Tuesday, October 07, 2003
Copyright © Las Vegas Review-Journal

Tax panel OKs rule for collection of bank fee

Commission must develop more regulations to put Legislature's new levies into effect

CARSON CITY -- The state Tax Commission approved the first permanent regulation Monday to allow the state to collect a small share of the record $836 million tax increase signed into law July 22.

Members devised rules to collect a $1,750 quarterly fee from each branch of a bank.

Members raised several questions on how the tax will be collected on branch banks that open during a business quarter. In most cases, such banks will be assessed the charge, one that will bring the state about $2.7 million a year.

Chairwoman Barbara Smith Campbell said she doubted banks will delay opening branches to avoid the quarterly tax.

She said the commission needed to finish a regulation. Members must develop five regulations before the state Taxation Department can start collecting the taxes.

"I am relieved," she said. "It is real important that people understand the administrative code."

State Taxation Director Chuck Chinnock said his staff members have plenty of time to draft regulations. The quarterly bank branch tax went into effect Oct. 1, but the state does not collect any money until January.

The tax, like the 0.7 percent tax on company payrolls and 2 percent tax on bank employee pay, is collected the quarter after wages are earned or the branch is open.

Besides the bank branch tax, commissioners approved an emergency regulation to allow the Taxation Department to assess a $100-per-company annual business license fee. The state expects to receive about $22 million a year from the fee.

It will be collected on all businesses except for home-based businesses that earn less than $21,500 a year. The exemption rises to $22,000 starting Jan. 1.

Owners of home-based businesses should look at Schedule C of the federal income tax return to determine whether they are subject to the fee, Campbell. said If their income exceeds $21,500, then the tax is due.

The emergency regulation will remain in effect for at least 120 days.

Campbell said she hopes businesses with concerns or questions about the emergency regulation will express their views in future meetings to help the commission develop an easy-to-understand permanent regulation.

During Monday's hearing, members peppered Deputy Attorney General Greg Zunino with several questions about the emergency regulation.

Member Joan Lambert wanted to know whether people with home-based businesses who rent space at a farmers' market are subject to the annual fee. Zunino said they were.

"It gets convoluted," Zunino said. "If you own, rent, lease or license real property other than your personal residence for use in furtherance of a business, then you are not a home-based business. There are so many scenarios that come up."