Did you get that letter from the Nevada Department of Taxation? The one that says, “Welcome To Nevada Commerce Tax”.
If you have a business entity or state business license registered in the State of Nevada, you probably just received a “Welcome to Nevada Commerce Tax” letter. Generally, “Welcome To” and “Tax” are not words we like to see together.
The commerce tax, previously discussed here, imposes annual commerce tax on business gross revenues generated in Nevada over $4,000,000 during the previous fiscal year. The amount of the tax is based on your registered industry code. Each business category is assigned its own gross receipts tax rate with rates ranging from 0.051 percent to 0.331 percent. Businesses which do not fit into any other category are taxed at the 0.128 percent rate for Unclassified businesses.
|Business Category||Tax Rate||Business Category||Tax Rate|
|Rail Transportation||0.33%||Management of Companies||0.14%|
|Waste Management Services||0.26%||Other Transportation||0.13%|
|Publishing, Software, Data Processing||0.25%||Warehousing and Storage||0.13%|
|Arts, Entertainment, and Recreation||0.24%||Retail Trade||0.11%|
|Truck Transportation||0.20%||Financial Activities||0.11%|
|Food Services (includes restaurants)||0.19%||Manufacturing||0.09%|
|Administrative and Support Services||0.15%||Air Transportation||0.06%|
Regardless of the amount of gross revenue, each business is required to file a return. August 15, 2016 is the due date for the first return and any payment which may be due.
Since the commerce tax legislation was enacted, Incline Law Group LLP has been counseling clients on its potential impact on their businesses. Of particular concern to many of our real estate clients is the impact of the tax on the sale or leasing revenues of real estate holdings. There are a number of ways that such holdings can be held and structured to minimize the impact of commerce tax on these ventures. Likewise, careful planning can minimize the impact of these taxes on non-real estate related ventures or businesses which own a mix of real estate and provide other goods or services.
Businesses that may be subject to the new commerce tax are highly advised to consult with their legal and tax advisors prior to filing their first return in August. We would also highlight that the return is based on a fiscal, rather than calendar, year which may prove inconvenient for businesses operating on a calendar year tax election.
If you have questions about the commerce tax you may find information at www.nevadatax.nv.gov or feel free to call our office.