Back Door Tax Hike–Bad for Nevada BusinessBack Door Tax Hike–Bad for Nevada Business

On ThursRoss Millerday of last week the interim Legislative Subcommittee on Regulations approved a rule that now requires limited liability companies (LLCs) to pay an annual $200 business license tax, which is assessed and collected by the Nevada Secretary of State.

This new regulation prevents LLCs from claiming an exemption to the tax for home-based businesses that earn less than $27,000 per year. Nevada Secretary of State, Ross Miller, sought the rule because he says hundreds of LLCs wrongly claim the exemption.

The new regulation will cost businesses an estimated $10 million per year, and that does not touch upon the significant loss of new businesses who will decide to organize in other states, instead of in Nevada, just to avoid this tax.

We agree with the Las Vegas Review-Journal opinion that because State tax collections are ahead of projections, there is no reason to pursue an unconstitutional money grab. Mr. Miller’s action warrants a legal challenge from the business community.

If he is so desperate for more spending money, let him make the case to the 2013 Legislature (he tried to get the same tax hike through the Legislature last year–and failed).  It is our feeling that this tax increase is bad for Nevada business.

Such tax increases, in our opinion, are to be debated and made during legislative sessions, not during back-door sessions.  Shame on you Mr. Miller!

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GMD Legal