Nevada Modified Business Tax: Everything You Need to Know
Nevada modified business tax covers total gross wages (amount of all wages plus any tips for each calendar quarter), minus employee health care benefits paid by the business. 4 min read
2. A Business’s Duty Regarding Modified Business Tax Abatement
3. What Is the Eligibility for Abatement?
4. When Are the Forms and Tax Payments Due?
5. Taxes on Cigarettes
6. Commerce Tax Imposed on Business Gross Receipts
Nevada Modified Business Tax: Everything You Need to Know
Nevada modified business tax covers total gross wages (amount of all wages plus any tips for each calendar quarter), minus employee health care benefits paid by the business. Tax is based on gross wages paid by the employer during a calendar quarter. Employers may deduct allowable health care expenses from the taxable wage amount. Wages are as defined in NRS 612.190, paid by the employer during a calendar quarter with respect to employment.
Every employer who is subject to Nevada Unemployment Compensation Law (NRS 612) is also subject to the Modified Business Tax. Exceptions to this are employers of exempt organizations and employers with household employees only.
A partial abatement of the business tax during the initial period of operation is available. Nevada Revised Statute 363B.120 provides an abatement of the Modified Business Tax for qualifying businesses. Qualifying employers are able to apply for an abatement of 50 percent of the tax due during the initial four years of its operations. For a new business, the abatement of the Modified Business Tax applies to the number of new employees stated in its application. For an expanding business, the abatement does not apply to existing employees of the business, but it does apply to the number of new employees directly related to the expansion.
A Business’s Duty Regarding Modified Business Tax Abatement
All businesses are required to register under the applicable state and county laws and to obtain all licenses and other permits required. They are also required to maintain the business in Nevada for a period of five years. If a business does not comply with this requirement, abatement could be voidable. The state taxation department will conduct audits after two and five years to ensure compliance.
What Is the Eligibility for Abatement?
The Commission on Economic Development will review the certain criteria when regarding the applicant’s eligibility for abatement. As a condition of approval, the applicant agrees in writing to supply upon request copies of all necessary records for the Commission’s director to verify that the applicant meets all requirements. The Commission on Economic Development reserves the right to grant or deny certification on a case-by-case basis.
If an applicant is approved, the taxpayer is eligible for tax abatements for four years. The start date begins when the first qualified employee is hired at the designated facility. The applicant should allow a minimum of 42 calendar days prior to the next regularly scheduled GOED Board meeting for the processing of an application. GOED will execute an agreement with the company and forward a certificate of eligibility to the Department for administration of the tax abatements upon approval of its application. The agreement with the company must provide that the business agrees to allow the Department to conduct audits of the business and to supply upon request copies of all necessary records to verify the applicant meets all requirements.
The Nevada Department of Taxation may determine the business has substantially complied with the requirements. If a business is not maintained at the approved level in this state for five years after tax abatement approval, the company will repay to the Department of Taxation the amount of the abatement allowed before the failure to comply.
Applicant should allow a minimum of 30 working days prior to the next regularly scheduled Commission meeting for application processing. Special review and consideration may require a longer period of time to complete the certification process. Upon certification, the Commission will immediately forward the application for abatement to the Nevada Department of Taxation.
When Are the Forms and Tax Payments Due?
All forms and tax payments are due by the end of the month following the end of the four-month period. The due dates are April 30, July 31, October 31, and January 31. Forms and payments have to be mailed or hand delivered to one of the four district offices of the Nevada Department of Taxation.
Taxes on Cigarettes
Taxes on cigarettes are currently 80 cents per pack. However, under Nevada’s new tax package, the tax will increase to nearly $2. This will put Nevada in the top third of states for cigarette taxes. It will also put Nevada in the top two for taxes in the region.
Commerce Tax Imposed on Business Gross Receipts
Nevada’s new tax on commerce is a revised version of Gov. Sandoval’s Business License Fee. The new tax categorizes the state’s economy into 26 sectors, with at least one industry classification pursuant to the North American Industry Classification System (NAICS). Each sector is given its own gross receipt tax that would range from .05 percent to .33 percent. An industry that doesn’t fit into any sector (i.e. a business that can’t be classified) will be taxed at .13 percent.
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