Businesses hit with $100 annual tax

Tuesday, Oct. 7, 2003 | 11:17 a.m.

CARSON CITY -- The state Tax Commission on Monday adopted an emergency regulation that imposes an annual $100 tax on an estimated 100,000 businesses in Nevada.

The $100 yearly payment is part of the $836 million tax increase plan adopted by the Nevada Legislature. It will replace the one-time $25 fee each business had been charged at its start-up.

Dino DiCianno, assistant director of the state Taxation Department, estimated that 100,000 businesses would have to pay the new annual fee. It is expected to yield more than $22 million this fiscal year.

All home-based businesses will have to pay the new fee. Many of them had been exempt from the $25 fee. That fee was paid only by those who earned more than 66 2/3 percent of the average annual wage, which was $21,500 last year.

Commissioners, at their Monday meeting, got answers about how the emergency regulation would be applied.

If a person lives upstairs and runs a business downstairs, such as a bar, that business owner will be subject to the tax, DiCianno said.

Also, owners of property who rent out that property will be subject to the $100 annual tax.

And if a husband and a wife both run separate business, they must each pay fees. But a person has to pay only once if he or she has multiple business activities.

The new tax will be due on the anniversary of the start of the business. A company that started business in January 2003 would start to pay the tax in January 2004, DiCianno said.

Tax Commission Chairwoman Barbara Smith-Campbell noted that the emergency regulation is good for 120 days. She said there would be additional workshops and hoped business would provide "more guidelines" on the application of the annual tax.

There are several exemptions to the tax.

The owner of a limited-liability company consisting of a single person doesn't have to pay the tax "so long as the limited-liability company is disregarded, for federal income tax purposes, as an entity separate from its owner."

Also exempt would be trusts that qualify under the federal income tax law.

The $100 fee regulation was approved under emergency status because it needed to be effective this month, so the commission had to expedite its approval.

The commission is still developing regulations for the 0.07 percent tax on payrolls of businesses and 2 percent on financial institutions. More workshops are scheduled to get suggestions for the final language.

The commission however adopted final regulations for the imposition of a $1,750 tax on each financial institution branch except for businesses that have only one financial institution in Nevada.

That tax is expected to yield $1.3 million this year.

The commission also certified that the assessed taxation value of Nevada's utilities, airlines, railroads and telecommunication companies at $1.896 billion for this fiscal year.

That's down 8 percent from last year. The assessed value is 35 percent of full cash value and is used to compute property tax.

Terry Rubald, the woman in charge of centrally assessed properties for the Nevada Department of Taxation, said the assessed value of the 33 telecommunications companies fell by 24 percent.

"There was a lot of negative performance of stocks. There was unrealistic expectation of growth," Rubald said. Rubald said 11 of the 33 companies filed bankruptcies.

Felicia Denney, another Taxation Department employee who works with centrally assessed properties, said the assessed value of the airlines dropped 13 percent.

"Things did not go well for them in 2002," she said. The airlines downsized, faced added security costs as well as higher insurance premiums and had to make drastic changes in their operation, she said.

Assessed value on electric companies fell by 8 percent, gas and pipeline companies rose 1.9 percent and railroads were up 8.4 percent.