AB276 - Revises provisions governing the commerce tax. (BDR 32-192)

EXEMPT (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 276 - *AB276_R1* ASSEMBLY BILL NO. 276–ASSEMBLYMEMBERS O’NEILL AND DICKMAN FEBRUARY 24, 2025 ____________ Referred to Committee on Revenue SUMMARY—Revises provisions governing the commerce tax. (BDR 32-192) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to taxation; increasing and providing for the adjustment of the gross revenue threshold above which the gross revenue of a business entity is subject to the commerce tax; prohibiting the payment of interest on an overpayment of commerce tax resulting from the use of a gross revenue threshold other than the adjusted threshold calculated and published by the Department of Taxation; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law imposes an annual commerce tax on each business entity whose 1 Nevada gross revenue in a fiscal year exceeds $4,000,000, with the rate of 2 commerce tax based on the industry in which the business entity is primarily 3 engaged. Existing law imposes the tax only on the portion of the Nevada gross 4 revenue of a business entity that is in excess of $4,000,000. (NRS 363C.200, 5 363C.300-363C.560) Sections 4 and 6 of this bill eliminate the $4,000,000 Nevada 6 gross revenue threshold and replace it with a revenue threshold that is calculated on 7 an annual basis. Section 4 provides the method for calculating the revenue 8 threshold for a taxable year. For the taxable year beginning on July 1, 2025, section 9 4 sets the revenue threshold at $4,000,000 plus an additional amount that is 10 determined by multiplying $4,000,000 by the average 12-month percentage 11 increase in the Consumer Price Index for All Urban Consumers, West Region (All 12 Items) for the 3 calendar years immediately preceding July 1, 2025. For all 13 subsequent taxable years, section 4 provides that the revenue threshold is: (1) the 14 same as the previous taxable year, if the average 12-month change in the Consumer 15 Price Index for All Urban Consumers, West Region (All Items) for the previous 3 16 calendar years is negative; or (2) increased from the previous taxable year by an 17 amount equal to the revenue threshold from the previous taxable year multiplied by 18 the average 12-month percentage increase in Consumer Price Index for All Urban 19 – 2 – - *AB276_R1* Consumers, West Region (All Items) for the previous 3 calendar years, if the 20 average 12-month percentage change for that period was positive. Under section 4, 21 the revenue threshold calculated for each taxable year must be rounded to the 22 nearest $100,000. Section 6 requires a business entity whose Nevada gross revenue 23 in a taxable year exceeds the revenue threshold calculated as described in section 4 24 to file a return for that taxable year and excuses all business entities whose Nevada 25 gross revenue is equal to or less than the revenue threshold from the requirement to 26 file such a return for that taxable year. Sections 2, 3 and 5 of this bill define the 27 terms “consumer price inflation index” and “revenue threshold” for the purposes of 28 the provisions governing the commerce tax. Sections 7-33 of this bill make 29 conforming changes to provisions governing the calculation of the commerce tax 30 owed by a business entity to reflect that any Nevada gross revenue of a business 31 entity that is equal to or below the revenue threshold is excluded from the 32 calculation of the commerce tax. 33 Under existing law, a business entity that overpays the commerce tax is entitled 34 to a refund of the amount of the overpayment if, with certain exceptions, the 35 business entity claims the refund within a certain period. (NRS 363C.600) With 36 certain exceptions, existing law requires such a business entity to be paid interest 37 on any overpayment of any amount of the commerce tax at a rate specified in 38 existing law. However, the Department of Taxation is prohibited from paying 39 interest to a business entity if the Department determines that any overpayment has 40 been made intentionally or by reason of carelessness. (NRS 363C.620) Section 41 33.5 of this bill prohibits the Department from paying interest on such an 42 overpayment of the commerce tax because a business entity uses a revenue 43 threshold to calculate the amount of commerce tax it owes other than the revenue 44 threshold calculated by the Department and published pursuant to section 4. 45 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 363C of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2, 3 and 4 of this act. 2 Sec. 2. “Consumer price inflation index” means the 3 Consumer Price Index for All Urban Consumers, West Region 4 (All Items), as published by the United States Department of Labor 5 or, if that index ceases to be published by the United States 6 Department of Labor, the published index selected by the 7 Department of Taxation pursuant to subsection 11 of 8 NRS 361.091. 9 Sec. 3. “Revenue threshold” means the amount described in 10 subsection 1 of section 4 of this act for a given taxable year. 11 Sec. 4. 1. The revenue threshold is: 12 (a) For the taxable year beginning on July 1, 2025, $4,000,000 13 plus the product of $4,000,000 multiplied by the average 12-month 14 percentage increase in the consumer price inflation index for the 3 15 calendar years immediately preceding the taxable year beginning 16 on July 1, 2025. The revenue threshold calculated pursuant to this 17 paragraph must be rounded to the nearest $100,000. 18 (b) For each subsequent taxable year: 19 – 3 – - *AB276_R1* (1) If the average 12-month percentage change in the 1 consumer price inflation index for the 3 calendar years 2 immediately preceding the taxable year for which the revenue 3 threshold is being calculated is positive, the revenue threshold for 4 the immediate preceding taxable year plus the product of the 5 revenue threshold for the immediately preceding taxable year 6 multiplied by the average percentage increase in the consumer 7 price inflation index for the 3 calendar years immediately 8 preceding the taxable year for which the revenue threshold is 9 being calculated. A revenue threshold calculated pursuant to this 10 subparagraph must be rounded to the nearest $100,000. 11 (2) If the average 12-month percentage change in the 12 consumer price inflation index for the 3 calendar years 13 immediately preceding the taxable year for which the revenue 14 threshold is being calculated is negative, an amount equal to the 15 revenue threshold for the immediately preceding taxable year. A 16 revenue threshold calculated pursuant to this subparagraph must 17 be rounded to the nearest $100,000. 18 2. Not later than 30 days after July 1, 2025, the Department 19 shall calculate and publish on its Internet website the revenue 20 threshold for the taxable year that began on July 1, 2025. Not later 21 than March 1 of each subsequent year, the Department shall 22 calculate and publish on its Internet website the revenue threshold 23 for the taxable year beginning the following July 1. 24 Sec. 5. NRS 363C.010 is hereby amended to read as follows: 25 363C.010 As used in this chapter, unless the context otherwise 26 requires, the words and terms defined in NRS 363C.015 to 27 363C.085, inclusive, and sections 2 and 3 of this act have the 28 meanings ascribed to them in those sections. 29 Sec. 6. NRS 363C.200 is hereby amended to read as follows: 30 363C.200 1. For the privilege of engaging in a business in 31 this State, a commerce tax is hereby imposed upon each business 32 entity whose Nevada gross revenue in a taxable year exceeds 33 [$4,000,000] the revenue threshold in an amount determined 34 pursuant to NRS 363C.300 to 363C.560, inclusive. The commerce 35 tax is due and payable as provided in this section. 36 2. Each business entity whose Nevada gross revenue in a 37 taxable year exceeds [$4,000,000] the revenue threshold shall, on 38 or before the 45th day immediately following the end of that taxable 39 year, file with the Department a return on a form prescribed by the 40 Department. The Department shall not require a business entity 41 whose Nevada gross revenue for a taxable year is [$4,000,000] 42 equal to or less than the revenue threshold to file a return for that 43 taxable year. The return required by this subsection must include 44 such information as is required by the Department. 45 – 4 – - *AB276_R1* 3. For the purposes of determining the amount of the 1 commerce tax due pursuant to this chapter, the initial return filed by 2 a business entity with the Department pursuant to subsection 2 must 3 designate the business category in which the business entity is 4 primarily engaged. A business entity may not change the business 5 category designated for that business entity unless the person applies 6 to the Department to change such designation and the Department 7 determines that the business is no longer primarily engaged in the 8 designated business category. 9 4. A business entity shall remit with the return the amount of 10 commerce tax due pursuant to subsection 1. Upon written 11 application made before the date on which payment of the 12 commerce tax due pursuant to this chapter must be made, the 13 Department may for good cause extend by not more than 30 days 14 the time within which a business entity is required to pay the 15 commerce tax. If the commerce tax is paid during the period of 16 extension, no penalty or late charge may be imposed for failure to 17 pay the commerce tax at the time required, but the business entity 18 shall pay interest at the rate of 0.75 percent per month from the date 19 on which the amount would have been due without the extension 20 until the date of payment, unless otherwise provided in NRS 21 360.232 or 360.320. 22 Sec. 7. NRS 363C.300 is hereby amended to read as follows: 23 363C.300 Except as otherwise provided in this section, the 24 commerce tax required to be paid by a business entity engaging in a 25 business in this State is equal to the amount obtained by subtracting 26 [$4,000,000] the revenue threshold from the Nevada gross revenue 27 of the business entity for the taxable year and multiplying that 28 amount by the rate set forth in NRS 363C.310 to 363C.550, 29 inclusive, for the business category in which the business entity is 30 primarily engaged. If the business entity cannot be categorized in a 31 business category set forth in NRS 363C.310 to 363C.550, 32 inclusive, the commerce tax required to be paid by that business 33 entity is equal to the amount obtained by subtracting [$4,000,000] 34 the revenue threshold from the Nevada gross revenue of the 35 business entity for the taxable year and multiplying that amount by 36 the rate set forth in NRS 363C.560. 37 Sec. 8. NRS 363C.310 is hereby amended to read as follows: 38 363C.310 1. The agriculture, forestry, fishing and hunting 39 business category (NAICS 11) includes all business entities 40 primarily engaged in agricultural production or agricultural support 41 activities, or both, including, without limitation, growing crops, 42 raising animals, harvesting timber and harvesting fish and other 43 animals from a farm, ranch or their natural habitats. 44 – 5 – - *AB276_R1* 2. Examples of business entities in this category include, 1 without limitation, farms, ranches, dairies, greenhouses, nurseries, 2 orchards and hatcheries. 3 3. This category does not include business entities primarily 4 engaged in agricultural research or administering programs for 5 regulating and conserving land, minerals, wildlife or forest use. 6 4. The amount of the commerce tax for a business entity 7 included in this category is the amount obtained by subtracting 8 [$4,000,000] the revenue threshold from the Nevada gross revenue 9 of the business entity for the taxable year and multiplying that 10 amount by 0.063 percent. 11 Sec. 9. NRS 363C.320 is hereby amended to read as follows: 12 363C.320 1. The mining, quarrying and oil and gas 13 extraction business category (NAICS 21) includes all business 14 entities primarily engaged in mining operations and mining support 15 activities, including, without limitation, extracting: 16 (a) Naturally occurring mineral solids, such as coal and ores; 17 (b) Liquid minerals, such as crude petroleum; and 18 (c) Gases, such as natural gas. 19 2. Examples of business entities in this category include, 20 without limitation: 21 (a) Business entities operating mines, quarries or oil and gas 22 wells on their own account or for others on a contract or fee basis. 23 (b) Mining support activities, including business entities that 24 perform exploration or other mining services, or both, on a contract 25 or fee basis, except geophysical surveying, mine site preparation and 26 the construction of oil and gas pipelines. 27 3. As used in subsections 1 and 2, the term “mining” includes 28 quarrying, well operations and beneficiating, including, without 29 limitation, crushing, screening, washing, flotation and other 30 preparation customarily performed at a mine site or as a part of 31 mining activity. 32 4. The amount of the commerce tax for a business entity 33 included in this category is the amount obtained by subtracting 34 [$4,000,000] the revenue threshold from the Nevada gross revenue 35 of the business entity for the taxable year and multiplying that 36 amount by 0.051 percent. 37 Sec. 10. NRS 363C.330 is hereby amended to read as follows: 38 363C.330 1. The utilities and telecommunications business 39 category (NAICS 22 and 517, respectively) includes: 40 (a) All business entities primarily engaged in providing utility 41 services, including, without limitation, electric power, natural gas, 42 steam supply, water supply and sewage removal; and 43 (b) All business entities primarily engaged in providing 44 telecommunications and the services related to that activity, 45 – 6 – - *AB276_R1* including, without limitation, telephony, cable and satellite 1 distribution services, Internet access and telecommunications 2 rese [Text truncated for display. Full text available on LegiScan.]