Nevada, often celebrated for its lively cities and vast deserts, stands as a distinct hub for commerce and innovation. And if you plan on establishing your business in the Silver State, understanding sales tax in Nevada is crucial for navigating its unique business landscape.
This guide breaks down everything you need to know about Nevada’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Nevada’s sales tax with confidence and ease.
Sales Tax Nexus in Nevada
When a business creates either a physical or economic nexus, it is required to collect sales tax in Nevada.Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Nevada include:- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus or Click-through Nexus: You could trigger a physical nexus if you have affiliates, whether they operate online or in-person, who have collectively sold more than $10,000 worth of products for delivery in Nevada in the last four quarterly periods.
- Presence at Trade Show: You must collect sales tax at Nevada trade shows if you made sales at one or two events during a 12-month period.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus. Beginning October 1, 2018, the threshold for economic nexus in Nevada is $100,000 in gross revenue or 200 transactions in the previous or current calendar year’s sales. While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for sales tax nexus requirements in Nevada.
Nevada Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Nevada.Tangible Products
Almost all goods are taxable in Nevada, including:- Clothing
- Cosmetics
- Electronics
- Furniture
- Jewelry
- Home Goods
- Beer, Wine, and Liquor
- Medical and Dental Equipments
- Groceries – Grocery items, including candies and sodas, and unprepared food are not subject to sales tax in Nevada. However, prepared food intended for immediate consumption and beverages are taxable.
- Feminine Hygiene Products – (i.e. pads, tampons, and menstrual cups)
- Farm machinery
- Prescription Medications
Services
In Nevada, the majority of service-based transactions, such as professional services, advertising, and cleaning services, are not subject to sales tax if separately stated on an invoice. When a service also includes some tangible goods or property, the service portion can still be exempt from sales tax if two conditions are met:- The transaction is fundamentally for the service. Any physical property involved should be minor and non-essential to providing the service.
- The invoice separately lists the charge for the service itself, apart from any goods or materials charges.
- Production, fabrication, processing, printing, and imprinting services
- Food or beverage preparation services
Software-As-A-Service (SaaS)/Digital Products
SaaS is not taxable in the state of Nevada. Digital products (i.e., ebooks, downloadable video content, mobile apps) are also not taxable.Shipping/Handling
Shipping and handling charges in the state of Nevada are not taxable when you buy a physical item, and the shipping cost is listed separately on the bill. But, if there are extra services like packing or handling, you still have to pay tax on those, even if they’re listed separately. Also, any shipping costs that happened before you bought the item (like getting it to the store) are taxable. These costs might be added to the item’s price or shown separately on your bill.Sales Tax Permits and Licenses in Nevada
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Nevada, the next important step is getting your Nevada Seller’s Permit, also known as a sales tax permit.Seller’s Permit
You can register for a Nevada sales tax permit online at the Nevada Tax Center. Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale. In Nevada, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items. You can fill out the Tax-C006 Nevada Resale Certificate form provided by the Nevada Department of Taxation after you receive your sales tax permit. You can also fill out theStreamlined Sales and Use Tax Certificate of Exemption if you would like to get sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. Nevada has been a party to this program since April 1, 2008, meaning it follows the uniform rules and definitions established by SST. Check with the Nevada Department of Taxation for the most current information on Nevada’s participation in the Streamlined Sales Tax initiative.Calculating and Collecting Sales Tax in Nevada
Sales Tax Computation
In Nevada, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Pennsylvania and sells to a customer in Las Vegas, Nevada, with a ZIP code of 89032. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
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Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax. Nevada is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a Nevada-based seller, sales tax is generally based on the location of the buyer when selling within the state. For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Pennsylvania to a customer in Las Vegas, Nevada, where you have nexus, you’d apply Las Vegas’ sales tax rate to that sale. To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.Filing and Remitting Sales Tax Returns in Nevada
The next step after collection is filing and remitting your Nevada sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, or annually. By default, all businesses are required to file sales tax returns monthly. However:- If a business has taxable monthly sales of less than $10,000, they may file their returns quarterly.
- If a business’s annual taxable sales do not exceed $1,500, they may request a change in their filing frequency to annually.
Due Dates
In Nevada, the due date falls on the last day of the following month. For instance, sales tax collected in January is due by February 28th (or 29th if it’s a leap year) for monthly filers. However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 31st deadline falls on a holiday or weekend, you’ll have until June 1st, the following business day, to submit.Filing Sales Tax Returns
To file your sales tax return for Nevada, a few options are available:- File online through the Nevada Tax Center.
- File by mail – Fill out the Form TXR-01.01c and file and pay through mail
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. Nevada’s timely filing discount is an uncapped 0.25% discount of the total sales tax due.Sales Tax Holiday
Currently, for 2023 – 2024, the planned sales tax holiday in Nevada:- Nevada Day (October 27-29, 2023): All tangible personal property sold to active-duty National Guards living in Nevada are sales tax exempt.
Nevada Sales Tax Penalties
Like in most states, sales tax is a big part of how Nevada generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state. Here are the specific penalties for non-compliance with sales tax regulations in Nevada:- Civil penalties amounting to 10% of the total sales tax due;
- On the criminal side, offenses can be classified as misdemeanors, depending on the severity and specific circumstances.