STATE OF NEVADA DEPARTMENT OF TAXATION

STATE OF NEVADADEPARTMENT OF TAXATION

AutomotiveIndustry

LAWS GOVERNING AUTO INDUSTRY Two of the main chapters of the Nevada Revised Statutes and Nevada Administrative Code discussed today are: • Chapter 372: Sales and Use Taxes • Chapter 482: Motor Vehicles and Trailers: Licensing, Registration, Sales and Leases Also referenced will be chapter 374, Local School Support Tax

Automobile Industry The Department of Taxation administers the sales/use tax laws and regulations while the Department of Motor Vehicles (DMV) administers laws and regulations governing the licensing, selling, titling and other related issues involving vehicles which are required to be licensed to drive on a public highway (NRS 482.135)

Automobile Industry The Department of Taxation looks to some of the definitions contained in NRS Chapter 482 for guidance in making determinations of taxability.

Automobile Industry Some useful sources of information can be found at: DMV main website: http://www.dmvnv.com/index.htm DMV Registration/Title Guide: http://www.dmvnv.com/pdfforms/regtitle.pdf Department of Taxation: http://www.tax.state.nv.us Statutes and Nevada Administrative Code at http://www.leg.state.nv.us/law1.cfm

Automobile Industry Laws affecting automobile industry • Trade Ins • Trade down • Dealer Special Plates – they are gone

Automobile Industry - Sales • NRS 372.025, “Gross Receipts” is a primary statute describing what is included in gross receipts and what is not included: • Included All receipts, cash, property Manufacturer’s discounts, or rebates Mandatory warranties Services that are part of the sale

Automobile Industry - Sales • NRS 372.025, “Gross Receipts” - what is not included: Dealer issued discounts Luxury Tax imposed by the U.S.Government Drive-away permit costs Optional Warranties

Automobile Industry-Sales • Sales to Military: Generally taxable • Sales to Students: Generally taxable • Sales to Native Americans: Generally taxable • Sales to Snowbirds:Sometimes taxable • Sales to Active Nevada National Guard members:Generally exempt

Automobile Industry – Taxable Sales • Tire Sales • Smog fees • Doc(ument) fees • Parts Sales • Repairs • Shop Supplies

Automobile Industry-Sales Giveaway cars in casino promotions • Transaction between dealership & casino = Nevada sale • Casino posts contest rules-winner pays tax = Winner paying Casino tax burden = Nevada sale

Automobile Industry - Sales Trade-Ins are reportable at full county tax rate (Clark County = 8.1% as of 7/1/2009) Trade-Downs (Trade-in allowance reportable limited to amount of new vehicle purchase) (Example: New vehicle purchase: $15,000 Trade-down amount: $20,000. Trade-in allowed on sales/use tax return = $15,000)

NOTE: This form is no longer needed for a VEHICLE trade-in; however, trade-in of a vessel will require use of this form. Trade-ins of vessels do not get the full tax credit; in using this form to record a vessel trade-in, use the full county tax rate less 2%. (Example: Clark County full tax rate as of 7/1/2009 is 8.1%. Vessels trade-in tax rate is 6.1%) Gone!

Trade-In Transaction • Current reporting requirements …………..as of 1/1/2007 Trade-In Transaction: Car sale……………………………………………….$20,000 report in Column A of sales tax return Trade-in……………………………………………….$10,000 report in Column B of sales tax return

Trade-Down Transactions • Reporting requirements ………………..as of 1/1/2007 Trade-DownTransaction: Car sale……………………………………………….$20,000 report in Column A of sales tax return Trade-in……………………………………………….$25,000 report only $20,000 in Column B of sales tax return

Automobile Industry - Sales • Unwinds – Not Taxable • Repossessions – Taxable • Lemon Law returns - Taxable

Automobile Industry-Leases • Leases True lease: NAC 372.070(1)(2) Capitalized Cost Reduction First Payment Other advance payments all taxable

Automobile Industry-Exempt Sales Exempt Sales to: • State of Nevada • U. S. Government • Government fees (title fees, luxury tax) • Religious or charitable organizations • Resale • Out of State • Active members of the Nevada National Guard & Family

Nevada residents are not allowed Drive-away permits • Beware of Drive-away permits to these states • Oregon • Montana • Delaware • Alaska • New Hampshire

Automobile Industry – Use Tax • Giveaway items • Self-use items purchased ex-tax • Internet ex-tax purchases for self use • Vehicles placed in service for use by dealership • Parts for company vehicles

RECORDS TO BE KEPT • Purchase invoices • Sales journals • General ledgers • Deal files • Affidavits and Drive–away permits Must keep records for four (4) years

Electronic Filing Requirements • Effective July 1, 2008….. All payments of money for taxes, interest, penalties or other obligations in the aggregate amount to $10,000 or more MUST be made by electronic transfer….* For more information and to register and pay your taxes, go to: http://www.nevadatax.nv.gov/web *SB 517, 2007 Legislative Session

Written Response Most tax issues can be addressed by the Department of Taxation. Please be advised that any responses to inquires made to the Department are only binding if put in writing, such as Nevada Revised Statutes, Administrative Code, Nevada Tax Notes, or in written correspondence.

STATE OF NEVADA DEPARTMENT OF TAXATION