Nevada’s implementation plan for its commerce tax included a special grace period for the first year’s payment and return that were due last summer. To be eligible for this one-time grace period waiver, a business must:
- File and pay its commerce tax by February 15, 2017
- Demonstrate that the failure to pay and file on time occurred despite exercising ordinary care and wasn’t intentional or the result of willful neglect
Two Distinguishing Points
This may sound like Nevada’s normal penalty abatement language—it’s not.
Two key elements of the one-time grace period waiver provided by Senate Bill 283 are distinguishable from the provisions of Nevada’s standard penalty and interest waiver statute, Nev. Rev. Stat. Section 360.419.
The bill removed the Nevada Department of Taxation’s discretion by stating “the Department shall” waive any penalty and interest associated with a late payment or filing should the provisions of the section be met. This is distinguishable from the language of the statute, which merely provides that “the Department may” waive penalties or interest.
The requirement that the taxpayer has “circumstances beyond his or her control”—a condition of the waiver provided by the statute—is absent from the bill. The bill requires only that taxpayers demonstrate they exercised ordinary care and that the late payment or filing wasn’t intentional or the result of willful neglect.
How to Request the Waiver
Requests for the grace period waiver must be made in writing and addressed to the department’s Carson City office. The request should:
- Include all necessary taxpayer identifying information
- Affirm that the waiver is being requested pursuant to Section 110 of Senate Bill 283
- Declare that the failure occurred despite ordinary care and wasn’t intentional or the result of willful neglect
The department has observed several errors in returns already filed, such as businesses inappropriately taking deductions. There’s still time to correct these mistakes and request any applicable late payment or interest charges be waived.
Following is a partial list of common issues compiled by the Department of Revenue:
- There’s no combined filing. All entities—including disregarded entities—are required to file on a separate company basis.
- The tax is measured on Nevada source gross revenue in excess of $4 million. Each entity is entitled to the $4 million exemption, including related and commonly held entities.
- You’re required to file even if no tax is due. Only certain types of entities are excluded from the filing requirement, including not-for-profit organizations, credit unions, and real estate investment trusts.
- Certain types of revenue are exempted or deductible, such as amounts realized from the sale or licensing of certain intangibles, interest income, dividends, and distributions from corporations.
- There are industry-specific methodologies for apportioning revenue derived from activities performed both within and without the state.
The tax rate varies by industry, which is determined by the activities predominately undertaken in Nevada. Taxpayers with multiple classes of activities aren’t permitted to segregate their revenue to apply different industry rates; the tax rate applicable to the business’s predominate industry applies to all of the business’s taxable revenue.
We're Here to Help
For more information about Nevada’s commerce tax or help determining its implications for your business, please email firstname.lastname@example.org or visit www.mossadams.com/statetax.