SB392 - Imposes a tax on the retail sale of certain digital products. (BDR 32-700)

REQUIRES TWO-THIRDS MAJORITY VOTE (§§ 24, 27, 28, 33, 107) S.B. 392 - *SB392* SENATE BILL NO. 392–SENATOR NEAL MARCH 17, 2025 ____________ Referred to Committee on Revenue and Economic Development SUMMARY—Imposes a tax on the retail sale of certain digital products. (BDR 32-700) 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; 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 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 1-22, 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 15 the sales and use tax. Section 130 of this bill establishes January 1, 2026, as the 16 effective date of this bill. 17 Section 94 requires a person who directly or indirectly facilitates retail sales of 18 specified digital products to collect and remit the tax if, in the immediately 19 preceding calendar year or the current calendar year, the facilitator had more than 20 $100,000 of gross receipts from certain transactions made to customers in this State 21 – 2 – - *SB392* or made or facilitated 200 or more transactions, on its own behalf or on behalf of a 22 seller, unless the facilitator enters into an agreement with a seller whereby the seller 23 agrees to assume responsibility for the collection and imposition of the tax. Section 24 95 provides that such a facilitator is not liable for the payment of the tax under 25 certain circumstances. 26 Section 96 requires certain persons who receive a fee in exchange for listing or 27 advertising a product for a seller but do not collect money or other consideration 28 from a customer to impose, collect and remit the tax if 200 or more retail sales to 29 customers in this State result from referrals made by the person or the cumulative 30 gross receipts of sales resulting from such referrals exceed $100,000, unless the 31 person complies with certain notice requirements and makes a monthly report to the 32 Department of Taxation. 33 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 – 3 – - *SB392* Sec. 10. 1. “Gross receipts” means the total amount of the 1 sales price or lease or rental price, as the case may be, of the retail 2 sales of specified digital products of retailers of specified digital 3 products, valued in money, whether received in money or 4 otherwise, without any deduction on account of any of the 5 following: 6 (a) The cost of the specified digital products sold, except that, 7 in accordance with such rules and regulations as the Department 8 may prescribe, a deduction may be taken if the retailer has 9 purchased specified digital products for some other purpose than 10 resale, has reimbursed the vendor of the specified digital products 11 for tax which the vendor is required to pay to the State or has paid 12 the use tax with respect to the specified digital products, and has 13 resold the specified digital products before making any use of the 14 specified digital products other than the broadcast, rebroadcast, 15 transmission, retransmission, licensing, relicensing, distributing, 16 redistributing or exhibition in the regular course of business. If 17 such a deduction is taken by the retailer, no refund or credit will 18 be allowed to the vendor of the specified digital products with 19 respect to the sale of the specified digital products. 20 (b) The cost of the materials used, labor or service cost, 21 interest paid, losses or any other expense. 22 2. The total amount of the sales or lease or rental price 23 includes all of the following: 24 (a) Any services that are a part of the sale. 25 (b) All receipts, cash, credits and property of any kind. 26 (c) Any amount for which credit is allowed by the seller to the 27 purchaser. 28 3. “Gross receipts” does not include any of the following: 29 (a) Cash discounts allowed and taken on sales. 30 (b) The sales price of specified digital products returned by 31 customers when the full sales price is refunded either in cash or 32 credit, but this exclusion does not apply in any instance when the 33 customer, in order to obtain the refund, is required to purchase 34 other specified digital products at a price greater than the amount 35 charged for the specified digital products that are returned. 36 (c) The price received for labor or services used in installing or 37 applying the specified digital products sold. 38 (d) The amount of any tax imposed by the United States upon 39 or with respect to retail sales, whether imposed upon the retailer or 40 the end user. 41 4. For purposes of the tax imposed by section 24 of this act, if 42 a retailer establishes to the satisfaction of the Department that the 43 tax has been added to the total amount of the sales price and has 44 not been absorbed by the retailer, the total amount of the sales 45 – 4 – - *SB392* price shall be deemed to be the amount received exclusive of the 1 tax imposed. 2 Sec. 11. “In this State” or “in the State” means within the 3 exterior limits of the State of Nevada and includes all territory 4 within these limits owned by or ceded to the United States of 5 America. 6 Sec. 12. 1. “Occasional sale” includes: 7 (a) A sale of specified digital products not held or used by a 8 seller in the course of an activity for which the seller is required to 9 hold a seller’s permit, if the sale is not one of a series of sales 10 sufficient in number, scope and character to constitute an activity 11 requiring the holding of a seller’s permit. 12 (b) Any transfer of all or substantially all the specified digital 13 products held or used by a person in the course of such an activity 14 when after such transfer the real or ultimate ownership of such 15 property is substantially similar to that which existed before such 16 transfer. 17 2. For the purposes of this section, stockholders, 18 bondholders, partners or other persons holding an interest in a 19 corporation or other entity are regarded as having the “real or 20 ultimate ownership” of the specified digital products of the 21 corporation or other entity. 22 Sec. 13. “Other digital products”: 23 1. Means greeting cards, digital images, video or electronic 24 games or news and prewritten computer software, as defined in 25 NRS 360B.470. 26 2. Does not include: 27 (a) Computer software that is not prewritten computer 28 software. 29 (b) The storage, management and dissemination of data and 30 information on a cloud network, server or other digital storage 31 medium. 32 (c) The provision of maintenance services for computer 33 software, provided that, if the purchase of the maintenance 34 services occurs at the same time as the purchase of the software, 35 the maintenance services are optional and are separately stated on 36 any invoice, billing or other document given to a purchaser. 37 (d) Internet service. 38 (e) Payment processing services, including, without limitation, 39 services for processing payments from retail sales and peer-to-peer 40 money transfers. 41 (f) Accounting, bookkeeping and check preparation services. 42 (g) Internet broadcasts of live entertainment or educational or 43 informational presentations. 44 (h) Website hosting, storage or backup. 45 – 5 – - *SB392* (i) The transmission of educational or instructional 1 programming, including, without limitation, the transmission of 2 courses by an elementary or secondary school, vocational or 3 technical school or institution of higher education or the 4 transmission of courses of professional development. 5 (j) The services of a travel agent. 6 (k) Cryptocurrency or digital currency, not including 7 simulated currencies or in-game currencies which are not 8 intended to be convertible to legal tender. 9 (l) Gift cards. 10 Sec. 14. “Purchase” means any transfer, exchange or barter, 11 conditional or otherwise, in any manner or by any means 12 whatsoever, of specified digital products for a consideration. 13 Sec. 15. “Retail sale” or “sale at retail” means a sale for any 14 purpose other than resale in the regular course of business of 15 specified digital products. 16 Sec. 16. 1. “Retailer” includes: 17 (a) Every seller who makes any retail sale or sales of specified 18 digital products. 19 (b) Every person engaged in the business of making sales of 20 specified digital products for use. 21 (c) Every person making more than two retail sales of specified 22 digital products during any 12-month period, including sales made 23 in the capacity of assignee for the benefit of creditors or a receiver 24 or trustee in bankruptcy. 25 2. When the Nevada Tax Commission determines that it is 26 necessary for the efficient administration of this chapter to regard 27 any salespersons, representatives, peddlers or canvassers as the 28 agents of the dealers, distributors, supervisors or employers under 29 whom they operate or from whom they obtain the specified digital 30 products sold by them, irrespective of whether they are making 31 sales on their own behalf or on behalf of such dealers, 32 distributors, supervisors or employers, the Nevada Tax 33 Commission may so regard them and may regard the dealers, 34 distributors, supervisors or employers as retailers for purposes of 35 this chapter. 36 Sec. 17. “Ringtones” means digitized sound files that are 37 downloaded onto a device and that may be used to alert the 38 customer with respect to a communication. 39 Sec. 18. “Sale” means and includes any transfer of title or 40 possession, exchange, barter, lease or rental, conditional or 41 otherwise, in any manner or by any means whatsoever, of 42 specified digital products for a consideration, including, without 43 limitation, any such transfer, exchange or barter on a subscription 44 basis. 45 – 6 – - *SB392* Sec. 19. 1. “Sales price” means the total amount for which 1 specified digital products are sold, valued in money, whether paid 2 in money or otherwise, without any deduction on account of any 3 of the following: 4 (a) The cost of the specified digital products sold. 5 (b) The cost of materials used, labor or service cost, interest 6 charged, losses or any other expenses. 7 (c) The cost of transmitting the specified digital products 8 before purchase. 9 2. The total amount for which specified digital products are 10 sold includes all of the following: 11 (a) Any services that are a part of the sale. 12 (b) Any amount for which credit is given to the purchaser by 13 the seller. 14 3. “Sales price” does not include any of the following: 15 (a) Cash discounts allowed and taken on sales. 16 (b) The amount charged for specified digital products returned 17 by customers when the entire amount charged therefor is refunded 18 either in cash or credit, except that this exclusion does not apply in 19 any instance when the customer, in order to obtain the refund, is 20 required to purchase other specified digital products at a price 21 greater than the amount charged for the specified digital products 22 that [Text truncated for display. Full text available on LegiScan.]