Nevada Tax Form Notes (Page 3 of 4) in pdf

1. A deficiency determination or additional tax due.

now in the process of initiating a new computer system

2. A credit for over paying a tax liability

for sales tax, which will go live in May 2006. Starting with

3. No adjustments because the auditor determines the

the July 2006 reporting period, the collection allowance

business is in full compliance of the tax law.

will no longer be allowed on the use tax portion of the tax

return liability. This is in keeping with the intent of NRS

After a supervisory review of the audit, an audit report

372.370. Tax returns for that period mailed out by the

and letter will be sent to you along with a Petition for

Department will have separate reporting sections for

Redetermination form, and a copy of the related statutes

sales tax and use tax liability but will otherwise look

regarding your rights and responsibilities. If there is a

similar to those currently being used. If you have any

deficiency determination, the letter will clearly show the

questions on the collection allowance, please call your

due date to appeal the determination and/or pay the

local Taxation Department office.

deficiency to avoid further penalties and interest.

(NRS 360.350, NRS 360.400) You should also know that

CLAIMING A CREDIT

auditors cannot be evaluated based on the amount of

If you made an error on a Sales Tax, Use Tax or

tax recovered during an audit.

Modified Business Tax return and have a credit coming

Every business and taxpayer is required to pay their fair

to you, do not take the credit until you have received

and legal share of tax.

The Department’s job is to

written notification from the Department of Taxation. If

educate the taxpayer and assure that businesses

you need instructions on how to amend a return, please

comply with the law. If you have any further questions

contact your district office or view information regarding

about the audit procedure, please feel free to contact the

the procedure to amend a return on the Department’s

Department of Taxation.

website by selecting the link to the “Ask the Advisors”

page.

SERVICE AND MAINTENANCE CONTRACTS

ACCOUNT NUMBERS

Service contracts included in the total selling price of

tangible personal property are subject to sales/use tax.

Be sure to put your Sales Tax number, Modified

Business Tax number or Taxpayer Identification Number

Mandatory service contacts sold in conjunction with

on checks when submitting a return or payment. This

tangible personal property and invoiced separately are

will help reduce processing errors.

subject to sales/use tax.

Parts used to fulfill a

mandatory service contract are not subject to sales/use

CONSTRUCTION CONTRACTOR EXEMPTION FROM

tax, since the tax was collected when the service

SALES/USE TAX RATE INCREASE

contract was originally sold.

Effective October 1, 2005, the sales/use tax rate in

Optional service contracts invoiced separately from

Churchill County increased by ¼ of one percent (0.25%)

tangible personal property are not subject to sales/use

to a total rate of 7.25%. The increase will be utilized to

tax.

If parts and materials used to fulfill an optional

support infrastructure.

service contract are substantial, and the fair retail-selling

Also effective October 1, 2005, the sales and use tax

price is separately stated on the invoice, sales tax is due

rate in Clark County increased by ¼ of one percent

on the parts and materials only. If parts and materials

(0.25%) to a total rate of 7.75%. The increase will be

are not separately stated, the tax applies to the entire

utilized to employ and equip additional police officers.

charge made to the customer.

Repairmen are

considered consumers of parts and materials if those

All vendors selling in or delivering into those counties on

items are insubstantial in relation to the total charge and

or after that date are required to collect the appropriate

not separately stated on the invoice. Repairmen must

new taxes.

pay the tax on the purchase and must not give a resale

Existing construction contracts entered into and signed

certificate to their suppliers.

prior to October 1, 2005, may be exempt from the

Parts used to fulfill mandatory or optional service

additional ¼ percent increase if an exemption letter is

contracts with exempt organizations are non-taxable,

obtained from the Department of Taxation.

The

providing an exemption letter is acquired from the

exemption is only available to contractors with existing

organization and kept on file.

construction contracts; it is not available to vendors with

purchase agreements or sales contracts.

For more

COLLECTION ALLOWANCE CHANGE

information on how to obtain a contractor’s exemption

letter, please contact the Carson City office of the

The collection allowance established by NRS 372.370

Department of Taxation at (775) 684-2000.

was updated in 2003 and is currently 0.5% of the tax

liability if the tax is collected and remitted timely by the

AUTOMOBILE TRADE-IN ALLOWANCE AND

retailer. It was first enacted in 1979 to help retailers

BALLOT MEASURE 8

reimburse themselves for the cost of collecting and

At the 2004 General Election, Ballot Measure 8 was

remitting the tax and was always meant to be a

defeated.

This repealed certain statutory exemptions

percentage of the sales tax collected only, not the use

effective December 31, 2005.

The ballot measure

tax. The computer system the Department has been

included a section with respect to Nevada Revised

using did not allow for the collection allowance to be

Statutes 374.070, which provides for an allowance

applied to the sales tax portion only. The Department is

Nevada Tax Form Notes Page 3

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