AB362 - Provides for taxes on the sale or transfer of a controlling interest in an entity which possesses an interest in real property. (BDR 32-687)

REQUIRES TWO-THIRDS MAJORITY VOTE (§§ 7, 8) (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 362 - *AB362_R1* ASSEMBLY BILL NO. 362–ASSEMBLYMEMBER CONSIDINE MARCH 4, 2025 ____________ Referred to Committee on Revenue SUMMARY—Provides for taxes on the sale or transfer of a controlling interest in an entity which possesses an interest in real property. (BDR 32-687) FISCAL NOTE: Effect on Local Government: May have Fiscal Impact. 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; providing for the imposition, collection, administration and enforcement of taxes on the sale or transfer of a controlling interest in an entity which possesses an interest in real property in this State; providing penalties; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law imposes several taxes, known as real property transfer taxes, on 1 each deed by which lands, tenements or other realty are assigned, transferred or 2 otherwise conveyed to, or vested in, another person, or land sale installment 3 contract, if the consideration or value of the interest or property conveyed exceeds 4 $100. The amount of the real property transfer taxes owed is required to be 5 computed on the basis of the value of the transferred real property. (NRS 375.020, 6 375.023, 375.026) Existing law provides for the disposition and use of the proceeds 7 of the real property transfer taxes for specific purposes, including: (1) deposit in the 8 State General Fund; (2) deposit in the Account for Affordable Housing; (3) deposit 9 in the Local Government Tax Distribution Account for credit to the accounts of 10 each county; (4) deposit in the county school district’s fund for capital projects, 11 with respect to proceeds collected in a county whose population is 700,000 or 12 more; and (5) transmittal to the State Treasurer for use by the Division of Plant 13 Health and Compliance of the State Department of Agriculture. (NRS 375.023, 14 375.026, 375.070) 15 Section 8 of this bill imposes taxes on the sale or transfer of a controlling 16 interest in an entity which possesses, directly or indirectly, an interest in real 17 property in this State when the value of the real property interest exceeds $100. 18 Section 8 imposes the taxes at the same rate as the existing real property transfer 19 taxes and requires the taxes to be computed based on the value of the entity’s 20 – 2 – - *AB362_R1* interest in the real property, which corresponds to the estimated fair market value of 21 the real property. Section 9 of this bill requires the person who receives a 22 controlling interest in an entity which is subject to the tax to file a return and remit 23 the tax to the county recorder of each county in which the entity has a controlling 24 interest in real property on or before the last day of the month immediately 25 following the month in which the sale or transfer was made. Section 11 of this bill 26 requires the county recorder to dispose of the proceeds of the tax in the same 27 manner as the corresponding real property transfer taxes. Sections 11 and 25.5 28 authorize the county recorder to deduct and withhold from the tax required to be 29 transmitted to the State Controller for deposit in the State General Fund: (1) for the 30 first 5 years after the effective date of this bill, 2 percent of those taxes to reimburse 31 the county for the cost of collecting the tax; and (2) for each year thereafter, 1 32 percent of those taxes. Section 12 of this bill exempts certain transfers of the 33 controlling interest in an entity from the taxes imposed by section 8. Section 23 of 34 this bill makes it a misdemeanor to willfully falsely declare the estimated fair 35 market value of real property on a return filed pursuant to section 9 and requires the 36 payment of any additional tax required plus a penalty of 25 percent of that amount. 37 Sections 2.5, 3 and 4 of this bill define the terms “controlling interest,” 38 “estimated fair market value” and “taxpayer,” respectively, for the purposes of the 39 provisions governing the taxes imposed by section 8. 40 Section 25 of this bill requires money from the taxes imposed by section 8 41 which is received by the Division of Plant Health and Compliance to be allocated 42 for disbursement to each county in proportion to the money collected with respect 43 to real property in that county: (1) for use by the State Department of Agriculture 44 for programs on the exclusion, detection and control of invasive species and 45 endemic pests and weeds; and (2) to make grants to local governments and 46 nonprofit organizations for the control or management of such species, pests 47 and weeds. 48 Sections 5-5.7, 10.5, and 24.1-24.18 of this bill provide for the administration 49 and enforcement of the taxes imposed by section 8 in, to the extent applicable, the 50 same manner as the real property transfer taxes. 51 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Title 32 of NRS is hereby amended by adding 1 thereto a new chapter to consist of the provisions set forth as 2 sections 2 to 24.18, inclusive, of this act. 3 Sec. 2. As used in this chapter, unless the context otherwise 4 requires, the words and terms defined in sections 2.5, 3 and 4 of 5 this act have the meanings ascribed to them in those sections. 6 Sec. 2.5. “Controlling interest” means: 7 1. With respect to a corporation, owning, controlling or 8 holding more than 50 percent of: 9 (a) The total combined voting power of all classes of stock of 10 the corporation; or 11 (b) The capital, profits or beneficial interest in the voting stock 12 of the corporation. 13 – 3 – - *AB362_R1* 2. With respect to any entity other than a corporation, 1 owning, controlling or holding more than 50 percent of the 2 capital, profits or beneficial interest in the entity. 3 Sec. 3. “Estimated fair market value” means the estimated 4 price the real property would bring on the open market in a sale 5 between a willing buyer and a willing seller. Such price must be 6 derived from the assessor’s taxable value or the prior purchasing 7 price, if the prior purchase was within the 5 years immediately 8 preceding the date of valuation, whichever is higher. 9 Sec. 4. “Taxpayer” means any person liable for a tax 10 imposed by this chapter. 11 Sec. 5. The Department may prescribe such regulations as it 12 may deem necessary to carry out the purposes of this chapter. 13 Sec. 5.3. With regard to the administration of any tax 14 imposed by this chapter, the county recorder shall apply the 15 principles set forth in NRS 375.018. 16 Sec. 5.5. 1. A county recorder who has any question of law 17 regarding the imposition or collection of any tax imposed by this 18 chapter shall request an opinion from the district attorney 19 pursuant to NRS 252.160. The district attorney shall request an 20 opinion from the Attorney General pursuant to NRS 228.150 if: 21 (a) The county recorder informs the district attorney that there 22 is a conflict between the opinions of two or more district attorneys 23 in this State on the question; or 24 (b) The district attorney: 25 (1) Chooses not to render an opinion on the question; or 26 (2) Determines that he or she will not be able to render an 27 opinion on the question within a reasonable time. 28 2. If, according to an opinion issued by the Attorney General 29 in response to a request submitted pursuant to subsection 1, the 30 amount of any taxes received by a county recorder differs from the 31 amount required by law, the county recorder shall cause the notice 32 required by section 24.13 of this act to be given to the taxpayer. 33 Sec. 5.7. 1. The Department shall, to ensure that the tax 34 imposed by subsection 2 of section 8 of this act is collected fairly 35 and equitably in all counties, coordinate the collection and 36 administration of that tax. For this purpose, the Department may 37 conduct such audits of the records of the various counties as are 38 necessary to carry out the provisions of this chapter with respect to 39 subsection 2 of section 8 of this act. 40 2. When requested, the Department shall render assistance to 41 the county recorder of a county whose population is less than 42 30,000 relating to the imposition and collection of the tax imposed 43 by subsection 2 of section 8 of this act. 44 – 4 – - *AB362_R1* 3. The Department is not entitled to receive any fee for 1 rendering any assistance pursuant to subsection 2. 2 Sec. 6. (Deleted by amendment.) 3 Sec. 7. (Deleted by amendment.) 4 Sec. 8. 1. There is hereby imposed a tax on the sale or 5 transfer of a controlling interest in any entity which possesses, 6 directly or indirectly, an interest in real property in this State when 7 the value of the interest in real property exceeds $100, at the rate 8 of: 9 (a) If the real property is located in a county whose population 10 is 700,000 or more, $1.25; and 11 (b) If the real property is located in a county whose population 12 is less than 700,000, 65 cents, 13  for each $500 of value, or fraction thereof, of the interest in 14 real property possessed, directly or indirectly, by the entity. 15 2. In addition to all other taxes imposed pursuant to this 16 section, there is hereby imposed a tax on the sale or transfer of a 17 controlling interest in any entity which possesses, directly or 18 indirectly, an interest in real property in this State when the value 19 of the interest in real property exceeds $100, at the rate of $1.30 20 for each $500 of value, or fraction thereof, of the interest in real 21 property possessed, directly or indirectly, by the entity. 22 3. In addition to all other taxes imposed pursuant to this 23 section, there is hereby imposed a tax on the sale or transfer of a 24 controlling interest in any entity which possesses, directly or 25 indirectly, an interest in real property which is located in a county 26 whose board of county commissioners has imposed a tax pursuant 27 to NRS 375.026 when the value of the interest in real property 28 exceeds $100, at the rate which is an amount of cents per $500 of 29 value, or fraction thereof, of the interest in real property 30 possessed, directly or indirectly, by the entity that is equal to the 31 amount of cents per $500 of value, or fraction thereof, imposed by 32 the board of county commissioners of the county as the rate for 33 the tax pursuant to NRS 375.026. 34 4. For the purposes of this section, an entity only possess an 35 interest in real property if the entity possesses, directly or 36 indirectly, more than 50 percent of the total ownership interest in 37 the real property. The value of an entity’s interest in real property 38 is the estimated fair market value of the real property. 39 5. A taxable sale or transfer of a controlling interest in an 40 entity includes a single transaction or a series of related 41 transactions. It is presumed that transactions which occur within 42 24 months of each other are a series of related transactions. 43 6. A taxable sale or transfer of a controlling interest in an 44 entity includes a sale or transfer made by one seller or transferor 45 – 5 – - *AB362_R1* or a sale or transfer made by a group of sellers or transferors 1 acting in concert. It is presumed that sellers or transferors are 2 acting in concert if the sellers or transferors are: 3 (a) Persons who are related to each other by blood or marriage 4 within the fourth degree of consanguinity; or 5 (b) Entities which are under common control. 6 Sec. 9. 1. On or before the last day of the month 7 immediately following the month in which the sale or transfer of a 8 controlling interest in an entity which is subject to any of the taxes 9 imposed by section 8 of this act occurs, the person receiving the 10 interest shall file with the county recorder of each county in which 11 the entity has an interest in real property a return and remit to the 12 county recorder any tax due pursuant to section 8 of this act. The 13 return must separately: 14 (a) Identify each parcel of real property in the county in which 15 the entity possesses, directly or indirectly, an interest; 16 (b) State the estimated fair market value of each parcel of real 17 property in the county in which the entity possesses, directly or 18 indirectly, an interest; and 19 (c) State the amount of tax remitted with respect to each such 20 parcel. 21 2. Unless filed electronically, returns must be signed by the 22 person required to file the return or by his or her authorized agent 23 but need not be verified by oath. 24 Sec. 10. (Deleted by amendment.) 25 Sec. 10.5. If, after acceptance of the return filed pursuant to 26 section 9 of this act, the county recorder disallows an exemption 27 that was claimed at the time the return was filed or through audit 28 or otherwise determines that an additional amount of tax is due, 29 the county recorder shall promptly notify the person who filed the 30 return of the additional amount of tax due. If the additional 31 amount of tax is not paid within 30 days after the date the person 32 is notified, the county recorder shall impose a penalty of 10 33 percent of the additional amount due in addition to interest at a 34 rate of 1 percent per month, or a portion thereof, of the additional 35 amount due calculated from the date the return was filed through 36 the date on which the additional amount due, penalty and interest 37 are paid to the county recorder. 38 Sec. 11. 1. The county recorder shall transmit the proceeds 39 of the tax imposed by section 8 of this act at the end of each 40 quarter in the following manner: 41 (a) An amount equal to that portion of the proceeds which is 42 equivalent to 10 cents for each $500 of value or fraction thereof in 43 the Account for Affordable Housing created pursuant to 44 NRS 319.500. 45 – 6 – - *AB362_R1* (b) In a county whose population is 700,000 or more, an 1 amount equal to that portion of the proceeds which is equivalent 2 to 60 cents for each $500 of value or fraction thereof must be 3 transmitted to the county treasurer for deposit in the county school 4 district’s fund [Text truncated for display. Full text available on LegiScan.]