all other entity types remain unchanged at $200, In addition, there will be a $25 fee increase in both Initial lists and Annual lists for all entity types. These changes will be in effect beginning July 1.

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