RENO - Rules and regulations implementing the state's new business, banking and live entertainment taxes were approved Tuesday by the Nevada Tax Commission.
Taxation Department director Chuck Chinnock said the regulations would be posted on the department's Web site immediately.
Asked whether the average businessman would be able to understand the rules governing who pays and at what rate, commission chair Barbara Smith Campbell said, "it was our effort to make it that way."
"We were trying to make it as simple as possible," she said.
Even so, Chinnock said his department is preparing for numerous questions by businessmen about how to apply the new rules "including whether they fall under the regulations at all." His department will answer questions by phone if possible (687-4820 in Carson City) and will provide advisory opinions for those asking whether they must pay at all and whether they fall under the general business rate or the higher rate on financial institutions.
"Anytime you implement something brand new, you have that surge," he said, predicting a large number of calls in the coming weeks. He said after the initial round of questions, things will settle down.
"For 95 percent of people, it's pretty cut and dried," Chinnock said. "It's the remaining 5 percent that have issues."
Businesses, he said, are "lining up" to register with the state as required by the new laws. His department has been approved for 55 new employees to handle the load created by the new taxes.
Sen. Randolph Townsend, R-Reno, the only legislator who participated in all of the more than 14 workshops held to develop the regulations, said the commission did an excellent job and he expects the Legislative Commission to approve the regulations Dec. 3 without challenge.
Townsend pointed out there were many problems with Senate Bill 8, the bill which contained all the new taxes. That legislation was put together as a compromise during the final days of the 20th special session in July.
"I hope my colleagues see that these guys did their job better that we did ours," he said.
Many of those who testified during those workshops were businessmen arguing that one or another of the taxes shouldn't apply to them. Most lost those arguments when it came to the modified business tax and the tax on financial institutions.
Independent mortgage brokers have served notice they intend to ask the 2005 Legislature to consider their plight since all they do is arrange for loans and don't actually loan the money. They argue the tax puts them at a competitive disadvantage with banks and savings and loan institutions.
But small club owners and others did get some relief from the live entertainment tax as the commission agreed it was never intended to impose a 10 percent tax on background music or strolling minstrels in a restaurant or to apply when patrons sing karaoke or dance.
The modified business tax imposes a 0.7 percent levy on gross wages paid by an employer and the corresponding financial institutions tax levies 2 percent of gross on those businesses. The general business tax portion drops to 0.65 percent in July 2004.
Both plans give extensive credit against the tax to all businesses for the amount they provide to employee health insurance - a dollar for dollar reduction.
The modified business tax is expected to raise $321.5 million over the next two years but that is offset by the loss of $144 million from the business activity tax which it replaces. The net increase in revenue state officials expect is $260 million for the biennium.
The financial institutions tax is expected to raise just $3.9 million over the next two years.
The live entertainment tax doesn't hit small nightclubs with fewer than 300 seats or gaming establishments in that size range with fewer than 51 slots or 6 table games.
Those establishments with 301-7,500 seats would face a 10 percent tax on their admission charge plus 10 percent on food, drinks and merchandise sold at an event. Those with more than 7,500 seats would pay a 5 percent tax on their admission charge.
The live entertainment tax is expected to generate $116.9 million between now and the end of fiscal 2005.
Commission legal counsel Greg Zunino said the only remaining task before the commission in implementing SB8 is to adopt permanent business license regulations.
The next commission meeting is set for Dec. 8.