Regulations governing trusts and estates to be studied
October 4, 2004
At the request of member David Turner, a Reno tax accountant, the Nevada Tax Commission has ordered a study of how a new financial institutions tax applies to trusts and estates.
Deputy Taxation Director Dino Dicianno agreed the department has “struggled” with how to define which trusts should be registered as businesses and hit with the tax and which should not. Financial institutions pay a higher tax rate under the new business tax than other businesses – 2 percent of gross payroll compared to two-thirds of 1 percent.
But Turner said the issue is also whether those trusts and estates should be licensed as businesses at all. If not, they would be exempt from the tax, as well as the annual business license fee of $100.
“It’s how do we define trusts and how do we define estates and whether they should be required to have a business license,” he said.
He said he is just one “small practitioner” and that he handles upwards of 500 trusts each year. He said the total statewide could be in the “hundreds of thousands” since trusts have become a very common financial planning tool for individuals with some assets.
Dicianno said the tax commission was being asked to open a regulatory process to review existing interpretations of the business tax laws and determine exactly which estates and trusts should be exempted.