Legislative Commission OKs regulations for new taxes

Thursday, Dec. 4, 2003 | 9:05 a.m.

CARSON CITY -- After months of hearings and rewrites, the regulations imposing the centerpieces of Nevada's $833 million tax increase plan were approved by the Legislative Commission Wednesday.

The 0.07 percent tax on payrolls for most businesses, the 2 percent tax on payrolls of financial institutions and the 10 percent live-entertainment tax were passed by the commission without dissent.

Barbara Smith Campbell, chairwoman of the Nevada Tax Commission, told the Legislative Commission that taxpayers are welcome to seek advisory opinions on how the taxes may apply in certain situations.

There will probably be a multitude of questions on deductions for providing health care insurance on the payroll tax and where and when the live entertainment tax applies.

The live-entertainment tax replaces the 10 percent cabaret tax that was applicable only to casinos. This tax may pose some of the greatest problems.

Senate Minority Leader Dina Titus, D-Las Vegas, said the new tax closes loopholes in the cabaret tax, which dates back to the 1960s. Under the cabaret tax some large casinos were not required to pay.

Titus wants to make sure a fair share is paid by strip clubs that are making "a tremendous amount of money."

"Their contributions to the community are dubious," she said.

She said that because the women who work in the clubs are private contractors, not covered by health or industrial accident insurance, employers now don't have to pay the $100 a year per worker.

As a result, strip clubs were specifically included in the bill that created the taxes and the regulations that will enforce them.

The regulations define businesses subject to the payroll tax as those that pay the industrial accident insurance.

Assembly Majority Leader Barbara Buckley, D-Las Vegas, said she wanted to make sure the record showed that the live-entertainment tax does not apply to mariachi bands or hula dancers.

Smith Campbell said there may be situations in which two shopping centers with entertainment are taxed differently, if one is owned by a casino and the other by a private business.

Those are some of the things that will have to be worked out.

The payroll tax on business and financial institutions became effective in October and the first payment is due next month. The entertainment tax becomes effective next month.

Employers who pay health care insurance for their workers and their families will be able to deduct that from the payroll tax.

Assemblyman Bernie Anderson, D-Sparks, said the addition of insurance for workers' families in that exemption made it broader than he thought it was going to be. He suggested that if an employer paid for a worker to be a member of a fitness club that also could be deducted.

The regulations, in part, mirror the IRS rules that define these exemptions.

Smith Campbell said if the deduction fits the IRS standards, then it is permissible.