With Tax Day less than a month away, Nevadans can focus on the requirements of the Internal Revenue Service, secure in the knowledge that the Silver State imposes no income tax.
But the state's residents, particularly those who operate businesses, are subject to a variety of other taxes ranging from sales and use to excise taxes.
Failure to comply can result in penalties and unexpected tax liabilities. But failure to understand the tax rules and plan ahead can also be costly, in the form of unnecessary overpayment, a Carson City lawyer warns.
John Bartlett was a deputy Nevada attorney general assigned to the state Department of Taxation before opening his private practice specializing in tax issues.
The area where people most frequently get confused and miss opportunities to control their tax burdens is in Nevada's sales and use tax, Bartlett said recently.
"Nevada's laws regarding leases are different than in surrounding states. Here, you have the option of paying the tax on the sales price itself or on the lease stream - the period payments over the course of the lease," Bartlett said. "There's very different tax consequences.
"I'm working with one client who had a $110,000 lease and paid almost $11,000 over five years instead of $7,000."
Bartlett said the difference is in how a lease agreement is drawn up. "There are ways a lease can be structured to really reduce the tax impact. But a lot of leasing comes out of California and no knows that it makes such a difference here," he said.
Another area where businesses and sometimes individuals overpay state taxes is in construction contracts, he said.
"A contractor only has to pay sales or use tax on his actual cost of materials for a project," he said.
"On any contract to improve real estate - such as new windows, cabinetry, fencing. light fixtures, installation of wiring for phones or computers - you should only be paying the tax on the materials, not the installation or labor costs.
"On many real estate projects, the cost to fabricate and install is higher than the cost of materials, but a lot of people are being charged a tax on the whole cost of the contract."
He indicated that trying to scrimp on Nevada's personal property tax isn't on the list of suggested tax economy measures.
"The personal property tax is a fairly minor part of taxes in Nevada and it's fairly hard for the state to administer, which is why the Nevada Taxpayers Association went on record favoring its elimination," Bartlett said. "If you 'forgot' to file, it could catch up to you in fees and penalties."
Dave Pursell, executive director of the Nevada Department of Taxation, suggested people concerned about state tax issues start their research with a visit to the department's Web site at http://www.state.nv.us/taxation.
The site includes listings and overviews of all the state's taxes, downloadable tax manuals and reporting forms, sales tax charts and links to related Web sites.
The Frequently Asked Questions page helps out with explanations such as how a resale certificate is used to exempt a sale from sales or use tax, how to find out if a car dealer undercharges on the sales tax on a new car (which can lead to more tax being due at licensing time), how to make sure the sales tax paid on an out-of-state purchase is credited against the use tax due in Nevada and why software purchased and downloaded from the Internet is not subject to sales or use tax.
One interesting answer explains how Nevada can determine someone has made an out-of-state purchase so the state can collect that use tax: "The Department can identify those who owe use tax by various methods. These include routine audits, special audits, self-assessment programs, complaints, reports, investigations and by obtaining lists of out-of-state purchases through the cooperation of vendors in other states."
The department's site also explains the quarterly business license fee due from any business that has employees.
