Nevada Department of Taxation DRAFT Nevada Commerce Tax Return For the taxable year through [ Nevada Tax ID No NAICS code Business Entity legal name Business entity adress - Final return [amended return [-] Alternative stusing method [_] __ estimates used WOU (Gross Revenue from engaging in business in Nevada 1 Sale of inventory 7 - g | 2. Service performance 2 Z| 3 Rents royalties and leases 3 3 | 4 interest income from credit sales and loans 4 2 | 5. Otherrevenue: 5 | 52 Damages received from Iitigation for loss of business income sa 3 5b. Insurance proceeds for loss of business income 5b z % | 5. Forgiven debt Se _ ‘5d Other revenue (attach explanation) sd | 5 Total Gross Revenue sf 7 Less $4,000,000 Threshold : 7 ($4,000,000) subtotal 3 NE) (General Business Deductions [79 Returns and refunds to customers 9 10. Bad debt 10 2 11 Pass-through revenue: a Z 118 Distributions required by fiduciary duty or law na [7 8 1b Distributions under certain written contracts 1b | £ 1H1e Reimbursement of certain expenses and advances by clients nie | 3 11d Taxes collected from 3” party and remitted to taxing authority 1d 3 |_12 other deductions (attach explanation) 12 B [industry specific Deductions % [13 Employee leasing deduction B % | 14 Gaming deduction 4 3 | 15 Health care provider deduction 18 | 16 insurance deduction 16 e 17 Liquor tax deduction w7 18 Mining deduction 8 19 US Armed Forces housing deduction 19 | 20 Total Deductions 20 21_Nevada Taxable Revenue 2 7 22 Taxrate per NAICS code — 2 [23 Commerce Taxdue 23 E | 24 Pluspenatty 24 B | 25 Plusinterest 25 3 | 25. Pustablty estabished by Department 26 © | 27 Less credit(s) approved by Department a7 28 Total amount due and payable 23 29 Amount remitted withthe return 29 Business entity authorized representative's signature Phone number: Name and tte Date: IATNevada Department of Taxation 2015 Instructions for Commerce Tax Return General instructions Purpose of the form Use Commerce Tax Return Form to report the Gross revenue from engaging in business and Nevada and deductions of a business entity {o arrive to the amount of Nevada Commerce Tax for 2016 taxable year. Who must file Each business entity, including sole proprietors, that is engaged in business in Nevada, unless specifically excluded by the law, has to file the Commerce Tax retu, even if there is no tax billy due. Specifically excluded by the law from filing requirements: ‘+ Natural person, unless engaged in a business and files Schedule C, € or F with the federal tax return; © Governmental entity; ‘+ IRC section 504(c) or NRS 82 or NRS 84 non-profit organization; Credit Union; + Certain non-business trusts, including REITs and REMICS as defined in IRC + Passive entities; + Entity that solely manages intangible investments; ‘+ Entity participating in exhibition in Nevada and is not required to obtain a bilsiness license pursuant to NRS 360.780. Taxable year ‘The taxable year is July 1, 2015 through June 30, 2016:1f the businoss entity ceases to exist before the end of the taxable year, input the date the entity ceased to exist in the second box of line For the taxable year... through’. The box “Final return’ should also be checked. When to file The Commerce Tax rotumn is due on August 15, 2016. Where to file Return can be fled electronically or on a hard copy. To fil electronically go to: hitp:fRax:nv.cow! ‘Send a hard copy to: P.O. BOX XXXXX, Phoenix AZ, 85072-XXXX ‘Accounting method ‘The accounting method must bs the same as for the federal income tax purposes. Recordkeeping Each person responsible for maintaining the records of a business entity shal: ‘+ Keep such records as may be necessary to determine the amount ofthe liability ofthe business entity for Commerce Tax. ‘+ Preserve those records for 4 years or until any Itigation or prosecution pursuant to this chapter is finally determined, whichever is longer, and ‘+ Make the records available for inspection by the Department upon demand at reasonable times during regular business hours. ‘Amended return Ifyou later realized you made a mistake fling the original Commerce Tax return, you may fle an amended retum. The box “Amended rotum” should be checked. Extension to file ‘You may apply to the Department for a 20-days extension, if you have a good cause. No penalties or late charge willbe imposed for failure to pay the Commerce tax atthe time required, but the interest atthe rate 0.75% per month will be charge on the late payment Lniass otherwise provided in NRS 360.232 or 360.320. Who must sign ‘The retu must be signed by the business entity authorized representative, Indicate the name, the tile and the contact phone number of the authorized representative. NAICS code ‘The NAICS code is selected on the frst return the business entity fles. Use the North American Industry Classification System website to determine your NAICS code at http:/wuw.census govleosiwwvinaics! Page 1If your business engaged in more than one business activities, the NAICS category code is based on the category in which the highest percentage ofits Nevada gross revenue is generated Match your NAICS code determined to the NAICS category codes/Tax rates chart on page 7 of the Instructions. ‘Once the NAICS code is selected, it may be changed only upon permission from the Department. Refer to section 3 ofthe Proposed regulations forthe details. Use of estimates For the calculation of the uncompensated care amounts refer to the section 6 ofthe proposed regulations. Ifyou relied on the revenue calculation from the federal income tax year immediately preceding the year i fled its Commerce Tax, check the box "Estimates used”. However, you will have to fle an amended return, once the true amounts become available. Alternative situsing method Ifthe situsing rules of the Law or Proposed regulations do not fairly represent the extent of the business conducted in Nevada, the business entity may utilize an altemative method of situsing. The alternative method should be reasonable, consistent, uniformly applied ‘and supported by the records Check the box “Alternative situsing method’, if you used the alternative method to situs the revenue. Revenue Do nat include in revenue: ‘© Cash discounts taken by the customers ‘Value of complimentary goods or services provided to customers Cost of property or services donated to IRC §501(c) nonprofit organizations ‘Amounts indirectly realized from reduction of expense or deduction Interest or dividends received, except for interest on credit sales or from loans to customers (see instructions for ine 4) Distributions from corporations and distributive or proportionate share of receipts and income from partnerships or single member LLC ‘+ Revenue from hedging transactions as defined by IRC §1221 or FASB No.133, for the exception the title to real or tangible personal property is transferred in such transactions + Revenue reeled from anther member of aad group (60% or mor dec or indirect onneshi, control o possession ofa usiness entity) ‘+ Proceeds attributable to the repayment, maturity or eademption of the principal of loan, bond, mutual fund, certificate of deposit (or marketable instrument ‘The principal amount received under repurchase agreement or on account of any transaction characterized as a loan. Proceeds rom the isuance of he business en's own stock, options, wares, pus cal, rom tho sao ofthe roasury sk + Contributions to a corporation or a partnership (IRC §118 and §721) ‘+ Amounts realized in corporate liquidations (IRC §331 and §336) ‘+ Amounts realized from liquidation of subsidiaries by a corporation (IRC §332 and §337) ‘+ Amounts realized from certain corporate acquisitions (IRC §338) ‘+ Amounts realized transfer of assots to a Corporation in exchange for stock (IRC $364) ‘Amounts realized from corporate modifications and reorganizations (IRC §355 and §368) + Distributions from a partnership (IRC §731) + Amounts realized in ike-kind exchanges (IRC $1031) + Amounts realized from the sale of an account receivable, + Amounts realized from the sale exchange, disposition or other grant o the right to use trademarks, trade names, patonts, Copyrights and similar intellectual property + Receipts from the sale, exchange or other disposition ofthe capital assets (IRC§ 1221 or 1231) ‘+ Amounts realized from involuntary conversions (IRC §1033) ‘+ Insurance policy proceeds, forthe exception of proceeds received for the loss of business revenue (see instructions for line Sb) ‘+ Damages received as a result of tigation, for he exception of damages received for loss of business income (see instructions for line Sa) ‘+ Revenue that is not subject to tax pursuant United States or Nevada Constitution ‘+ Amounts that are not considered revenue under generally accepted accounting principals Deductions Deductions are allowed to the extent they are included ir the gross revenue, Page 2Line-bystine instructions: LINE # INSTRUCTIONS, EXAMPLES Line t ‘Sale of inventory Include sitused to Nevada revenue from the sale of Inventory. The inventory is the property that is held for sale inthe ordinary course of business. It may consist of tangible property, real property, securities, ete Situsing: = Porsonal tangible property: ifthe sale is deemed to ‘Silusing of personal tangible property sales revenue Barbary Coats, Inc. solls raincoats at their Las Vegas store ‘and through the company’s website For the year they generated $4,800,000 in sales. Out of slate sales consisted ofthe following: take place in Nevada, revenues from sale of such__| + Oregon Sales $2,200,000 property is sitused to Nevada (similar to the Nevada _| + Washington Sales $2,500,000 Salas & use tax situsing rules; refer to NRS Total Sales § 4,800,000 - Oregon Sales $2,200,000 - 3608360). Washington Sales $2,500,000 = Sitused to Nevada Gross ‘+ Real property: if real property located in Nevada, Revenue $ 100,000. revenue from sale of such real property is sitused to Nevada. ‘+ Allother inventory: the situsing s based on the physical location ofthe purchaser, or an alternative method can be used. Line2 | Service performance Include sitused to Nevada revenue from the perfomance r of services, Beagl, Inc. is a mobile dog groomer located in Mesquit Situsing: NY. Several times a month the owner travels to St ‘Transportation: revenue is sitused to Nevada when | George, UT to provide services at the customers’ homes. both origin and destination ofthe trip are located in| The company has $27,000 in total revenue, $12,000 of Nevade, Which was earned on the trips to Utah ‘+ Allother services: in general, the situsing is based on | Total Service Revenue $ 27,000 - Revenue from Utah the location of purchaser's use or benefit from service, | customers $12,000 = Sitused to Nevada Gross Revenue $ For specific situsing rules for services refer to section | 15,000. 10 of tho Proposed regulations, Line 3 | Rents, royalties and leases: Include sitused to Nevada revenue from rents, subrents, | Si ible personal property rent revenue royalties, leasos and subleases. oxample: Situsing ‘Tahoo Rentals, nc. fs located in Carson City, NV. itrents| ‘+ Real property: if real property located in Nevada, ‘paving equipment to one of the customers. The customer revenue from rents and royalties is sitused to Nevada. | is paving the road between Reno, NV and Sacramento, ‘+ Tangible personal property: f rent, or subrent, lease, | CA. it uses Tahoe's equipment paving a two mile stretch of (oF Sublease of tangible personal property is to take | road in Truckee, CA. Tahoe Rentals receives $4,500,000 place in Nevada, the revenue from such rent, or {or the equipment rental during the year. Subrent, lease, or sublease is sitused to Nevada (see | Total Rental Revenue § 4,500,000 - Property used in CA NRS 3608.365 and 3608.370), {$4,500,000 = Sitused to Nevada Gross Revenue $0. ‘+ Ifa lease or sublease, rental or Subrental of real property or tangible personal property is treated as a sale for federal income tax purposes, then the receipts {rom the transaction are sitused in the same manner asa sale. Tine 4 | Interest income from credit sales and loans Include sitused to Nevada interest Income from credit rest income from loan. sales and loans, Bast rates, LLC is located in Long Beach, CA. It makes car ‘The situsing is based on the location of purchaser's use or | loans to the customers in California and Nevada. During benefit from service, or an altemative method can be used. | the year the total interest revenue on the loans equaled to '$10,000,000, including $5,000,000 trom Nevada _ _ customers. Hence, $5,000,000 is sitused to Nevada. Tine § | Other revenue: ‘Add amounts itemized on lines 8a, 5b, 6c and 5d and input sum on line § Line 62 | Damages received from litigation for loss of business Income Include sitused to Nevada damages received as result of ligation for loss of business income. Situsing is based on the type of business activity from ich the revenue would be otherwise generated. See mages mI mpl: Burgers, Inc., Nevada restaurant, sues Bernie's Grills, Inc. for supply of defective equipment. Burgers, Inc. wins the cease and is awarded $1,000,000 for the cost of the Page 3situsing rules for lines 7-4, ‘defective equipment and $2,000,000 forthe lag in business. The $2,000,000 damages from lag in business are reportable for Commerce Tax revenue. Line 5b Insurance proceeds received for loss of business revenue Include insurance proceeds received for the loss of business revenue. Situsing: If the business entity is located in Nevada, the insurance proceeds for loss of business revenue are sitused to Nevada. ] Insurance proceeds received for loss of business revenue sxample: Tony, a Solo proprietor and Nevada resident, is unable to run his business due to a short term disablity. The insurance company pays him out on his business interruption insurance policy $350,000. This amount is Includable for the Commerce Tax. Line Se Forgiven debt Include debt transferred or forgiven as consideration, Do not include discharge of indebtedness as a result of @ Bankruptcy proceeding, Situsing Ifthe business entity is located in Nevada, forgiven debt is sitused to Nevada Forgiven debt revenue example ‘Swift&Smart nc. decides not to pay its business credit ‘card debt of $50,000. Because it does not have any valuable assets and due to the cost of ligation, the bank does not pursue to bankrupt it, but rejects Swift&Smar, Inc. asa client and sends it the form 1099-C. The amount cof cancellad debts includable for the Commerce Tax. Tine 5d ‘Other revenue Include any other revenue from engaging in business in Nevada not othenwise listed above and subject to Commerce Tax. Attach a statement including description, ‘amount(s) and situsing method applied, Example of other revenue: Cost of uncompensated care previously deducted on the ‘Commerce Tax return for which payments was later received by the healthcare provider. Tine 6 Total Gross Revenue ‘Add lines 1 through and input sum on line 6 Line Less $4,000,000 Threshold No data input needed Line & ‘Subtotal Subtract $4,000,000 from fine 6. + Ifthe results zer0 oF less, go to line 23 and input zero. + _ Ifthe result is more than zero, continue on tine 9. Lined Returns and refunds to customers Deduct the amount of returns and refunds to customors Tine 70 Bad debts, Deduct the aciual bad debt write off amount. The amount should conform to IRC §166 treatment. Line 17 Pass-through revenue ‘Add amounts itemized on lings 11a, 11b, 4c and 11é and Line ita ‘Deduct required by law or as described in NRS 162 fiduciary duty distrbutions to another person or governmental entity, including: + the distributions of damages to a claimant by the claimant’ attorney, ‘+ amounts subject to lien or other contractual obligation arising out of legal representation of the cient, other than fees for legal services, + amounts subject to subrogation interest or other 3" party contractual claim, ‘+ amounts for legal services paid to another attomey not affliated with your business enti Tine 1b Distributions under certain written contracts Deduct following amounts distributed to another parson or entity: ‘+ sales commissions reported on 1099-MISC, ‘+ taxbasis of underwritten securities, ‘+ payments under contract of subcontract to provide ‘services, labor or materials for actual or proposed design, construction, remodeling, remediation or Page 4Tepairofmprovements on real propery ar the location ‘of the boundaries of real property ‘The istibution shall be mandated by contract or subcontract. Line tte Reimbursement of expenses and advances by client ‘Deduct reimbursements of advances made by your business on behalf of cients, other than with respect to services rendered or goods purchased in ordinary course ‘of business, including legal service expenses specific to | claimant, other than general operating expenses. | Tine 11d ‘Taxes collected from 3 party and remitted to taxing authority Deduct taxes collected from customers and remitied to a taxing authority. Only taxes imposed on a customer are deductible, Taxes imposed on your business are not deductible Deductible fax oxempl Por NRS 370.077, the Nevada Cigarette taxes are direct taxes imposed on the consumer and although they are precollected and added to the soling price ofthe Cigarettes, they are deductible to the extent the amount Included in the revenue from sale of inventory. Line 12 ‘Other deductions Deduct any other amounts not listed as deductions on lines 9 through 19, but allowed by the Commerce Tax law, to the extent they included in revenue. Attach a statement including description, reference(s) to the law and amount(s) ‘Oiher deductions example ‘Tax basis of securities and loans sol, if such socurties ‘are your inventory, Tine 13 Employee leasing deduction Ifyou are an employee leasing company, deduct wages, payroll taxes on those wages, employee and worker's ‘compensation benefits received from the clients for the leased employees Line 14 ‘Gaming deduction Ifyou are required to pay Nevada monthly gaming license foe per NRS 463.370, deduct the gaming amounts reported on the form NGC-01 Tine 15 Health care provide deduction Ifyou are a health care provider, deduct the amounis, received: ‘from Medicaid, Medicare, the Children’s Health Insurance Program, the Fund for Hospital Care to Indigent Person per NRS 428.175 or TRICARE + for worker's compensation claim services * the cost of uncompensated care If you are a health care institulion, only 80% of the amounts above are deductible. Tine 76 Insurance deduction Ifyou are an insurance company, deduct + Net direct premiums reported for Nevada insurance premium tax ‘+ Premiums on fe insurance policies/annuity contracts Issued in ‘connection with the funding of a pension, annuity or ‘qualified profit-sharing plan ‘+ Payments received pursuant to section 1876 of the Social Security Act, 42 U.S.C. §1395mm + Net drect premiums reported for Nevada captive Insurance premium tax ‘+ _Promiums reported for Nevada tax on surplus lines Line 17 Liquor tax deduction If you are required to pay the exciso tax por NRS 360, deduct the amount of Nevada Liquor tax paid Tine 18 ing deduction If you are required to pay the tax per NRS 362, deduct the Gross Yield of minerals extracted reported for Nevada mining tax, Page STine 19” | US Armed Forces housing deduction if you operate a housing facility for US Armed Forces ‘members and itis located on property ovmed or lease by the Federal government, deduct the revenue received from operation of such facility Tine 20 | Total Deductions ‘Add lines 9 through 19 and input the sum on ine 20 Tine 27 | Nevada Taxable Revenue Subiractine 20 from fine 8 I Tine 22 [Tax rate per NAICS code Determine your tx rate per NAICS catogory code (500 NAICS category codes/Tax rate chart on pago 7) and input online 22 Line 23 | Commerce Tax due Multiply line 2 and 22 and input the result on Tne 23 Line 24 | Plus penalty Ifyou filed your tax return late and did not apply for an ‘extension, calculate the penalty based on the schedule on page 6 of the Instructions and input on line 24 Line 25 | Plus interest ifyou had a Commerce Tax lability and did not pay it with the retum calculate the interest tax rate on page 6 and input on line 25, Line 26 | Plus liability established by Department, Enter any amount due for prior reporting periods for which] you have received a Department of Taxation debit notice | Line 27 | Less credit(s) approved by Department Enter amount due to you for overpayment made In prior Teporting periods for which you have received a Department of Taxation credit notice. Do not take the Credit if you have applied fora refund. NOTE: Only credits established by the Department may be used. Line 28 | Total amount due and payable ‘Add lines 23 through 26 and subtract line 27, input the result online 28. Line 29 | Amount remitted with the return Enter the total amount paid with this return. Interest and penalties worksheet Penalty charge: I the Commerce Tax retum is not submittodipostmarked and taxes are not paid on ar before the due date, the amount of penalty due is based on the number of days the payment is late por NAC 360,395 (see table below). The maximum penalty amount is 10%, Number of days late [ Penalty Percentage | Multiply b 440 2% ‘0.02 11-15 a (0.04 1620 6% 0.06 21-30 8%. 0.08 att 10% [0.10 Determine the number of days late the payment s, and multiply the Commerce Tax due (Line 23) by the appropriate rate based on the table above. The result is the amount of penalty that should be entered. Example: the Commerce Tax was due August 15, 2016, but not paid until August 30, 2016. The number of days late is 15 so the penalty is 4%, Interest rate charge: To calculate interest for each month the payment is late multiply Line 23 x 0.75% (or 0078). Page 6NAICS category codes/Tax rate chart Business category [NAICS category code | Taxrato% agri, forestry, fishing, hunting i ‘0.063% ‘ining, quarying. ol and gas exracion 124 0.051% ules 22 0.136% ‘elocommunicaions 517 0.136% construction 23 ‘0.083% manufacturing 31,5258 0.091% wholesale trade #2 010% retail trade 44,45 O11i% air transporaion a8 0.058% iruck transportation 484 0.202% rail ransportaion a2 0.331% athe transportation 48, 465,486, ABT, HEB, A, AWP_| 0.100% warehousing and storage 493 0.128% publishing, software and data processing | 611, 612,675, 518 0.253% finance and insurance 52 O111% realestate and rental and easing 53 0.250% professional, scielifc and echnical senoes | 54 0.181% ‘management of companies and enterprises | 55 0.137% administaive and suppor services 56i 0.154% waste management and remediation Senfes | 562 0.261% ‘educational sonices 61 0.281% health care and social assistance 62 0.190% ais, entetainment and recreation 71 0.240% ‘accommodation Tai 0:200% {ood services and dnking laces 122 0.498% | [other services Bi 0.142% [Cunciassied business 29) 0.128% Additional resources: Text of $B 483: httov/tax.nv govluploadedFilesitaxnvgoviConten/FAQs/SB483 pdt Tex of Proposed regulations: http/tax nv.gov/uploadedFiles/taxnvqoviConten/EAQs/Proposed Regulation R123-15.pdf The Department's website for the Commerce Tax: hitpillax.nv.govlF AQs/Commerce Tax Contact For general questions please call or e-mail: 1(866) 962-3707 or [email protected]. Hours of operation are Monday through Friday: 8:00am to 6:00pm Pacific Time, Page 7