Conducting Business in Nevada? New Nevada Commerce Tax Due August 15

Do you do business in Nevada? Nevada has a new commerce tax return Nevada businesses are required to file, and the deadline is Monday, August 15, 2016.

If your return isn’t ready, you can request a 30-day extension and mail or fax your request to the Nevada Department of Taxation. This year only, you may also request a six-month extension until February 15, 2017, if you provide reasonable cause for needing the extra time. However, the request for an extension must be made before August 15, 2016.

The filing instructions also say that penalties and late charges may be waived for a failure to pay the initial Commerce Tax before February 15, 2017. To obtain this waiver, you will have to show that the failure occurred despite your exercise of ordinary care and was not intentional or the result of willful neglect.

Does This Affect Your Business?

This tax is new for the fiscal year ending on June 30, 2016. A return is required of all entities, trusts and individuals who engage in business in the state, even if the tax liability is zero. Nevada generally uses a physical presence standard to determine whether a taxpayer is engaged in business in Nevada and is subject to filing requirements. Businesses that still have questions should reach out to a tax professional to clarify if they have a filing requirement and file for an extension if necessary.

This new tax is based on gross receipts from Nevada sources. Nevada has issued guidance on how to source gross receipts in order to determine the taxpayer’s tax base and what deductions are allowed. The guidelines vary, based on the industry in which you operate. The tax rate is also dependent upon the industry you’re in.

Only taxpayers with Nevada taxable revenue in excess of $4,000,000 will pay this tax. However, all taxpayers engaged in business in Nevada must file the Nevada Commerce Tax Return, even if Nevada taxable revenue is below the $4,000,000 threshold and no tax is due. There’s a simplified reporting method available for taxpayers with less than $4,000,000 of qualifying revenue in which taxpayers fill out basic business information, check a box indicating they have less than $4,000,000 of Nevada taxable revenue, and sign the return. No revenue is required to be reported.

The Nevada Commerce Tax return must be filed based on your operations for the period July 1, 2015, through June 30, 2016, regardless of what tax year you use for federal tax purposes.

Next Steps

Complying with the requirements of any new tax can be challenging. This is even truer when the law is based on a different time period or apportionment method than you use for other purposes. In the case of the Nevada Commerce Tax, it is likely that both the apportionment method and the time period covered differ from your normal filing requirements.

Still have questions about how your business activities are impacted by the Nevada Commerce Tax? Reach out to your local Cherry Bekaert service team. You can also contact our State and Local Tax (“SALT”) team. They can guide you forward as you navigate your way through this new tax because you don’t want to pay more than is necessary. While you’re talking to them, ask them about reviewing your operations to make sure that you’re not missing any other opportunities to minimize your state and local tax exposure.