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Bank excise tax language as easy as FDIC

Anne Knowles

The Nevada Tax Commission last week tackled the controversial but seemingly simple excise tax on banks.

The Commission began meeting weekly last month to draw up regulations for the state’s new taxes.

The panel, which oversees the Department of Taxation, has already started work on the modified business tax and next week plans to take up the new live entertainment tax.

The new bank excise tax places a $1,750 quarterly levy on all of a bank’s branches save one.

The annual charge works out to $7,000 per branch (see chart).

The tax, which had not been discussed during the Nevada Legislature’s regular session, ended up in the final tax bill passed during the second special session to the chagrin of the state’s banks.

The regulation itself, though, is turning out to be less troublesome than the tax.

The commission said it will likely adopt the definition of a bank branch used by the Federal Deposit Insurance Corp.

No bank representative spoke during the public comment period, and Mindy Elliott, a lobbyist for Wells Fargo bank, said she attended the meeting just to make sure the FDIC language was used.

More problematic may be the definition of a business for the new $100 annual business license fee.

In its proposed draft, the tax department includes legal entities such as limited- liability company and limited-liability partnership.

Questions arose from both Greg Zunino, senior deputy attorney general, and during public comment, whether that would include family limited-liability entities usually established to manage estates.

As written, it would mean that such entities would have to pay the fee, but Zunino said it would not capture socalled living trusts.

Barbara Smith Campbell, the commission chair, also asked Zunino to clarify whether the fee would apply to LLPs or LLCs not actively doing business.

Campbell noted that film production companies are excluded from the current business license fee, but will not be exempt from the modified business license tax, the new payroll tax.

Zunino said he expected there to be many occurrences of businesses that must pay the payroll tax but not the annual license fee.

“All of this will be a challenge in respect to discovery and to drafting language with legislative intent,” said Dino DiCianno, deputy executive director of the tax division.

“These are unchartered waters for us.

Any outside comment is very welcome.”

The commission plans to discuss the final draft of the modified business tax next at its Sept.

12 meeting.

What the10 biggest banks would pay Bank Annual fee Wells Fargo $728,000 Bank of America $504,000 Nevada State Bank $441,000 U.S.

Bank $294,000 Washington Mutual $140,000 First National Bank $91,000 Colonial Bank $70,000 Bank of the West $63,000 Nevada Bank & Trust $49,000 Citibank (West) $49,000 Source: State Department of Taxation


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