MINUTES OF THE Meeting

of the

ASSEMBLY Committee on Taxation

 

Seventy-First Session

May 10, 2001

 

 

The Committee on Taxationwas called to order at 1:30 p.m., on Thursday, May 10, 2001.  Chairman David Goldwater presided in Room 3142 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr.                     David Goldwater, Chairman

Mr.                     Roy Neighbors, Vice Chairman

Mr.                     Bernie Anderson

Mr.                     Morse Arberry Jr.

Mr.                     John Marvel

Mr.                     Harry Mortenson

Mr.                     David Parks

Mr.                     Bob Price

 

COMMITTEE MEMBERS ABSENT:

 

Mr.                     Greg Brower - Excused

Mr.                     David Brown - Excused

Mrs.                     Vivian Freeman - Excused

Ms.                     Sandra Tiffany - Excused

 

GUEST LEGISLATORS PRESENT:

 

Assemblywoman Kathy McClain, District No. 15

 

STAFF MEMBERS PRESENT:

 

Ted Zuend, Fiscal Analyst

Cheryl O'Day, Committee Secretary

 

OTHERS PRESENT:

 

Peter D. Krueger, Cigar Association of America

Dino Di Cianno, Deputy Director, Nevada Department of Taxation

Alan Glover, Carson City Clerk/Recorder, County Fiscal Officers Association

Kathy Burke, Washoe County Recorder

Alan D. Caldwell, Independent Power Corporation

Alfredo Alonso, BP Solar

Gaylyn Spriggs, Nevada Taxpayers Association

 

 

Senate Bill 381:  Makes various changes to provisions governing tax on products made from tobacco, other than cigarettes. (BDR 32-818)

 

Chairman Goldwater opened the hearing on S.B. 381 and called Peter D. Krueger forward.

 

Peter D. Krueger advised that he represented the Cigar Association of America (CAA) and addressed his concerns over the elimination of the exemption in Section 2.  The exemption related to “other tobacco products” (OTP) that were exhibited or displayed at trade shows within Nevada by wholesale dealers or manufacturers.  Mr. Krueger stated that Las Vegas shows and conventions provided a large amount of revenue for the state and his amendment (Exhibit C) simply proposed replacing the pertinent language.  He quoted NRS 370.450(2)(b) with respect to the display aspect and confirmed he was referring to someone not licensed in Nevada.  Mr. Krueger clarified that if products were simply displayed, the current exemption applied and no taxes were paid.  However, if the product was sold or given way, the tax would apply; however, that was not the focus of S.B. 381.  Mr. Krueger stated they were concerned that at some future point, the then current state representatives would take a different view with respect to the exemption.  He felt the balance of the bill was appropriately reviewed by the explanation, with the exception of Section 2.

 

Mr. Anderson requested confirmation that S.B. 381 did not, in some manner, allow gray-market cigarettes to reenter the market.

 

Mr. Krueger clarified that OTP involved any tobacco product except cigarettes.  S.B. 381 had no effect on any gray-market issues, as it simply allowed for proper licensing.

 

Mr. Anderson wanted to be certain that, with the reinclusion of previous language, a doorway was not being provided by which gray-market cigarettes could pass through.

 

Mr. Krueger stated that S.B. 381 absolutely did not provide for the reentry of gray-market cigarettes into United States markets.

 

Mr. Anderson was under the impression that information had been provided regarding tobacco representatives’ concerns on that matter.

 

Mr. Krueger advised that there had been no opposition to the bill and his understanding was different than that discussed by Mr. Anderson.

 

Chairman Goldwater requested clarification as to why the language was not added while the bill was still before the Senate.

 

Mr. Krueger advised that it was due to the time spent ensuring the bill’s technical correctness with the manufacturers.  The rush created by the Friday deadline to pass bills out of the houses of origin had further hampered actions.

 

Dino Di Cianno introduced himself as the Deputy Director of the Nevada Department of Taxation (NDT).  He stated the proposed legislation would assist the NDT in the administration of OTP.  OTP trade shows were not taxable events.  If set up only for display and show, there was no tax owing; therefore, the language was considered unnecessary.  If the language was replaced, it did not create an exemption because there was never an exemption.  He confirmed that if a vendor was to sell or give away any product, the tax would be due at that point in time.  Mr. Di Cianno explained that was the reason the NDT had no opinion over reinsertion of the language.

 

Chairman Goldwater asked for Mr. Di Cianno’s opinion as to whether the language was okay or unnecessary.

 

Mr. Di Cianno advised that from the NDT’s position, the amendment was unnecessary; however, they would administer it if the language was included, as it was not harmful in any manner.

 

Mr. Anderson proposed a hypothetical cigar convention.  Mr. Di Cianno confirmed that taxes on the number of cigars handed out would be applicable even when Mr. Anderson was not charged any admission and even though the vendors were from out of state.

 

Chairman Goldwater closed the hearing on S.B. 381.

Assembly Joint Resolution 11:  Proposes to amend Nevada Constitution to allow legislature to authorize state to operate lottery for support of public education of children and for support of health and welfare of senior citizens. (BDR C-1200)

 

Chairman Goldwater reviewed the work session history of A.J.R. 11 and invited Assemblywoman Kathy McClain forward.

 

Assemblywoman McClain reviewed the proposed amendment (Exhibit D) for the committee and referred to other state lottery programs (Exhibit E).  She advised that the amendment “scaled” the bill “back quite a bit” because she realized the excessive language would be included in the Nevada Constitution.  If the legislature authorized the lottery, it would then determine the appropriate manner of operation, separate accounting of the proceeds, and would, via appropriation, disburse those proceeds.  The proceeds would be divided between two separate groups of Nevada residents:  children and senior citizens.

 

Chairman Goldwater advised that the Chair would accept a motion for an amend and do pass.

 

ASSEMBLYMAN ANDERSON MOVED FOR AN AMEND AND DO PASS ON A.J.R. 11.

 

            ASSEMBLYMAN PRICE SECONDED THE MOTION.

 

THE MOTION WAS PASSED UNANIMOUSLY BY THOSE PRESENT, AS ASSEMBLYPERSONS Brower, Brown, Freeman, AND Tiffany WERE ABSENT.

 

 

Senate Bill 238:  Makes various changes relating to tax on transfer of real property. (BDR 32-138)

 

Chairman Goldwater opened the hearing on S.B. 238.

 

Alan Glover, Carson City Clerk/Recorder, testified on behalf of the County Fiscal Officers Association (CFOA).  Mr. Glover addressed last session’s legislation as to responsibility for the collection of real property taxes, how the burden was shifted from a buyer to a seller, and that no way to collect the tax had been provided.  He then outlined S.B. 238.

 

Mr. Glover described Sections 3 through 10 as the “taxpayers bill of rights”; Sections 11 and 12 dealt with audit provisions; Section 13 addressed waiver of penalties; Sections 14 and 15 related to refunds; and Sections 16 and 17, with due process.  He requested a technical amendment at page 5, line 23, that “recorder” be inserted in the place of “commissioner.”  Continuing with his review, Sections 18 through 24 were said to concern liens; Sections 25 through 29 related to what he called “general provisions of the law.”  Mr. Glover stated they consisted of changes requested by the recorders.  There was another technical amendment needed on page 9, line 41.  The Senate Committee on Taxation had approved a change that had not made it through the bill draft process.  The words “or from” were to be deleted.

 

Mr. Glover reiterated that, as Sections 2 through 24 were taken directly out of NRS 360, there was no new language added.  The language was simply applied to transfer tax.  He explained that Section 25(2) defined the word “deed” and that subsection 5 was “clean-up language.”  He went on to discuss sections that were drafted with the assistance of land title experts.  Section 26 dealt with exemptions for assumed liens.  Section 27 required the recorder to notify not only the buyer and seller if there was to be an audit, but also the individual who recorded the relevant document.  Section 28(1) addressed tax transfers from the United States Government or any of its political subdivisions.  Section 7 provided more clean-up language with respect to trusts.  In closing, Mr. Glover advised that subsection 12 was also clean-up language and Section 29 contained “hold harmless” provisions.  He stated the bill was very important because it dealt with a great deal of money, especially where Clark County was concerned.  In response to Mr. Price’s inquiry, Mr. Glover confirmed that a reference to “pain” should reflect, “paid.”  He then asked, since the bill needed two small technical changes, whether it was possible to move exemption No. 12 up to No. 1, since exemption No. 1 had been deleted and redefined.  That move would be of great assistance to the recorders since they had already memorized the different exemptions.

 

It was the Chair’s opinion that Mr. Glover’s suggestion regarding the order of exemptions was a harmless choice that posed a distinct benefit to the various county recorders.

 

Mr. Anderson requested clarification within hypothetical situations involved in land reacquired by the state of Nevada.  Mr. Glover stated that transfers from the United States to the state of Nevada would be involved and, therefore, exempt.  Mr. Anderson’s point of question was what had originally precipitated the inclusion of such language.

 

Kathy Burke introduced herself as the Washoe County Recorder.  Ms. Burke discussed circumstances involving an actual sale between HUD or another agency and a private citizen and explained that the transfer tax would be required.  If a repossessed home was purchased through the government, it was still a sale.  Current language exempted a buyer from paying any portion of that transfer tax.

 

Mr. Glover offered that the statutes in question were not that old, perhaps from the 1960s.  He admitted that the recorders really did not know the purpose behind the statutes.

 

Chairman Goldwater stated that the committee would take the bill under advisement and would call the witnesses back as needed.  He then closed the hearing on S.B. 238.

 

 

Senate Bill 273:  Exempts from local school support tax and certain analogous taxes certain systems designed or adapted to use renewable energy to generate electricity. (BDR 32-641)

 

Chairman Goldwater opened the hearing on S.B. 273.

 

Alan D. Caldwell, representing Independent Power Corporation (IPC) based in Sparks, Nevada, testified in favor of S.B. 273.  Mr. Caldwell advised that there had been some adopted amendments and that the committee had the first reprint before them.  He described S.B. 273 as a very comprehensive bill that covered all renewable energy sources.  It covered entire systems and not just components, such as solar panels.  Mr. Caldwell pointed out that Nevada had an abundance of renewable energy sources.  He could see the bill being applied more in the rural areas and he felt it complemented the net metering statute.

 

In response to Mr. Price’s request for a more detailed description of Independent Power Corporation’s business, Mr. Caldwell advised that they designed, sold, installed, and maintained small renewable energy systems such as solar, microhydro and geothermal systems.

 

Chairman Goldwater inquired whether the sales tax was a barrier to what they wanted to accomplish.  Mr. Caldwell advised that the bill did not help his company but it was of direct assistance to consumers.

 

Alfredo Alonso, representing BP Solar (BPS), described the bill as part of a package of bills meant to “jumpstart” an industry that had traditionally been financially out of reach for most individuals.  He described S.B. 273 as another tool to assist the industry.

 

Mr. Price inquired as to the bill’s effect where an energy company built a large number of wind turbines.  He wondered if that company would be exempt or was the exemption intended for private homeowners.

 

Mr. Alonso believed the intent was to stimulate both.  He understood there to be a companion bill that dealt solely with large generation units.

 

Gaylyn Spriggs, representing the Nevada Taxpayers Association (NTA), advised the committee that the NTA had assisted with the bill’s development to ensure it achieved what was intended.  Ms. Spriggs pointed out that the bill expired by limitation on June 30, 2003.  As the bill was proactive in nature, but not perpetual, the NTA did not oppose S.B. 273.

 

Mr. Marvel asked it S.B. 273 would affect the royalties paid on geothermal.

 

Mr. Di Cianno stated that S.B. 273 would help in those situations.  He addressed S.B. 227, the previously mentioned companion bill, and discussed its relationship to economic development of larger facilities.  He confirmed that S.B. 273 was intended to assist residential consumers in purchasing geothermal systems.

 

Chairman Goldwater closed the hearing on S.B. 273 and adjourned the meeting at 2:25 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Cheryl O'Day

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman David Goldwater, Chairman

 

 

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