Nevada Tax Reform Update (continued)
Filing period and due dates: The taxable year for assessment of the Nevada commerce tax is the
12-month period from July 1 to June 30. The returns will be due on or before the 45th day
following the end of the taxable year. The first payments will therefore due August 15, 2016 for the period July 1, 2015 through June 30, 2016.
Taxpayers may request a 30-day extension to pay the tax. No penalties will apply during the 30-day extension, but interest will be assessed.
Payroll Tax Broadened and Increased:
The Modified Business Tax (MBT) is currently imposed on businesses other than financial institutions in the amount of 1.17
percent of wages paid above an exemption level of $85,000 per quarter. Financial institutions pay a higher rate of 2 percent. Under the new law, the MBT will increase from 1.17 percent to 1.475 percent for most businesses and the exemption is reduced to
$50,000 per quarter. Mining companies will join financial institutions in paying the higher 2 percent tax rate.
After the first year in which the commerce tax is in effect, taxpayers may deduct up to 50 percent of their commerce tax payments from their MBT liability. Each year’s deduction for the commerce tax payments will be applied to the following four
quarters MBT liability. If the deduction is not fully utilize during those quarters, it expires.
Should total revenue from all business taxes exceed projections by more than four percent, the MBT rate will be adjusted downward, but not below 1.17 percent.
Live Entertainment Tax Reformed:
Nevada’s Live Entertainment Tax (LET) is imposed on admission, food and beverage, and merchandise at venues where live entertainment is provided and admission is charged. Smaller venues, with maximum capacities between 200 and 7,499 people, are
currently taxed at a rate of 10 percent. Venues with capacities over 7,500 are taxed at a rate of 5 percent, and venues with
capacities under 200 are exempt. The tax is riddled with exemptions, including ones for large events like Burning Man and Electric Daisy Carnival.
In legislation separate from the broader tax bill, S.B. 266, the LET is significantly simplified and reformed on a revenue-neutral
basis. With limited exceptions, venues will now be subject to a 9 percent tax on admissions, with food and beverage exempt from
the LET. Boxing matches will continue to be subject to the tax but at a reduced 8 percent rate. NASCAR’s continued exemption
from the LET is contingent upon holding two races per year in Nevada. Non-profit events distributing more than 7,500 tickets
are no longer exempt, a policy adopted in response to Burning Man’s effort to avoid admissions tax by reclassifying itself as a
charity.
Cigarette Tax Increased by 125 Percent:
Cigarette taxes, currently set at 80 cents per pack, will rise markedly to $1.80 per pack under the new tax package. This puts
Nevada in the top one-third of states with the highest cigarette excise tax rates. Before the change, Nevada ranked 34th. The new
rate will give Nevada the secondhighest cigarette tax in the region, trailing only Arizona’s $2 per pack rate. Other cigarette tax
rates in the region include Utah’s $1.70, Oregon’s $1.31, California’s 87 cents, and Idaho’s 57 cents.
If you are interested in further details regarding these changes or how they may impact you or your business, please do not hesitate to contact our offices.
Sincerely,
Rich, Wightman & Company, CPAs, LLC
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IREM Chapter 99