(REPRINTED WITH ADOPTED AMENDMENTS)

 

Assembly Bill No. 361–Assemblyman Marvel

 

March 14, 2001

____________

 

Referred to Committee on Taxation

 

SUMMARY—Revises provisions governing tax on net proceeds of minerals. (BDR 32‑1078)

 

FISCAL NOTE:  Effect on Local Government: No.

                             Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to taxation; revising the provisions governing the reporting requirements, payment schedules and collection procedures for the tax on the net proceeds of minerals; 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 16 of each year, file with the

1-5  department a statement showing the gross yield and claimed net proceeds

1-6  from each geographically separate operation where a mineral is extracted

1-7  by that person during the calendar year immediately preceding the year in

1-8  which the statement is filed.

1-9    (b) May have up to 30 days after filing the statement required by

1-10  paragraph (a) to file an amended statement, if beforehand he [makes]

1-11  submits a written application to the department and the department finds

1-12  good cause to allow the amendment of the statement.

1-13  2.  The statement must:

1-14  (a) Show the claimed deductions from the gross yield in the detail set

1-15  forth in NRS 362.120. The deductions are limited to the costs incurred

1-16  during the [period covered by the statement.] calendar year immediately

1-17  preceding the year in which the statement is filed.

1-18  (b) Be in the form prescribed by the department.

1-19  (c) Be verified by the manager, superintendent, secretary or treasurer of

1-20  the corporation, or by the owner of the operation, or, if the owner is a

1-21  natural person, by someone authorized in his behalf.

1-22  3.  Each recipient of a royalty as described in subsection 1 shall

1-23  annually file with the department a list showing each of the lessees

2-1  responsible for taxes due in connection with the operation or operations

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

2-3    Sec. 2.  NRS 362.120 is hereby amended to read as follows:

2-4    362.120  1.  The department shall, from the statement filed pursuant

2-5  to NRS 362.110 and from all obtainable data, evidence and reports,

2-6  compute in dollars and cents the gross yield and net proceeds of the [period

2-7  covered by the statement.] calendar year immediately preceding the year

2-8  in which the statement is filed.

2-9    2.  The gross yield must include the value of any mineral extracted

2-10  which was:

2-11  (a) Sold;

2-12  (b) Exchanged for any thing or service;

2-13  (c) Removed from the state in a form ready for use or sale; or

2-14  (d) Used in a manufacturing process or in providing a

2-15  service,

2-16  during [the period covered by the statement.] that period.

2-17  3.  The net proceeds are ascertained and determined by subtracting

2-18  from the gross yield the following deductions for costs incurred during that

2-19  period, and none other:

2-20  (a) The actual cost of extracting the mineral.

2-21  (b) The actual cost of transporting the mineral to the place or places of

2-22  reduction, refining and sale.

2-23  (c) The actual cost of reduction, refining and sale.

2-24  (d) The actual cost of marketing and delivering the mineral and the

2-25  conversion of the mineral into money.

2-26  (e) The actual cost of maintenance and repairs of:

2-27      (1) All machinery, equipment, apparatus and facilities used in the

2-28  mine.

2-29      (2) All milling, refining, smelting and reduction works, plants and

2-30  facilities.

2-31      (3) All facilities and equipment for transportation except those that

2-32  are under the jurisdiction of the public utilities commission of Nevada or

2-33  the transportation services authority.

2-34  (f) The actual cost of fire insurance on the machinery, equipment,

2-35  apparatus, works, plants and facilities mentioned in paragraph (e).

2-36  (g) Depreciation of the original capitalized cost of the machinery,

2-37  equipment, apparatus, works, plants and facilities mentioned in paragraph

2-38  (e). The annual depreciation charge consists of amortization of the original

2-39  cost in a manner prescribed by regulation of the Nevada tax commission.

2-40  The probable life of the property represented by the original cost must be

2-41  considered in computing the depreciation charge.

2-42  (h) All money expended for premiums for industrial insurance, and the

2-43  actual cost of hospital and medical attention and accident benefits and

2-44  group insurance for all employees.

2-45  (i) All money paid as contributions or payments under the

2-46  unemployment compensation law of the State of Nevada, as contained in

2-47  chapter 612 of NRS, all money paid as contributions under the Social

2-48  Security Act of the Federal Government, and all money paid to either the

3-1  State of Nevada or the Federal Government under any amendment to either

3-2  or both of the statutes mentioned in this paragraph.

3-3    (j) The actual cost of developmental work in or about the mine or upon

3-4  a group of mines when operated as a unit.

3-5    (k) All money paid as royalties by a lessee or sublessee of a mine or

3-6  well, or by both, in determining the net proceeds of the lessee or sublessee,

3-7  or both.

3-8    4.  Royalties deducted by a lessee or sublessee constitute part of the net

3-9  proceeds of the minerals extracted, upon which a tax must be levied against

3-10  the person to whom the royalty has been paid.

3-11  5.  Every person acquiring property in the State of Nevada to engage in

3-12  the extraction of minerals and who incurs any of the expenses mentioned in

3-13  subsection 3 shall report those expenses and the recipient of any royalty to

3-14  the department on forms provided by the department.

3-15  6.  The several deductions mentioned in subsection 3 do not include

3-16  any expenditures for salaries, or any portion of salaries, of any person not

3-17  actually engaged in:

3-18  (a) The working of the mine;

3-19  (b) The operating of the mill, smelter or reduction works;

3-20  (c) The operating of the facilities or equipment for transportation;

3-21  (d) Superintending the management of any of those operations; or

3-22  (e) The State of Nevada, in office, clerical or engineering work

3-23  necessary or proper in connection with any of those operations.

3-24  Sec. 3.  NRS 362.130 is hereby amended to read as follows:

3-25  362.130  1.  When the department determines from the annual

3-26  statement filed pursuant to NRS 362.110 the net proceeds of any minerals

3-27  extracted, it shall prepare its certificate of the amount of the net proceeds

3-28  and the tax due and shall send a copy to the owner of the mine, operator of

3-29  the mine, or recipient of the royalty, as the case may be.

3-30  2.  The certificate must be prepared and mailed not later than April 20

3-31  immediately following the month of February during which the statement

3-32  was filed.

3-33  3.  The tax due as indicated in the certificate prepared pursuant to this

3-34  section must be paid on or before May 10 of the year in which the

3-35  certificate is received.

3-36  4.  [If the owner of the mine, operator of the mine, or recipient of the

3-37  royalty paid taxes pursuant to subsection 1 or 2 of NRS 362.145, the

3-38  certificate must indicate any deficiency remaining from the previous

3-39  calendar year or any overpayment of the taxes made for the previous

3-40  calendar year.

3-41  5.  Any deficiency remaining from the previous calendar year, as

3-42  indicated on the certificate prepared pursuant to this section must be paid

3-43  on or before May 10 of the year in which the certificate is received.

3-44  6.] If an overpayment was made , [and subsection 1 or 2 of NRS

3-45  362.145 applies to the taxpayer for the current calendar year or the

3-46  taxpayer chooses to pay the tax pursuant to subsection 1 or 2 of NRS

3-47  362.145 for the current calendar year,] the overpayment may be credited

3-48  toward the payment due on [August 1 of the current calendar year. If

3-49  neither subsection 1 nor subsection 2 of NRS 362.145 applies to the

4-1  taxpayer for the current calendar year and the tax is paid on or before] May

4-2  10 of the next calendar year . [, the overpayment may be credited toward

4-3  that payment.] If the certificate prepared pursuant to this section shows a

4-4  net loss for the year covered by the certificate or an amount of tax due for

4-5  that year which is less than an overpayment made for the preceding year,

4-6  the amount or remaining amount of the overpayment must be refunded to

4-7  the taxpayer within 30 days after the certification was sent to the taxpayer.

4-8    Sec. 4.  NRS 362.170 is hereby amended to read as follows:

4-9    362.170  1.  There is hereby appropriated to each county the total of

4-10  the amounts obtained by multiplying, for each extractive operation situated

4-11  within the county, the net proceeds of that operation and any royalties paid

4-12  by that operation, by the combined rate of tax ad valorem, excluding any

4-13  rate levied by the State of Nevada, for property at that site, plus a pro rata

4-14  share of any penalties and interest collected by the department for the late

4-15  payment of taxes distributed to the county. The department shall report to

4-16  the state controller on or before [February 28,] May 25 [and August 15] of

4-17  each year the amount appropriated to each county, as calculated for each

4-18  operation from the final statement made in February of that year for the

4-19  preceding calendar year . [and the statements filed pursuant to NRS

4-20  362.145.] The state controller shall distribute all money due to a county on

4-21  or before [March 5,] May 30 [and August 20] of each year.

4-22  2.  The county treasurer shall apportion to each local government or

4-23  other local entity an amount calculated by:

4-24  (a) Determining the total of the amounts obtained by multiplying, for

4-25  each extractive operation situated within its jurisdiction, the net proceeds

4-26  of that operation and any royalty payments paid by that operation, by the

4-27  rate levied on behalf of that local government or other local entity;

4-28  (b) Adding to the amount determined pursuant to paragraph (a) a pro

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

4-30  late payment of taxes distributed to that local government or local entity;

4-31  and

4-32  (c) Subtracting from the amount determined pursuant to paragraph (b) a

4-33  [percentage] commission of 3 percent of that amount which must be

4-34  deposited in the county general fund.

4-35  3.  The amounts apportioned pursuant to subsection 2, including,

4-36  without limitation, the amount retained by the county and excluding the

4-37  percentage commission, must be applied to the uses for which each levy

4-38  was authorized in the same proportion as the rate of each levy bears to the

4-39  total rate.

4-40  4.  The department shall report to the state controller on or before May

4-41  25 of each year the amount received as tax upon the net proceeds of

4-42  geothermal resources which equals the product of those net proceeds

4-43  multiplied by the rate of tax levied ad valorem by the State of Nevada.

4-44  Sec. 5.  NRS 362.145 is hereby repealed.

4-45  Sec. 6.  This act becomes effective upon passage and approval.

 

5-1  TEXT OF REPEALED SECTION

 

5-2    362.145 Tax on net proceeds and royalties of certain

5-3   geographically separate extractive operations: Due date of payment;

5-4   rate; copy of calculations required; notice of applicability.

5-5    1.  If the net proceeds of a geographically separate extractive operation

5-6   in any calendar year exceed $4,000,000, the tax upon the net proceeds for

5-7   the next calendar year must be paid:

5-8    (a) On or before August 1 for one-half of the net proceeds extracted

5-9   from January 1 through June 30 of that year; and

5-10  (b) On or before February 16 for the remaining one-half of the net

5-11   proceeds extracted from January 1 through June 30 and for the net

5-12   proceeds extracted from July 1 through December 31 of the preceding

5-13  year.

5-14  The rate of tax must be computed pursuant to NRS 362.140 on the basis of

5-15   the best estimate of the taxpayer as to the rate that will be applicable for

5-16   the current year. If the rate selected is different than the rate paid in the

5-17   previous year, the taxpayer shall submit a brief explanation with the

5-18   payment to justify the rate selected. If, upon investigation of the facts, the

5-19   department determines that an inappropriate rate was used which resulted

5-20   in an underpayment of the taxes due, the department shall immediately

5-21   notify the taxpayer in writing of the deficiency. The taxpayer shall pay the

5-22   deficiency within 10 days after receipt of such a notice.

5-23  2.  If the total amount of royalties paid by a geographically separate

5-24   operation to a person in any calendar year exceeds $100,000, the recipient

5-25   of the royalties shall pay the tax on the royalties for the next calendar year:

5-26  (a) On or before August 1 for royalties paid from January 1 through

5-27   June 30 of that year; and

5-28  (b) On or before February 16 for royalties paid from July 1 through

5-29   December 31 of the preceding year.

5-30  3.  The tax upon the net proceeds for any other operation or on any

5-31   other royalties may be paid pursuant to the requirements of subsection 1

5-32  or 2.

5-33  4.  The taxpayer shall include with each payment made pursuant to this

5-34   section a copy of the calculations by which the amount of the payment was

5-35   determined, including, without limitation, the amount of net proceeds and

5-36   the rate of tax.

5-37  5.  On or before April 15 of each year, the department shall provide a

5-38   notice to each person to whom subsection 1 or 2 applies. The notice must

5-39   include a copy of this section and state that the department has determined

5-40   that subsection 1 or 2 applies to that person for the current calendar year.

5-41   Failure to receive the notice required by this subsection does not excuse

5-42   late payment or nonpayment.

 

5-43  H