MINUTES OF MEETING
ASSEMBLY COMMITTEE ON TAXATION
Sixty-seventh Session
March 9, 1993
The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 1:33 p.m., Tuesday, March 9, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Robert E. Price, Chairman
Mrs. Myrna T. Williams, Vice Chairman
Mr. Rick C. Bennett
Mr. Peter G. Ernaut
Mr. Ken L. Haller
Mrs. Joan A. Lambert
Mr. John W. Marvel
Mr. Roy Neighbors
Mr. John B. Regan
Mr. Michael A. Schneider
Mr. Larry L. Spitler
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Mrs. Marcia D. DeBraga
STAFF MEMBERS PRESENT:
Mr. Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Janice A. Wright, Deputy Executive Director, Department of Taxation
Richard D. Franklin, representing the Assessors' Association
Bill Bartlett, Churchill County Assessor
Kit Weaver, Carson City Assessor
Mark Schofield, Clark County Assessor
Doug Busselman, Executive Vice President, Nevada Farm Bureau
Chairman Price opened testimony on AB 173.
ASSEMBLY BILL 173 - Proposes to exempt horses from certain taxes on retail sales. (BDR 32-1244)
Mrs. Marcia D. de Braga, Assembly District No. 35, spoke as sponsor of AB 173. She explained the bill sought to exempt the sale of horses from sales tax. At the present time, horses were the only livestock subject to the sales tax. She believed the reason horses were subject to the tax was based primarily upon the assumption horses were used for pleasure. She asserted the assumption was far from the truth and horses were used for a great variety of uses including food and work animals.
Mrs. de Braga stressed the sales tax was unenforceable. The only place the sales tax was enforced that she was aware of was through the livestock auction. She pointed out there was only one livestock auction in the state of Nevada. There were a few other special sales enforcing the sales tax on horses, but for the most part very few people were caught.
Mrs. de Braga referred to a table marked Exhibit C setting forth the amounts of sales tax paid on horses by Gallagher Livestock, Inc., during the course of the last three years. She stressed Exhibit C was not completely accurate because in addition to the sales tax charged on horses sold through Gallagher Livestock, Inc., it also reflected sales tax on other items sold through Gallagher Livestock, Inc. The actual sales tax figure for horses would be less.
Mrs. de Braga presented another fiscal note marked Exhibit D prepared by the Nevada Department of Taxation. Mrs. de Braga continued explaining Exhibit D showed in the course of the year to date, $5,631 had been secured through the sale of horses, but again it was an estimate because horses were not singled out as a category. Accurate records were not available. Mrs. de Braga explained Exhibit D included three, one-time sales events which accounted for over 68 percent of the taxable sales reported on horses.
Mrs. de Braga introduced Mr. Tim Gallagher, owner of Gallagher Livestock, Inc., located in Fallon, Nevada. Mr. Gallagher felt his company was the only one in the state of Nevada collecting the sales tax on horses. His customers became upset whenever he charged the sales tax on horse sales. The customers indicated never having to pay sales tax to anyone else for the purchase of a horse. Mr. Gallagher iterated numerous horses were sold every day out in the rural areas, and stressed his company had been singled out to pay the sales tax. He expanded stating if the sales tax was not in place, outside groups might be interested in moving more horse sales to the area.
Mr. Schneider asked if other states had a sales tax. Mr. Gallagher was not aware of any other state that imposed a sales tax on horses.
Mrs. de Braga mentioned there was a sales tax on horses in California, but it was more enforceable because of the state income tax. She believed if the sales tax was abolished, Nevada would see more multi million dollar horse sales revenue.
Mr. Marvel agreed the sales tax was virtually unenforceable and endorsed the bill.
Mr. Ernaut asked if mules were defined as horses for the purpose of mule racing. Mrs. de Braga stated sales tax was collected on mule sales.
Mrs. de Braga explained many people could get an exemption from paying the horse sales tax. Some of the exemptions included people who bought horses for immediate resale out of the country or state. Many people search for a buyer with an exemption and thus avoid the sales tax.
Mr. Regan responded to Mr. Marvel explaining the Bureau of Land Management (BLM) did not collect sales tax when selling wild horses to individuals.
Mr. Haller referenced the last line in the description of the bill and asked what "certain analogous taxes" meant. Mr. Zuend explained the reference to analogous taxes referred to the Basic City-County Relief Tax (BCCRT), the Supplemental City-County Relief Tax (SCCRT), the Local School Support Tax (LSST) and the Local Option Tax. He emphasized the state does not require a vote to change the above-referenced taxes. AB 173 would only exempt horses from the referenced taxes if the voters approved the exemption to the Sales and Use Tax Act.
Chairman Price explained to Mr. Regan the date of effectiveness of January 1, 1995, was imposed because AB 173 required a vote of the people in the 1994 election.
Janice A. Wright, Deputy Executive Director, Department of Taxation, State of Nevada, stated the current statute provided that all livestock was subject to sales tax. The exemption provided anything considered for human consumption be exempt. The specific citation was NRS 372.280. Ms. Wright listed other exemptions. The Department of Taxation found in preparing the fiscal note only eight people throughout Nevada were registered with the Department of Taxation as being in the business of selling horses. Of those eight, only three were one-time events. The fiscal note (Exhibit D) showing $5,631 represented a five month period of time. Ms. Wright expressed the problem the Department of Taxation had in checking the total revenue was there was no way of knowing who was selling a horse. The Department of Taxation was unable to provide the Committee with any more information to show the real impact of AB 173.
ASSEMBLYMAN MARVEL MOVED DO PASS ON AB 173.
ASSEMBLYMAN REGAN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Price called for testimony on AB 136.
ASSEMBLY BILL 136 - Revises provisions governing assessment of agricultural and open space land for property taxation. (BDR 32-1019)
Richard D. Franklin represented the Assessor's Association. Mr. Franklin provided committee members with a Summary of AB 136 (Exhibit E). The Assessor's Association requested AB 136. Mr. Franklin mentioned AB 104 of the 1991 Legislative Session made provision for the Assessors to reopen the secured roll after it was closed in the fall. reopening the secured roll once it had been closed and sent to the newspaper allowed the Assessor to make changes that occurred between the time the roll was closed and when the tax bills came out in July. He continued explaining AB 136 extended the reopening of the roll to agricultural property which was not covered under AB 104. He pointed out people would be able to apply later for agricultural assessment, and if someone had property assessed as agricultural property and stopped farming or ranching, then the Assessor could change the roll to reflect the change.
Mr. Franklin suggested an amendment to AB 136, amend Section 13 to reflect the bill would become effective upon passage and approval as opposed to waiting until July 1, 1993.
Chairman Price opened testimony on AB 137.
ASSEMBLY BILL 137 - Makes various changes concerning assessment of property for taxation. (BDR 32-1018)
Mr. Franklin conveyed AB 137 was also requested by the Assessor's Association. He provided committee members with a Summary of AB 137 (Exhibit F) which he said was basically a clean-up bill. Mr. Franklin recommended some amendments to the bill. He suggested deleting sections 2 and 18 which dealt with the Nature Conservancy exemption. He also requested the deletion of section 4 of the bill which dealt with the assessment of possessory interest. He explained at least two other bill drafts had been requested on that subject.
Mr. Franklin detailed the bill section by section for the committee referring to Exhibit F. With regard to Sections 6 and 16 of his handout (Exhibit F) he noted it should say "quantity" instead of "quality".
Mr. Franklin expressed the desire to amend the bill and add a separate section that dealt with the language in NRS 361.357. The language called for people appealing the full cash value of their property to file an appeal before January 15th, whereas in NRS 361.240 the language dealing with filing an appeal said the appeal must be filed not later than January 15th. He wanted to conform the language in NRS 361.357 to reflect the language in NRS 361.240 to eliminate any confusion with the date.
Mrs. Williams verbalized her concern with the optional stickers on mobile homes. She said the mobile home sticker was a matter of safety showing the mobile home had been inspected. She understood the rural areas had a different situation.
Bill Bartlett, Churchill County Assessor, pointed out to Mrs. Williams the inspection sticker she referred to was issued by manufactured housing. Mrs. Williams still believed the sticker was a good idea. Mr. Bartlett was only familiar with the computer systems of 11 or 12 of the counties and not the bigger counties like Washoe and Clark. In the smaller counties, unless the treasurer issued a number when the sticker was purchased, the sticker could not be traced to any one individual.
Mark Schofield, Clark County Assessor, iterated Clark County wanted to have the ability to issue stickers and would continue to issue stickers. It was an issue of compliance. Clark County had two full-time delinquent tax collectors out in the field and one of the ways it was determined if taxes were paid and current was by the display of the decal. Clark County had approximately 25 percent turnover in mobile homes every year. Mobile homes were moved so frequently in rural areas that in some cases a printout would not assist in locating mobile homes.
Mr. Franklin informed Mr. Neighbors the fiscal impact would be very minor. He noted section 19 of the bill clarified what had been done in the past. Mr. Neighbors asked if someone wanted to place a mobile home on the real tax roll, did it have to be on a foundation. Mr. Franklin responded there were a series of requirements in a section of NRS covering conversion of a mobile home to real property. There were steps to adhere to. Mr. Franklin clarified if a mobile home was placed on personal property, if the person owned the land, the person would be billed with a secured bill, but it would still be assessed as personal property. Another situation would be a person who converted a mobile home into real property by placing it on a foundation to meet the requirements. Mr. Franklin noted for Mr. Neighbors the mobile home converted into real property would depreciate at one and one-half percent per year, but if the mobile home was billed on the secure roll, it would be valued and depreciated in the same way as other mobile homes. Mr. Neighbors wanted to know if in ten years the mobile home converted into real property would be valued higher than the mobile home placed on personal property. Mr. Franklin said it could happen.
Mr. Neighbors asked Mr. Bartlett if Nature Conservancy had any problem with being withdrawn from the bill. Mr. Bartlett responded Nature Conservancy did not have a problem with being withdrawn from the discussions. Chairman Price communicated for Mr. Neighbors, Nature Conservancy was a nonprofit corporation. Nature Conservancy could be dealt with in another bill.
Mr. Bartlett added with regard to the mobile home stickers the compliance rate was very low in many of the counties. Churchill County did not have the manpower to police the stickers. He explained it was one of the reasons for the optional stickers.
Mr. Franklin clarified that the language in AB 137 would not prevent Clark County from continuing to issue stickers, but on the other hand it would not require the smaller counties to provide the stickers. Chairman Price asked if the stickers would still be purchased, but not placed on the mobile home. Mr. Bartlett said that was correct.
Kit Weaver, Carson City Assessor, explained for Mrs. Lambert the option for the decal was to issue one decal for the mobile home as long as it stayed in the same location, then the "rainbow effect" could be prevented. It would also save the county money. He continued explaining in Carson City there were no vacant lots to relocate a mobile home. The mobile homes remained in the same place unless a mobile home was replaced. Carson City did not have the difficulty the other counties had.
Mark Schofield, Clark County Assessor, stressed he did not want his testimony to impede the passage of the language contained in AB 137. Mr. Schofield concurred with AB 137. The smaller counties did not have the same type of difficulty with compliance as Clark County had, simply because of the numbers. For example, Churchill had 2,500 mobile homes and in Clark County there were 31,000. Mr. Schofield agreed with the assessors in the smaller counties and felt it was not necessary when dealing the low numbers.
Doug Busselman, Executive Vice President, Nevada Farm Bureau, believed Nevada Farm Bureau caused section 2 of AB 137 to be deleted. He said at the taxation subcommittee hearing an amendment was proposed on page 2, line 39, by substituting "local" in place of "other" and additionally to amend page 2, line 43 to substitute "local" in place of "another." He believed the proposed amendments caused the section to be deleted. The idea was in the event Nature Conservancy purchased property for acquisition by the state or a local government entity everything would remain as it was, however; he continued, there was another level of government Nature Conservancy did business with and Nevada Farm Bureau was interested in encouraging the business to be directed more toward state ownership or local government ownership as opposed to the federal government acquiring more of the property in the state of Nevada. Chairman Price said the discussion would be ongoing if another bill was drafted. Mr. Busselman's intent was to inform the committee the section had been deleted after the subcommittee hearing. Mr. Busselman explained he would like to make the changes, but the changes could be made elsewhere. Mrs. Williams and Mr. Busselman had some discussion with regard to Nature Conservancy.
Chairman Price asked for a motion on AB 136.
ASSEMBLYMAN HALLER MOVED TO AMEND AND DO PASS AB 136.
ASSEMBLYMAN SCHNEIDER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * * * * * *
Chairman Price asked for a motion on AB 137 amending the bill to eliminate sections 2, 4 and 18, and asked permission to request a bill draft to deal with those particular issues.
Mr. Franklin added another amendment to AB 137 would be to add a new section amending NRS 361.357 so the wording with regard to the filing date would be not later than January 15th.
ASSEMBLYMAN LAMBERT MOVED TO AMEND AND DO PASS AB 137 WITH THE FOUR AMENDMENTS STATED ABOVE.
ASSEMBLYMAN HALLER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Price asked permission to request a bill draft with regard to the sections that were eliminated from AB 137. Hearing no objection, he would request the bill draft.
ASSEMBLY BILL 101 - Authorizes department of taxation to waive payment of interest on certain taxes. (BDR 32-772)
Chairman Price presented Amendment No. 43 (Exhibit G) and Amendment No. 44 (Exhibit H) with regard to AB 101.
Mrs. Lambert explained there were two amendments to AB 101. One amendment incorporated the suggestion made by the Nevada Department of Taxation proposing the interest payment be waived or reduced and additionally made the bill become effective upon passage and approval (Exhibit H). Amendment No. 43 (Exhibit G) had the same language but with the addition Andrea "Ande" Engleman, Nevada State Press Association, Inc., had suggested requiring disclosure, at the request of a person, of the name of the person whose interest or penalty was waived or reduced and the amount so waived or reduced. Chairman Price reminded committee members Amendment No. 43 included both the recommendation from the Nevada Tax Commission and the suggestion from Ms. Engleman. It appeared to be tight enough no one could obtain information with regard to a business, just the actual name.
ASSEMBLYMAN WILLIAMS MOVED TO AMEND AND DO PASS AB 101 TO INCLUDE AMENDMENT NO. 43 (EXHIBIT G).
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
There being no further business to come before committee, the meeting was adjourned at 2:33 p.m.
RESPECTFULLY SUBMITTED:
DIANNE LAIRD
Committee Secretary
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Assembly Committee on Taxation
March 9, 1993
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