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Making sales, renting property, or filing a Schedule C pertaining to Nevada-based business? If so, you need to be aware of the new Nevada Commerce Tax.
On June 10, 2015, Governor Sandoval signed SB 483 imposing a new Nevada Commerce Tax (NCT) on business entities doing business in Nevada and whose gross receipts in the state exceed $4,000,000 per taxable year. The NCT is imposed on separate business entities for the purpose of doing business in the state.
Business entities are defined to include a corporation, partnership, proprietorship, limited-liability company, business associates, joint venture, etc. Individuals filing Schedule C, Schedule E, and Schedule F are also included. Certain government entities, non-profits, grantor trusts, estates, and passive entities are excluded from the NCT. Passive entities are entities which receive more than 90% of their gross revenue from property that generates investment income.
The NCT is applied on gross revenue apportioned to or property “sitused” in Nevada. This includes, but is not limited to, sales of tangible personal property shipped or delivered to a buyer in Nevada, revenue from services to the extent the benefit is received in Nevada, rents and gross proceeds from real property located in Nevada, and rents and royalties from tangible personal property located or used in Nevada.
The NCT is a tax applied on the gross revenue in excess of $4,000,000. There are no deductions for costs of goods sold or other business expenditures. There are certain exclusions for investment revenue, revenue from intangible property, cash discounts, and revenue deferred from transactions subject to Internal Revenue Code provisions; for example, gross revenue from a like-kind exchange.
The NCT rate varies from .0051% to .331% and is applied based on the type of industry the entity is primarily engaged in. For example, a rental real estate entity has gross revenue from rents of $6,000,000 in Nevada. The entity would be subject to NCT on $2,000,000 at .250% = $5,000.
The taxable year for all business entities subject to the NCT begin July 1 and end June 30. The NCT is effective July 1, 2015 and the first NCT tax reports for the period July 1, 2015 through June 30, 2016 are due 45 days after June 30, 2016.