A Refresher on the Nevada Commerce Tax

As I was preparing our firm’s Nevada Commerce Tax Return this last week, I thought it would be a good idea to write a short post to remind our business clients and friends about this annual requirement in Nevada, which has a filing and payment deadline coming up soon.

What is the Nevada Commerce Tax?

Nevada has historically been considered a relatively tax-friendly state, and one of the few that does not have a state income tax, so when the commerce tax was passed by the Nevada legislature and signed into law by the governor a couple years ago, it was not without controversy. The commerce tax is effectively a tax on business gross revenue (minus certain limited exclusions and deductions that don’t include cost of goods sold or other most common business expenses). The tax rate varies by industry and ranges from 0.051 percent on the low end (for mining, quarrying, and oil and gas extraction) to 0.331 percent on the high end (for rail transportation).

Who is required to pay?

The commerce tax applies to all businesses engaged in business in Nevada, including corporations (C corporations and S corporations), LLCs, partnerships, and sole proprietorships. However, the good news for many smaller businesses is that there is no tax on gross revenue under $4 million.

When is the deadline, and what is the filing requirement?

For commerce tax purposes, the tax year begins July 1st and ends June 30th. Thus, calendar-year taxpayers and fiscal-year taxpayers with year ends other than June 30th will need to mark their calendars each year and adjust their normal financial reporting period for purposes of calculating the commerce tax and filing the commerce tax return.

The commerce tax return is due on or before the 45th day following the end of the tax year (June 30th) each year. According to the Nevada Department of Taxation, in general this means the return is due on August 14, but if the deadline falls on a weekend or holiday, the return will be due the next business day instead.

Keep in mind that every business is required to file a commerce tax return each year, regardless of the amount of its gross revenue. However, if the total amount of gross revenue is less than $4 million, the return allows for simplified reporting, and the taxpayer can skip the portion of the return that asks for financial information and calculations.

Are extensions allowed?

Yes. A business taxpayer can, for good cause, request a 30-day extension before the commerce tax return due date. If a 30-day extension is granted, there will be no penalty or late fee imposed on the amount due if it is paid within the extension period. That being said, interest will accrue from the original due date.

What are the penalties for failing to file or pay?

Filing late or failing to pay the commerce tax on time can carry relatively steep penalties ranging from 2 to 10 percent of the amount due. In addition, interest on unpaid amounts continues to accrue at a rate of 0.75 percent per month. As with most types of tax requirements, it’s best to not to delay getting into compliance.

If you have questions or need assistance relating to the Nevada Commerce Tax, don’t hesitate to give us a call.