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
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.
