Nevada enacts 'commerce tax'

Nevada has signed into law (SB 483) the imposition of a new 'commerce tax' on each business entity engaged in business in Nevada whose gross revenue in a fiscal year exceeds $4 million. 

The Nevada gross revenue is determined by taking gross revenue and making specific adjustments.

Note: there is no adjustment for cost of goods sold.

Revenue is sitused to Nevada differently depending on the source of revenue (i.e., tangible property, real property, services, etc.).

Note: Services are sitused using market-based sourcing methodology (i.e., where the purchaser receives the benefit of the service).

The tax rate will vary based on the industry of the taxpayer.

The tax year begins July 1, 2015 and the first report is due 45 days following June 30, 2016.

Bottom Line

Taxpayers are now subject to a new tax in Nevada, similar to Texas' gross receipts tax, Washington's Business & Occupation Tax or Ohio's Commercial Activity Tax, but with deviation.

Taxpayers must prepare to comply, budget and navigate this new tax (burden).