Nevada Department of Taxation Registration
We run into many business owners who believe that the state business license, issued by the Nevada Secretary of State (NVSOS), is all they need to properly transact business in our state. Not so.
First, what does it mean to “transact business?” The law is written such that you should assume you are, in fact, transacting business unless you fall under an exemption. Exemptions include handling litigation; holding board meetings; maintaining bank accounts; making sales through independent contractors; fulfilling orders accepted out of state; owning, without more, real or personal property; engaging in isolated transactions that are completed within 30 days and are not part of a series of similar transactions; producing a motion picture, or transacting business in interstate commerce. This list is not exhaustive, so consult your attorney. (See NRS 80.015)
If you don’t fall under an exemption above, you need a state and local business license in every jurisdiction in which you transact business. That means if you offer your goods or services in more than one local municipality (like a food truck or mobile detailer), you need a business license from each of those jurisdictions. In Southern Nevada, we have several jurisdictions – Clark County, and the cities of Las Vegas, Henderson, North Las Vegas, Boulder City, and Mesquite. How do you determine which jurisdiction? Luckily, Clark County maintains the Southern Nevada Regional Business License Launch Page. Enter your business address in the search bar and the jurisdiction will pop up.
“But the title of this article is the Nevada Department of Taxation…” The prerequisite to obtaining your local license(s) is registering with the Nevada Department of Taxation (NVTax) for either a sales/use tax or a consumer use tax permit.
If you are selling tangible goods, then you need a sales tax permit. Tangible goods are those that can be felt, measured, weighed, seen, touched, or are otherwise perceptible to the senses. If you aren’t selling tangible goods, you must still register for a consumer use tax permit which requires you to track any purchase you make of items that are consumed in your business (from printer paper to paper clips) on which you did NOT pay sales tax, and remit the sales tax you would have paid to the state. The purpose was to level the playing field between out of state vendors who didn’t have to charge sales tax and in-state vendors who did. This was a bigger issue back when Amazon and other online retailers weren’t charging sales tax. More FAQs here.
Your sales tax permit fee is $15.00 for each business location; a consumer use tax permit has no fee. Your sales tax permit must be conspicuously displayed at each location.
In addition to the permit fee, sales tax permits may require security deposits, based on the estimated average tax due. The frequency of your tax return filing depends on sales. The default is monthly filing , but if you have less than $10,000/month in sales, you may file quarterly. If you have less than $1,500 in sales in the prior year, you can request to file annually.
Quarterly filers must post a security deposit of 2x the estimated average tax due; monthly filers 3x and annual filers 4x. If your estimated tax is less than $1,000, no deposit is required. You may apply for a waiver from the security deposit after a three year perfect payment record. If your tax due exceeds $10,000, you must pay by electronic transfer.
How do you register? You can head over to SilverFlume to register. You can even complete some local business licensing on SilverFlume. If you’re already registered with NVTax, you can visit tax.nv.gov to file and pay online.
What is subject to sales tax? Delivery charges when they are charged as part of the sale of tangible personal property. If such postage or shipping charges are stated separately, then they are not subject to sales tax. If you lease tangible personal property, then sales tax is due. What about books or videos delivered electronically? Those are not subject to sales or use tax, unless they’re transmitted by a disk (remember those?) or in another tangible form. More on what is and isn’t subject to sales tax here and in NRS 372.
Speaking of online retailers, Nevada became part of the Streamlined Sales Tax system which was established after the US Supreme Court ruled that states can’t require a seller without a physical presence in the state to collect sales tax on sales into that state. However, the tax must still be paid, so the Streamlined Sales Tax system was established to make it easier to comply.
What if you’re a nonprofit? Your tax-exempt letter from the IRS doesn’t automatically exempt you from registration or payment with NVTax. Your organization must have a religious, charitable, or educational purpose (animal rescues didn’t qualify as of my last attempt because they don’t support ‘persons’ as defined in NRS 371.3261 – insert sad face here). You must apply and be approved for an exemption from sales tax. Download the form here.
Fun fact: You can’t advertise that you’ll pay the sales tax (NRS 372.115), but you can say that “sales tax is included in the price.”
What about resale certificates? There’s really no magic to resale certificates and you can create your own using this template. That certificate allows you to purchase goods for resale from someone above you in the supply chain without paying sales tax because you’re representing that you’ll pay it when you eventually sell it to your end customer.
It’s important to make sure you’re properly licensed to do business, or risk paying fines and penalties for failure to do so. This becomes especially risky because competitors can tattle on you. Anonymously.
Another pitfall to avoid – if you’re buying a business, make sure to request a “Certificate of Amount Due” from NVTax so you aren’t on the hook for taxes owed by the seller.
Please note: Rules and regulations regarding Nevada tax change frequently. As an example, just this year (2019) the legislature did away with the requirement that all entities file a Commerce Tax return, even if no tax is owed. Now, only those who owe the tax must file. That’s the bad news. The good news is the Nevada Department of Taxation regularly holds seminars to educate taxpayers and they are easily accessible with any questions you might have at 866-962-3707. Their Taxpayer Information Packet is also very helpful.