Tax News Update    Email this document    Print this document  

The Nevada Commerce Tax return is due 45 days following the end of Nevada's fiscal year, which ended on June 30, 2021. That means that this year, the return for all taxpayers is due August 16, 2021. (Unlike the gross receipts tax returns of nearly every other state, the filing of the return is not tied to the taxpayer's year end but that of the state.)

The Nevada Commerce Tax is based on a taxpayer's Nevada gross receipts over $4 million earned from July 1, 2020 through June 30, 2021. Businesses with $4 million or less of Nevada gross receipts are not required to file a return.

The rate of the tax varies according to a schedule based on the type or classification of the earned business revenue. (The rates by industry sector are set forth in Nev. Rev. Stat. Sections 363C.300 to 363C.560.)

For purposes of the statute, a business's Nevada Commerce Tax classification is based on its North American Industry Classification System (NAICS) code; however, the NAICS code may not always reflect the current nature of a business accurately. Once a taxpayer has selected a classification on its initial return, it must petition the Nevada Department of Revenue to change it on future returns.

Unlike gross receipts taxes in other states (e.g., Ohio commercial activity tax), Nevada does not permit consolidated or combined filing by related businesses. Even single member limited liability companies that are engaged in business in Nevada and disregarded for US federal income tax purposes must separately file a return based on their activity in Nevada.

Despite the lack of a combined or consolidated filing method, the Nevada Commerce Tax law allows taxpayers to avoid double taxation through the exclusion of gross revenues from certain related-party transactions from the taxpayer's tax base. For example, "pass-through revenue" as defined by the statute (Nev. Rev. Stat. Section 363.070) is not includable as taxable Nevada gross receipts. Specifically, payments between affiliated entities (defined as entities with 50% or more common direct or indirect ownership) constitute "pass-through revenue" that is excluded from Nevada gross receipts (see Nev. Rev. Stat. Section 363C.070(1)(f)). Likewise, Nevada Commerce Tax does not apply to receipts from partners or members in pass-through entities that may have had a separate Nevada filing obligation (see Nev. Rev. Stat. Section 363C.070(1)(a)).

Implications

Taxpayers that fail to timely file their return and pay the Nevada Commerce Tax due may be subject to the imposition of penalties and interest. Taxpayers that need additional time to file the return and pay the tax due can apply for a 30-day extension before the payment due date of the Nevada Commerce Tax.

———————————————