Nevada’s new commerce tax includes an aggressive approach to auditing out-of-state individuals and businesses.  Any person who “may be liable” for the commerce tax and keeps records outside the state will have to pay for the state auditor to audit their records.  (Nevada Senate Bill 483, section 18, part 2)

The “may be liable” wording casts a big net for potential audits.  With a few exceptions any corporation, partnership, LLC, sole proprietorship or rental property owner in Nevada are subject to the commerce tax.  They might not have a tax liability because of the $4 million threshold however, they are still required to submit a commerce tax return.

The Nevada commerce tax targets larger companies for payment of the tax, however, small companies, individuals and rental property owners can get caught up in the net of audits and penalties for not filing returns even though no tax balance is due.  The commerce tax has an unusual fiscal year end of June 30th and is new for 2016.  Many out-of-state rental property owners won’t even be aware of the new tax because it will be the first time they will be required to file a return with the state.