Over $2 million could come from bank tax

Friday, Aug. 22, 2003 | 10:25 a.m.

Nevada stands to collect more than $2.7 million annually from a new state excise tax on banks that have more than one branch.

A list of the banks that would pay that tax, which goes into effect Jan. 1, was distributed Thursday at a workshop conducted by the Nevada Tax Commission.

The commission has been conducting a series of workshops in Las Vegas and Carson City to clarify the new tax legislation that was approved in special session this summer by the Nevada Legislature. The clarification includes settling on definitions to determine the individuals and businesses that must pay the new taxes.

The bank branch excise tax equates to $7,000 per year per branch, with the first branch exempt. Under that definition, 23 Nevada banks would be exempt because each has only one office in the state. But 29 other banks would have to pay the tax.

Leading the way is Wells Fargo Bank Nevada, which would have to pay $728,000 a year for 104 branches. They are followed by Bank of America, $504,000 for 72 branches, Nevada State Bank, $441,000 for 63 branches, U.S. Bank, $294,000 for 42 branches, and Washington Mutual Bank, $140,000 for 20 branches.

The total annual take for the state would be $2,723,000, based on 389 bank branches. An additional 52 branches would be exempt from the tax.

Those figures are subject to change, however. What still needs to be ironed out is the definition of a bank branch.

Under consideration is a definition used by the Federal Deposit Insurance Corp., whose mission is to ensure stability in the nation's financial system.

"A branch/office is any location, or facility, of a financial institution, including its main office, where deposit accounts are opened, deposits are accepted, checks paid and loans granted," the FDIC definition states.

"Some branches include, but are not limited to, brick and mortar locations, detached or attached drive-in facilities, seasonal offices, offices on military bases or government installations, paying/receiving stations or units, nondeposit offices, Internet and phone banking locations where a customer can open accounts, make deposits and borrow money."

Other issues that may be clarified have to do with the fact that the tax will be paid quarterly, which works out to $1,750 every three months per branch.

The Tax Commission also has begun to consider the definition of what constitutes a business for the purpose of assessing the newly increased $100 annual business license fee, which went into effect July 22.

Gregory Zunino, deputy attorney general who advises the Nevada Department of Taxation, said it was his opinion that family trusts would be exempt even though they may be operated for profit.

But the commission is still wrestling with a provision in the new tax law that would exempt individuals who work out of their home from paying the business license fee if they earn less than 66.6 percent of the state's average annual wage, or less than $21,500 under current wage levels. At issue is whether the law addresses individuals who work out of their home who have formed corporations.

Dino DiCianno, deputy executive director of the taxation department, discussed the difficulty of ironing out the new tax law.

"These are uncharted waters for us," he said. "We're making a valiant attempt to cover everything possible in a short period of time. I trust the general public has patience with us in getting through this process."

The tax commission plans to conduct workshops at least through October to clarify the new tax law. The commission has been voting on definitions at its monthly meetings.