SB430 - Revises provisions relating to taxation. (BDR 32-693)

S.B. 430 - *SB430* SENATE BILL NO. 430–COMMITTEE ON REVENUE AND ECONOMIC DEVELOPMENT MARCH 24, 2025 ____________ Referred to Committee on Revenue and Economic Development SUMMARY—Revises provisions relating to taxation. (BDR 32-693) 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 issuance of transferable tax credits and the partial abatement of certain taxes for certain projects of single-family residences; exempting such residences from the taxes on real property and transfers of such residences from the taxes on transfers of real property in certain circumstances; prohibiting the sale of such residences to certain corporate investors; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Under existing law, financial institutions and other employers are required to 1 pay an excise tax (the modified business tax) on wages paid by them. (NRS 2 363A.130, 363B.110) Existing law provides for the imposition and administration 3 of sales and use taxes pursuant to the Sales and Use Tax Act and the Local School 4 Support Tax Law. (Chapters 372 and 374 of NRS) Any amendment to the Local 5 School Support Tax Law also applies to other sales and use taxes imposed under 6 existing law. (NRS 354.705, 374A.020, 376A.060, 377.040, 377A.030, 377B.110, 7 543.600; and various special and local acts) Sections 2-13 of this bill authorize the 8 Housing Division of the Department of Business and Industry to approve 9 applications for the issuance of transferable tax credits and granting of abatements 10 of the excise tax on employers other than financial institutions or local sales and 11 use taxes imposed pursuant to the Local School Support Tax Law that are 12 submitted by a project sponsor engaged in a project for the acquisition, 13 development and construction of single-family residences to be sold for the direct 14 cost of the residences to households who will occupy the residences and whose 15 income is less than 130 percent of the area median income. Section 9 authorizes the 16 project sponsor, on behalf of the project, to apply to the Division for these tax 17 – 2 – - *SB430* incentives. Sections 9 and 19 of this bill provide for the confidentiality of certain 18 information in the application and for the adoption of regulations. Section 9 19 authorizes the Division to approve such an application if the Division finds that the 20 project meets the qualifications. 21 If the Division approves an application for transferable tax credits, section 10 22 requires the Division to issue to the project sponsor in the qualified project a 23 certificate of eligibility for transferable tax credits. Section 10 provides that a 24 project is eligible for transferable tax credits in an amount equivalent to the costs of 25 financial assistance provided by the project sponsor to purchasers of single-family 26 residences. Section 10 also provides that the expiration of the transferable tax 27 credits is 4 years after the date of issuance to the project sponsor. 28 If the Division approves an application for an abatement, section 11 provides 29 that the project sponsor is entitled to an abatement of: (1) employer excise taxes for 30 a period of not more than 10 years in an amount equal to the amount of the 31 employer excise taxes that would otherwise be owed for the project; and (2) certain 32 local sales and use taxes for a period of not more than 20 years and in an amount 33 equal to those local sales and use taxes that would otherwise be owed in the county 34 in which the project is located. Sections 15 and 16 of this bill make conforming 35 changes as a result of the authorization of these abatements. 36 Section 12 requires the project sponsor to repay any portion of transferable tax 37 credits and any portion of an abatement to which the project sponsor is not entitled 38 if the Division determines that the project sponsor becomes ineligible for the 39 incentives. Section 13 requires the Division to prepare and submit to the 40 Legislature certain reports concerning any tax incentives provided to a project 41 pursuant to sections 2-13. 42 Existing law provides for the assessment of ad valorem taxes on certain real 43 and personal property and provides certain exemptions from those taxes. (Chapter 44 361 of NRS) Section 14 of this bill provides an exemption from the tax on real 45 property for the initial owner of a single-family residence constructed as part of a 46 project approved pursuant to sections 2-13. The Nevada Constitution requires the 47 Legislature to provide a specific date on which an exemption from property taxes 48 will cease to be effective. (Nev. Const. Art. 10, § 6) To comply with this 49 requirement, section 14 prohibits an application for an exemption pursuant to that 50 section from being submitted on or after July 1, 2055. However, an exemption 51 granted pursuant to an application submitted before July 1, 2055, would continue to 52 be in effect until the owner of the residence no longer qualifies for the exemption. 53 Existing law provides for the imposition of taxes on transfers of real property 54 and exempts certain transfers from such taxes. (NRS 375.020, 375.023, 375.026, 55 375.090) Section 17 of this bill exempts the initial transfers of single-family 56 residences constructed in a project approved pursuant to sections 2-13 from the real 57 property transfer tax. 58 Section 18 of this bill prohibits the initial purchaser of a single-family 59 residence in a project approved pursuant to sections 2-13 from selling the single- 60 family residence to a corporation, limited-liability company or affiliate of such an 61 entity. 62 The Nevada Constitution prohibits the Legislature from enacting an exemption 63 from property taxes and sales and use taxes unless the Legislature makes certain 64 findings regarding the benefits and effects of the exemption. (Nev. Const. Art. 10, § 65 6) Section 20 of this bill sets forth such findings of the Legislature with respect to 66 any such exemption provided in this bill. 67 – 3 – - *SB430* THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 360 of NRS is hereby amended by adding 1 thereto the provisions set forth as sections 2 to 13, inclusive, of this 2 act. 3 Sec. 2. As used in sections 2 to 13, inclusive, of this act, 4 unless the context otherwise requires, the words and terms defined 5 in sections 3 to 8, inclusive, of this act have the meanings ascribed 6 to them in those sections. 7 Sec. 3. “Division” means the Housing Division of the 8 Department of Business and Industry. 9 Sec. 4. “Employer excise taxes” means the taxes imposed on 10 the wages paid by an employer pursuant to chapter 363B of NRS. 11 Sec. 5. “Local sales and use taxes” means the taxes imposed 12 on the gross receipts of any retailer from the sale of tangible 13 personal property sold at retail, or stored, used or otherwise 14 consumed, in the county in which the project is located. The term 15 does not include any taxes imposed by the Sales and Use Tax Act. 16 Sec. 6. “Participant” means a person who contributes to or 17 participates in the project, including, without limitation, a 18 contractor and subcontractor. 19 Sec. 7. “Project” means a project for the acquisition, 20 development and construction of at least 100 single-family 21 residences for households with an income of not more than 130 22 percent of the area median income. 23 Sec. 8. “Project sponsor” means a person who acquires an 24 ownership interest in a project and is designated by the 25 participants in the project to apply for a certificate of eligibility for 26 transferable tax credits or an abatement of employer excise taxes 27 or local sales and use taxes, or both, pursuant to section 9 of this 28 act. 29 Sec. 9. 1. On behalf of a project, the project sponsor may 30 apply to the Division for: 31 (a) A certificate of eligibility for transferable tax credits which 32 may be applied to employer excise taxes or local sales and use 33 taxes, or both. 34 (b) An abatement of employer excise taxes or local sales and 35 use taxes, or both. 36 2. For a project to be eligible for the transferable tax credits 37 described in paragraph (a) of subsection 1 and the abatement of 38 the taxes described in paragraph (b) of subsection 1, the project 39 sponsor must, on behalf of the project: 40 (a) Submit an application on a form prescribed by the 41 Division; 42 – 4 – - *SB430* (b) Enter into a written agreement with the Division that 1 requires the project sponsor to sell each single-family residence in 2 the project for not more than the direct costs to acquire, develop 3 and construct the single-family residence to a household that will 4 occupy the residence and has an income of not more than 130 5 percent of the area median income; and 6 (c) Meet any other requirements prescribed by the Division. 7 3. Any participant may submit a request to the Administrator 8 of the Division to protect from disclosure any information in the 9 application which, under generally accepted business practices, 10 would be considered a trade secret or other confidential 11 proprietary information of the participant. After consulting with 12 the participant, the Administrator of the Division shall determine 13 whether to protect the information from disclosure. The decision 14 of the Administrator of the Division is final and is not subject to 15 judicial review. If the Administrator of the Division determines to 16 protect the information from disclosure, the protected 17 information: 18 (a) Is confidential proprietary information of the participant; 19 (b) Is not a public record; 20 (c) Must be redacted by the Administrator of the Division from 21 any copy of the application that is disclosed to the public; and 22 (d) Must not be disclosed to any person who is not an officer 23 or employee of the Division unless the participant consents to the 24 disclosure. 25 4. The Division may approve an application submitted 26 pursuant to subsection 1 if the Division finds that the project is 27 eligible pursuant to subsection 2. 28 5. The Division may adopt any regulations necessary to carry 29 out the provisions of sections 2 to 13, inclusive, of this act. 30 6. The Nevada Tax Commission may adopt any regulations 31 necessary to carry out the provisions of sections 2 to 13, inclusive, 32 of this act. 33 Sec. 10. 1. If the Division approves an application for a 34 certificate of eligibility for transferable tax credits submitted 35 pursuant to paragraph (a) of subsection 1 of section 9 of this act, 36 the Division shall immediately forward a copy of the certificate of 37 eligibility which identifies the estimated amount of the tax credits 38 available pursuant to this section to: 39 (a) The project sponsor; and 40 (b) The Department. 41 2. A project may be approved for a certificate of eligibility for 42 transferable tax credits in an amount equal to the costs of 43 financial assistance provided by the project sponsor to purchasers 44 of single-family residences in the project. 45 – 5 – - *SB430* 3. The transferable tax credits issued to a project sponsor 1 pursuant to this section expire 4 years after the date on which the 2 transferable tax credits are issued to the project sponsor. 3 Sec. 11. 1. If the Division approves an application for an 4 abatement of employer excise taxes or local sales and use taxes, or 5 both, submitted pursuant to paragraph (b) of subsection 1 of 6 section 9 of this act, the Division shall immediately forward a 7 certificate of eligibility for the abatement to: 8 (a) The Department; and 9 (b) The Nevada Tax Commission. 10 2. The abatement for the project sponsor in the project must: 11 (a) For employer excise taxes, be for a duration of not more 12 than 10 years after the date on which the application is submitted 13 and in an amount that equals the amount of the employer excise 14 taxes that would otherwise be owed by each participant for 15 employees employed by the participant for the project; and 16 (b) For local sales and use taxes, be for a duration of not more 17 than 20 years after the date on which the application is submitted 18 and in an amount that equals the amount of the local sales and 19 use taxes that would otherwise be owed by each participant in the 20 project. 21 3. If the Division approves an abatement of local sales and 22 use taxes, the Division shall issue to the project sponsor a 23 document certifying the abatement which can be presented to 24 retailers at the time of sale. The document must clearly state the 25 rate of sales and use taxes which the purchaser is required to pay 26 in the county in which the abatement is effective. 27 Sec. 12. 1. The project sponsor shall, upon the request of 28 the Division, furnish the Division with copies of all records 29 necessary to verify that the project meets the eligibility 30 requirements for any transferable tax credits issued pursuant to 31 section 10 of this act and the abatement of any taxes approved 32 pursuant to section 11 of this act. 33 2. A project sponsor that is found to have submitted any false 34 statement or made any false representation in any document 35 submitted for the purpose of obtaining transferable tax credits 36 pursuant to sections 2 to 13, inclusive, of this act, or that otherwise 37 becomes ineligible for transferable tax credits after receiving the 38 transferable tax credits pursuant to sections 2 to 13, inclusive, of 39 this act shall repay to the Department any portion of the 40 transferable tax credits to which the project sponsor is not entitled. 41 3. Transferable tax credits purchased in good faith are not 42 subject to forfeiture or repayment by the transferee unless the 43 transferee submitted fraudulent information in connection with 44 the purchase. 45 – 6 – - *SB430* 4. Notwithstanding any provision of this chapter, if the 1 project sponsor of a project for which an abatement has been 2 approved pursuant to section 11 of this act and is in effect fails to 3 meet the requirements for eligibility pursuant [Text truncated for display. Full text available on LegiScan.]