following information is for general guidance only. Please be advised that
any information made available through FAQs cannot change controlling statutes
or regulations and any such information is not intended to constitute “written
advice” for purposes of NRS 360.294. To obtain written advice, please
request an advisory opinion.
Every employer who is subject to Nevada Unemployment Compensation Law (NRS
612) is also subject to the Modified Business Tax on total gross wages less
employee health care benefits paid by the employer. Total gross wages are the
total amount of all gross wages and reported tips paid for a calendar quarter
as reported to the Employment Security Division on form NUCS 4072. Exceptions
to this are non-profit organizations, Indian Tribes, political subdivisions, and
employers with household employees only.
Modified Business Tax has two classifications:
General Business – The tax rate for most General Business employers, as
opposed to Financial Institutions, is 1.475% on wages after deduction of health
benefits paid by the employer and certain wages paid to qualified veterans.
However, the first $50,000 of gross wages is not taxable. For example: if
the sum of all wages for the 9/15 quarter is $101,000 after health care and
qualified veteran wage deductions, the tax is $752.25 ($101,000 – $50,000 =
$51,000 x 0.01475). These are changes that became effective July 1, 2015 pursuant
to SB283 of the 2015 legislative session. A tax return will still need to be
filed by all employers, even if the taxable wages are less than $50,000 and tax
due is $0.
Prior to July
1, 2015, SB475 of the 2013 Legislative Session amended the tax rate
to 1.17% on taxable wages over $85,000 and prior to July 1, 2011, AB561 amended the tax rate 1.17% on taxable
wages over $62,500. On July 1, 2009, SB 429 created the tiered system. The sum
of all taxable wages, after health care deduction, paid by the employer not
exceeding $62,500 for the calendar quarter was calculated at 0.5%. If the sum
of all the wages paid by the employer exceeded $62,500 for the calendar
quarter, the tax was $312.50 plus 1.17% of the amount the wages exceeded
$62,500. The tax rate for general business prior to July 1, 2009 was 0.63% with
No changes were made to the tax rate
for Financial Institutions which remains at 2% since its inception in October
In addition to the rate change and
the deduction for qualified veteran wages pursuant to AB71, the 78th
(2015) Legislative session also enacted AB165, SB412, and SB507 that created
certain credits a taxpayer may be able to take against their Modified Business
Tax liability. These credits all require prior approval and a credit notice
from the Department before they can be taken. Please see the legislative
website at www.leg.state.nv.us for further information regarding these bills.
AB 389 of the 78th
Legislative Session amended NRS 616B.691 to make the client of an Employee
Leasing Company the employer of the leased employees for purposes of NRS 612.
- The tax rate for financial institutions is 2% on the gross wages less
employee health care benefits paid by the employer and certain wages paid to
qualified veterans. Financial institutions
are not provided the wage exemption afforded to general businesses and must
report and pay tax at the 2% rate on all wages less the deductions. SB 483 of
the 78th Legislative Session included Taxpayers who are subject to
the Net Proceeds of Minerals Tax, NRS 362.100 to 362.240, in the definition of
Financial Institutions and therefore liable for the tax at the 2% rate. A new Modified
Business Tax Return, MBT-Mining has been developed for this reporting purpose.
In addition to the change to the
Financial Institution definition and the deduction for qualified veteran wages
pursuant to AB71, the 78th (2015) Legislative session also enacted
AB165, SB412, and SB507 that created certain credits a Taxpayer may be able to
take against their Modified Business Tax liability. These credits all require
prior approval and a credit notice from the Department before they can be
taken. Please see the legislative website at www.leg.state.nv.us for further information regarding these bills.
entities qualify as Financial Institutions?
363A.050 defines a financial institution and lists 19 different categories including
institution licensed, registered or otherwise authorized to do business in this
State pursuant to the provisions of title 55 or 56 of NRS or chapter 604A, 645B or 645E of NRS, or a similar
institution chartered or licensed pursuant to federal law; a person licensed or
registered or required to be licensed or registered pursuant to NRS 90.310, 90.330, 90.453, 686A.340 or 688C.190; and a person
holding or required to hold a solicitation permit or license pursuant to NRS 692B.040, 692B.190 or 692B.260;
This definition also
provides that if you are an entity related to any of the listed persons or
entities, you are a Financial Institution. You should review the definition of
Financial Institution to determine if you are a person or entity who should be
registered as a Financial Institution. You can find the definition of Financial
Institution at NRS 363A.050.
AB 103 of the 78th
Legislative Session amended the definition of Financial Institution to exclude
a person who sells, solicits, or negotiates insurance and whose business
primarily consists of the sale, solicitation, or negotiation of insurance. As a
result entities licensed as described in NRS 368A.050 who also sell insurance
must certify that over 50% of their income is from insurance commissions and
must inform the Department when this changes.
How is it
be determined that a business qualifies as a Financial Institution?
The Department primarily looks to
see what the entity is licensed or registered for. Modified Business Tax is a
self-reporting tax and you are responsible for properly characterizing your
business as a Financial Institution or General Business. However, the
Department will classify taxpayers when it discovers through account review,
audit, a lead or other research that a company falls into one of the
definitions under NRS 363A.050.
do I dispute my classification as a Financial Institution?
dispute may be made by filing a petition through a letter with the Department.
The petition must include a description of the business, a statement of all the
grounds upon which the person challenges the classification, and such financial
records and documents as may be necessary to substantiate the claim.
Who is affected?
How do I register for this tax?
When you register with the Nevada Employment Security Division (ESD) for
Unemployment Compensation for your employees you are automatically registered
with the Department of Taxation for Modified Business Tax. You will start
receiving tax returns from the Department of Taxation. They will be sent to you
at the same address you have registered with the Employment Security Division.
If you would like your Modified Business Tax returns to be sent to a different
address you must notify the Department of Taxation by phone or in writing.
Who do I pay this tax to?
This tax is paid to the Department of Taxation.
When is the tax due?
Tax for each calendar quarter is due on the last day of the quarter and
is to be paid on or before the last day of the month following the quarter. For
example, the tax return and remittance for October 1, 2006 through December 31,
2006 was due on or before January 31, 2007. A return must be filed for each
period even if no gross wages were paid during the period.
Do I also pay the unemployment compensation contributions to the Employment Security Division?
What are gross wages?
Gross wages are the total wages paid by the employer during the calendar
quarter. This amount should include reported tips.
Is there a cap on the gross wages?
No, there is no cap, or limit, on the gross wages.
Are there any allowable deductions from gross wages?
Yes. There is a deduction for qualified health insurance/health benefit plans for employees paid by the employer. This does not include premiums being repaid to the employer by the employee. Effective July 1, 2015, AB71 of the 78th Legislative Session enacted a deduction for certain wages of qualified veterans. The veteran must meet specific qualifications and provide the employer documentation regarding Unemployment Benefits received. This documentation along with a signed affidavit from the employer must be attached to the Modified Business Tax return when taking this deduction.
Are employees’ dependents included in the allowable deduction?
Yes, if the premiums, claims, etc. are paid by the employer.
Are employee dental and vision insurance premiums considered allowable health insurance/health benefit plan?
Yes, as long as they are paid by the employer.
My company is self-insured; does that qualify for the deduction?
Yes. There is a provision for amounts paid for claims and direct
administrative services costs.
What about amounts paid by an employer to a Taft-Hartley Trust for participation in an employee welfare benefit plan?
These amounts would also qualify for the deduction.
What if the amounts paid for premiums, claim, etc. exceed the amount of gross wages for the quarter?
The excess amount may be carried forward to be applied as an offset to
the gross wages in the following quarter.
Do amounts paid for health care or premiums paid for insurance for any industrial injury or occupational diseases qualify for the deduction?
Can I deduct these taxes from the employee’s wages?
What if I, as an employer, pay $300 per employee per quarter for health insurance premiums, and the employee pays $100 per quarter for a total of $400 paid to the insurance company. How much can I deduct from gross wages?
You can deduct $300 per employee per quarter.
If I do not own a business but I hire domestic help in my home, am I required to pay this tax?
Effective July 1, 2005 you are considered to be a consumer of service
only and not required to pay this tax on their wages, even if the wages are
over $1000 a calendar quarter.
What if I make a mistake- how do I amend my return?
amendments or corrections that need to be made on a tax return, an 'amended
return' must be mailed to the Department reflecting these changes in the
Include a copy of the
Write the word “AMENDED”
in black ink in the upper right-hand corner of the return.
original figures, in black ink, leaving original figures legible.
Enter corrected figures,
in black ink, next to or above the lined-through figures.
Enter amount of credit
claimed (if any) or amount due.
Include a written explanation
and documentation (such credit memos, exemption certificates, adjustments,
etc.) substantiating the basis of the amendment(s).
If the amended return
results in a credit, a credit will be used first to satisfy current liabilities
or future liabilities unless a refund is specifically requested. Please note on
the amended return if you are requesting a refund.
If additional tax is
due, please remit payment along with applicable penalty and interest
The Department will send
you a written notice when a credit request has been processed and the credit is
available for use or refund. Please do not apply a credit to future returns
prior to receiving Department notification that the credit is available.