AB453 - Revises provisions relating to taxation. (BDR 32-895)

REQUIRES TWO-THIRDS MAJORITY VOTE EXEMPT (§§ 24, 27, 28, 33, 107) (Reprinted with amendments adopted on April 21, 2025) FIRST REPRINT A.B. 453 - *AB453_R1* ASSEMBLY BILL NO. 453–ASSEMBLYMEMBERS ANDERSON AND CONSIDINE MARCH 17, 2025 ____________ JOINT SPONSOR: SENATOR NEAL ____________ Referred to Committee on Revenue SUMMARY—Revises provisions relating to taxation. (BDR 32-895) FISCAL NOTE: Effect on Local Government: Increases or Newly Provides for Term of Imprisonment in County or City Jail or Detention Facility. 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, administration, collection and enforcement of a tax on certain digital products electronically transferred to a purchaser; prohibiting the issuance and use of certain transferable tax credits if money is transferred or allocated from the Account to Stabilize the Operation of the State Government; stating the intent of the Legislature to review the transferable tax credits which the State is authorized to issue under certain circumstance; providing penalties; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Sections 24 and 33 of this bill impose a tax on a retail sale in this State of 1 specified digital products electronically transferred to a person and on the use of 2 specified digital products electronically transferred to a person in a transaction in 3 this State for which the tax was not collected at the time of sale. Section 23 of this 4 bill establishes requirements for determining the place where a sale of specified 5 digital products takes place for the purpose of the tax. Under sections 24 and 33, 6 the rate of the tax is the same as the sales and use tax rate imposed in the county in 7 which the sale of the specified digital products takes place, as determined pursuant 8 – 2 – - *AB453_R1* to section 23. Under section 100 of this bill, the requirement to impose, collect and 9 remit the tax is imposed on a retailer who does not maintain a place of business in 10 this State if, in the immediately preceding calendar year or the current calendar 11 year, the retailer had more than $100,000 of gross revenue from certain transactions 12 that took place in this State or 200 or more such transactions that took place in this 13 State. Sections 2-22, 25-32, 34-99 and 101-127 of this bill provide for the 14 administration, collection and enforcement of the tax in the same manner as the 15 sales and use tax. 16 Section 94 requires a person who directly or indirectly facilitates retail sales of 17 specified digital products to collect and remit the tax if, in the immediately 18 preceding calendar year or the current calendar year, the facilitator had more than 19 $100,000 of gross receipts from certain transactions made to customers in this State 20 or made or facilitated 200 or more transactions, on its own behalf or on behalf of a 21 seller, unless the facilitator enters into an agreement with a seller whereby the seller 22 agrees to assume responsibility for the collection and imposition of the tax. Section 23 95 provides that such a facilitator is not liable for the payment of the tax under 24 certain circumstances. 25 Section 96 requires certain persons who receive a fee in exchange for listing or 26 advertising a product for a seller but do not collect money or other consideration 27 from a customer to impose, collect and remit the tax if 200 or more retail sales to 28 customers in this State result from referrals made by the person or the cumulative 29 gross receipts of sales resulting from such referrals exceed $100,000, unless the 30 person complies with certain notice requirements and makes a monthly report to the 31 Department of Taxation. 32 Existing law creates the Account to Stabilize the Operation of State 33 Government, also known as the Rainy Day Fund, and authorizes the Director of the 34 Office of Finance in the Office of the Governor to request a transfer of money from 35 the Account to the State General Fund if: (1) the total actual revenue of the State 36 falls short by 5 percent or more of the total anticipated revenue for the biennium in 37 which the transfer will be made, as determined by the Legislature or the Interim 38 Finance Committee; or (2) the Legislature or Interim Finance Committee and the 39 Governor declare that a fiscal emergency exists. The Legislature may also allocate 40 money from the Account directly. (NRS 353.288) Section 157.3 of this bill 41 prohibits the issuance of transferable tax credits or the application of transferable 42 tax credits to state or local taxes during any fiscal year in which a transfer or 43 allocation is made from the Account by the Interim Finance Committee or during a 44 fiscal emergency by the Legislature. Section 157.3 limits this prohibition to 45 transferable tax credits authorized by state legislation that is enacted on or after the 46 effective date of section 157.3. 47 Existing law requires the Governor, on or before July 1 of each even-numbered 48 year, to impanel an Economic Forum consisting of economic and financial experts 49 appointed by the Governor to provide an estimate of the revenue that will be 50 collected by the State for general, unrestricted uses during the subsequent biennium 51 and make such projections for economic indicators as the Economic Forum deems 52 necessary to ensure that this estimate is accurate. (NRS 353.226, 353.228) Section 53 157.7 of this bill provides that, if the Economic Forum forecasts that such revenue 54 in the subsequent biennium will be less than in the then-current biennium and that 55 the reduction in revenue exceeds 7 percent, it is the intent of the Legislature to 56 review any transferable tax credits which the State is authorized to issue and 57 consider if the amount of such credits should be reduced. 58 Section 160 of this bill establishes January 1, 2026, as the effective date of the 59 provisions of this bill. 60 – 3 – - *AB453_R1* 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 117, 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 3 to 22, 5 inclusive, of this act have the meanings ascribed to them in those 6 sections. 7 Sec. 3. “Business” includes any activity engaged in by any 8 person or caused to be engaged in by any person with the object of 9 gain, benefit or advantage, either direct or indirect. 10 Sec. 4. “Computer software” means a set of coded 11 instructions designed to cause a computer or automatic data 12 processing equipment to perform a task. 13 Sec. 5. “Digital audio works” means works that result from 14 the fixation of a series of musical, spoken or other sounds, 15 including, without limitation, ringtones. 16 Sec. 6. “Digital audio-visual works” means a series of 17 related images which, when shown in succession, impart an 18 impression of motion, together with accompanying sounds, if any. 19 Sec. 7. “Digital books” means works that are generally 20 recognized in the ordinary and usual sense as “books.” 21 Sec. 8. “Electronically transferred” means obtained by the 22 purchaser by means other than tangible storage media. 23 Sec. 9. “End user” means any person who receives a 24 specified digital product, other than a person who receives by 25 contract a specified digital product for further commercial 26 broadcast, rebroadcast, transmission, retransmission, licensing, 27 relicensing, distribution, redistribution or exhibition of the 28 specified digital product, in whole or in part, to another person or 29 persons. 30 Sec. 10. 1. “Gross receipts” means the total amount of the 31 sales price or lease or rental price, as the case may be, of the retail 32 sales of specified digital products of retailers of specified digital 33 products, valued in money, whether received in money or 34 otherwise, without any deduction on account of any of the 35 following: 36 (a) The cost of the specified digital products sold, except that, 37 in accordance with such rules and regulations as the Department 38 may prescribe, a deduction may be taken if the retailer has 39 purchased specified digital products for some other purpose than 40 resale, has reimbursed the vendor of the specified digital products 41 for tax which the vendor is required to pay to the State or has paid 42 – 4 – - *AB453_R1* the use tax with respect to the specified digital products, and has 1 resold the specified digital products before making any use of the 2 specified digital products other than the broadcast, rebroadcast, 3 transmission, retransmission, licensing, relicensing, distribution, 4 redistribution or exhibition in the regular course of business. If 5 such a deduction is taken by the retailer, no refund or credit will 6 be allowed to the vendor of the specified digital products with 7 respect to the sale of the specified digital products. 8 (b) The cost of the materials used, labor or service cost, 9 interest paid, losses or any other expense. 10 2. The total amount of the sales or lease or rental price 11 includes all of the following: 12 (a) Any services that are a part of the sale. 13 (b) All receipts, cash, credits and property of any kind. 14 (c) Any amount for which credit is allowed by the seller to the 15 purchaser. 16 3. “Gross receipts” does not include any of the following: 17 (a) Cash discounts allowed and taken on sales. 18 (b) The sales price of specified digital products returned by 19 customers when the full sales price is refunded either in cash or 20 credit, but this exclusion does not apply in any instance when the 21 customer, in order to obtain the refund, is required to purchase 22 other specified digital products at a price greater than the amount 23 charged for the specified digital products that are returned. 24 (c) The price received for labor or services used in installing or 25 applying the specified digital products sold. 26 (d) The amount of any tax imposed by the United States upon 27 or with respect to retail sales, whether imposed upon the retailer or 28 the end user. 29 4. For purposes of the tax imposed by section 24 of this act, if 30 a retailer establishes to the satisfaction of the Department that the 31 tax has been added to the total amount of the sales price and has 32 not been absorbed by the retailer, the total amount of the sales 33 price shall be deemed to be the amount received exclusive of the 34 tax imposed. 35 Sec. 11. “In this State” or “in the State” means within the 36 exterior limits of the State of Nevada and includes all territory 37 within these limits owned by or ceded to the United States of 38 America. 39 Sec. 12. 1. “Occasional sale” includes: 40 (a) A sale of specified digital products not held or used by a 41 seller in the course of an activity for which the seller is required to 42 hold a seller’s permit, if the sale is not one of a series of sales 43 sufficient in number, scope and character to constitute an activity 44 requiring the holding of a seller’s permit. 45 – 5 – - *AB453_R1* (b) Any transfer of all or substantially all the specified digital 1 products held or used by a person in the course of such an activity 2 when after such transfer the real or ultimate ownership of such 3 property is substantially similar to that which existed before such 4 transfer. 5 2. For the purposes of this section, stockholders, 6 bondholders, partners or other persons holding an interest in a 7 corporation or other entity are regarded as having the “real or 8 ultimate ownership” of the specified digital products of the 9 corporation or other entity. 10 Sec. 13. “Other digital products”: 11 1. Means greeting cards, digital images, video or electronic 12 games or news and prewritten computer software, as defined in 13 NRS 360B.470. 14 2. Does not include: 15 (a) Computer software that is not prewritten computer 16 software. 17 (b) The storage, management and dissemination of data and 18 information on a cloud network, server or other digital storage 19 medium. 20 (c) The provision of maintenance services for computer 21 software, provided that, if the purchase of the maintenance 22 services occurs at the same time as the purchase of the software, 23 the maintenance services are optional and are separately stated on 24 any invoice, billing or other document given to a purchaser. 25 (d) Internet service. 26 (e) Payment processing services, including, without limitation, 27 services for processing payments from retail sales and peer-to-peer 28 money transfers. 29 (f) Accounting, bookkeeping and check preparation services. 30 (g) Internet broadcasts of live entertainment or educational or 31 informational presentations. 32 (h) Website hosting, storage or backup. 33 (i) The transmission of educational or instructional 34 programming, including, without limitation, the transmission of 35 courses by an elementary or secondary school, vocational or 36 technical school or institution of higher education or the 37 transmission of courses of professional development. 38 (j) The services of a travel agent. 39 (k) Cryptocurrency or digital currency, not including 40 simulated currencies or in-game currencies which are not 41 intended to be convertible to legal tender. 42 (l) Gift cards. 43 – 6 – - *AB453_R1* Sec. 14. “Purchase” means any transfer, exchange or barter, 1 conditional or otherwise, in any manner or by any means 2 whatsoever, of specified digital products for a consideration. 3 Sec. 15. “Retail sale” or “sale at retail” means a sale for any 4 purpose other than resale in the regular course of business of 5 specified digital products. 6 Sec. 16. 1. “Retailer” includes: 7 (a) Every seller who makes any retail sale or sales of specified 8 digital products. 9 (b) Every person engaged in the business of making sales of 10 specified digital products for use. 11 (c) Every person making more than two retail sales of specified 12 digital products during any 12-month period, inc [Text truncated for display. 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