Law of unintended consequences

When Nevada legislators in 2003 passed a revised statute calling for annual business license fees of $100, they set in motion some unintended consequences a not uncommon occurrence in the legislative world.

"It posed a challenge," says Charles Chinnock, executive director,Nevada Department of Taxation,"because our technology was not set up to handle annual business licenses."

Originally, Chinnock's department had a list of 80,000 businesses.

But the list did not include all business categories.

Sole proprietorships, for example,were not on it.

Working from a combination of databases the secretary of state's, the Internal Revenue Service's individual and business schedule C,E, and F reportings, and from business associations' lists the department built its own list and sent out notices.

"The job was three to four times what we thought it would be," says Chinnock.

The list is currently well over 150,000 and Chinnock is estimating it will include 250,000 to 300,000 businesses in the end.

"If you have a business in the state of Nevada," says Chinnock,"you need to pay the annual fee."

And you made the list.

Swooped up along with the businesses were some family trusts one of those unintended consequences, says Carole Vilardo, president of the Nevada Taxpayers Association.

Some trusts those acting akin to sole proprietorships may find themselves subject to the annual fee.

But family trusts were not the target of the statute.And most will be exempt from it.

The department will be recommending guidelines for the legislature written as output from upwards of 20 to 25 workshops on the new fees, to help clarify who exactly needs to pay the annual fee.

Meanwhile, the department issued a waiver of penalties and interest resulting from nonpayment of the fee from its inception of July 1, 2004 to Dec.

31, 2004.

And it is expected to extend the penalty waiver to June 30, 2005.

The $100 fee itself is not being waived, Chinnock emphasizes.

The department continues to send notifications and to collect the fees, says Chinnock, with the goal of covering all businesses in the state and creating a clean database for annual fee collections.With about 30,000 new businesses starting up every year and another 10,000 to 20,000 closing, the database challenge continues.

So does the ongoing clarification of who is affected.