Nevada, historically known for its lack of state income taxes, has enacted a new gross receipts tax that may impact in-state and out-of-state businesses doing business within Nevada.

Pursuant to Senate Bill 483, effective July 1, 2015, Nevada imposes an annual Commerce Tax on the gross revenue of a business entity engaging business in the state. Each business entity subject to the tax must file a return. However, there is no tax liability if a business’s Nevada gross revenue (after exclusions and deductions) in a taxable year is less than $4 million.

Business Entities Subject to Tax. The tax is imposed on a separate entity basis. A business entity for Commerce Tax purposes includes a “corporation, partnership, proprietorship, limited-liability company, business association, joint venture, limited-liability partnership, business trust, professional association, joint stock company, holding company and any other person engaged in business”. Various entities, including but not limited to, government entities, nonprofits, credit unions, grantor trusts, estates, and real estate investment trusts are excluded from the tax.

Tax Rates. The tax rates vary from 0.051% to 0.331%, depending on the industry in which the business entity is primarily engaged based on a company’s NAICS code.

Reporting Requirements. The tax year for all businesses is a twelve month period beginning July 1 and ending on June 30. The return is due 45 days following the last day of the taxable year (June 30). The first return and payment are due on August 15, 2016. A business may apply for a 30-day extension to pay the tax, but must still pay the interest on the amount due as of the original filing/payment date.

If you are doing business in Nevada and would like more information about the Commerce Tax, please contact me at 714.990.1040 or nchung@frazerllp.com.