Legislative Counsel Brenda Erdoes has advised the Tax Commission a new business tax on financial institutions doesn't apply to casinos, retailers who allow people to pay in installments or other businesses which issue credit as long as it's not part of their profit-making enterprise.
The question was raised by casino operators who feared the financial institutions tax -- nearly three times the size of the per-employee tax levied on regular businesses -- would hit them because they issue lines of credit to patrons. Physicians who allow patients to pay in installments and retailers who provide credit for those who purchase major items from them were also concerned.
Erdoes' opinion says lawmakers intended the financial institutions tax to be focused on banks, businesses which act as brokers or dealers in securities or commodities and other businesses which make money by lending. She said regular businesses will pay the 0.7 percent of employee salaries rather than the 2 percent levied on financial institutions.
But Erdoes had some bad news for mortgage brokers. They argued they don't issue credit but, instead, put buyers together with financial institutions which do.
"It is the opinion of this office that mortgage brokers licensed in this state are financial institutions" for purposes of the tax, she wrote.
Erdoes also advised the Tax Commission the law allowing businesses to deduct the amount they pay for health benefits for employees should include dependents with coverage as well.
That law is designed to encourage businesses to provide health benefits for workers and their dependents. The money a business pays for vision and dental care would also qualify for the tax write-off.
She confirmed what lobbyist Joe Guild told the commission last week -- railroads operating in Nevada don't have to pay the tax because it is based on workers who are covered by the state's workers compensation laws, and railroad workers are covered separately under federal law.
The legal interpretation was provided to help the Tax Commission develop regulations determining which businesses must pay the new taxes, which are exempt and exactly what qualifies for the deductions allowed.
The commission plans to begin adopting regulations implementing the taxes contained in SB8 next month. The new employee tax on businesses takes effect in October.