MINUTES OF THE
SENATE COMMITTEE ON TAXATION
Sixty-seventh Session
March 25, 1993
The Senate Committee on Taxation was called to order by Chairman Dean A. Rhoads, at 2:04 p.m., on Thursday, March 25, 1993, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Dean A. Rhoads, Chairman
Senator Ann O'Connell, Vice Chairman
Senator Randolph J. Townsend
Senator Sue Lowden
Senator Bob Coffin
Senator Raymond C. Shaffer
COMMITTEE MEMBERS ABSENT:
Senator Ernest E. Adler (Excused)
GUEST LEGISLATORS PRESENT:
Assemblyman Joan Lambert, Assembly District #29
Assemblyman Marcia de Braga, Assembly District #35
STAFF MEMBERS PRESENT:
Kevin Welsh, Deputy Fiscal Analyst
Billie Brinkman, Committee Secretary
OTHERS PRESENT:
Janice Wright, Deputy Executive Director, Department of
Taxation, State of Nevada
Andrea Engleman, Lobbyist, Nevada Press Association
Carole Vilardo, Executive Director, Nevada Taxpayers Association
Bonnie James, Lobbyist, Las Vegas Chamber of Commerce
Tim Gallagher, Gallagher Livestock Inc.
Chairman Rhoads opened the hearing on Assembly Bill (A.B.) 101.
ASSEMBLY BILL 101: Authorizes department of taxation to waive payment of interest on certain taxes.
Assemblyman Joan Lambert, Assembly District #29, explained that A.B. 101 allows the Department of Taxation to waive or reduce interest on overdue taxes. She said the Department of Taxation can presently waive penalties, but not interest. She testified the intent of A.B. 101 is to give the Department of Taxation and the Tax Commission more flexibility in being equitable and treating the taxpayers as fairly as possible. She continued, saying A.B. 101 also deals with the subject of public information.
Discussion ensued.
Senator O'Connell related an experience she knew of where a taxpayer posted taxes at a post office whose cancellation stamp does not produce the date of mailing. She pointed out the delinquent interest is not on the penalty, but on the amount of money the state loses in interest from the tax dollars that were owed.
Assemblyman Lambert interjected, saying the interest rate is 1-1/2 percent per month.
Senator Coffin spoke of lowering the (interest) rate, suggesting it is an onerous rate. He said statutorily the rate could always be changed every 2 years if conditions warranted such a change.
Discussion ensued.
Assemblyman Lambert acknowledged there is a need to have a fairly high interest rate to encourage taxpayers not to use the state as a lending institution.
Senator O'Connell pointed out the only reason the Taxation Department would waive the interest and/or penalty is if there was an honest reason for the tax having not been paid in a timely fashion originally, such as a non-dated postmark.
Janice Wright, Deputy Executive Director, Department of Taxation, explained that currently, the Taxpayer Bill of Rights which was passed in 1991, does provide for waiving up to $5,000 of tax interest and penalties.
Ms. Wright said the design of the interest was to reimburse the state for losing use of the money, and therefore, the state was not earning interest on those funds. So the taxpayer reimburses the state for that loss in interest.
Discussion ensued.
Senator Townsend pointed out the change in the interest rate is mutually exclusive from A.B. 101. He said he thought the important part of A.B. 101 were lines 4 through 8, which is the disclosure requirement and therefore takes care of the political problem of an arbitrary decision by the Department of Taxation.
Ms. Wright, responded on behalf of the Department of Taxation, to the political inference that has been made in regard to actions of the Department of Taxation. She reminded the committee that all actions of the Department of Taxation are appealable to the Nevada Tax Commission and the appeals are heard by an eight-member board appointed by the Governor.
Andrea Engleman, Lobbyist, Nevada Press Association, came forward in support of A.B. 101.
Chairman Rhoads closed the hearing on A.B. 101 and opened the hearing on Assembly Bill (A.B.) 173.
ASSEMBLY BILL 173: Proposes to exempt horses from certain taxes on retail sales.
Assemblyman Marcia de Braga, Assembly District No. 35, came forward to comment on A.B. 173. Tim Gallagher, owner of Gallagher Livestock Inc., Fallon, accompanied Assemblyman de Braga.
Assemblyman de Braga explained A.B. 173 seeks to exempt horses from sales tax. She pointed out that currently, horses are the only livestock being taxed. She said it is assumed that horses are primarily used for pleasure, when in fact there are many other uses for horses, including for food and for work animals. Assemblyman de Braga pointed out the tax on horses is virtually uncollectible. She said the only place in Nevada where that particular tax is now being collected is through sales of horses at the only livestock auction yard in Nevada (Gallagher Livestock Inc.) and at a few special sales.
Assemblyman de Braga referred to a handout, "Sales Taxes on Horses," (Exhibit C) which reflects the sales tax paid by Gallagher Livestock, Inc., but it does not reflect only horses, it also includes all the sales tax paid by Gallagher Livestock Inc. She called attention to another handout (Exhibit D), an estimate showing sales tax which does not segregate tax paid on horses, so there are no true and accurate figures for the sales tax on horses.
Tim Gallagher, owner, Gallagher Livestock Inc., Fallon, testified that his business probably sells less than 85 percent of the horses in Nevada. All the other horses are sold through private parties. He said in conversation with other horse owners, he had learned they did not know of this particular sales tax. Mr. Gallagher said in his business, he is required to pay the sales tax.
Chairman Rhoads said he was not aware of this tax until A.B. 173 was introduced.
Assemblyman de Braga pointed out this type sales tax is in place in California, however, it is more collectible there because of the state income tax.
Ms. Wright testified that all livestock in Nevada is subject to tax. The only exemption exists if it is something that is ordinarily for human consumption. She pointed out that Nevada Revised Statues (NRS) 372.280 says that any kind of animal or plant life that is for human consumption is exempt. She explained the only other means of obtaining a tax exemption on horse sales is by selling two or fewer horses in a 12-month period. She said the one-time large horse sales in Nevada do register with the Department of Taxation and do pay the tax.
Chairman Rhoads asked Ms. Wright to investigate those states that do have a sales tax on horses.
Chairman Rhoads closed the hearing on A.B. 173.
There being no further business to come before the committee, Chairman Rhoads adjourned the meeting at 3:30 p.m.
RESPECTFULLY SUBMITTED:
Billie Brinkman,
Committee Secretary
APPROVED BY:
Senator Dean A. Rhoads, Chairman
DATE:
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Senate Committee on Taxation
March 25, 1993
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