Small businesses lose tax exemption, to pay state $200 fee

By Cy Ryan

Friday, March 9, 2012 | 6:10 p.m.

CARSON CITY - An estimated 60,000 Nevada businesses will now be assessed a $200 annual fee.

On a party line vote, the Legislative Subcommittee to Review Regulations approved this week ending the business fee exemption, a move that will yield $10 million in additional revenue for the state each year.

The fee will be imposed immediately on those who file for new businesses licenses and on those that renew existing licenses, a spokeswoman said.

The legislative committee heard complaints Thursday that this would hit people who sell cosmetics out of their home.

The regulation change was sought by Secretary of State Ross Miller, who previously testified to the subcommittee that the state will exempt a sole proprietor or general partner operating from home and making less than $27,000. This exemption is aimed at "mom and pop" businesses, he said.

The Secretary of State's office says an estimated 270,000 Nevada businesses are subject to the fee.

Miller said in one instance the office found corporations from China and Taiwan had formed hundreds of businesses in Nevada that were seeking exemptions from the fee. The businesses were not operated out of homes and didn't have revenue below $27,000.

The Nevada Legislature in 2003 put in effect a $100 business fee. It was initially given to the Tax Department to collect but then transferred to the Secretary of State's office in 2009 and the amount was increased to $200.

Miller said he got advice from a deputy attorney general that exemptions existed for many small businesses including home based LLCs and corporations making less than $27,000 a year. When the revenue collected dropped dramatically, Miller said he talked with another deputy attorney general and the exemptions were removed. He told the subcommittee Thursday he got the wrong legal advice initially.

A bill in the 2011 Legislature to clarify who should be exempted passed both houses but failed to get the signature of Gov. Brian Sandoval.

Sen. Michael Robertson, R-Las Vegas, said there was never a formal written opinion from the Attorney General's office to justify the switch. Robertson and Assemblyman Lynn Stewart, R-Henderson, voted against eliminating the tax exemptions.

C. T. Wang of Las Vegas told the subcommittee the regulation amounted to "imposing a tax against our consent."

The Nevada Registered Agents Association has filed suit arguing Miller's office is illegally asking for the revenue and salary of those filing for the exemption. Miller had sued asking the courts to force the LLCs and companies to pay the fee.