Senate Bill No. 318–Committee on Taxation

March 5, 1999

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Referred to Committee on Taxation

 

SUMMARY—Revises provisions governing collection of taxes on transfer of real property and clarifies responsibility for payment. (BDR 32-1434)

FISCAL NOTE: Effect on Local Government: Yes.

Effect on the State or on Industrial Insurance: No.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

 

AN ACT relating to taxation; revising the method of collecting the taxes on the transfer of real property; clarifying the responsibility for payment of the taxes; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1-1 Section 1. Chapter 375 of NRS is hereby amended by adding thereto

1-2 the provisions set forth as sections 2 and 3 of this act.

1-3 Sec. 2. 1. If any portion of the tax imposed by NRS 375.020 and

1-4 375.025 is not paid by the seller or sellers when due, the county recorder

1-5 may, within 36 months after the date that the tax was determined to be

1-6 due, record a certificate which states:

1-7 (a) The amount of the tax due;

1-8 (b) The name and address of the seller or sellers who are liable for the

1-9 amount due as they appear on the records of the county recorder; and

1-10 (c) That the county recorder has complied with all procedures

1-11 required by law for determining the amount due.

1-12 2. If the county recorder determines that a certificate should be

1-13 recorded pursuant to subsection 1, he shall record the certificate in the

1-14 county in which the taxable transaction occurred and may record such a

1-15 certificate in any other county in the state in which he believes property

1-16 of the seller or sellers is or may in the future be located.

1-17 3. From the time of the recording of the certificate, the amount due

1-18 constitutes a lien upon all real and personal property located in the

1-19 county or counties in which the certificate is recorded that is owned by

2-1 the seller or sellers or acquired by the seller or sellers afterwards and

2-2 before the lien expires. The lien has the effect and priority of a judgment

2-3 lien and continues for 5 years after the time of the recording of the

2-4 certificate unless sooner released or otherwise discharged.

2-5 4. Within 5 years after the date of the recording of the certificate or

2-6 within 5 years after the date of the last extension of the lien pursuant to

2-7 this subsection, the lien may be extended by the county recorder by

2-8 recording a certificate of renewal of the lien. From the time of recording,

2-9 the lien is extended to all real and personal property located in the county

2-10 or counties in which the certificate is recorded that is owned by the seller

2-11 or sellers or acquired by the seller or sellers afterwards for 5 years, unless

2-12 sooner released or otherwise discharged.

2-13 Sec. 3. 1. The county recorder may release all or any portion of

2-14 the property subject to a lien imposed pursuant to section 2 of this act or

2-15 subordinate the lien to other liens and encumbrances if he determines

2-16 that the amount due is secured sufficiently by a lien on other property or

2-17 that the release or subordination of the lien will not jeopardize the

2-18 collection of the amount due.

2-19 2. A certificate by the county recorder stating that property has been

2-20 released from the lien, or that the lien has been subordinated to other

2-21 liens and encumbrances, is conclusive evidence that the property has

2-22 been released, or that the lien has been subordinated.

2-23 Sec. 4. NRS 375.010 is hereby amended to read as follows:

2-24 375.010 The following terms, wherever used or referred to in this

2-25 chapter, have the following meaning unless a different meaning clearly

2-26 appears in the context:

2-27 1. "Deed" means every instrument in writing, [except a last will and

2-28 testament,] whatever its form, and by whatever name it is known in law, by

2-29 which title to any estate or present interest in real property, including a

2-30 water right, permit, certificate or application, is conveyed or transferred to,

2-31 and vested in, another person, but does not include [a] :

2-32 (a) A lease for any term of years ;

2-33 (b) Any transaction in which an interest in real property is

2-34 encumbered for the purposes of securing a debt;

2-35 (c) A deed that is being filed for a second time to correct an error;

2-36 (d) A deed transferring title to or from the United States, any territory

2-37 or state or any agency, department, instrumentality or political

2-38 subdivision thereof;

2-39 (e) A last will and testament; or [an]

2-40 (f) An easement.

2-41 2. "Seller" means any person or other legal entity conveying title to

2-42 real property, including without limitation, a grantor or other transferor

2-43 of real property.

3-1 3. "Value" means:

3-2 (a) In the case of any deed not a gift, the amount of the full, actual

3-3 consideration paid or to be paid for the real property, excluding the amount

3-4 of any lien or liens assumed.

3-5 (b) In the case of a gift, or any deed with nominal consideration or

3-6 without stated consideration, the estimated price the real property would

3-7 bring in an open market and under the then prevailing market conditions in

3-8 a sale between a willing seller and a willing buyer, both conversant with the

3-9 property and with prevailing general price levels.

3-10 Sec. 5. NRS 375.020 is hereby amended to read as follows:

3-11 375.020 1. A tax, at the rate of:

3-12 (a) In a county whose population is 400,000 or more, $1.25; and

3-13 (b) In a county whose population is less than 400,000, 65 cents,

3-14 for each $500 of value or fraction thereof, is hereby imposed on each deed

3-15 by which any lands, tenements or other realty is granted, assigned,

3-16 transferred or otherwise conveyed to, or vested in, another person, if the

3-17 consideration or value of the interest or property conveyed, exclusive of the

3-18 value of any lien or encumbrance remaining on the interest or property at

3-19 the time of sale, exceeds $100.

3-20 2. The amount of tax must be computed on the basis of the value of the

3-21 transferred real property as declared pursuant to NRS 375.060.

3-22 3. The seller or sellers are responsible for the payment of the tax

3-23 imposed by subsection 1.

3-24 Sec. 6. NRS 375.025 is hereby amended to read as follows:

3-25 375.025 1. In addition to all other taxes imposed on transfers of real

3-26 property, a board of county commissioners in each county whose

3-27 population is 100,000 or more but less than 400,000, may by ordinance, but

3-28 not as in a case of emergency, impose a tax at the rate of up to 1/10 of 1

3-29 percent of the value thereof on each deed by which any residential lands,

3-30 tenements or other residential realty is granted, assigned, transferred or

3-31 otherwise conveyed to or vested in another person, after receiving the

3-32 approval of a majority of the registered voters of the county voting on the

3-33 question at a primary, general or special election. A county may combine

3-34 this question with questions submitted pursuant to NRS 376A.040,

3-35 376A.050 and 376A.070 or any combination thereof.

3-36 2. A special election may be held only if the board of county

3-37 commissioners determines, by a unanimous vote, that an emergency exists.

3-38 The determination made by the board is conclusive unless it is shown that

3-39 the board acted with fraud or a gross abuse of discretion. An action to

3-40 challenge the determination made by the board must be commenced within

3-41 15 days after the board’s determination is final. As used in this subsection,

3-42 "emergency" means any unexpected occurrence or combination of

3-43 occurrences which requires immediate action by the board of county

4-1 commissioners to prevent or mitigate a substantial financial loss to the

4-2 county or to enable the board to provide an essential service to the residents

4-3 of the county.

4-4 3. The amount of the tax must be computed on the basis of the value of

4-5 the transferred property as declared pursuant to NRS 375.060. The seller or

4-6 sellers are responsible for the payment of the tax. The county recorder

4-7 shall collect the tax in the manner provided in NRS 375.030, except that he

4-8 shall deposit all of the proceeds from the tax imposed pursuant to this

4-9 section in the county general fund to be used in the manner specified in

4-10 NRS 375.075.

4-11 4. Before the tax may be imposed, an open-space plan must be adopted

4-12 by the board of county commissioners pursuant to NRS 376A.020 and the

4-13 adopted open-space plan must be endorsed by the city council of each

4-14 incorporated city within the county.

4-15 Sec. 7. NRS 375.090 is hereby amended to read as follows:

4-16 375.090 [The tax imposed by NRS 375.020 and 375.025 does not

4-17 apply to:

4-18 1. Any transaction wherein an interest in real property is encumbered

4-19 for the purposes of securing a debt.

4-20 2. A transfer of title to or from the United States, any territory or state

4-21 or any agency, department, instrumentality or political subdivision thereof.

4-22 3. A]

4-23 1. Except as otherwise provided in paragraph (a) of subsection 2, the

4-24 tax imposed by NRS 375.020 and 375.025 must be paid in full by the

4-25 seller or sellers before the acceptance of the deed for recordation, without

4-26 regard to whether the deed is exempt from the tax pursuant to subsection

4-27 3.

4-28 2. If one of the exemptions provided in subsection 3 applies to the

4-29 deed, the seller or sellers may apply for approval of the exemption from

4-30 the county recorder:

4-31 (a) Before the deed is offered for recordation, and if the approval is

4-32 granted, the county recorder shall accept the deed for recordation

4-33 without payment of the tax imposed by NRS 375.020 and 373.025; or

4-34 (b) Within 60 days after the deed is recorded. If the approval is

4-35 granted, the county recorder shall refund the amount of the tax paid. The

4-36 refund must be made pursuant to the same distribution formula under

4-37 which the tax was initially paid.

4-38 3. A deed evidencing one of the following acts is exempt from the tax

4-39 imposed by NRS 375.020 and 373.025:

4-40 (a) A transfer of title recognizing the true status of ownership of the real

4-41 property.

5-1 [4.] (b) A transfer of title without consideration from one joint tenant or

5-2 tenant in common to one or more remaining joint tenants or tenants in

5-3 common.

5-4 [5.] (c) A transfer of title to community property without consideration

5-5 when held in the name of one spouse to both spouses as joint tenants or

5-6 tenants in common, or as community property.

5-7 [6.] (d) A transfer of title between spouses, including gifts.

5-8 [7.] (e) A transfer of title between spouses to effect a property

5-9 settlement agreement or between former spouses in compliance with a

5-10 decree of divorce.

5-11 [8.] (f) A transfer of title to or from a trust, if the transfer is made

5-12 without consideration.

5-13 [9.] (g) Transfers, assignments or conveyances of unpatented mines or

5-14 mining claims.

5-15 [10.] (h) A transfer, assignment or other conveyance of real property to

5-16 a corporation or other business organization if the [person] seller or sellers

5-17 conveying the property [owns] own 100 percent of the corporation or

5-18 organization to which the conveyance is made.

5-19 [11.] (i) A transfer, assignment or other conveyance of real property if

5-20 the owner of the property is related to the person to whom it is conveyed

5-21 within the first degree of consanguinity.

5-22 [12.] (j) The making, delivery or filing of conveyances of real property

5-23 to make effective any plan of reorganization or adjustment:

5-24 [(a)] (1) Confirmed under the Bankruptcy Act, as amended, Title 11 of

5-25 U.S.C.;

5-26 [(b)] (2) Approved in an equity receivership proceeding involving a

5-27 railroad as defined in the Bankruptcy Act;

5-28 [(c)] (3) Approved in an equity receivership proceeding involving a

5-29 corporation, as defined in the Bankruptcy Act; or

5-30 [(d)] (4) Whereby a mere change in identity, form or place of

5-31 organization is effected, such as a transfer between a corporation and its

5-32 parent corporation, a subsidiary or an affiliated corporation,

5-33 if the making, delivery or filing of instruments of transfer or conveyance

5-34 occurs within 5 years after the date of the confirmation, approval or change.

5-35 [13.] (k) The making or delivery of conveyances of real property to

5-36 make effective any order of the Securities and Exchange Commission if:

5-37 [(a)] (1) The order of the Securities and Exchange Commission in

5-38 obedience to which the transfer or conveyance is made recites that the

5-39 transfer or conveyance is necessary or appropriate to effectuate the

5-40 provisions of section 11 of the Public Utility Holding Company Act of

5-41 1935, 15 U.S.C. § 79k;

5-42 [(b)] (2) The order specifies and itemizes the property which is ordered

5-43 to be transferred or conveyed; and

6-1 [(c)] (3) The transfer or conveyance is made in obedience to the order.

6-2 [14.] (l) A transfer to or from an educational foundation. As used in this

6-3 subsection, "educational foundation" has the meaning ascribed to it in

6-4 subsection 3 of NRS 388.750.

6-5 [15.] (m) A transfer to or from a university foundation. As used in this

6-6 subsection, "university foundation" has the meaning ascribed to it in

6-7 subsection 3 of NRS 396.405.

6-8 [16.] (n) A transfer, assignment or other conveyance of real property to

6-9 a corporation sole from another corporation sole. As used in this

6-10 subsection, "corporation sole" means a corporation which is organized

6-11 pursuant to the provisions of chapter 84 of NRS.

6-12 4. The county recorder may audit the records of the transaction to

6-13 verify the computation of the amount of tax due and any claimed

6-14 exemption by requesting from the department a subpoena for production

6-15 of the records necessary for the audit. Any such audit must be completed

6-16 within 36 months after the date on which the last document for the

6-17 transaction was recorded. If the county recorder receives confidential

6-18 information during the course of an audit, he shall keep the information

6-19 confidential.

6-20 5. The county recorder shall immediately inform the seller or sellers

6-21 by written notice of any additional tax which the county recorder

6-22 determines to be owed on the basis of an audit. The seller or sellers shall

6-23 pay the amount due within 30 days after the date on which the county

6-24 recorder sends the notice of the amount due.

6-25 Sec. 8. NRS 388.750 is hereby amended to read as follows:

6-26 388.750 1. An educational foundation:

6-27 (a) Shall comply with the provisions of chapter 241 of NRS;

6-28 (b) Except as otherwise provided in subsection 2, shall make its records

6-29 public and open to inspection pursuant to NRS 239.010; and

6-30 (c) Is exempt from the tax on transfers of real property pursuant to

6-31 paragraph (l) of subsection [14] 3 of NRS 375.090.

6-32 2. An educational foundation is not required to disclose the names of

6-33 the contributors to the foundation or the amount of their contributions. The

6-34 educational foundation shall, upon request, allow a contributor to examine,

6-35 during regular business hours, any record, document or other information

6-36 of the foundation relating to that contributor.

6-37 3. As used in this section, "educational foundation" means a nonprofit

6-38 corporation, association or institution or a charitable organization that is:

6-39 (a) Organized and operated exclusively for the purpose of supporting

6-40 one or more kindergartens, elementary schools, junior high or middle

6-41 schools or high schools, or any combination thereof;

6-42 (b) Formed pursuant to the laws of this state; and

6-43 (c) Exempt from taxation pursuant to 26 U.S.C. § 501(c)(3).

7-1 Sec. 9. NRS 396.405 is hereby amended to read as follows:

7-2 396.405 1. A university foundation:

7-3 (a) Shall comply with the provisions of chapter 241 of NRS;

7-4 (b) Except as otherwise provided in subsection 2, shall make its records

7-5 public and open to inspection pursuant to NRS 239.010;

7-6 (c) Is exempt from the tax on transfers of real property pursuant to

7-7 paragraph (l) of subsection [14] 3 of NRS 375.090; and

7-8 (d) May allow a president or an administrator of the university or

7-9 community college which it supports to serve as a member of its governing

7-10 body.

7-11 2. A university foundation is not required to disclose the name of any

7-12 contributor or potential contributor to the university foundation, the amount

7-13 of his contribution or any information which may reveal or lead to the

7-14 discovery of his identity. The university foundation shall, upon request,

7-15 allow a contributor to examine, during regular business hours, any record,

7-16 document or other information of the foundation relating to that

7-17 contributor.

7-18 3. As used in this section, "university foundation" means a nonprofit

7-19 corporation, association or institution or a charitable organization that is:

7-20 (a) Organized and operated exclusively for the purpose of supporting a

7-21 university or a community college;

7-22 (b) Formed pursuant to the laws of this state; and

7-23 (c) Exempt from taxation pursuant to 26 U.S.C. § 501(c)(3).

7-24 Sec. 10. The administrative regulation adopted by the Nevada Tax

7-25 Commission which is codified as NAC 375.190 is hereby declared void. In

7-26 preparing the supplements to the Nevada Administrative Code on or after

7-27 July 1, 1999, the Legislative Counsel shall remove NAC 375.190.

7-28 Sec. 11. This act becomes effective on July 1, 1999.

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