CPA organization lining up against Guinn’s proposed gross receipts tax

Erin Neff

Friday, Feb. 21, 2003 | 11:21 a.m.

CARSON CITY -- The Nevada Society of Certified Public Accountants has given a thumbs down to the linchpin of Gov. Kenny Guinn's tax plan.

The CPAs' Taxation Group studied both the Nevada Task Force on Tax Policy and Guinn's State of the State address in coming up with a series of recommendations.

In opposing the proposed gross receipts tax on business, the CPA group's report states: "It is our belief that most businesses understand income, sales and property taxes. Any departure from these basic taxes puts business in the uncomfortable situation of not only bearing the burden of the tax, but also the administrative cost of complying with the tax."

The gross receipts tax would levy a one quarter of 1 percent tax on the total receipts of a business above $450,000. The Las Vegas Chamber of Commerce and the Nevada Taxpayers Association lead the opposition to the proposal because they say businesses will not be able to properly plan for their tax burden.

The CPAs agreed.

"The state's taxpayers should be able to project their anticipated future tax burden with a high level of certainty," the report states. "Many of the current proposals that are being considered will only create uncertainty."

The CPA report found the proposed tax discriminates between different business, is regressive and could have a pyramiding effect, whereby the sale of the same items could be taxed at several different levels.

Dennis Meservy, a CPA in Las Vegas who worked on the report, said none of the 10 accountants who examined the tax proposals agreed with the gross receipts tax.

"While as CPAs we're happy to have clients that need us for the tax, I don't think it's good for business or for Nevada," Meservy said.

The report also found that instituting a gross receipts tax would discourage new businesses from locating in Nevada.

The governor's office welcomed the outside review, but was not worried about the group's opposition to the gross receipts tax.

"They took this upon themselves to do this analysis and they deserve credit for that because this obvious affects them directly," said Guinn's spokesman Greg Bortolin. "It's objective, and when the governor submitted his budget plan, he never expected everyone to agree with everything."

Guy Hobbs, chairman of the Task Force on Tax Policy, said some of the CPAs' opposition is based on assumptions of how the tax would be filed.

"They're not familiar with the mechanics of it because they haven't seen the bill yet," Hobbs said. "I'm not a CPA, I'm just a lowly MBA, but it is fairly easy to understand and administer."

Hobbs said a sample tax return for the gross receipts tax is "not even two pages with enlarged type." He said it is also an easy form to fill out.

As to whether the tax is regressive and discriminatory, Hobbs said he thought the CPAs might have strayed from simple accounting into tax policy.

"I welcome anyone to look at the proposal," Hobbs said. "But if they're going to oppose something, I wish they'd come up with an alternative. There are inherent problems with any tax."

The CPAs did support increases in the liquor and cigarette taxes and property tax, but called for consideration of splitting residential and business properties into separate rolls. The report supports increases on slot route taxes, corporate filing fees (with some modifications) and for so-called passive revenue generators.

"It's a positive sign that we're more right than wrong," Bortolin said.

Guinn has consistently said his tax plan was designed to fill the $704 million deficit in the coming two years. The taxes are needed, he said, to maintain current funding of K-12 and higher education.