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Nevada Tax Climate And Sales Tax Structure



Monika Miles - Nevada

Nevada is a western U.S. state defined by its great expanses of desert, and by the 24-hour casinos and entertainment for which its largest city, Las Vegas, is famed. Las Vegas is home to elaborate themed hotels and luxury resorts that line its main thoroughfare, the Las Vegas Strip. The city is also home to museums such as the Mob Museum, extravagant live shows and upscale shopping malls and restaurants.

Nevada is largely desert and semi-arid, much of it lies within the Great Basin. Areas south of the Great Basin are within the Mojave Desert, while Lake Tahoe and the Sierra Nevada lie on the western edge. About 86% of the state’s land is managed by various jurisdictions of the U.S. federal government, both civilian and military.

Nevada is the driest state in the United States. It is made up of mostly desert and semi-arid climate regions, and, with the exception of the Las Vegas Valley. While winters in northern Nevada are long and fairly cold, the winter season in the southern part of the state tends to be of short duration and mild. Most parts of Nevada received scarce precipitation during the year. Most rain that falls in the state falls on the lee side (east and northeast slopes) of the Sierra Nevada.

Business Climate

The economy of Nevada is tied to tourism (especially entertainment and gambling related), mining, and cattle ranching. Nevada’s industrial outputs are tourism, mining, machinery, printing and publishing, food processing, and electric equipment.

Mining shaped Nevada’s economy for many years. However, mining declined in the late 19th century. However, the rich silver strike at Tonopah in 1900, followed by strikes in Goldfield and Rhyolite boosted Nevada’s economy yet again.

In portions of the state outside of the Las Vegas and Reno metropolitan areas mining plays a major economic role. By value, Gold is by far the most important mineral mined. Other minerals mined in Nevada include construction aggregates, copper, gypsum, diatomite and lithium. Despite its rich deposits, the cost of mining in Nevada is generally high, and output is very sensitive to world commodity prices.

Cattle ranching is a major economic activity in rural Nevada. Nevada’s agricultural outputs are cattle, hay, alfalfa, dairy products, onions, and potatoes. Over 90% of Nevada’s 484,000 acres of cropland is used to grow Hay, mostly alfalfa, for livestock feed.

Tax Climate  

Nevada does not administer an individual income tax, nor does it facilitate a corporate income tax.

To compensate for not having a corporate income tax, Nevada administers a gross receipts tax (Commerce tax). This is modeled after the gross receipt taxes in Ohio, Texas and Washington state. This Commerce Tax is a tax on the privilege of engaging in business in Nevada. It is an annual tax that was passed by the state legislature in 2015. Business entities engaged in business in Nevada are subject to the Commerce Tax. Each business entity engaged in business in Nevada is required to file the Commerce Tax return regardless of whether there is tax due or not. Some examples of business entities include C and S corporations, limited liability companies and partnerships and sole proprietorships, just to name a few. Some organizations are exempt from this tax, such as government entities, non-profit organizations pursuant to section 501(c) of the Internal Revenue Code and passive entities.

$4,000,000 is the standard amount a business entity is allowed to deduct from its Nevada gross revenue before the Commerce Tax is imposed. It reduces the business entity’s subject to tax, but it does NOT exempt the business entity from the filing requirement.

Sales Tax Structure  

Nevada’s average sales tax rate is 6.85%, which ranks 7th in the nation.

Nevada has enacted economic nexus legislation. Remote sellers are required to register to collect and remit NV sales tax if the company’s gross revenue is more than $100,000 from the retail sale of tangible personal property or makes 200 or more retail sales of tangible personal property for delivery into NV. This legislation went into effect on Oct. 1, 2018.

Nevada is not very aggressive in its approach to the taxation of technology products for sales tax purposes. All digital content is exempt from taxation. Prewritten computer software that is electronically downloaded is exempt and so is custom computer software that is electronically downloaded. Lastly, all cloud services are exempt. How products are produced, sold and delivered is critical to determining their tax status.

Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies, emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. Nevada, however, does not currently have any scheduled sales tax holidays.

Random Facts

  • Nevada takes its name from a Spanish word meaning snow-capped.
  • Nevada is the largest gold producing state in the nation. It is second in the world behind South Africa.
  • It would take 288 years for one person to spend one night every hotel room in Las Vegas.
  • U.S. route 50 is known as the loneliest road in America.
  • Construction worker hard hats were first invented specifically for workers on the Hoover Dam in 1933.
  • In Death Valley, the Kangaroo Rat can live its entire life without drinking a drop of liquid.

Have a tax question? Contact Monika Miles

 

 

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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