Nevada to collect sales tax for online purchases
September 30, 2018
CARSON CITY, Nev. — Lawmakers on Sept. 27 approved regulations that will allow Nevada to start collecting sales taxes from online retailers who sell to Nevada customers.
Taxation Director Bill Anderson said Nevada is one of 32 states moving to collect those taxes in the wake of the Supreme Court decision in South Dakota v. Wayfair — a ruling that said it's legal for states to collect from retailers that don't have a physical presence in their state.
He said the target date is Oct. 1 but "it's not going to be an immediate windfall." Anderson said it will take time for retailers to sign on through the Streamlined Sales and Use Tax Agreement and begin to remit those taxes.
"It will evolve over time," he said. "We're not going to come in here Monday and it will magically be in place."
Nor will the tax generate huge amounts of sales tax cash even though current estimates are 10 percent of all taxable sales are now occurring online. Anderson said Nevada already has agreements with major online retailers that make up about half that percentage of sales and is getting those revenues.
The biggest was the agreement Gov. Brian Sandoval worked out with Amazon, which now collects sales taxes on items purchased directly from it.
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Estimates are the state will realize $17-$29 million a year from its 2 percent portion of the sales tax.
But when the other parts of the sales tax are added in, Anderson said the federal Government Accounting Office estimates Nevada governments will get a total of $87-$134 million in revenue annually.
The Local School Support Tax rate is 2.6 percent which could generate $35 million for K-12 Education. The combined City County Relief Tax is worth another 2.25 percent, which could provide those local governments some $30 million a year.
Together, they bring the total base sales tax rate in Nevada to 6.85 percent.
Assemblyman Keith Pickard, R-Henderson, objected to the regulation.
"I'm not one inclined to support any kind of tax increase unless it's supported by a sufficient number of participants," he said.
But Sen. James Settelmeyer, R-Gardnerville, said it's not a tax increase.
"This goes back to an issue this legislature's been trying to address for years," he said. "Everyone in the state of Nevada owes taxes in Nevada if they buy something."
He said, however, the old law required the buyer to voluntarily pay the sales tax on out of state or online purchases and since there was no way to enforce that law, no one ever paid.
"This is not a new tax," he said. "This is just a way to collect the tax that's already owed."
Anderson agreed it's not a new tax.
"We're just trying to make sure our brick and mortar establishments in the state of Nevada have a level playing field."
Pickard cast the only vote against adopting the regulation.
Anderson said the Nevada regulation complies with the Supreme Court ruling. It doesn't apply the sales tax retroactively and sets some limits to protect small businesses.
He emphasized even though it will take taxation time to fully implement the regulations, there's nothing to stop online businesses from immediately beginning to collect the sales tax on Nevada sales.