Business fee penalty may be waived

Monday, June 28, 2004 | 10:45 a.m.

CARSON CITY -- There are 200,000 to 300,000 businesses in Nevada that have not registered and paid the annual $100 business fee imposed by the 2003 Legislature, state officials estimate.

The new law says those that failed will face a $100 penalty in addition to the tax if they don't pay by Thursday. But the Nevada Tax Commission is preparing a regulation to waive the $100 penalty if the companies take care of the tax by Dec. 31.

The fee went into effect Oct. 1 and so far about 140,000 firms have registered and paid the levy, state records show. Despite the publicity and state-mailed notices about the new tax, many businesses apparently never got word about it, Barbara Smith Campbell, tax commission chairwoman, said.

The commission conducted a workshop Friday on the regulation to waive the penalty and will meet July 6 in a televised conference between Reno and Las Vegas to formally adopt the rule excusing the penalty for those that have failed to register.

Campbell said figures from the Internal Revenue Service indicate that 200,000 to 300,000 businesses are not registered with the state to pay the tax. But the Nevada Secretary of State's Office's estimate is much smaller.

Campbell said the commission wants to be "taxpayer friendly" and encourage businesses to sign up with the state. The $100 a year fee, paid in $25 quarterly increments, replaces the one-time $25 levy that each business previously had to pay.

Compounding the confusion, the state Department of Taxation is still trying to figure out the nature of the state's businesses, said Dino DiCianno, the department's deputy director for compliance.

The hundreds of thousands of licensed Nevada businesses range from major employers, such as MGM MIRAGE and Nevada Power, to shell companies residing here in incorporation status only while doing business in another state. They also include single-employee businesses, such as real estate agents with business licenses.

The Taxation department is currently checking its records with those of the IRS, the Secretary of State's Office and the state's Employment Security Division to determine which businesses actually have employees, DiCianno said.

"We do not have an answer to that question yet," he said.

The state also will have to determine if those shell companies and single-employee firms are subject to the tax, he said.

"That's a legal determination we are going to have to make," DiCianno said.

Those businesses that were signed up before now pay the quarterly $25 starting on the anniversary date of their registration with the state.

So far this fiscal year, the state has collected $8.2 million from the business license fee as of April.

And there's more good news for business come July 1.

The 0.70 percent tax on gross payroll for a business that was also levied by the 2003 Legislature will be reduced to 0.65 percent.

The gross payroll tax is computed after deductions paid by the employer for health insurance expenses for workers.

However the 2 percent payroll tax levied on financial institutions such as banks and savings and loans will continue at its present level.

The payroll tax replaced the $100-a-year per-employee tax that businesses had to pay.

The state taxation department says it has collected $106.8 million in the modified business tax, 2 percent higher than was projected.

Sun reporter