It's still too early to gauge the effect of Nevada's new business taxes and filing fees, say state officials, but the tax department says it has so far seen little of the expected opposition to the new levies.
More than 45,000 modified business tax returns were mailed at the beginning of the month, according to Chuck Chinnock, executive director of the Nevada Department of Taxation, when he testified before the Legislative Committee on Taxation, Public Revenue and Tax Policy last week.
About 40,000 forms were sent to general businesses while 2,700 went to financial institutions that will be paying the tax at the higher 2 percent rate.
Another 1,700 businesses were sent returns for both types of modified business taxes because it is unclear whether they should be classified as general businesses or financial institutions, said Chinnock.
Sen.
Bob Coffin (D-Clark County), a member of the committee, asked Chinnock if the department had received any protests or threats of litigation.
"We have not had any indications to that effect yet," said Chinnock.
After the meeting, Chinnock said the department has received a dozen or so calls from businesses that may appeal their classification as a financial institution.
The department this week is expected to start work investigating those complaints.
The department has assembled an internal panel consisting of department staff as well as an attorney from the Attorney General's office and a representative from the Employment Security Division to review appeals.
(The modified business tax, which is a payroll tax, uses unemployment insurance data provided by ESD.) If the taxpayer is not satisfied with the panel and department conclusions, claims can be made to the tax commission for adjudication, said Chinnock.
Chinnock said he hopes that at this week's meeting of the tax commission it will consider granting relief of penalty for the new taxes because of initial confusion surrounding when and how much to pay.
The legislative committee is meeting in the interim to monitor the affect of the new taxes on the state's revenues and its businesses, as well as to tweak the tax regulations where needed.
At last week's meeting, Ray Bacon, executive director, Nevada Manufacturer's Association, told the committee it should consider using the definition used by the federal government for healthcare deductions to make it easier for both taxpayers and the tax department.
The modified business tax allows a business to deduct from its tax bill eligible costs for providing employee's healthcare insurance and benefits.
The complicated deduction was the focus of much the tax commission's work late last year as it worked to write the tax regulations for the new taxes.
Carole Vilardo, president of the Nevada Taxpayers Association, made several suggestions to the committee, including considering changing the payroll tax to a tax on taxable wages, rather than gross wages.
Her reason, she said, was that a tax on gross wages acts as a deterrent to businesses with high-paying jobs.
Sen.
Bill Raggio (R-Washoe County) replied that such a tax was discussed during the legislative session when it was determined that it would hurt small businesses.
Scott Anderson, deputy secretary of state, said there had been a rush of corporate filings at the end of 2003 as businesses tried to beat the deadline before the fees were raised.
He said, though, that it would probably be a full year before the secretary of state's office can determine the full effect of the new fees because many businesses wait until year end to file.
But Anderson did say he thought Nevada remains competitive with other states in terms of corporate filings.
"These fees may not be as adverse as the positive side of our business friendly filing requirements."
