(Reprinted with amendments adopted on May 29, 2003)
THIRD REPRINT S.B. 473
Senate Bill No. 473–Committee on Taxation
March 24, 2003
____________
Referred to Committee on Taxation
SUMMARY—Makes various changes to provisions governing abatement of taxes for new or expanded businesses. (BDR 32‑1241)
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.
Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).
AN ACT relating to economic development; making various changes to the provisions governing the abatement of taxes for new or expanded businesses; extending the prospective expiration of certain amendments to those provisions; 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 360.750 is hereby amended to read as follows:
1-2 360.750 1. A person who intends to locate or expand a
1-3 business in this state may apply to the Commission on Economic
1-4 Development for a partial abatement of one or more of the taxes
1-5 imposed on the new or expanded business pursuant to chapter 361,
1-6 364A or 374 of NRS.
1-7 2. The Commission on Economic Development shall approve
1-8 an application for a partial abatement if the Commission makes the
1-9 following determinations:
1-10 (a) The business is consistent with:
1-11 (1) The state plan for industrial development and
1-12 diversification that is developed by the Commission pursuant to
1-13 NRS 231.067; and
1-14 (2) Any guidelines adopted pursuant to the state plan.
2-1 (b) The applicant has executed an agreement with the
2-2 Commission which states that the business will, after the date on
2-3 which a certificate of eligibility for the abatement is issued pursuant
2-4 to subsection 5, continue in operation in this state for a period
2-5 specified by the Commission, which must be at least 5 years, and
2-6 will continue to meet the eligibility requirements set forth in this
2-7 subsection. The agreement must bind the successors in interest of
2-8 the business for the specified period.
2-9 (c) The business is registered pursuant to the laws of this state or
2-10 the applicant commits to obtain a valid business license and all other
2-11 permits required by the county, city or town in which the business
2-12 operates.
2-13 (d) Except as otherwise provided in NRS 361.0687, if the
2-14 business is a new business in a county whose population is 100,000
2-15 or more or a city whose population is 60,000 or more, the business
2-16 meets at least two of the following requirements:
2-17 (1) The business will have 75 or more full-time employees
2-18 on the payroll of the business by the fourth quarter that it is in
2-19 operation.
2-20 (2) Establishing the business will require the business to
2-21 make a capital investment of at least $1,000,000 in this state.
2-22 (3) The average hourly wage that will be paid by the new
2-23 business to its employees in this state is at least 100 percent of the
2-24 average statewide hourly wage as established by the Employment
2-25 Security Division of the Department of Employment, Training and
2-26 Rehabilitation on July 1 of each fiscal year and:
2-27 (I) The business will provide a health insurance plan for
2-28 all employees that includes an option for health insurance coverage
2-29 for dependents of the employees; and
2-30 (II) The cost to the business for the benefits the business
2-31 provides to its employees in this state will meet the minimum
2-32 requirements for benefits established by the Commission by
2-33 regulation pursuant to subsection 9.
2-34 (e) Except as otherwise provided in NRS 361.0687, if the
2-35 business is a new business in a county whose population is less than
2-36 100,000 or a city whose population is less than 60,000, the business
2-37 meets at least two of the following requirements:
2-38 (1) The business will have [25] 15 or more full-time
2-39 employees on the payroll of the business by the fourth quarter that it
2-40 is in operation.
2-41 (2) Establishing the business will require the business to
2-42 make a capital investment of at least $250,000 in this state.
2-43 (3) The average hourly wage that will be paid by the new
2-44 business to its employees in this state is at least 100 percent of the
2-45 average statewide hourly wage as established by the Employment
3-1 Security Division of the Department of Employment, Training and
3-2 Rehabilitation on July 1 of each fiscal year and:
3-3 (I) The business will provide a health insurance plan for
3-4 all employees that includes an option for health insurance coverage
3-5 for dependents of the employees; and
3-6 (II) The cost to the business for the benefits the business
3-7 provides to its employees in this state will meet the minimum
3-8 requirements for benefits established by the Commission by
3-9 regulation pursuant to subsection 9.
3-10 (f) If the business is an existing business, the business meets at
3-11 least two of the following requirements:
3-12 (1) The business will increase the number of employees on
3-13 its payroll by 10 percent more than it employed in the immediately
3-14 preceding fiscal year or by six employees, whichever is greater.
3-15 (2) The business will expand by making a capital investment
3-16 in this state in an amount equal to at least 20 percent of the value of
3-17 the tangible property possessed by the business in the immediately
3-18 preceding fiscal year. The determination of the value of the tangible
3-19 property possessed by the business in the immediately preceding
3-20 fiscal year must be made by the:
3-21 (I) County assessor of the county in which the business
3-22 will expand, if the business is locally assessed; or
3-23 (II) Department, if the business is centrally assessed.
3-24 (3) The average hourly wage that will be paid by the existing
3-25 business to its new employees in this state is at least 100 percent of
3-26 the average statewide hourly wage as established by the
3-27 Employment Security Division of the Department of Employment,
3-28 Training and Rehabilitation on July 1 of each fiscal year and:
3-29 (I) The business will provide a health insurance plan for
3-30 all new employees that includes an option for health insurance
3-31 coverage for dependents of the employees; and
3-32 (II) The cost to the business for the benefits the business
3-33 provides to its new employees in this state will meet the minimum
3-34 requirements for benefits established by the Commission by
3-35 regulation pursuant to subsection 9.
3-36 (g) In lieu of meeting the requirements of paragraph (d), (e) or
3-37 (f), if the business furthers the development and refinement of
3-38 intellectual property, a patent or a copyright into a commercial
3-39 product, the business meets at least two of the following
3-40 requirements:
3-41 (1) The business will have 10 or more full-time employees
3-42 on the payroll of the business by the fourth quarter that it is in
3-43 operation.
3-44 (2) Establishing the business will require the business to
3-45 make a capital investment of at least $500,000 in this state.
4-1 (3) The average hourly wage that will be paid by the new
4-2 business to its employees in this state is at least 100 percent of the
4-3 average statewide hourly wage as established by the Employment
4-4 Security Division of the Department of Employment, Training and
4-5 Rehabilitation on July 1 of each fiscal year and:
4-6 (I) The business will provide a health insurance plan for
4-7 all employees that includes an option for health insurance
4-8 coverage for dependents of the employees; and
4-9 (II) The cost to the business for the benefits the business
4-10 provides to its employees in this state will meet with minimum
4-11 requirements established by the Commission by regulation
4-12 pursuant to subsection 9.
4-13 3. Notwithstanding the provisions of subsection 2, the
4-14 Commission on Economic Development may:
4-15 (a) Approve an application for a partial abatement by a business
4-16 that does not meet the requirements set forth in paragraph (d), (e) ,
4-17 [or] (f) or (g) of subsection 2;
4-18 (b) Make the requirements set forth in paragraph (d), (e) , [or]
4-19 (f) or (g) of subsection 2 more stringent; or
4-20 (c) Add additional requirements that a business must meet to
4-21 qualify for a partial abatement,
4-22 if the Commission determines that such action is necessary.
4-23 4. If a person submits an application to the Commission on
4-24 Economic Development pursuant to subsection 1, the Commission
4-25 shall provide notice to the governing body of the county and the city
4-26 or town, if any, in which the person intends to locate or expand a
4-27 business. The notice required pursuant to this subsection must set
4-28 forth the date, time and location of the hearing at which the
4-29 Commission will consider the application.
4-30 5. If the Commission on Economic Development approves an
4-31 application for a partial abatement, the Commission shall
4-32 immediately forward a certificate of eligibility for the abatement to:
4-33 (a) The Department;
4-34 (b) The Nevada Tax Commission; and
4-35 (c) If the partial abatement is from the property tax imposed
4-36 pursuant to chapter 361 of NRS, the county treasurer.
4-37 6. An applicant for a partial abatement pursuant to this section
4-38 or an existing business whose partial abatement is in effect shall,
4-39 upon the request of the Executive Director of the Commission on
4-40 Economic Development, furnish the Executive Director with copies
4-41 of all records necessary to verify that the applicant meets the
4-42 requirements of subsection 2.
4-43 7. If a business whose partial abatement has been approved
4-44 pursuant to this section and is in effect ceases:
4-45 (a) To meet the requirements set forth in subsection 2; or
5-1 (b) Operation before the time specified in the agreement
5-2 described in paragraph (b) of subsection 2,
5-3 the business shall repay to the Department or, if the partial
5-4 abatement was from the property tax imposed pursuant to chapter
5-5 361 of NRS, to the county treasurer, the amount of the exemption
5-6 that was allowed pursuant to this section before the failure of the
5-7 business to comply unless the Nevada Tax Commission determines
5-8 that the business has substantially complied with the requirements of
5-9 this section. Except as otherwise provided in NRS 360.232 and
5-10 360.320, the business shall, in addition to the amount of the
5-11 exemption required to be paid pursuant to this subsection, pay
5-12 interest on the amount due at the rate most recently established
5-13 pursuant to NRS 99.040 for each month, or portion thereof, from the
5-14 last day of the month following the period for which the payment
5-15 would have been made had the partial abatement not been approved
5-16 until the date of payment of the tax.
5-17 8. A county treasurer:
5-18 (a) Shall deposit any money that he receives pursuant to
5-19 subsection 7 in one or more of the funds established by a local
5-20 government of the county pursuant to NRS 354.6113 or 354.6115;
5-21 and
5-22 (b) May use the money deposited pursuant to paragraph (a) only
5-23 for the purposes authorized by NRS 354.6113 and 354.6115.
5-24 9. The Commission on Economic Development:
5-25 (a) Shall adopt regulations relating to:
5-26 (1) The minimum level of benefits that a business must
5-27 provide to its employees if the business is going to use benefits paid
5-28 to employees as a basis to qualify for a partial abatement; and
5-29 (2) The notice that must be provided pursuant to
5-30 subsection 4.
5-31 (b) May adopt such other regulations as the Commission on
5-32 Economic Development determines to be necessary to carry out the
5-33 provisions of this section.
5-34 10. The Nevada Tax Commission:
5-35 (a) Shall adopt regulations regarding:
5-36 (1) The capital investment that a new business must make to
5-37 meet the requirement set forth in paragraph (d) , [or] (e) or (g) of
5-38 subsection 2; and
5-39 (2) Any security that a business is required to post to qualify
5-40 for a partial abatement pursuant to this section.
5-41 (b) May adopt such other regulations as the Nevada Tax
5-42 Commission determines to be necessary to carry out the provisions
5-43 of this section.
5-44 11. An applicant for an abatement who is aggrieved by a final
5-45 decision of the Commission on Economic Development may
6-1 petition for judicial review in the manner provided in chapter 233B
6-2 of NRS.
6-3 Sec. 2. NRS 361.0687 is hereby amended to read as follows:
6-4 361.0687 1. A person who intends to locate or expand a
6-5 business in this state may, pursuant to NRS 360.750, apply to the
6-6 Commission on Economic Development for a partial abatement
6-7 from the taxes imposed by this chapter.
6-8 2. For a business to qualify pursuant to NRS 360.750 for a
6-9 partial abatement from the taxes imposed by this chapter, the
6-10 Commission on Economic Development must determine that, in
6-11 addition to meeting the other requirements set forth in subsection 2
6-12 of that section:
6-13 (a) If the business is a new business in a county whose
6-14 population is 100,000 or more or a city whose population is 60,000
6-15 or more:
6-16 (1) The business will make a capital investment in the county
6-17 of at least $50,000,000 if the business is an industrial or
6-18 manufacturing business or at least [$5,000,000] $2,000,000 if the
6-19 business is not an industrial or manufacturing business; and
6-20 (2) The average hourly wage that will be paid by the new
6-21 business to its employees in this state is at least 100 percent of the
6-22 average statewide hourly wage as established by the Employment
6-23 Security Division of the Department of Employment, Training and
6-24 Rehabilitation on July 1 of each fiscal year.
6-25 (b) If the business is a new business in a county whose
6-26 population is less than 100,000 or a city whose population is less
6-27 than 60,000:
6-28 (1) The business will make a capital investment in the county
6-29 of at least [$5,000,000 if the business is an industrial or
6-30 manufacturing business or at least $500,000 if the business is not an
6-31 industrial or manufacturing business;] $500,000; and
6-32 (2) The average hourly wage that will be paid by the new
6-33 business to its employees in this state is at least 100 percent of the
6-34 average statewide hourly wage as established by the Employment
6-35 Security Division of the Department of Employment, Training and
6-36 Rehabilitation on July 1 of each fiscal year.
6-37 3. Except as otherwise provided in NRS 361.0685 and
6-38 subsection 4, if a partial abatement from the taxes imposed by this
6-39 chapter is approved by the Commission on Economic Development
6-40 pursuant to NRS 360.750:
6-41 (a) The partial abatement must:
6-42 (1) Be for a duration of at least 1 year but not more than 10
6-43 years;
6-44 (2) Not exceed 50 percent of the taxes on personal property
6-45 payable by a business each year pursuant to this chapter; and
7-1 (3) Be administered and carried out in the manner set forth in
7-2 NRS 360.750.
7-3 (b) The Executive Director of the Commission on Economic
7-4 Development shall notify the county assessor of the county in which
7-5 the business is located of the approval of the partial abatement,
7-6 including, without limitation, the duration and percentage of the
7-7 partial abatement that the Commission granted. The Executive
7-8 Director shall, on or before April 15 of each year, advise the county
7-9 assessor of each county in which a business qualifies for a partial
7-10 abatement during the current fiscal year as to whether the business is
7-11 still eligible for the partial abatement in the next succeeding fiscal
7-12 year.
7-13 4. If a partial abatement from the taxes imposed by this chapter
7-14 is approved by the Commission on Economic Development
7-15 pursuant to NRS 360.750 for a facility for the generation of
7-16 electricity from renewable energy[:] or a facility for the production
7-17 of an energy storage device:
7-18 (a) The partial abatement must be:
7-19 (1) For a duration of 10 years;
7-20 (2) Equal to 50 percent of the taxes on real and personal
7-21 property payable by the facility each year pursuant to this chapter;
7-22 and
7-23 (3) Administered and carried out in the manner set forth in
7-24 NRS 360.750.
7-25 (b) The Executive Director of the Commission on Economic
7-26 Development shall:
7-27 (1) Notify the county assessor of the county in which the
7-28 facility is located of the approval of the partial abatement; and
7-29 (2) Advise the county assessor of the county in which the
7-30 facility is located as to the dates on which the partial abatement will
7-31 begin and end.
7-32 5. As used in this section:
7-33 (a) “Biomass” means any organic matter that is available on a
7-34 renewable basis, including, without limitation:
7-35 (1) Agricultural crops and agricultural wastes and residues;
7-36 (2) Wood and wood wastes and residues;
7-37 (3) Animal wastes;
7-38 (4) Municipal wastes; and
7-39 (5) Aquatic plants.
7-40 (b) “Energy storage device” means a device for use and
7-41 storage of electrical energy that alleviates the consumption of
7-42 fossil fuel and does not produce fossil fuel emissions.
7-43 (c) “Facility for the generation of electricity from renewable
7-44 energy” means a facility for the generation of electricity that:
8-1 (1) Uses renewable energy as its primary source of energy;
8-2 and
8-3 (2) Has a generating capacity of at least 10 kilowatts.
8-4 The term includes all the machinery and equipment that is used
8-5 in the facility to collect and store the renewable energy and to
8-6 convert the renewable energy into electricity. The term does not
8-7 include a facility that is located on residential property.
8-8 [(c)] (d) “Industrial or manufacturing business” does not
8-9 include a facility for the generation of electricity from renewable
8-10 energy.
8-11 [(d)] (e) “Renewable energy” means:
8-12 (1) Biomass;
8-13 (2) Solar energy; or
8-14 (3) Wind.
8-15 The term does not include coal, natural gas, oil, propane or any
8-16 other fossil fuel, or nuclear energy.
8-17 Sec. 3. NRS 364A.170 is hereby amended to read as follows:
8-18 364A.170 1. A business that qualifies pursuant to the
8-19 provisions of NRS 360.750 is entitled to an exemption of[:
8-20 (a) Eighty] 50 percent of the amount of tax otherwise due
8-21 pursuant to NRS 364A.140 during the first 4 [quarters of its
8-22 operation;
8-23 (b) Sixty percent of the amount of tax otherwise due pursuant to
8-24 NRS 364A.140 during the second 4 quarters of its operation;
8-25 (c) Forty percent of the amount of tax otherwise due pursuant to
8-26 NRS 364A.140 during the third 4 quarters of its operation; and
8-27 (d) Twenty percent of the amount of tax otherwise due pursuant
8-28 to NRS 364A.140 during the fourth 4 quarters] years of its
8-29 operation.
8-30 2. If a partial abatement from the taxes otherwise due pursuant
8-31 to NRS 364A.140 is approved by the Commission on Economic
8-32 Development pursuant to NRS 360.750, the partial abatement must
8-33 be administered and carried out in the manner set forth in
8-34 NRS 360.750.
8-35 Sec. 4. NRS 374.357 is hereby amended to read as follows:
8-36 374.357 1. A person who maintains a business or intends to
8-37 locate a business in this state may, pursuant to NRS 360.750, apply
8-38 to the Commission on Economic Development for an abatement
8-39 from the taxes imposed by this chapter on the gross receipts from
8-40 the sale, and the storage, use or other consumption, of eligible
8-41 machinery or equipment for use by a business which has been
8-42 approved for an abatement pursuant to NRS 360.750.
8-43 2. Except as otherwise provided in subsection 3, if an
8-44 application for an abatement is approved pursuant to NRS 360.750:
9-1 (a) The taxpayer is eligible for an abatement from the tax
9-2 imposed by this chapter for not more than 2 years[.] for machinery
9-3 or equipment which is leased or purchased. In the case of
9-4 machinery or equipment that is leased, the lessee is the taxpayer
9-5 who is eligible for an abatement.
9-6 (b) The abatement must be administered and carried out in the
9-7 manner set forth in NRS 360.750.
9-8 3. If an application for an abatement is approved pursuant to
9-9 NRS 360.750 for a facility for the generation of electricity from
9-10 renewable energy[:] or a facility for the production of an energy
9-11 storage device:
9-12 (a) The taxpayer is eligible for an abatement from the tax
9-13 imposed by this chapter for 2 years.
9-14 (b) The abatement must be administered and carried out in the
9-15 manner set forth in NRS 360.750.
9-16 4. As used in this section, unless the context otherwise
9-17 requires:
9-18 (a) “Biomass” means any organic matter that is available on a
9-19 renewable basis, including, without limitation:
9-20 (1) Agricultural crops and agricultural wastes and residues;
9-21 (2) Wood and wood wastes and residues;
9-22 (3) Animal wastes;
9-23 (4) Municipal wastes; and
9-24 (5) Aquatic plants.
9-25 (b) “Eligible machinery or equipment” means:
9-26 (1) If the business that qualifies for the abatement is not a
9-27 facility for the generation of electricity from renewable energy,
9-28 machinery or equipment which is leased or purchased and for
9-29 which a deduction is authorized pursuant to 26 U.S.C. § 179. The
9-30 term does not include:
9-31 (I) Buildings or the structural components of buildings;
9-32 (II) Equipment used by a public utility;
9-33 (III) Equipment used for medical treatment;
9-34 (IV) Machinery or equipment used in mining; [or]
9-35 (V) Machinery or equipment used in gaming[.] or
9-36 (VI) Aircraft.
9-37 (2) If the business that qualifies for the abatement is a facility
9-38 for the generation of electricity from renewable energy, all the
9-39 machinery and equipment that is used in the facility to collect and
9-40 store the renewable energy and to convert the renewable energy into
9-41 electricity.
9-42 (c) “Energy storage device” means a device for use and
9-43 storage of electrical energy that alleviates the consumption of
9-44 fossil fuel and does not produce fossil fuel emissions.
10-1 (d) “Facility for the generation of electricity from renewable
10-2 energy” means a facility for the generation of electricity that:
10-3 (1) Uses renewable energy as its primary source of energy;
10-4 and
10-5 (2) Has a generating capacity of at least 10 kilowatts.
10-6 The term includes all the machinery and equipment that is used
10-7 in the facility to collect and store the renewable energy and to
10-8 convert the renewable energy into electricity. The term does not
10-9 include a facility that is located on residential property.
10-10 [(d)] (e) “Fuel cell” means a device or contrivance which,
10-11 through the chemical process of combining ions of hydrogen and
10-12 oxygen, produces electricity and water.
10-13 [(e)] (f) “Renewable energy” means a source of energy that
10-14 occurs naturally or is regenerated naturally, including, without
10-15 limitation:
10-16 (1) Biomass;
10-17 (2) Fuel cells;
10-18 (3) Geothermal energy;
10-19 (4) Solar energy;
10-20 (5) Waterpower; and
10-21 (6) Wind.
10-22 The term does not include coal, natural gas, oil, propane or any
10-23 other fossil fuel, or nuclear energy.
10-24 Sec. 5. Section 9 of chapter 335, Statutes of Nevada 2001, at
10-25 page 1585, is hereby amended to read as follows:
10-26 Sec. 9. 1. This section and sections 1, 2 and 4 to 8,
10-27 inclusive, of this act become effective on July 1, 2001.
10-28 2. Sections 2 and 5 of this act expire by limitation on
10-29 June 30, [2005.] 2009.
10-30 3. Section 3 of this act becomes effective on July 1,
10-31 [2005.] 2009.
10-32 Sec. 6. The amendatory provisions of this act apply only to an
10-33 abatement from taxation for which a person applies on or after
10-34 July 1, 2003.
10-35 Sec. 7. 1. This act becomes effective on July 1, 2003.
10-36 2. Sections 2 and 4 of this act expire by limitation on June 30,
10-37 2009.
10-38 H