FAQs are for general guidance only. For a written advice, as it relates to your business, please request an advisory opinion, pursuant to NAC 360.190.
What is the Commerce Tax credit?
The Commerce Tax credit is a non-refundable credit applied toward a Modified Business Tax liability for your business. It equals 50% of the Commerce Tax paid.
Who is eligible for the Commerce Tax credit?
A business, which pays the Commerce Tax and the Modified Business Tax, is eligible for the Commerce Tax credit. Special rules apply to the members of an affiliated group.
How do I take the credit?
Use
the Modified Business Tax return form (7-1-23 to Current). The form includes a
line to report the Commerce Tax credit. The form can be found here.
When can I take the credit?
You can take the credit for any of the 4 calendar quarters immediately following the end of the Commerce Tax year, June 30th.
Example: The Commerce Tax year ends on June 30, 2016. On August 15, 2016 a business filed its Commerce Tax return and paid $1,000 in Commerce Tax. $500 of the Commerce Tax credit may be applied to the Modified Business Tax liability for any of the quarters ending September 30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017.
What if the credit is more than my Modified Business Tax liability?
The Commerce Tax credit is valid for 4 calendar quarters immediately following the end of the Commerce Tax year, June 30th. If you applied the credit to the Modified Business Tax liability for the quarter ending September 30th and there is still an unused portion of the credit left, you may apply the unused portion in the following quarter ending December 31st and so on until the credit is all used or the credit expires.
Example: The Commerce Tax year ends on June 30, 2016. On August 15, 2016 a business filed its Commerce Tax return and paid $20,000 in Commerce Tax.
The Modified Business Tax liability before applying the Commerce Tax credit for the quarter ending:
- September 30, 2016 is $3,000;
- December 31, 2016 is $3,500;
- March 31, 2017 is $3,000;
- June 30, 2017 is $3,000.
The Modified Business Tax Liability after applying the Commerce Tax credit for the quarter ending:
- September 30, 2016 - $0 (the remaining credit carryforward to the next quarter is $7,000);
- December 31, 2016 - $0 (the remaining credit carryforward to the next quarter is $3,500);
- March 31, 2017 - $0 (the remaining credit carryforward to the next quarter is $500);
- June 30, 2017 - $2,500 (all credit is used).
Example: The Commerce Tax year ends on June 30, 2016. On August 15, 2016 a business filed its Commerce Tax return and paid $20,000 in Commerce Tax.
The Modified Business Tax liability before applying the Commerce Tax credit for the quarter ending:
- September 30, 2016 is $2,000;
- December 31, 2016 is $2,500;
- March 31, 2017 is $2,000;
- June 30, 2017 is $2,000.
The Modified Business Tax Liability after applying the Commerce Tax credit for the quarter ending:
- September 30, 2016 - $0 (the remaining credit carryforward to the next quarter is $8,000);
- December 31, 2016 - $0 (the remaining credit carryforward to the next quarter is $5,500);
- March 31, 2017 - $0 (the remaining credit carryforward to the next quarter is $3,500);
- June 30, 2017 - $0 (the unused portion of the credit of $1,500 expires).
Can I still take the credit, if I pay the Commerce Tax partially or late?
If you pay only part of the Commerce Tax due you are entitled to 50% of the amount you paid to be taken as the Commerce Tax credit. If you pay the Commerce Tax late, you may still take the credit in any of the four eligible quarters immediately following the end of the Commerce Tax year, June 30th. You may need to amend a previous Modified Business Tax return in order to apply the credit.
Example: For the Commerce Tax year ended June 30, 2016, a business owed $1,000 in Commerce Tax, but paid only $200. The Commerce Tax credit the business can apply to the Modified Business Tax liability is $100.
Example: For the Commerce Tax year ended June 30, 2016, a business was able to pay the Commerce Tax in May 2017. It may still claim the credit for the quarter ending June 30, 2017 and/ or amend the Modified Business Tax returns for the quarters ended September 30, 2016, December 31, 2016 and March 31, 2017.
If I pay the Commerce Tax late, during what period can I amend my Modified Business Tax return to take the credit?
A Modified Business Tax return may be amended within three years after the last day of the month following the calendar quarter for which the overpayment of the Modified Business Tax was made.
What are the special rules for the members of an affiliated group for taking the credit?
If an affiliated group is structured in a way that one of the
members is a central employer for other members of the affiliated group, such
employer may apply to the Department to be designated as a payroll provider in
order to claim the Commerce Tax credit the other members of the affiliated
group have generated.
Such employer must demonstrate that:
A) It is a member of an affiliated group which:
1)
Provides payroll services for one or more members for the affiliated group;
2) Pays
wages to employees who provide services on behalf of one or more members of the
affiliated group; and
3)
Reports and pays Modified Business Tax on wages paid to employees who provide
services on behalf of one or more members of the affiliated group; and
B) Each member of the affiliated group for which a Commerce Tax
credit is claimed would have a liability for the Modified Business Tax if the
persons were treated as employees of the affiliate rather than as employees of
the employer.
Example:
Parent Inc. owns 100% of PP LLC, 80% of
Stores Front LLP, and 75% of Factory Inc.
Stores Front LP and Factory Inc. have
employees and pay Commerce Tax, Parent Inc. has no employees, but pays Commerce
Tax.
The sole purpose of PP LLC is to provide the
payroll services to Stores Front LLP and Factory Inc.
PP LLC may apply to the Department to obtain
the affiliated group payroll provider status in order to claim the Commerce Tax
credit generated by Stores Front LLP and Factory Inc. on its Modified Business
Tax return.
Parent Inc. has no employees; therefore, the
Commerce Tax generated by Parent Inc. may not be taken as a credit towards the
Modified Business Tax liability under PP LLC.
Does an unrelated third party payroll company that prepares payroll and files payroll reports on behalf of that business have to apply for the payroll provider status?
No, the unrelated third party payroll
company does not have to apply for the payroll provider status. It should simply
file the Modified Business Tax return on behalf of the business reporting the
amount of Commerce Tax credit the business is entitled to.
What is an affiliated group?
An affiliated group is a group of two or more business entities, each of which is controlled by one or more common owners or by one or more members of the group. “Controlled by” means the direct or indirect ownership, control or possession of 50% or more of the ownership interest in a business entity.
Does a business that is a member of an affiliated group, but pays the Commerce Tax and generates its own Modified Business Tax liability have to apply for the payroll provider status?
No, such business may apply 50
percent of the Commerce Tax it paid as credit on its Modified Business Tax
return without filing the Affiliated Group Payroll Provider application.
How do I apply to be designated as a payroll provider?
The Affiliated Group Payroll
Provider Application can be found here.
Please mail the form with the supporting documents to:
Nevada Department
of Taxation,
1550 College
Parkway Suite 115,
Carson City,
Nevada 89706