Senate Bill No. 502–Committee on Government Affairs

(On Behalf of Legislative Committee to Study the
Distribution Among Local Governments of
Revenue From State and Local Taxes)

March 22, 1999

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Referred to Committee on Taxation

 

SUMMARY—Makes various changes regarding tax on net proceeds of minerals. (BDR 32-985)

FISCAL NOTE: Effect on Local Government: No.

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; providing for a transition from a distribution to local governments of the estimated tax on net proceeds to a distribution based on the actual net proceeds of minerals; requiring the department of taxation to provide certain estimates to local governments for purposes of budgeting; authorizing a school district to set aside a portion of the revenue received from the tax on the net proceeds of minerals to establish a mitigation fund for use in certain circumstances; 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. NRS 362.110 is hereby amended to read as follows:

1-2 362.110 1. Every person extracting any mineral in this state or

1-3 receiving any royalty:

1-4 (a) Shall, on or before February [1] 16 of each year, [except as

1-5 otherwise provided in paragraph (b),] file with the department a statement

1-6 showing the gross yield and claimed net proceeds from each geographically

1-7 separate operation where a mineral is extracted by that person during the

1-8 calendar year immediately preceding the year in which the statement is

1-9 filed.

1-10 (b) May have up to [15 additional days to file the] 45 days after filing

1-11 the statement required by paragraph (a) to file an amended statement, if

2-1 beforehand he makes written application to the department and the

2-2 department finds good cause [for the extension.] to allow the amendment

2-3 of the statement.

2-4 2. The statement must:

2-5 (a) Show the claimed deductions from the gross yield in the detail set

2-6 forth in NRS 362.120. The deductions are limited to the costs incurred

2-7 during the period covered by the statement.

2-8 (b) Be in the form prescribed by the department.

2-9 (c) Be verified by the manager, superintendent, secretary or treasurer of

2-10 the corporation, or by the owner of the operation, or, if the owner is a

2-11 natural person, by someone authorized in his behalf.

2-12 3. Each recipient of a royalty as described in subsection 1 shall

2-13 annually file with the department a list showing each of the lessees

2-14 responsible for taxes due in connection with the operation or operations

2-15 included in the statement filed pursuant to subsections 1 and 2.

2-16 Sec. 2. NRS 362.115 is hereby amended to read as follows:

2-17 362.115 1. In addition to the statement required by subsection 1 of

2-18 NRS 362.110, each person extracting any mineral in this state shall, on or

2-19 before April [30] 1 of each year, file with the department a statement

2-20 showing the estimated gross yield and estimated net proceeds from each

2-21 such operation for the entire current calendar year and an estimate of all

2-22 royalties that will be paid during the current calendar year.

2-23 2. The department shall [use this] :

2-24 (a) Use the statement filed pursuant to subsection 1 only to prepare

2-25 estimates for use by local governments in the preparation of their budgets

2-26 [.] ; and

2-27 (b) Submit those estimates to the local governments on or before April

2-28 25 of each year.

2-29 Sec. 3. NRS 362.130 is hereby amended to read as follows:

2-30 362.130 1. When the department determines from the annual

2-31 statement filed pursuant to NRS 362.110 the net proceeds of any minerals

2-32 extracted, it shall prepare its certificate of the amount of the net proceeds

2-33 and the tax due and shall send a copy to the owner of the mine, operator of

2-34 the mine, or recipient of the royalty, as the case may be.

2-35 2. The certificate must be prepared and mailed not later than April 20

2-36 immediately following the month of February during which the statement

2-37 was filed.

2-38 3. The tax due as indicated in the certificate prepared pursuant to this

2-39 section must be paid on or before May 10 of the year in which the

2-40 certificate is received.

2-41 4. If the owner of the mine, operator of the mine, or recipient of the

2-42 royalty paid taxes pursuant to subsection 1 or 2 of NRS 362.145, the

2-43 certificate must indicate any deficiency remaining from the previous

3-1 calendar year or any overpayment of the taxes made for the previous

3-2 calendar year.

3-3 5. Any deficiency remaining from the previous calendar year, as

3-4 indicated on the certificate prepared pursuant to this section must be paid

3-5 on or before May 10 of the year in which the certificate is received.

3-6 6. If an overpayment was made and subsection 1 or 2 of NRS 362.145

3-7 applies to the taxpayer for the current calendar year or the taxpayer chooses

3-8 to pay the tax pursuant to subsection 1 or 2 of NRS 362.145 for the current

3-9 calendar year, [one-half of] the overpayment may be credited [towards]

3-10 toward the payment due on August 1 of the current calendar year . [and

3-11 one-quarter may be credited towards each of the other two payments due

3-12 for the current calendar year.] If neither subsection 1 nor subsection 2 of

3-13 NRS 362.145 [is applicable] applies to the taxpayer for the current

3-14 calendar year and the tax is paid on or before May 10 of the next calendar

3-15 year, the overpayment may be credited [towards] toward that payment. If

3-16 the certificate prepared pursuant to this section shows a net loss for the

3-17 year covered by the certificate or an amount of tax due for that year

3-18 which is less than an overpayment made for the preceding year, the

3-19 amount or remaining amount of the overpayment must be refunded to

3-20 the taxpayer within 30 days after the certification was sent to the

3-21 taxpayer.

3-22 Sec. 4. NRS 362.145 is hereby amended to read as follows:

3-23 362.145 1. If the net proceeds of a geographically separate extractive

3-24 operation in any calendar year exceed $4,000,000, the tax upon the net

3-25 proceeds for the next calendar year must be paid:

3-26 (a) On or before August 1 for one-half of the net proceeds extracted

3-27 from January 1 through June 30 of that year; and

3-28 (b) On or before [November 1 for the net proceeds extracted from July 1

3-29 through September 30 of that year; and

3-30 (c) On or before February 1] February 16 for the remaining one-half

3-31 of the net proceeds extracted from January 1 through June 30 and for

3-32 the net proceeds extracted from [October] July 1 through December 31 of

3-33 the preceding year.

3-34 The rate of tax must be computed pursuant to NRS 362.140 on the basis of

3-35 the best estimate of the taxpayer as to the rate that will be applicable for the

3-36 current year. If the rate selected is different than the rate paid in the

3-37 previous year, the taxpayer shall submit a brief explanation with the

3-38 payment to justify the rate selected. If, upon investigation of the facts, the

3-39 department determines that an inappropriate rate was used which resulted

3-40 in an underpayment of the taxes due, the department shall immediately

3-41 notify the taxpayer in writing of the deficiency. The taxpayer shall pay the

3-42 deficiency within 10 days after receipt of such a notice.

4-1 2. If the total amount of royalties paid by a geographically separate

4-2 operation to a person in any calendar year exceeds $100,000, the recipient

4-3 of the royalties shall pay the tax on the royalties for the next calendar year:

4-4 (a) On or before August 1 for royalties paid from January 1 through

4-5 June 30 of that year; and

4-6 (b) On or before [November 1 for royalties paid from July 1 through

4-7 September 30 of that year; and

4-8 (c) On or before February 1] February 16 for royalties paid from

4-9 [October] July 1 through December 31 of the preceding year.

4-10 3. The tax upon the net proceeds for any other operation or on any

4-11 other royalties may be paid pursuant to the requirements of subsection 1 or

4-12 2.

4-13 4. The taxpayer shall include with each payment made pursuant to this

4-14 section a copy of the calculations by which the amount of the payment was

4-15 determined, including , without limitation, the amount of net proceeds and

4-16 the rate of tax.

4-17 5. On or before March 15 of each year, the department shall provide a

4-18 notice to each person to whom subsection 1 or 2 [is applicable.] applies.

4-19 The notice must include a copy of this section and state that the department

4-20 has determined that subsection 1 or 2 [is applicable] applies to that person

4-21 for the current calendar year. Failure to receive the notice required by this

4-22 subsection does not excuse late payment or nonpayment.

4-23 Sec. 5. NRS 362.170 is hereby amended to read as follows:

4-24 362.170 1. There is hereby appropriated to each county the total of

4-25 the amounts obtained by multiplying, for each extractive operation situated

4-26 within the county, the net proceeds of that operation and any royalties paid

4-27 by that operation, by the combined rate of tax ad valorem, excluding any

4-28 rate levied by the State of Nevada, for property at that site, plus a pro rata

4-29 share of any penalties and interest collected by the department for the late

4-30 payment of taxes distributed to the county. The department shall report to

4-31 the state controller on or before February [15,] 28, May 25 [,] and August

4-32 15 [and November 15] of each year the amount appropriated to each

4-33 county, as calculated for each operation from the final statement made in

4-34 February of that year for the preceding calendar year and the statements

4-35 filed pursuant to NRS 362.145. The state controller shall distribute all

4-36 money due to a county on or before [February 20,] March 5, May 30 [,]

4-37 and August 20 [and November 20] of each year.

4-38 2. The county treasurer shall apportion to each local government or

4-39 other local entity an amount calculated by:

4-40 (a) Determining the total of the amounts obtained by multiplying, for

4-41 each extractive operation situated within its jurisdiction, the net proceeds of

4-42 that operation and any royalty payments paid by that operation, by the rate

4-43 levied on behalf of that local government or other local entity;

5-1 (b) Adding to the amount determined pursuant to paragraph (a) a pro

5-2 rata share of any penalties and interest collected by the department for the

5-3 late payment of taxes distributed to that local government or local entity;

5-4 and

5-5 (c) Subtracting from the amount determined pursuant to paragraph (b) a

5-6 percentage commission of 3 percent of that amount which must be

5-7 deposited in the county general fund.

5-8 3. The amounts apportioned pursuant to subsection 2, including ,

5-9 without limitation, the amount retained by the county and excluding the

5-10 percentage commission, must be applied to the uses for which each levy

5-11 was authorized in the same proportion as the rate of each levy bears to the

5-12 total rate.

5-13 4. The department shall report to the state controller on May 25 of each

5-14 year the amount received as tax upon the net proceeds of geothermal

5-15 resources which equals the product of those net proceeds multiplied by the

5-16 rate of tax levied ad valorem by the State of Nevada.

5-17 Sec. 6. NRS 362.171 is hereby amended to read as follows:

5-18 362.171 1. Each county to which money is appropriated by

5-19 subsection 1 of NRS 362.170 may set aside a percentage of that

5-20 appropriation to establish a county fund for mitigation.

5-21 [2.] Money from the fund may be appropriated by the board of county

5-22 commissioners only to mitigate adverse effects upon the county, or the

5-23 school district located in the county, which result from [the] :

5-24 (a) A decline in the revenue received by the county from the tax on the

5-25 net proceeds of minerals during the 2 fiscal years immediately preceding

5-26 the current fiscal year; or

5-27 (b) The opening or closing of an extractive operation from the net

5-28 proceeds of which revenue has been or is reasonably expected to be derived

5-29 [under] pursuant to this chapter.

5-30 2. Each school district to which money is apportioned by a county

5-31 pursuant to subsection 2 of NRS 362.170 may set aside a percentage of

5-32 the amount apportioned to establish a school district fund for mitigation.

5-33 Money from the fund may be used by the school district only to mitigate

5-34 adverse effects upon the school district which result from:

5-35 (a) A decline in the revenue received by the school district from the

5-36 tax on the net proceeds of minerals during the 2 fiscal years immediately

5-37 preceding the current fiscal year; or

5-38 (b) The opening or closing of an extractive operation from the net

5-39 proceeds of which revenue has been or is reasonably expected to be

5-40 derived pursuant to this chapter.

5-41 Sec. 7. This act becomes effective on July 1, 1999.

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