Understanding Nevada Sales and Use Taxes
Understanding and complying with the sales tax requirements in the states in which you do business is absolutely essential. More states are taxing services, as well as retail sales, so no business owner can afford to be in the dark. In addition, you may find that you are liable for use taxes for products purchased out of state. This article answers some of the basic questions regarding sales tax in Nevada.
Nevada imposes a 6.85 percent tax on all retailers for the privilege of selling tangible personal property at retail and on the storage, use or other consumption in Nevada of tangible personal property. In addition, make sure you contact your local governments in Nevada because they are allowed to assess a local sales and use tax.
Because the tax is related to sales or use of tangible personal property, receipts from services are generally not subject to tax. Taxable items and transactions includes the following:
- producing or processing of tangible personal property for consumers who furnish the materials used in such producing, fabricating, processing, printing, or imprinting
- furnishing and distributing of personal property for a consideration by social clubs
- furnishing, preparing, or serving of food, meals, or drinks for a consideration
- transactions in which possession of property is transferred but the seller retains the title as security for the payment of the price
- transfers for consideration of the title or possession of tangible personal property that has been produced, fabricated, or printed to the special order of the customer, or of any publication
- sale of company assets when the business is a registered seller
Leases. In Nevada, a sale includes lease or rental. A lease or rental of tangible personal property is considered a taxable sale if the Tax Commission finds that the transaction is in place of a transfer of title, exchange, or barter.
Sales Tax Must Be Collected from Buyer
In Nevada the sales tax is imposed on the privilege of selling tangible personal property at retail. The sales tax must be collected by the retailer from the consumer "insofar as it can be done."
Absorbing the tax is not permitted. It is against the law in Nevada to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.
Tax Permits Required in Nevada
In Nevada every seller must obtain a permit, valid indefinitely, for each in-state place of business at a fee of $15. The same fee applies to location changes, additional locations, and ownership changes.
The permit must be displayed at all times at the place of business for which it is issued. If a business does not have a physical location in Nevada, it must still pay a minimum $15 fee.
Many Transactions Are Exempt from Tax
Nevada does exempt specific items from sales tax — for example, certain prescription medications are exempt from Nevada sales tax. You'll want to check and see if you are exempt from the sales tax.
An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself.
Purchases for Resale Are Not Taxed
In Nevada all gross receipts are presumed to be subject to tax until the contrary is established. The burden of proving that a sale of tangible personal property is not a retail sale is upon the seller, unless the seller takes from you a resale certificate.
Resale exemption certificate. In general, a resale certificate must be substantially in the form prescribed by the Department and include the following information:
- the purchaser's name and address;
- the purchaser's signature;
- the purchaser's retail permit number or the reason why the purchaser don't hold a permit
- description of the general character of the tangible personal property sold by the purchaser in the regular course of business
Blanket Resale Certificates Are Allowed
Sellers may accept blanket certificates from the purchaser if you repeatedly purchase the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or services not covered by a blanket certificate. A blanket certificate must be given to the seller in advance to cover all orders except those orders that specify otherwise. The blanket certificate must describe the general kind of property to be purchased for resale. A blanket certificate is valid until it is revoked in writing. A seller must accept a blanket certificate in good faith in order for it to be valid.
Physical Presence Triggers Tax Liability
Mail order and telemarketing are not expressly covered by Nevada statute. Like most states, Nevada exempts sales of goods that are shipped to purchasers out of state, whether by seller's trucks, common carrier, or customs broker. Nevada taxes out-of-state mail order and catalogue sellers only if you have physical presence within Nevada. To determine if you have physical presence, ask yourself the following:
- Do I have retail facilities, a warehouse, or any office space in Nevada? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
- Do my employees or I enter Nevada for purposes of taking and transmitting orders from Nevada? If your employee or independent contractor goes into Nevada to take or transmit orders, your business may have physical presence in Nevada. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
- Do my delivery vehicles frequently enter Nevada for purposes of delivering property? Frequent deliveries in Nevada by your trucks will give you physical presence in Nevada.
Nevada Permits Use of Sale Tax Bracket System
The bracket system may be followed by sellers in computing the sales tax. The 6.85 percent tax is computed on each dollar and/or fraction of a dollar according to the following table:
|Amount of Sale ||Tax |
|$0.01 to $0.07 ||no tax |
|0.08 to 0.21 ||$0.01 |
|0.22 to 0.36 ||0.02 |
|0.37 to 0.51 ||0.03 |
|0.52 to 0.65 ||0.04 |
|0.66 to 0.80 ||0.05 |
|0.81 to 0.94 ||0.06 |
|.95 to 1.09 ||0.07 |
|and so forth |
Overpayments Can Be Claimed as a Credit or Refunded
The sales tax on returned goods is credited by excluding from taxable sales the sales price of the returned goods. The excluded amount only includes the sales tax previously collected. You may also file a refund claim with the Department of Taxation within three years from which the overpayment was made.
Nevada Imposes Use Tax on Out-of-State Purchases
A use tax is imposed on all property that was acquired out of state in a transaction that would have been a taxable sale if it had occurred within the state. The use tax does not apply to property on which the Nevada sales tax has been paid. Property brought into Nevada on which a sales or use tax has been paid in another state is not allowed a credit. Your purchase will be subject to the Nevada use tax. A user becomes and remains liable for the use tax in Nevada unless the user has paid the tax to the retailer and obtained a receipt.