Wednesday, April 30, 2003 | 9:11 a.m.
CARSON CITY -- Avon may not come calling if sole proprietors are included in the state's business license tax, a representative of direct sellers told lawmakers Tuesday.
The Washington-based Direct Selling Association asked the Assembly Taxation Committee to keep the state's current exemption for sole proprietors -- single business owners with no employees.
Proposals by Gov. Kenny Guinn and the Nevada Task Force on Tax Policy, as embodied in Senate Bill 238 and Assembly Bill 281 respectively, would remove the exemption.
"One of the primary benefits to direct selling is the low startup cost associated with the activity," said John Webb of the Direct Selling Association. "Any additional startup cost on direct sellers will discourage individuals from taking advantage of the opportunity."
Webb said he represented about 150 direct sales companies such as Avon, Pampered Chef, Creative Memories and Mary Kay. Roughly 81 percent of all direct sellers are women, he added.
Removing the sole proprietor exemption would also make hairdressers, barbers and those who simply keep a corporation for occasional business purposes subject to filing the state's business activities tax.
If the exemption is removed, sole proprietors would have to pay $25 to obtain a license and up to $140 on the tax under the current law. The governor is also proposing to make the license an annual, not just a one-time, fee, and he is proposing to triple the quarterly business activity tax.
Assemblyman Harry Mortenson, D-Las Vegas, expressed concerns that people like him, a former nuclear physicist who had a corporation, won't have a reason to hold onto a rarely-used business if they are subject to higher taxes.
"Then you won't get any of the revenue from them," Mortenson said.
In the Senate Taxation Committee, Sen. Sandra Tiffany, R-Henderson, has also expressed concerns about removing the sole proprietor exemption.
The task force recommended removing the exemption, in part, to get a better handle on the number of businesses in the state and to collect revenue from a broader base in the business community.
Brian Harrison of Alticor Inc., the parent company of Amway, told lawmakers roughly 5,000 direct sellers in Nevada would be subject to paying the tax if the exemption is removed.
Webb added that those sellers generate $10 million to $14 million in sales tax revenue for the state.
"If the numbers of sales people shrink, so will the sales tax revenue from our member companies," Webb said.
Josephine Mills of Avon Products in New York told the committee that women who become Avon sellers typically begin because they like the product.
"The majority of these people are doing this to get a discount on something they want and like and end up just selling to their families and friends," Mills said. "They probably won't start if they have the hassle of paying this tax."
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