For the latest news and updates on Nevada state and local tax

October 21, 2021

Nevada – Commerce Tax Policy

The Nevada Department of Taxation has asserted that only entities engaging in manufacturing in Nevada may claim the manufacturing tax rate for purposes of the Commerce Tax. Entities that are engaged in manufacturing – but conduct their manufacturing operations outside of Nevada are required to use the higher rate applicable to wholesaling activities. To be eligible for the 0.091% manufacturing rate, the business must be primarily engaged in the transformation of materials, substances, or components into new products – and those activities must occur within the state. Business entities are subject to the 0.101% wholesaling rate when their transformation activities occur outside Nevada.

Nevada’s policy very likely violates the Commerce Clause as it treats in-state and out-of-state business conducting the same activity differently. More specifically, Nevada’s policy discriminates against interstate commerce by subjecting businesses which conduct their manufacturing operations outside Nevada to a higher tax rate than similarly situated entities which conduct their manufacturing operations within the state. Manufacturers that paid the commerce tax at the higher 0.101% wholesaling rate are likely entitled to a refund and should consider filing protective claims while this issue is being litigated.

February 5, 2021

Nevada Tax Amnesty Program

The Nevada Department of Taxation recently released additional information about its tax amnesty program. The program will commence on February 1, 2021 and will be open through May 1, 2021. This tax amnesty program will allow a onetime waiver for penalties and interest for a number of taxes that the Department oversees, including the Commerce Tax, Sales & Use Tax, and Excise Taxes. Taxpayers with audits that have been finalized may be eligible for the program, but taxpayers currently under audit are not eligible for amnesty.
Businesses are advised to refer to the amnesty program guidance as issued by the state for more information regarding the specifics of the program, or reach out to Withum’s State and Local Tax Group for a deeper discussion.

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.