NAC: CHAPTER 372 - SALES AND USE TAXES

[Rev. 12/2/2022 3:26:14 PM]

[NAC-372 Revised Date: 11-22]

CHAPTER 372 - SALES AND USE TAXES

GENERAL PROVISIONS

372.010 Definitions.

372.012 “Commission” defined.

372.013 “Computer” defined.

372.014 “Computer software” defined.

372.015 “Custom computer software” defined.

372.016 “Delivered electronically” defined.

372.017 “Delivery charges” defined.

372.018 “Department” defined.

372.019 “Drug” defined.

372.020 “Durable medical equipment” defined.

372.021 “Electronic” defined.

372.022 “Food” defined.

372.023 “Load and leave” defined.

372.024 “Mobility enhancing equipment” defined.

372.026 “Prewritten computer software” defined.

372.027 “Prosthetic device” defined.

372.028 “Purchase price” defined.

372.029 “Purchaser” defined.

372.030 “Retail sale” defined.

372.031 “Sales price” defined.

372.032 “Sales tax” defined.

372.033 “Seller” defined.

372.034 “Tangible personal property” defined.

372.035 “Use tax” defined.

372.039 Ordinance by local government imposing sales and use tax rate must specify effective date; failure to receive actual notice does not relieve requirement to apply changed rate.

APPLICATION OF TAX

372.040 Purchases of capital goods: Aggregation to defer payment of tax.

372.045 Bundled transactions.

372.050 Credit sales.

372.055 Calculation of credit toward amount of use tax due for purchase outside of Nevada.

372.065 Collection of tax and documentation by retailer acting as agent to deliver tangible personal property for unregistered out-of-state retailer; issuance of driveaway permit to nonresident purchaser of vehicle delivered in Nevada.

372.090 Merchandise returned by customers.

372.101 Delivery charges.

372.110 Auctions when owner bids on his or her property.

372.120 Foreclosure sales.

372.130 Advertising agencies.

372.140 Barbers, beauty shop operators, bootblacks, launderers and cleaners.

372.150 Beer, wine and liquor dealers.

372.155 Broadcasters.

372.160 Pawnbrokers and consignees.

372.170 Coins and stamps; bullion.

372.180 Concessionaires; organizers or promoters of infrequent sales.

372.190 Construction contractors: Definitions.

372.200 Construction contractors: Tangible personal property purchased for performance of contract.

372.214 Court reporters: Definitions.

372.216 Court reporters: Purchases of tangible personal property for use in business; charges for providing services.

372.227 Designers.

372.229 Desktop publishers.

372.230 Florists and food bouquet businesses.

372.240 Garment or fur repairers, alterers and remodelers.

372.250 Gun clubs.

372.260 Hospitals.

372.265 Interior decorators.

372.270 Memorial dealers, cemeteries and cemetery associations.

372.280 Morticians: General provisions.

372.290 Morticians: Transactions with other states.

372.300 Morticians: Funeral expenses paid by United States.

372.305 Motor vehicles originally bought for resale: Use or loan of motor vehicle; sale of motor vehicle.

372.320 Oculists, optometrists and dispensing opticians.

372.330 Photographers.

372.350 Premiums; gifts; complimentary food and beverages.

372.365 Producers.

372.367 Property purchased for use as prize in raffle, contest or game of chance.

372.370 Property used in manufacturing.

372.380 “Producing,” “fabricating” and “processing” defined for NRS 372.060; separation of charges for labor from charges for tangible personal property required.

372.390 Repairing and reconditioning: Generally.

372.400 Repairing and reconditioning: Examples of parts and materials which are substantial or insubstantial in value in relation to total charge.

372.420 Repairing and reconditioning: Signs.

372.450 Painters, polishers and finishers; repainters and refinishers.

372.460 Replacement parts and materials.

372.470 Signs, showcards and posters.

372.480 Taxidermists.

372.500 Vending machines: Operator to obtain permit, report and pay tax; stickers required.

372.520 Vending machines: Sales price; computation of tax.

372.530 Producers of X-ray film for diagnostic use.

BAD DEBT DEDUCTION

372.532 “Bad debt deduction” defined.

372.534 Claim for bad debt deduction.

372.535 Maintenance and availability of records relating to bad debt.

372.536 Value of property sold that has been repossessed.

372.538 Method for determining actual cash value of property other than motor vehicle; retention of books and records substantiating actual cash value.

372.539 Method for determining actual cash value of motor vehicle; retention of books and records substantiating actual cash value.

EXEMPTIONS

372.540 Seeds and plants.

372.605 Food: “Prepared food intended for immediate consumption” interpreted.

372.607 Food: Determination whether food sold at retail by seller is sold with eating utensils provided by seller; method for calculating percentage of prepared food sold by seller.

372.620 Food: Records maintained by retailers.

372.625 Textbooks.

372.630 Newspapers: Sales of property for resale; exempt transactions.

372.640 Newspapers: Resale certificates.

372.650 Newspapers: Paper and ink; photographs; type metals.

372.660 Newspapers: Advertising books, mats and mat accessories.

372.680 Sales to United States: Unincorporated instrumentalities; incorporated instrumentalities.

372.690 Sales to United States: Army, Navy and Selective Service System.

372.695 Sales to State of Nevada: Applicability to credit union.

372.698 Sales of certain medical devices to governmental entities: “Medical device” construed.

372.700 Charitable, religious or educational organizations: Letters of exemption.

372.701 “Church, synagogue or other place of religious worship” construed.

372.702 Apprenticeship programs.

372.704 Application of exemption to property sold, shipped pursuant to sales contract or delivered outside State; application of tax to property sold or delivered to purchaser within State.

372.708 Vehicle delivered to nonresident purchaser within State; attached accessories and specialty items.

372.712 Proof of delivery outside State.

372.715 Application by air carrier.

ADMINISTRATION OF TAX

372.720 Revocation, suspension and reissuance of sellers’ permits.

372.730 Resale certificates.

372.735 Establishment of exemption; improper claim of exemption.

372.750 Certificate of authority for collection of use tax by retailers from out of State.

372.760 Determination of amount of tax due; inclusion of tax in sales price of item.

372.765 Over-collection of tax.

372.770 Receipts for tax paid to retailer.

372.780 Deduction for property resold after being purchased for purpose other than resale.

372.790 Receipt by Commission of reports, returns and remittances.

372.825 Security required for payment; waiver of security; habitually delinquent persons.

372.826 Interpretation of “habitually delinquent.”

372.827 Sale of capital goods: Security required for deferral of tax.

RETAILERS LOCATED OUTSIDE OF THIS STATE

372.841 “Component member” defined.

372.844 “Activity that is significantly associated with a retailer’s ability to establish or maintain a market in this State for the retailer’s products or services” interpreted.

372.846 Purpose of sections is to reduce disparate impact of responsibility to collect taxes.

372.848 Presumption of applicability to retailer that is part of controlled group of entities that has a component member in this State: Rebuttal of presumption; written certification by each component member; retention of certifications by retailer.

372.851 Presumption of applicability to retailers that enter into agreements with residents of this State for referral of customers through Internet links: Rebuttal of presumption; written certification by each resident; retention of certifications by retailer.

372.856 Factors for determining whether activities of retailer have sufficient nexus with this State.

COMPUTER SOFTWARE

372.875 Applicability of tax to custom computer software and custom programming services.

372.880 Applicability of tax to prewritten computer software and computer software maintenance contracts.

372.885 Prewritten computer software: Charges for modifications; taxable basis.

DIRECT SALES ORGANIZATIONS

372.900 Definitions.

372.902 “Direct sales organization” defined.

372.904 “Independent salesperson” defined.

372.906 “Sales tax collection agreement” defined.

372.908 Sales of tangible personal property by independent salesperson.

372.910 Sales tax collection agreement: Authority of Department; contents.

372.912 Sales tax collection agreement: Termination.

LEASES, RENTALS AND CERTAIN OTHER TRANSFERS

General Provisions

372.920 Applicability.

Property Purchased On or Before June 15, 2005

372.922 Collection and payment of tax when tangible personal property is purchased for lease or rental within this State.

372.924 Election by lessor to pay tax on use of tangible personal property rather than cost of acquisition.

372.926 Sale of tangible personal property designated as lease or rental for purpose of retaining security interest.

372.928 Sale of tangible personal property designated as finance lease.

372.930 Sale and lease back of tangible personal property.

372.932 Certain transfers of tangible personal property to governmental entities or nonprofit organizations.

Property Purchased After June 15, 2005

372.934 “Lease or rental” and “retailer” defined.

372.936 Lease or rental of tangible personal property constitutes sale.

372.938 Collection and payment of sales tax on lease or rental of tangible personal property; sale of property following its use in lease or rental service.

372.940 Treatment of various charges made in connection with lease or rental of tangible personal property.

372.942 Termination of lease.

372.944 Sale of tangible personal property designated as lease or rental for purpose of retaining security interest.

372.946 Purchase, sale and lease back of tangible personal property.

GENERAL PROVISIONS

NAC 372.010 Definitions. (NRS 360.090, 372.725) As used in this chapter, unless the context otherwise requires, the words and terms defined in NAC 372.012 to 372.035, inclusive, have the meanings ascribed to them in those sections.

(Supplied in codification; A by Tax Comm’n by R021-08, 4-17-2008)

NAC 372.012 “Commission” defined. (NRS 360.090, 372.725) “Commission” means the Nevada Tax Commission.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.013 “Computer” defined. (NRS 360.090, 360B.110, 372.725) “Computer” has the meaning ascribed to it in NRS 360B.410.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.014 “Computer software” defined. (NRS 360.090, 360B.110, 372.725) “Computer software” has the meaning ascribed to it in NRS 360B.415.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.015 “Custom computer software” defined. (NRS 360.090, 360B.110, 372.725) “Custom computer software” means computer software which is not prewritten computer software.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.016 “Delivered electronically” defined. (NRS 360.090, 360B.110, 372.725) “Delivered electronically” has the meaning ascribed to it in NRS 360B.420.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.017 “Delivery charges” defined. (NRS 360.090, 360B.110, 372.725) “Delivery charges” has the meaning ascribed to it in NRS 360B.425.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.018 “Department” defined. (NRS 360.090, 372.725) “Department” means the Department of Taxation.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.019 “Drug” defined. (NRS 360.090, 360B.110, 372.725) “Drug” has the meaning ascribed to it in NRS 360B.435 and includes, without limitation, injectable dermal fillers, saline solutions, medical grade gases and insulin.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008; A by R104-09, 11-25-2009)

NAC 372.020 “Durable medical equipment” defined. (NRS 360.090, 360B.110, 372.725) “Durable medical equipment” means equipment, including any repair and replacement parts therefor, which:

1. Can withstand repeated use;

2. Is primarily and customarily used to serve a medical purpose;

3. Generally is not useful to a person in the absence of illness or injury; and

4. Is not worn in or on the body,

Ê and includes, without limitation, abduction and orthotic pillows, anesthesia ventilators, bone growth stimulators, dialyzers and kidney dialysis machines.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.021 “Electronic” defined. (NRS 360.090, 360B.110, 372.725) “Electronic” has the meaning ascribed to it in NRS 360B.440.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.022 “Food” defined. (NRS 360.090, 360B.110, 372.725) “Food” has the meaning ascribed to it in NRS 360B.445.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.023 “Load and leave” defined. (NRS 360.090, 360B.110, 372.725) “Load and leave” means delivery to a purchaser by the use of tangible storage media where the tangible storage media is not physically transferred to the purchaser.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.024 “Mobility enhancing equipment” defined. (NRS 360.090, 360B.110, 372.725) “Mobility enhancing equipment” means equipment, including any repair and replacement parts therefor, which:

1. Is primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle;

2. Is not generally used by persons with normal mobility; and

3. Does not include any motor vehicle or equipment on a motor vehicle normally provided by a manufacturer of motor vehicles,

Ê and includes, without limitation, mobility enhancing car seats for children with a disability and swivel seats for persons with a disability.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.026 “Prewritten computer software” defined. (NRS 360.090, 360B.110, 372.725) “Prewritten computer software” has the meaning ascribed to it in NRS 360B.470.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.027 “Prosthetic device” defined. (NRS 360.090, 360B.110, 372.725) “Prosthetic device” has the meaning ascribed to it in NRS 360B.475 and includes, without limitation, breast implants, feeding catheters, medicine delivery catheters, insulin pumps, cochlear implants, orthodontic devices, and amalgams, ceramics, porcelain and gold, silver and other metal alloys used to fill teeth.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008; A by R104-09, 11-25-2009)

NAC 372.028 “Purchase price” defined. (NRS 360.090, 360B.110, 372.725) “Purchase price” means the measure subject to use tax and has the meaning ascribed to “sales price” in NRS 360B.480.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.029 “Purchaser” defined. (NRS 360.090, 360B.110, 372.725) “Purchaser” has the meaning ascribed to it in NRS 360B.063.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.030 “Retail sale” defined. (NRS 360.090, 360B.110, 372.725) “Retail sale” has the meaning ascribed to it in NRS 360B.067.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.031 “Sales price” defined. (NRS 360.090, 360B.110, 372.725) “Sales price” has the meaning ascribed to it in NRS 360B.480.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.032 “Sales tax” defined. (NRS 360.090, 360B.110, 372.725) “Sales tax” has the meaning ascribed to it in NRS 360B.070.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.033 “Seller” defined. (NRS 360.090, 360B.110, 372.725) “Seller” has the meaning ascribed to it in NRS 360B.080.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.034 “Tangible personal property” defined. (NRS 360.090, 360B.110, 372.725) “Tangible personal property” has the meaning ascribed to it in NRS 360B.095.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.035 “Use tax” defined. (NRS 360.090, 360B.110, 372.725) “Use tax” has the meaning ascribed to it in NRS 360B.100.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.039 Ordinance by local government imposing sales and use tax rate must specify effective date; failure to receive actual notice does not relieve requirement to apply changed rate. (NRS 360.090, 360B.110)

1. An ordinance imposing a sales and use tax must specify the date on which the tax must first be imposed. The effective date must:

(a) Be the first day of the first month of the calendar quarter that begins at least 120 days after the ordinance is approved by the governing body of a local government or the voters voting on a question concerning the imposition of the tax; and

(b) For purchases from a printed catalog where the purchaser computes the amount of sales tax owed on the purchase by using the sales and use tax rate published in the catalog, not be earlier than 120 days after the date on which the Department provides notice of the change on the Internet website maintained by the Department and in the newsletter of the Department entitled “Nevada Tax Notes.”

2. The failure of a person to receive actual notice of a change in the sales and use tax rate pursuant to subsection 1 does not relieve the person of the requirement to apply the changed rate to calculate the amount of tax due after the effective date of the change.

3. As used in this section, “sales and use tax rate” means the rate of the tax imposed on the gross receipts of a retailer from the sale of all tangible personal property sold at retail, or stored, used or otherwise consumed in the jurisdiction of a local government.

(Added to NAC by Tax Comm’n by R020-16, eff. 6-21-2017)

APPLICATION OF TAX

NAC 372.040 Purchases of capital goods: Aggregation to defer payment of tax. (NRS 360.090, 372.397, 372.725)

1. The periods for which related purchases of capital goods made to expand a business, establish a new business, or renovate or replace capital equipment which may be aggregated to defer payment of the tax are:

(a) Six months, if the purchases have a total sales price of at least $100,000 but less than $600,000.

(b) One year, if the purchases have a total sales price of at least $600,000.

2. The Department may extend the initial deferral period if the taxpayer requests an extension of time before the expiration of that period. The request must:

(a) Be in writing;

(b) Include the date on which the project is to be completed; and

(c) Include evidence that the purchases to be deferred are within the scope of the program approved by the Division of Economic Development.

3. Payments of deferred taxes must be accompanied by forms provided by the Commission.

(Added to NAC by Tax Comm’n, eff. 9-13-85; A by Dep’t of Taxation, 10-18-89)

NAC 372.045 Bundled transactions. (NRS 360.090, 360B.110, 372.725)

1. Except as otherwise provided by specific statute or regulation, the sales tax or use tax, as applicable, applies to the total amount of consideration received by a seller in connection with a bundled transaction.

2. For the purposes of this section:

(a) Except as otherwise provided in paragraph (b), “bundled transaction” means the retail sale of two or more products, except real property and services to real property, where the products are:

(1) Otherwise distinct and identifiable; and

(2) Sold for one nonitemized price.

(b) “Bundled transaction” does not include:

(1) The sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.

(2) The retail sale of tangible personal property and a service where the tangible personal property is essential to the use of the service and is provided exclusively in connection with the service, and the true object of the transaction is the service.

(3) A transaction that includes taxable products and nontaxable products and regarding which the purchase price or sales price of the taxable products is de minimis. For the purposes of this subparagraph:

(I) “De minimis” means that the seller’s purchase price or sales price of the taxable products is 10 percent or less of the total purchase price or sales price of the bundled products.

(II) Sellers must use either the purchase price or the sales price of the products to determine if the taxable products are de minimis. Sellers may not use a combination of the purchase price and sales price of the products to determine if the taxable products are de minimis.

(III) Sellers must use the full term of a service contract to determine if the taxable products are de minimis.

(4) The retail sale of exempt tangible personal property and taxable tangible personal property, where:

(I) The transaction includes food, drugs, durable medical equipment, mobility enhancing equipment, prosthetic devices or medical supplies; and

(II) The seller’s purchase price or sales price of the taxable tangible personal property is 50 percent or less of the total purchase price or sales price of the bundled tangible personal property. Sellers may not use a combination of the purchase price and sales price of the tangible personal property for the purpose of making this 50-percent determination for a transaction.

(1) Packaging items, such as containers, boxes, sacks, bags and bottles, or other materials, such as wrapping, labels, tags and instruction guides, that accompany the retail sale of the products and are incidental or immaterial to the retail sale thereof. Examples of packaging items that are incidental or immaterial to the retail sale of the products include grocery sacks, shoeboxes, dry cleaning garment bags, and express delivery envelopes and boxes.

(2) Products provided free of charge with the required purchase of another product. For the purposes of this subparagraph, a product is “provided free of charge” if the sales price of the product purchased does not vary depending on the inclusion of the product “provided free of charge.”

(3) Items included in the sales price.

(d) “One nonitemized price” does not include a price that is separately identified by product on binding sales or other supporting sales-related documentation made available to the customer in paper or electronic form, including, but not limited to, an invoice, bill of sale, receipt, contract, service agreement, lease agreement, periodic notice of rates and services, rate card or price list.

(e) “Sales price” applies to the measure subject to sales tax.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.050 Credit sales. (NRS 360.090, 372.725)

1. If tangible personal property is sold on credit, either under a conditional sale or lease contract or otherwise, the whole amount of the contract is taxable unless the retailer keeps adequate and complete records to show separately the sales price of the tangible personal property, and the insurance, interest, finance, carrying and other charges made in the contract. If such records are kept by the retailer, the insurance, interest, finance and carrying charges may be excluded from the computation of the tax.

2. The total amount of the tax on the entire sales price in credit transactions is due on the due date of the return to be filed after the close of the reporting period in which the sale was made.

3. No reduction in the amount of tax payable by the retailer is allowable by reason of his or her transfer at a discount of a conditional sale or lease contract or other evidence of indebtedness.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 35, eff. 3-1-68]

NAC 372.055 Calculation of credit toward amount of use tax due for purchase outside of Nevada. (NRS 360.090, 372.725) In determining the amount of use tax that is due from a taxpayer, the Department will allow a credit toward the amount due to this State in an amount equal to sales tax legitimately paid for the same purchase of tangible personal property to a state or local government outside of Nevada, upon proof of payment deemed satisfactory to the Department.

(Added to NAC by Tax Comm’n, eff. 8-26-96)

NAC 372.065 Collection of tax and documentation by retailer acting as agent to deliver tangible personal property for unregistered out-of-state retailer; issuance of driveaway permit to nonresident purchaser of vehicle delivered in Nevada. (NRS 360.090, 372.725)

1. Except as otherwise provided in subsections 2 and 3, if a retailer located in Nevada delivers, as an agent acting for an unregistered out-of-state retailer, tangible personal property in this State, the retailer shall collect from the person to whom it is delivered the appropriate amount of sales tax due on the basis of the sales price of the tangible personal property.

2. If the person to whom it is delivered informs the retailer that the tangible personal property is for resale, the retailer shall acquire a properly completed resale certificate.

3. If a vehicle is delivered in Nevada to a purchaser who is not a resident of Nevada and the purchaser informs the retailer that the vehicle is to be removed from the State for registration, storage, use and consumption in another state within 15 days after delivery to the purchaser, the retailer shall issue a driveaway permit to the purchaser and require the purchaser to complete and submit to him or her an affidavit of purchase.

4. The tax collected pursuant to subsection 1 and any documents acquired pursuant to subsections 2 and 3 must be accounted for in the same manner as all other tax receipts and related documents collected or otherwise acquired by the retailer in the normal course of his or her business.

(Added to NAC by Tax Comm’n, eff. 7-16-92)

NAC 372.090 Merchandise returned by customers. (NRS 360.090, 372.025, 372.725)

1. For the purposes of the deduction from gross receipts of the sales price of merchandise which was returned by customers, “full sale price” includes the portion of the price which was designated as sales tax.

2. When a charge for restocking or handling is deducted from the refund of the sales price to the customer for merchandise which was returned, the full sale price shall be deemed to have been refunded or credited to the customer if the charge represents, as closely as can reasonably be determined, the actual expense to the retailer of retaking the property and replacing it on the shelves or other place from which it was removed for delivery to the customer.

3. The charge may not include compensation for increased overhead costs because of the return, for refinishing or restoring the property to saleable condition where the necessity therefor was occasioned by customer usage, or for any expense which was incurred before the sale, such as the cost of transferring the title or possession under a conditional sale contract.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 37, eff. 3-1-68]

NAC 372.101 Delivery charges. (NRS 360.090, 360B.110, 372.025, 372.065, 372.725)

1. Delivery charges included in the sale of tangible personal property are subject to sales and use taxes, including, but not limited to, any charges for:

(a) Transportation, shipping or postage which are not stated separately on applicable invoices or other billing documents. Any charges for transportation, shipping or postage which are stated separately on applicable invoices or other billing documents shall be deemed not to be included in such a sale and are not subject to sales and use taxes.

(b) Handling, crating or packing, whether or not separately stated.

2. A delivery charge that is not connected with the sale of tangible personal property is a charge for a service and is not subject to sales and use taxes.

3. If a shipment of tangible personal property which is sold to a purchaser includes both taxable and exempt property, the seller of the property shall comply with the provisions of NRS 360B.255.

(Added to NAC by Dep’t of Taxation, eff. 8-2-90; A Tax Comm’n, 10-27-93; R082-02, 9-20-2002; R021-08, 4-17-2008; R104-09, 11-25-2009)

NAC 372.110 Auctions when owner bids on his or her property. (NRS 360.090, 372.725) Sales tax does not apply when an owner of property delivers it to an auctioneer for auction and bids on his or her own property at the auction.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 21, eff. 6-14-68]

NAC 372.120 Foreclosure sales. (NRS 360.090, 372.725)

1. The tax does not apply to sales of tangible personal property at public auction pursuant to the provisions of a chattel mortgage, if:

(a) The sale is made pursuant to a court decree of foreclosure by an officer appointed by the court for that purpose; or

(b) The property is bid in by the mortgagee.

2. The tax applies to other foreclosure sales and to sales by a person who has bid in the property to the same extent as to other sales.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 24, eff. 3-1-68]

NAC 372.130 Advertising agencies. (NRS 360.090, 372.725)

1. As used in this section, an “advertising agency” is a person who is primarily in the business of furnishing advertising and promotional services to clients.

2. An advertising agency is the consumer of all the tangible personal property used in the normal course of the business, such as ink, rubber cement and other items used for the purposes of the agency.

3. The development of primary advertising materials on behalf of a client for delivery to the print or broadcast media, a printer or a supplier is principally a service and the charges for such materials are not subject to the sales tax. As used in this subsection, the phrase “development of primary advertising materials” includes all activities involved in the conceptualization, production and refinement of the advertisement or public relations material before its subsequent reproduction by a printer or supplier. The gross receipts from primary advertising materials produced before reproduction are not subject to the sales tax regardless of their form because the development of these materials for the specific benefit of a particular client will be considered a service. These services may include, without limitation, rough or comprehensive visualizations, consultation, market analysis, writing of scripts or copy, creation of preliminary and final artwork or photographs, typesetting, typography, or placing or arranging for the placing of advertisements in newspapers, magazines, publications, television, radio or other advertising media. The sales tax does not apply to a charge billed as an agency fee, service charge or commission if it represents a charge or part of a charge for a service that is not subject to the sales tax.

4. The sales tax applies to the gross receipts from the creation of reproductions of the primary advertising materials, whether the reproduction is performed by a printer or supplier or is performed directly by the advertising agency.

5. An advertising agency may act as a purchasing agent for a customer for the acquisition of reproductions of primary advertising materials from a printer or supplier and pay the tax at the time of purchase from the printer or supplier if it:

(a) Obtains prior written authorization from the customer to purchase the reproductions on his or her behalf;

(b) Discloses to the printer or supplier the name of the customer for whom the reproductions are being purchased;

(c) Charges the customer for the reproductions an amount not to exceed the amount paid by the advertising agency, including the tax;

(d) Lists separately the charges to the customer set forth in paragraph (c) on the statement to the customer; and

(e) Does not use the reproductions for itself or any other customer.

6. The sales tax does not apply to any charges for:

(a) Supervision, consultation, research, postage, express, telephone and telegraph messages, transportation and travel expenses, or talent fees, if the charge is stated separately on the invoice or is part of a charge for other services.

(b) Retouching to prepare artwork or photographs for reproduction.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 51, eff. 6-7-68]—(NAC A 11-12-93; 7-5-94)

NAC 372.140 Barbers, beauty shop operators, bootblacks, launderers and cleaners. (NRS 360.090, 372.725)

1. Barbers, beauty shop operators, bootblacks, launderers and cleaners are the consumers of the supplies and other property used in performing their services and the tax applies to the sales price of their purchases of such property.

2. These persons are retailers of any supplies or other tangible personal property which they sell to their customers and the tax applies to the sales price of the property sold.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 3, eff. 6-14-68]

NAC 372.150 Beer, wine and liquor dealers. (NRS 360.090, 372.025, 372.065, 372.725) The tax applies in the retail sale of beer, wine and liquor to the entire amount charged for the product, including the amount of all other state and federal taxes imposed on the product.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 48, eff. 3-1-68]

NAC 372.155 Broadcasters. (NRS 360.090, 372.725, 372.734)

1. As used in this section, the term “broadcaster” means a radio or television broadcasting station primarily engaged in, and deriving income from, the business of facilitating speech via over-the-air communications, both as to pure speech and commercial speech.

2. The gross receipts of a broadcaster from the furnishing of broadcasting services are not subject to the sales tax, including, without limitation, the gross receipts from the sale of airtime and any charge for transmission of the signal.

3. Purchases of tangible personal property by broadcasters are subject to the sales tax if such property is consumed by the station and is not resold in the normal course of business. As an example of the application of this subsection, the purchase of a transmitter by a broadcaster is subject to the sales tax.

4. When a broadcaster engages in production services, including the development of commercially suitable audiotapes and videotapes intended for broadcasting purposes only, the gross receipts from the sale of the tapes to the client are not subject to the sales tax. The broadcaster is the consumer, not the retailer, of any tangible personal property which is used incidentally in rendering the service therefore the sales tax applies to the purchase of the property by the broadcaster. As an example of the application of this subsection, if a television station is engaged by a client to create an advertisement for a client and the television station:

(a) Purchases paint and other materials necessary to construct a set upon which the advertisement will be filmed;

(b) Purchases raw videotape footage onto which to dub the advertisement for the client;

(c) Engages in activities such as writing copy, preparing animation, taking photographs and putting music to the piece to complete the advertisement; and

(d) Prepares videotapes of the advertisement which will be distributed to various other television stations for broadcasting,

Ê the gross receipts from the sale of the finished videotapes are not subject to the sales tax but the sales tax on the purchase of the paint, videotape and other materials necessary for the production of the videotape must be paid by the station at the time of purchase by the station.

5. If a broadcaster engages in the business of duplicating audiotapes or videotapes beyond the first rendering which are not intended for broadcasting purposes only, the gross receipts from the copies are subject to the sales tax, except that, if a part of the charge for the copies is for services and that portion of the charge is separately stated on the invoice, the portion of the charge that is attributable to services is not subject to the sales tax. As an example of the application of this subsection, if a television station produces an advertisement for a client promoting his or her law practice and the client orders three commercially suitable videotapes of the advertisement intended for broadcast purposes only and 10 copies of the videotape to mail to family and friends, the gross receipts from the three videotapes for use in broadcasting only are not subject to the sales tax but the gross receipts from the 10 copies not for use in broadcasting are subject to the sales tax.

6. The sales tax does not apply to any charges for supervision, consultation, research, postage, express, telephone and telegraph messages, transportation and travel expenses, or talent fees, if the charge is stated separately on the invoice or is part of a charge for other services.

(Added to NAC by Tax Comm’n, eff. 11-12-93)

NAC 372.160 Pawnbrokers and consignees. (NRS 360.090, 372.055, 372.725)

1. A pawnbroker having possession of tangible personal property for the purpose of sale is a retailer with respect to sales of the property and the tax applies to the gross receipts from such sales.

2. A consignee having possession of tangible personal property owned by another person, or the authority to sell such property or to cause the transfer of title to such property, is a retailer with respect to sales of the property and the tax applies to the gross receipts from such sales.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 21, eff. 6-14-68]—(NAC A by R026-03, 10-30-2003)

NAC 372.170 Coins and stamps; bullion. (NRS 360.090, 372.725)

1. The tax applies to sales of coins or uncancelled stamps at a premium price for purposes other than use as a medium of exchange or postage. The tax does not apply to sales of coins or uncancelled stamps, even though sold at a premium price, if the purpose of the use of the coins or stamps is as a medium of exchange or postage.

2. If the sales price exceeds the face value of the coins or stamps by 50 percent, they will be deemed to have value as collectors’ items and will be taxable. If the sales price does not exceed the face value of the coins or stamps by 50 percent, they will be deemed to have value solely as a medium of exchange or postage and will not be taxable. Sales of any coins not currently accepted as money and sales of cancelled stamps or stamps not currently accepted for postage are taxable.

3. Sales of coins to gaming establishments at any price for use in gaming operations are not taxable, except that, sales of coins at a premium price to gaming establishments for purposes other than use as a medium of exchange are governed by subsection 2.

4. The tax applies to sales of bullion at a premium price for purposes other than use as a medium of exchange. The tax does not apply to sales of bullion, even though sold at a premium price, if the purpose of the use of the bullion is as a medium of exchange.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 74, eff. 9-7-73]—(NAC A by R154-10, 5-5-2011)

NAC 372.180 Concessionaires; organizers or promoters of infrequent sales. (NRS 360.090, 372.725)

1. A retailer is liable for the payment of the tax measured by the receipts from all retail sales made by the operation of a concession in his or her place of business unless the concessionaire has a valid seller’s permit from the Department.

2. If the retailer fails to make a return and remit the amount of tax due for the operation of the concession, the concessionaire must secure a permit and file a return together with the remittance of the amount of tax which is due.

3. Organizers or promoters of concession sales on an irregular basis, such as conventions, flea markets and sales of a seasonal character, who are registered sellers and are therefore liable for the tax on all concession sales, may provide simplified sales and use tax returns to their concessionaires, collect the taxes due at the termination of the sale and remit the total tax due on a single return to the Department. Any person desiring to use the simplified sales and use tax returns for concessionaires must secure the approval of the Department at least 10 days in advance of the sale. Any retailer, organizer or promoter desiring the assistance of the Department to determine questions of possible tax liability must contact the Department at least 30 days before the date of the planned sale.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 75, eff. 9-7-73]

NAC 372.190 Construction contractors: Definitions. (NRS 360.090, 372.725) For the purposes of this section and NAC 372.200:

1. “Construction contract for improvement to real property” means a contract for erecting, constructing or affixing a structure or other improvement on or to real property, or the remodeling, altering or adding to or repairing of an improvement to real property. The contract may be formal or informal. The term includes all types of contracts, including, without limitation:

(a) Advertised contracts;

(b) Negotiated contracts;

(d) Cost reimbursable contracts;

(e) Lump-sum contracts; and

(f) Time and material contracts.

2. “Construction contractor” means any person who acts solely in his or her professional capacity or through others to construct, alter, repair, add to, remodel or otherwise improve any real property. The term:

(a) Includes a subcontractor, an interior decorator and a specialty contractor.

(b) Does not include:

(1) An employee who receives wages as his or her sole compensation;

(2) A licensed architect;

(3) A licensed professional engineer; or

(4) A manufacturer of:

(I) Modular homes;

(II) Sectionalized housing;

(III) Prefabricated homes; or

(IV) Any other factory-built home or unit,

Ê who joins, installs or affixes the prefabricated unit to the real property unless the manufacturer has entered into a construction contract for improvement to real property with a governmental entity, in which case the manufacturer will be considered a construction contractor.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 67, eff. 1-13-72; A 12-20-79]—(NAC A 9-19-90; 9-16-92; 11-12-93; 8-26-96; R110-12, 11-1-2012)

NAC 372.200 Construction contractors: Tangible personal property purchased for performance of contract. (NRS 360.090, 372.725)

1. A construction contractor is the consumer of all the tangible personal property purchased for use in improving real property pursuant to a construction contract for improvement to real property and the tax applies to the total sales price of the property to the contractor.

2. If any such purchase is made and the sales tax is not paid because the vendor did not have a valid Nevada seller’s permit, or because a resale certificate was properly given, or for any other reason, the use tax applies based upon the sales price of the property to the contractor.

3. Any tangible personal property purchased by a construction contractor for use in the performance of a construction contract for improvement to real property shall be deemed to have been purchased for use in improving real property.

4. If a construction contract for improvement to real property requires the construction contractor to perform repairs or improvements on real property, the tax applies pursuant to the provisions of this section and not NAC 372.390 or 372.400.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 67, eff. 1-13-72; A 12-20-79]

NAC 372.214 Court reporters: Definitions. (NRS 360.090, 372.725) As used in this section and NAC 372.216, unless the context otherwise requires:

1. “Captioning services” means the reporting of a proceeding by means of manual or mechanical shorthand writing and real-time translation of the spoken word with open or closed-captioning capabilities.

2. “Communication access real-time translation services” means the reporting of a proceeding by means of mechanical shorthand writing and real-time transmission of the spoken word, including, without limitation, for use in assisting in communications.

3. “Convention services” means the reporting of a convention proceeding by means of manual or mechanical shorthand writing of the spoken word through the use of real-time translation or a certified transcript of the proceedings.

4. “Court reporter” means a person who is certified pursuant to chapter 656 of NRS to provide the service of court reporting.

5. “Proceeding” means any judicial proceeding, quasi-judicial proceeding, legislative proceeding, quasi-legislative proceeding or other similar proceeding or meeting, including, without limitation:

(a) Grand jury proceedings;

(b) Court proceedings;

(d) Proceedings of an administrative agency if the final decision of the agency with reference thereto is subject to judicial review;

(e) Arbitration proceedings;

(f) Regulatory proceedings;

(g) A meeting of a board of directors; or

(h) Any other proceeding or meeting during which the certification of a court reporter is of significant value to the client of the court reporter.

6. “Real-time translation” means reporting by means of mechanical shorthand writing of the spoken word that is simultaneously transmitted from the system used for reporting to a laptop computer or a screen.

7. “Service as a depository” means providing service as a depository of documents related to a court proceeding pursuant to the order of a court, including, without limitation:

(a) Storing documents used in litigation;

(b) Copying and imaging of documents used in litigation;

(d) Providing access to documents used in litigation.

8. “Service of court reporting” means the reporting of a proceeding by the use of any system of manual or mechanical shorthand writing.

9. “System of manual or mechanical shorthand writing” means a system used for the reporting of a proceeding, including, without limitation:

(a) A system for communication access real-time translation services.

(b) A system for captioning services.

10. “Transcript” means a written reproduction of a proceeding, including:

(a) A reproduction on paper.

(b) A reproduction on a computer disc or similar medium.

(Added to NAC by Tax Comm’n by R020-05, eff. 10-31-2005)

NAC 372.216 Court reporters: Purchases of tangible personal property for use in business; charges for providing services. (NRS 360.090, 372.725)

1. Purchases of tangible personal property by a court reporter are subject to the sales tax if the property is acquired for use in the operation of the business. As an example of the application of this section, if a court reporter purchases office supplies, computer equipment, computer software or devices used in providing the service of court reporting, the court reporter is the consumer of the tangible personal property and must therefore pay the sales tax at the time of purchase.

2. The sales tax does not apply to any charge for providing the service of court reporting if the charge is stated separately on the invoice or is part of a charge for other services. Charges for providing the service of court reporting include, without limitation, any fee or charge for:

(a) Attending a proceeding;

(b) Providing a transcript of a proceeding, or a copy thereof, to any party to that proceeding;

(c) Providing to any person a single copy of the transcript of a proceeding if such a copy is ordered for use in another proceeding;

(d) Providing real-time translation of a proceeding;

(e) Producing a condensed transcript of a proceeding;

(f) Providing to a representative of a convention proceeding a single copy of the transcript of the convention proceeding or any meeting conducted at the convention;

(g) Providing service as a depository; or

(h) Supervision, consulting, research, postage, express delivery, telephone messages, transportation and travel expenses, copies or computer discs.

(Added to NAC by Tax Comm’n by R020-05, eff. 10-31-2005)

NAC 372.227 Designers. (NRS 360.090, 372.725)

1. As used in this section, the term “designer” means a graphic designer or a commercial artist and designer who is primarily engaged in, and derives income from, providing stylized visual communication through the professional application of creative services which may be expressed in the form of graphic representations used for promotional, advertising or publication purposes, including, without limitation, commercial art and design for logos, stationery, advertisements, brochures, catalogs, newsletters and magazines.

2. Purchases of tangible personal property by designers are subject to the sales tax if such property is acquired for use in the operation of the business. As an example of the application of this subsection, if a designer purchases office supplies, art supplies, computer equipment, computer software or other devices for use in the normal course of business and not to be transferred in the performance of a service, the designer is the consumer of the tangible personal property and must therefore pay the sales tax at the time of purchase.

3. In cases where a contract, commonly referred to in the industry as an “assignment,” for graphic services is executed which requires the development of concepts and ideas, this constitutes the sale of professional services and sales tax does not apply. Drawings, visualizations and concept roughs which are prepared by the designer to convey ideas and concepts to clients will be treated as having been created incidentally in the performance of a service. As an example of the application of this section, if a company places an order for a designer to provide a corporate logo for use in promotional activities, the gross receipts from the consultation, concept and development, preliminary designs and first rendering of the final design are not subject to sales tax because the charge is for the services provided in producing and developing the design and the transfer of any tangible personal property is incidental to the performance of the services provided in the development of the design.

4. If a designer, in addition to providing creative services as described in subsection 3, also provides reproduction services, the designer is a retailer of the copies that are sold and the gross receipts derived therefrom are subject to the sales tax, except that, if a part of the charge for the copies is for services associated with the creation of the first rendering and that portion of the charge is separately stated on the invoice, the portion of the charge that is attributable to services is not subject to the sales tax. As an example of the application of this subsection, if a company commissions the design of a corporate logo for promotional and advertising activities, the cost of developing the first rendering of the final design is not subject to the sales tax because the charge is for the services provided in producing and developing the design and the transfer of any tangible personal property is incidental to the performance of the service of developing the design. In this example, if the company requires 10 additional copies of the logo, the gross receipts from the sale of those copies are subject to the sales tax.

5. The sales tax does not apply to any charges for supervision, consultation, research, postage, express, telephone and telegraph messages, transportation and travel expenses, or talent fees, if the charge is stated separately on the invoice or is part of a charge for other services.

(Added to NAC by Tax Comm’n, eff. 11-12-93)

NAC 372.229 Desktop publishers. (NRS 360.090, 372.725)

1. As used in this section, the term “desktop publisher” means a person who is in the business of producing original written or graphic material, or both, or refining, arranging, designing or otherwise modifying, editing, writing, rewriting or redesigning material, or any combination thereof.

2. Purchases of tangible personal property by a desktop publisher are subject to the sales tax if the property is acquired for use in the operation of the business. As an example of the application of this section, the purchase of a laser printer by a desktop publisher for use in that business is subject to the sales tax.

3. When a desktop publisher engages in the services described in subsection 1, the first rendering of the final design delivered to the client is not subject to the sales tax because it is the result of creative services. As an example of the application of this subsection, if a client furnishes information to the desktop publisher on a computer disc and the desktop publisher arranges and designs the material, provides a hard copy to the client for proofing, and makes any necessary corrections after which a final rendering is returned to the client on the original disc, the transaction is not subject to the sales tax.

4. If a desktop publisher, in addition to providing the creative services described in subsection 1, also provides reproduction services, the desktop publisher is a retailer of the copies that are sold and the gross receipts derived therefrom are subject to the tax, except that, if a part of the charge for the copies is for services associated with the creation of the first rendering and that portion of the charge is separately stated on the invoice, the portion of the charge that is attributable to services is not subject to the sales tax. As an example of the application of this subsection, if a desktop publisher provides a client with a presentation package for a sales meeting and also offers for sale copies of the package, the cost of the presentation package is not subject to the sales tax because the charge is for the services provided in producing and creating the idea but the charge for providing the copies is subject to the sales tax.

(Added to NAC by Tax Comm’n, eff. 11-12-93)

NAC 372.230 Florists and food bouquet businesses. (NRS 360.090, 360B.110, 372.725)

1. The tax applies to the entire amount charged by a florist or a food bouquet business who receives an order from a customer for the delivery of flowers, a food bouquet or other tangible personal property, including any charges for the delivery except charges for transportation, shipping or postage which are stated separately on the applicable invoice or other billing document. The tax applies to the florist or food bouquet business whether or not:

(a) The florist or food bouquet business instructs another person to make the delivery.

(b) The order is to be delivered in Nevada.

2. The tax does not apply to:

(a) A separate charge made for a telegram.

(b) The amount received by a florist or a food bouquet business in Nevada who makes a delivery pursuant to instructions received from another florist or food bouquet business, whether or not the other florist or food bouquet business is located in Nevada.

3. As used in this section:

(a) “Food bouquet” means a basket, box or other arrangement containing prepared food, including, without limitation, fresh fruit or fresh fruit covered in chocolate, that is intended for immediate consumption.

(b) “Food bouquet business” means a retailer who sells at retail a food bouquet.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 49, eff. 3-1-68]—(NAC A by R104-09, 11-25-2009; R038-17, 6-26-2018)

NAC 372.240 Garment or fur repairers, alterers and remodelers. (NRS 360.090, 372.725)

1. Repairers, alterers and remodelers of garments or furs are consumers of the thread, buttons, linings and other similar items used in repairing, altering and remodeling garments or furs. Except as provided in subsection 2, the tax applies to the sales price of their purchases of those items.

2. A repairer, alterer or remodeler who makes a separately stated charge for an item listed in subsection 1 is a seller making a retail sale of the item.

3. If the repairer, alterer or remodeler furnishes additional fur or material in connection with his or her services and the fair retail price of the fur or material is not segregated on the invoice to the customer, the tax applies to the entire amount charged.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 3, eff. 6-14-68]

NAC 372.250 Gun clubs. (NRS 360.090, 372.725) Gun clubs are the consumers of the clay pigeons and blue rocks furnished to members and patrons in connection with trapshooting and similar sports, even if the charge for the service is measured by the number of clay pigeons or blue rocks used.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 6, eff. 3-1-68]

NAC 372.260 Hospitals. (NRS 360.090, 372.325, 372.725)

1. A hospital which is maintained and operated by an organization which is exempt pursuant to section 50 of chapter 397, Statutes of Nevada 1955, (NRS 372.325), is:

(a) Not required to collect the sales tax on:

(1) Tangible personal property furnished to inpatients in connection with the rendition of hospital services.

(2) Meals served to staff members and personnel.

(b) The retailer of tangible personal property sold:

(1) To outpatients.

(2) Through any pharmacy which it operates for any purpose other than the rendition of hospital services.

2. All other hospitals, including nonprofit and private hospitals, shall pay either the sales tax on purchases of tangible personal property or the use tax on storing, using or consuming tangible personal property in Nevada, in accordance with the nature of the transaction. These hospitals must collect the sales tax on tangible personal property which they furnish to inpatients in connection with the rendition of hospital services. The tax will be measured:

(a) By the charge for the property if it is separately stated; or

(b) If the property and the hospital or medical services are not separately stated, by the cost to the hospital at the time of the acquisition of the property which was used for or transferred to the inpatient.

3. Cafes, restaurants, gift shops, and similar facilities which are operated by any type of hospital, are the retailers of the tangible personal property which they sell. The hospital, concessionaire, or other owner of the facility must report the sales, collect the sales tax from the patrons, and pay the sales tax to the State. This type of transaction is not considered to be within the scope of the primary function of a charitable hospital.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 62, eff. 3-1-68]

NAC 372.265 Interior decorators. (NRS 360.090, 372.725)

1. Except as otherwise provided in subsection 2, any money collected by an interior decorator for professional services is exempt from sales tax.

2. An interior decorator who renders professional services and sells tangible personal property such as wallcoverings, window treatments, or furniture to a person shall list the price for the services and property separately on the invoice. If the amount charged for professional services is not listed separately on the invoice, the decorator shall remit sales tax on the total amount set forth on the invoice.

3. An interior decorator who renders professional services shall maintain records which support the charges for the services.

4. As used in this section, “professional services”:

(a) Includes consultation, layout, the coordination of furniture and fabrics, the selection of color schemes, and paint and the supervision of painting.

(b) Does not include overhead or profit.

(Added to NAC by Tax Comm’n, eff. 9-19-90)

NAC 372.270 Memorial dealers, cemeteries and cemetery associations. (NRS 360.090, 372.725)

1. Memorial dealers are the retailers of the tombstones, markers and other memorials sold by them.

2. Memorial dealers, cemeteries and cemetery associations are the consumers of the cement and other materials used in constructing concrete foundations for setting memorials in place in cemeteries and the tax applies to their purchase of the materials used in making the concrete foundations.

3. If a memorial dealer agrees to furnish a memorial and set it in place in the cemetery for one charge, the tax applies to the entire amount charged. If a separate charge is set forth on the customer’s invoice for setting the memorial in place in the cemetery, the tax does not apply to this charge.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 23, eff. 3-1-68; A 8-1-68]

NAC 372.280 Morticians: General provisions. (NRS 360.090, 372.725)

1. Morticians are the retailers of the tangible personal property which they furnish in connection with rendering their services. The tax applies to the sale by the mortician of all tangible personal property so furnished.

2. The tax applies to:

(a) The fair retail value of clothing, boxes, vaults and any other property furnished in addition to that customarily furnished with standard service.

(b) Acknowledgment cards and appreciation cards, when furnished as part of the regular service, or when the family is charged for them.

(c) All other items of tangible personal property which are furnished by the mortician, computed upon 50 percent of the remainder of the charge for the funeral, except as provided in subsection 3.

3. If the items of tangible personal property are segregated in the billings to customers and specific charges are made, the tax applies to the charges.

4. The tax does not apply to accommodation cash advances for such items as cemetery charges, newspaper notices, railroad tickets, ministerial fees and flowers.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 7, eff. 6-7-68; A 7-8-80]

NAC 372.290 Morticians: Transactions with other states. (NRS 360.090, 372.725)

1. When death occurs in this State and burial is to occur in another state, the casket and other personal property purchased in this State for the preparation and delivery of the body to its ultimate burial destination are subject to Nevada sales tax.

2. Where burial occurs in this State, through ashes in urn, entombment in mausoleum or ground burial, the casket, urn or other materials purchased outside this State are not purchased for use in Nevada and are not subject to use tax. The taxable use has occurred outside this State.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 7, eff. 6-7-68; A 7-8-80]

NAC 372.300 Morticians: Funeral expenses paid by United States. (NRS 360.090, 372.325, 372.725)

1. If a portion of the expense of a funeral is paid by the United States directly to the mortician, the transaction is regarded as a sale to the United States and is exempt from the tax to the extent of the payment.

2. Payment to a relative or other person as reimbursement for a portion of the funeral expense is not a sale to the United States and is not exempt from the tax.

3. In cases where the family assigns the death benefits due from the Veterans’ Administration or Social Security to the mortician, the United States is not considered the purchaser and no part of the transaction is considered a tax-exempt sale to the United States.

4. Only when the governmental agency makes a payment directly to the mortician is that portion of the funeral expense considered exempt from the tax.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 7, eff. 6-7-68; A 7-8-80]

NAC 372.305 Motor vehicles originally bought for resale: Use or loan of motor vehicle; sale of motor vehicle. (NRS 360.090, 372.725)

1. Except as otherwise provided in subsections 2 and 3, if a vehicle dealer who purchases and gives a resale certificate for a motor vehicle uses the motor vehicle or loans the motor vehicle to any person, the use or loan of the motor vehicle is taxable to the dealer and the measure of the tax is the purchase price of the motor vehicle by the dealer.

2. A use or loan described in subsection 1 is not taxable to the dealer if each use or loan of the motor vehicle by the dealer is:

(a) Exempt from taxation pursuant to NRS 372.327; or

(b) Made for the purpose of retention, demonstration or display of the motor vehicle while holding it for sale in the regular course of business.

3. The loan of a motor vehicle by a vehicle dealer will be presumed to be made for the purpose of retention, demonstration or display of the motor vehicle while holding it for sale in the regular course of business if:

(a) The motor vehicle is being operated with a special license plate issued by the Department of Motor Vehicles in accordance with NRS 482.320 and 482.330 and NAC 482.032 to 482.048, inclusive;

(b) The cumulative period of all the loans of the motor vehicle by the dealer is less than 180 days; and

(1) The vehicle identification number and stock number of the motor vehicle;

(2) The number of the special license plate; and

(3) Each date on which the special license plate was displayed on the motor vehicle.

4. If the motor vehicle is sold following its taxable use or loan pursuant to this section to a purchaser who receives delivery of the motor vehicle in this State, the sales tax applies to the sales price of the motor vehicle to the purchaser without any deduction or credit for the use tax paid by the dealer pursuant to this section.

5. As used in this section:

(a) “Dealer” or “vehicle dealer” has the meaning ascribed to it in NRS 482.020.

(b) “Loan” means the gratuitous transfer of possession or control of a motor vehicle for a fixed or indeterminate term.

(Added to NAC by Tax Comm’n by R129-13, eff. 10-24-2014)

NAC 372.320 Oculists, optometrists and dispensing opticians. (NRS 360.090, 372.055, 372.725)

1. Oculists and optometrists are the consumers of ophthalmic materials including eyeglasses, frames and lenses used or furnished in the performance of their professional services in the diagnosis, treatment or correction of conditions of the human eye. The tax applies to the sale of the materials to oculists and optometrists.

2. The tax applies to the entire charge made by a dispensing optician for eyeglasses and related products furnished in filling a prescription.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 10, eff. 3-1-68]

NAC 372.330 Photographers. (NRS 360.090, 372.725, 372.729)

1. As used in this section, “photographer” means a person who is primarily engaged in the creation of visual images that are formed by the chemical action of light or other radiation on sensitive film for which he or she receives consideration.

2. The services performed by a photographer in the creation of a visual image represent the rendering of professional services and are exempt from taxation. Such professional services include, without limitation:

(a) Consultation, visualization, set-up, exposure and processing;

(b) The initial rendering of a visual image and the original proofs that are furnished by a photographer to a customer; and

3. A photographer who sells tangible personal property to a customer, such as contact sheets, duplicates or enlargements, is considered a retailer with respect to such sales and the gross receipts from those sales are subject to the sales tax.

4. A photographer is the consumer of the tangible personal property that the photographer uses in rendering his or her professional services and shall pay the tax at the time he or she purchases such property. Such property includes, without limitation, photographic equipment and accessories, film and chemicals.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 12, eff. 3-1-68]—(NAC A 11-12-93; R049-01, 11-1-2001)

NAC 372.350 Premiums; gifts; complimentary food and beverages. (NRS 360.090, 372.725)

1. Tangible personal property which is delivered as a premium, together with other merchandise which is sold, if the obtaining of the premium by the purchaser is certain and not dependent upon chance or skill, shall be deemed a sale of both the premium and the merchandise. The tax applies to the gross receipts received from the purchaser for the goods and the premium except when the premium is delivered along with a tax-exempt item. In such case the tax applies to the gross receipts from the sale of the premium, which shall be deemed to be the cost of the premium to the retailer, in the absence of any evidence that the retailer received a larger sum for the premium.

2. The tax applies to tangible personal property which is purchased for resale and given away in the form of gifts, as a use of the property other than retention, demonstration or display, while holding it for sale in the regular course of business.

3. The tax applies to tangible personal property purchased for resale and given away in the form of complimentary food and beverages as a use of the property other than retention, demonstration or display while holding it for sale in the regular course of business. The taxable cost of the complimentary food and beverage includes the cost of the food or beverage and other ingredients, including, but not limited to, napkins, straws and condiments.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 76, eff. 1-10-74]

NAC 372.365 Producers. (NRS 360.090, 372.725)

1. As used in this section, the term “producer” means a film or video producer, recording studio, postproduction edit facility, or audio record and mix facility, or any combination thereof.

2. The gross receipts of a producer from engaging in the business of applying creative services to the development and communication of an idea, concept, opinion, perspective, point of view, image, sound or message, are not subject to the sales tax.

3. Purchases of tangible personal property by a producer are subject to the sales tax if such property is acquired for use in the operation of the business and will not be resold in the normal course of the business. As an example of the application of this section, if a producer purchases capital equipment, materials, supplies or other devices for use in the business, the purchase is subject to the sales tax.

4. When a producer engages in rendering creative services by creating production materials or rendering creative production services, including the development of advertising materials on behalf of a client for delivery to the print or broadcast media, the gross receipts from such creative services are not subject to the sales tax if the charges for those services are separately stated on the invoice. The producer is the consumer, not the retailer, of any tangible personal property which is used incidentally in rendering the creative service. The sales tax applies to the purchase of tangible personal property by a producer. As an example of the application of this subsection, if a postproduction facility creates an information video about a hotel and as a part of the creative process, the postproduction facility purchases various props, graphics, and stock footage, performs writing and research, and adds music and sound effects to communicate the idea, concept, opinion, perspective, point of view, image, sound or message, and then the postproduction facility prepares a film or tape of the finished concept, which the producer provides to the hotel, the sale of the first rendering videotape is not subject to the sales tax because the substance of the transaction is the expression of the idea, concept, opinion, perspective, point of view, image, sound or message and the rendering of creative services. In this example, the postproduction facility must pay the sales tax at the time of purchase on all materials for use in the production of the videotape.

5. The gross receipts from any duplication, copying or regeneration of the original expression of the idea, concept, opinion, perspective, point of view, image, sound or message beyond the first rendering are subject to the sales tax. As an example of the application of this subsection, if a postproduction facility creates an information video about a casino, the first rendering is not subject to the sales tax because the substance of the transaction was the performance of creative services but if the casino wishes to purchase 400 copies of the videotape, the gross receipts from the sale of each duplicate, copy or regeneration after the first rendering are subject to the sales tax.

(Added to NAC by Tax Comm’n, eff. 11-12-93)

NAC 372.367 Property purchased for use as prize in raffle, contest or game of chance. (NRS 360.090, 372.725)

1. A person who purchases tangible personal property for the purpose of awarding the property as a prize to the winner of a raffle, contest or game of chance is considered to be the purchaser or consumer of that property for purposes of the sales or use tax. Except as otherwise provided in subsection 2, that person shall:

(a) Pay sales tax to the retailer; or

(b) If the property is acquired from a retailer outside this State who is not registered to collect sales and use tax for the State of Nevada, remit use tax to the Department at the time of purchase.

2. A retailer holding a Nevada seller’s permit who is informed by the purchaser that the tangible personal property is being purchased for the purpose of awarding it as a prize to the winner of a raffle, contest or game of chance may collect the sales tax from the winner of the prize in lieu of the purchaser if:

(a) The retailer and the purchaser agree by contract that the retailer will retain title, possession and risk of loss of the property until the prize is awarded;

(b) The winner of the prize takes possession of and title to the property at the retailer’s place of business; and

(c) The rules of the raffle, contest or game of chance state prominently and specifically that the winner of the raffle, contest or game of chance will be required to pay Nevada sales tax upon receipt of the property given as the prize.

3. A retailer who collects sales tax from the winner of a prize pursuant to subsection 2 must base the amount of the tax collected upon the sales price of the property to the purchaser, regardless of whether a sale of the prize to the winner would be exempt from the tax. If the winner of the prize elects to substitute another item of tangible personal property which is offered for sale by the retailer, the tax due will be calculated on the basis of the higher priced item.

(Added to NAC by Tax Comm’n, eff. 8-23-96)

NAC 372.370 Property used in manufacturing. (NRS 360.090, 372.725)

1. The tax applies to the sale of tangible personal property to persons who purchase it for the purpose of use in manufacturing, producing or processing tangible personal property and not for the purpose of physically incorporating it into the manufactured article to be sold. An example is a chemical used as a catalyst or otherwise to produce a chemical or physical reaction such as the production of heat or the removal of impurities.

2. The tax does not apply to sales of tangible personal property to persons who purchase it for the purpose of incorporating it into the manufactured article to be sold. An example is a raw material which becomes part of the manufactured article.

3. When a manufacturer purchases the materials to fabricate or purchases complete dies, patterns, jigs, tooling, photo engravings or other manufacturing aids for the account of a customer who acquires title upon delivery, or upon the completion of the fabrication, the manufacturer will be regarded as having purchased the property either as an agent of or for resale to the customer. An example is when, pursuant to the purchase order of a customer, a manufacturer obtains a particular pattern, die or tool which is required to manufacture the goods desired by the customer and identifies the special tool separately from the billing for the goods and either delivers it to the customer or holds it as bailee for the customer, it will be presumed that the manufacturer acquired the property as an agent of the customer or for immediate resale to him or her.

4. The tax applies either to the sale to the manufacturer as an agent of his or her customer or to the sale by the manufacturer to the customer.

5. In determining whether the manufacturer purchases the property as an agent of or for resale to his or her customer, the terms of the contract with the customer, the custom of usage of the trade and any other pertinent factors will be considered.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 9, eff. 3-1-68]

NAC 372.380 “Producing,” “fabricating” and “processing” defined for NRS 372.060; separation of charges for labor from charges for tangible personal property required. (NRS 360.090, 372.060, 372.725)

1. As used in section 5 of chapter 397, Statutes of Nevada 1955, (NRS 372.060), “producing,” “fabricating” and “processing”:

(a) Include any operation which results in the creation or production of tangible personal property or which is a step in a process or series of operations resulting in the creation or production of tangible personal property.

(b) Do not include any operation which constitutes merely the repair or reconditioning of tangible personal property to refit it for the use for which it was originally produced.

2. Charges for tangible personal property and the labor required for installation or application must be stated separately on the invoice. The tax is only applicable to the portion of the invoice that represents tangible personal property.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 55, eff. 3-1-68]—(NAC A 9-16-92)

NAC 372.390 Repairing and reconditioning: Generally. (NRS 360.090, 372.725)

1. Except as provided in NAC 372.420 and 372.450, repairers are retailers of parts and materials furnished in connection with repair work in which the value of the parts and materials is substantial in relation to the total charge. Those repairers who segregate on invoices and in their records the fair retail-selling price of the parts and materials from the charges for labor, installation and other service charges must collect the tax on the retail selling price of the parts and materials. If the labor and other service charges are not separately stated, the tax applies to the entire charge made to the customer.

2. The repairers are consumers of parts and materials furnished in connection with repair work in which the value of the parts and materials is insubstantial in relation to the total charge if no separate charge is made for the parts and materials. To be considered a consumer of the parts and materials used in connection with the repair services rendered, the repairer must pay the tax on the purchase and must not give a resale certificate to his or her suppliers. Even though the value of the parts and materials is insubstantial in relation to the total charge, repairers will be considered retailers, and not consumers, if a separate price is stated for the parts and materials.

3. If the method of repairing or reconditioning certain tangible personal property involves commingling property delivered to a repairer or reconditioner with similar property so that the customer received repaired or reconditioned property which may not be the identical property delivered to the repairer or reconditioner but which is exactly the same kind of property or derived from exactly the same kind of property as that so delivered, the tax applies to the amount charged by the repairer or reconditioner for the repaired or reconditioned property.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 16, eff. 6-14-68]—(NAC A by R110-12, 11-1-2012)

NAC 372.400 Repairing and reconditioning: Examples of parts and materials which are substantial or insubstantial in value in relation to total charge. (NRS 360.090, 372.725)

1. Repairs to motor vehicles, airplanes, machinery, appliances, farm implements, boats, radios and television sets and the repair of furniture, involving expensive cushion filling, brocades or other materials for covering, are jobs in which the parts and materials are substantial in value in relation to the total charge and must be separately stated and taxed.

2. Repairs to tires, tubes, clothing, watches, jewelry and shoes and the repair of a table by filling a dent with wood putty or filler, or sectioning of the wood with similar wood, staining and varnishing, are repair jobs in which the parts and materials are insubstantial in value in relation to the total charge, and the tax must be paid on the purchase of the parts and materials by the repairer.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 16, eff. 6-14-68]

NAC 372.420 Repairing and reconditioning: Signs. (NRS 360.090, 372.725)

1. Except as provided in this subsection, if labor is the greater part of the charge for the repair of a sign, the repairer may elect to pay the tax on the materials used by him or her rather than charge sales tax to the customer on the selling price of the materials. If materials are billed separately the sales tax applies to the selling price of the materials.

2. If materials constitute the greater part of the repair charge the materials must be billed separately and the sales tax applies to the selling price of the materials.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 15, eff. 6-14-68]

NAC 372.450 Painters, polishers and finishers; repainters and refinishers. (NRS 360.090, 372.725)

1. The tax applies to charges for painting, polishing and otherwise finishing tangible personal property in connection with the production of a finished product for consumers, whether the article to be finished is supplied by the customer or by the finisher. The tax does not apply to charges for painting or finishing real property.

2. The tax does not apply to charges for repainting or refinishing used articles. The tax applies to the sale to the refinisher of the paint and other materials used in the process, as he or she is regarded as the consumer of the property. If the refinisher uses paint or other materials purchased under a resale certificate, or without payment of the use tax if purchased outside the State or in interstate commerce, the refinisher must report and pay the tax measured by the cost of the materials to him or her.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 58, eff. 3-1-68]

NAC 372.460 Replacement parts and materials. (NRS 360.090, 372.385, 372.725)

1. The sale of tangible personal property by a retailer includes the furnishing of replacement parts or materials to repair or replace the tangible personal property pursuant to the provisions of a warranty or guaranty included in the contract of sale. Sales and use taxes do not apply to the purchase and use of replacement parts or materials by the retailer if the purchase and use of those parts or materials was made for the repair or replacement of tangible personal property pursuant to the provisions of the warranty or guaranty.

2. If a lessor leases or rents tangible personal property to a:

(a) Retailer who will furnish the tangible personal property to a customer; or

(b) Customer of a retailer,

Ê pursuant to the provisions of a warranty or guaranty included in a contract of sale, the lessor must not include the gross receipts from that lease or rental of the tangible personal property in the gross receipts that are subject to the use tax. The lessor shall maintain documentation that indicates that the tangible personal property was leased or rented to a retailer, or the customer of a retailer, pursuant to the provisions of a warranty or guaranty included in a contract of sale.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 40, eff. 3-1-68]—(NAC A by R025-99, 1-27-2000)

NAC 372.470 Signs, showcards and posters. (NRS 360.090, 372.725)

1. The tax applies to the total charges for painting signs, showcards and posters, whether or not the materials are furnished by the painter or the customer, and whether or not the charge for labor is separately stated. The labor charges are fabrication labor charges which are subject to the tax.

2. The tax does not apply to charges for painting or lettering on real property. The painter or letterer is the consumer of the materials used in the work and the tax applies to him or her on the sales price of those materials.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 15, eff. 6-14-68]

NAC 372.480 Taxidermists. (NRS 360.090, 372.725)

1. Except as provided in subsection 2, taxidermists are the consumers of the materials used in repairing, stuffing, and mounting any parts of animals, birds, fish or other objects furnished by their customers.

2. The taxidermist is the retailer of the materials if a separate charge for them is made on the invoices to the customers at the fair retail sales price.

3. The tax applies to all retail sales by taxidermists of skins, heads, mountings or other tangible personal property.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 8, eff. 3-1-68]

NAC 372.500 Vending machines: Operator to obtain permit, report and pay tax; stickers required. (NRS 360.090, 372.725)

1. Each person who operates vending machines which dispense tangible personal property of a kind the gross receipts from the retail sale of which are subject to tax shall obtain a permit to engage in the business of selling tangible personal property and shall report and pay to the State the tax upon the gross receipts from the sales made through the machines.

2. One permit is sufficient for all the machines of one operator.

3. A sticker showing the name of the vendor and Nevada sales tax permit number must be affixed in a conspicuous place upon each vending machine.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 25, eff. 6-14-68]

NAC 372.520 Vending machines: Sales price; computation of tax. (NRS 360.090, 372.725) Each operator of vending machines shall establish the sales price of the items in the machines with the Commission and if the Commission is satisfied that the sales price does not include the tax imposed, he or she may compute his or her tax on the basis of that sales price. If permission is granted to compute the tax on this basis, he or she shall post a notice on each vending machine notifying the public of this fact. The notice must be in substantially the following form:

“The sales price of any item sold through this machine includes applicable Nevada State and Local Sales Taxes.”

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 25, eff. 6-14-68]

NAC 372.530 Producers of X-ray film for diagnostic use. (NRS 360.090, 372.725) Producers of X-ray film for diagnostic use are the consumers of the materials and supplies used in the production of the film. The tax applies to the sale of the materials and supplies to the laboratory which produces the film whether it is operated by a physician, surgeon, dentist or other person.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 14, 3-1-68]

BAD DEBT DEDUCTION

NAC 372.532 “Bad debt deduction” defined. (NRS 360.090, 372.368, 372.725, 374.373, 374.725) As used in NAC 372.532 to 372.539, inclusive, unless the context otherwise requires, “bad debt deduction” means the deduction from the taxable sales of a retailer provided pursuant to NRS 372.368 and 374.373 for the amount of the sales price of a sale which the retailer is unable to collect.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

NAC 372.534 Claim for bad debt deduction. (NRS 360.090, 372.368, 372.725, 374.373, 374.725) A retailer who wishes to claim a bad debt deduction must claim the deduction on a return filed with the Department not later than 12 months after the last day of the month in which:

1. The retailer wrote off the bad debt in the business records of the retailer that are maintained in the ordinary course of the retailer’s business and became eligible to claim a deduction for the bad debt pursuant to section 166 of the Internal Revenue Code, 26 U.S.C. § 166, if the retailer is required to file a federal income tax return; or

2. The bad debt was written off in the records and books of account of the retailer in accordance with generally accepted accounting principles, if the retailer is not required to file a federal income tax return.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

NAC 372.535 Maintenance and availability of records relating to bad debt. (NRS 360.090, 372.368, 372.725, 372.735, 374.373, 374.725, 374.740)

1. Pursuant to NRS 372.735 and 374.740, a retailer who claims a deduction for a bad debt deduction shall maintain a record of the following information relating to the bad debt:

(a) The name of the debtor.

(b) The date on which the bad debt was incurred.

(d) The amount of sales tax remitted to the Department on the sale of tangible personal property giving rise to the bad debt.

(e) The portion of the bad debt representing:

(1) Interest;

(2) Any finance charge;

(3) Any service charge; and

(4) Any other amount charged as part of the sale which was not subject to sales tax.

(f) If the retailer is required to file a federal income tax return:

(1) The date on which the retailer wrote off the bad debt in the business records of the retailer that are maintained in the ordinary course of the retailer’s business and became eligible to claim a deduction for the bad debt pursuant to section 166 of the Internal Revenue Code, 26 U.S.C. § 166;

(2) The amount of the deduction claimed for the bad debt pursuant to section 166 of the Internal Revenue Code; and

(3) Any other evidence that the retailer claimed a deduction pursuant to section 166 of the Internal Revenue Code for the uncollectable portion of the bad debt on which sales tax was originally paid.

(g) If the retailer is not required to file a federal income tax return:

(1) The date on which the debt was written off the records and books of account of the retailer in accordance with generally accepted accounting principles;

(2) The amount of the debt written off the records and books of account of the retailer on which sales tax was originally paid; and

(3) Any other evidence that the uncollectable portion of the debt was written off the records and books of account of the retailer in accordance with generally accepted accounting principles.

(h) The amount of the bad debt deduction claimed by the retailer for each bad debt.

2. Upon request by the Department, a retailer shall provide to the Department a record maintained by the retailer pursuant to subsection 1.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

NAC 372.536 Value of property sold that has been repossessed. (NRS 360.090, 372.368, 372.725, 374.373, 374.725) For the purposes of NRS 372.368 and 374.373, the value of property sold that has been repossessed by the retailer is the actual cash value of the repossessed property.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

NAC 372.538 Method for determining actual cash value of property other than motor vehicle; retention of books and records substantiating actual cash value. (NRS 360.090, 372.368, 372.725, 372.735, 374.373, 374.725, 374.740)

1. Except as otherwise provided in NAC 372.539, for the purposes of NRS 372.368 and 374.373 and NAC 372.536, the actual cash value of property which has been repossessed is:

(a) If the retailer sells the repossessed property in an arm’s length transaction, the sales price of the repossessed property, less the direct cost of refinishing or restoring the property to saleable condition before the sale and any direct auction expenses paid to a third party; or

(b) If the retailer places the repossessed property into his or her resale inventory, the wholesale value of the property as recorded by the retailer in the records of the retailer’s resale inventory, less the direct cost to repossess the property and the direct cost of refinishing or restoring the property to saleable condition.

2. Except as otherwise provided in NAC 372.539, if a retailer repossesses property sold by the retailer, the retailer must retain with the books and records of the retailer documentation sufficient to substantiate the actual cash value of the property at the time it was repossessed, including, without limitation:

(a) If the property is sold at auction or to a person who purchases the property for the purpose of resale, sales invoices for that sale;

(b) Pictures documenting the condition of the property at the time of repossession;

(c) Inspection documents prepared by the retailer at the time of repossession documenting any damage to the property or any parts missing from the property;

(d) Any receipts from a third party for the refinishing or restoring of the property to saleable condition before resale;

(e) Any receipts from a third party for direct auction expenses; and

(f) If the property is placed in the resale inventory of the retailer, accounting records documenting the recorded wholesale value of the property at the time it is placed in the resale inventory of the retailer.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

NAC 372.539 Method for determining actual cash value of motor vehicle; retention of books and records substantiating actual cash value. (NRS 360.090, 372.368, 372.725, 372.735, 374.373, 374.725, 374.740)

1. For the purposes of NRS 372.368 and 374.373 and NAC 372.536, the actual cash value of a motor vehicle that has been repossessed by a retailer is the wholesale price published in a price guide recognized in the retailer’s industry for a motor vehicle of the same make, model and year which is in the same condition as the actual condition of the motor vehicle at the time the motor vehicle was repossessed.

2. The cost to repossess or improve the condition of a motor vehicle which has been repossessed may not be deducted from the actual cash value of the motor vehicle.

3. A retailer who claims a bad debt deduction for a motor vehicle that has been repossessed by the retailer shall retain, in the dealer jacket for the motor vehicle and with the books and records of the retailer, documentation substantiating the actual cash value of the motor vehicle at the time it was repossessed, including, without limitation:

(a) A copy of the published wholesale price which was used to determine the actual cash value of the motor vehicle pursuant to subsection 2.

(b) If the retailer receives a check from an insurer for the partial loss of the motor vehicle, a copy of that check.

(d) If the actual cash value of the motor vehicle was determined pursuant to subsection 1, documentation demonstrating the condition of the motor vehicle at the time of repossession which may include, without limitation:

(1) Pictures documenting the condition of the motor vehicle at the time of repossession; or

(2) Inspection documents prepared by the retailer of the motor vehicle substantiating the condition of the motor vehicle at the time of repossession.

4. If a motor vehicle that was repossessed by a retailer is sold by the retailer, the retailer must collect and remit sales tax on the sales price of the motor vehicle from the new sale.

5. If a retailer receives full payment from an insurance company on a debt for a motor vehicle that has been involved in an accident, the retailer may not claim a bad debt deduction for the sale of the motor vehicle.

(Added to NAC by Tax Comm’n by R191-18, eff. 12-19-2018)

EXEMPTIONS

NAC 372.540 Seeds and plants. (NRS 360.090, 372.280, 372.725)

1. The tax does not apply to sales of seeds, the products of which will be used as feed for any form of animal life of a kind the products of which ordinarily constitute food for human consumption or are to be sold in the regular course of the purchaser’s business.

2. The tax applies to sales of nonannual plants, such as fruit trees and berry vines, whether or not the products will be sold or used as food for human consumption, unless the plants themselves, as distinguished from their products, are purchased for resale.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 29, eff. 3-1-68]

NAC 372.605 Food: “Prepared food intended for immediate consumption” interpreted. (NRS 360.090, 360B.110, 372.284, 372.725)

1. As used in NRS 372.284, the Department will interpret the term “prepared food intended for immediate consumption” to:

(a) Mean prepared food, as defined in NRS 360B.460, which is deemed to be intended for immediate consumption. Subsections 1, 2 and 3 of NRS 360B.460 each describe a separate type of prepared food.

(b) Exclude, if sold without eating utensils provided by the seller:

(1) Two or more food ingredients mixed or combined by the seller for sale as a single item and sold:

(I) By a seller whose primary NAICS classification is within Subsector 311, Food Manufacturing; or

(II) In an unheated state by weight or volume as a single item.

(2) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish pastries, cakes, tortes, pies, tarts, muffins, bars, cookies and tortillas.

(3) Food ordinarily requiring cooking, as opposed to reheating, by the consumer before consumption.

(c) Exclude food sold as a single item which, according to the nutrition labeling information required by 21 C.F.R. § 101.9, contains four or more servings per container, if the seller maintains records of each such sale as are required by the Department pursuant to NRS 372.735.

2. For the purposes of this section, “NAICS classification” means classification under the North American Industry Classification System, 2007 Edition, which is hereby adopted by reference. A copy of the publication is available, free of charge, from the U.S. Census Bureau at the Internet address http://www.census.gov/eos/www/naics/index.html.

(Added to NAC by Tax Comm’n, 1-12-96, eff. 7-1-96; A by R021-08, 4-17-2008; R104-09, 11-25-2009; R020-16, 6-21-2017; R056-18, 6-8-2020)

NAC 372.607 Food: Determination whether food sold at retail by seller is sold with eating utensils provided by seller; method for calculating percentage of prepared food sold by seller. (NRS 360.090, 360B.110, 372.284, 372.725) For the purpose of determining whether food sold at retail by a seller is a food sold with eating utensils provided by the seller pursuant to subsection 3 of NRS 360B.460 and NAC 372.605:

1. Except as otherwise provided in subsection 2, a seller who made retail sales of prepared food during a tax year or business fiscal year, whichever is selected by the seller, as soon as practicable after accounting records for that tax year or business fiscal year, as applicable, are available to the seller but not later than 90 days after the beginning of the seller’s next tax year or business fiscal year, as applicable, shall calculate a percentage by:

(a) Calculating the sum of:

(1) The total dollar value of all retail sales of food which is described in subsection 1 of NRS 360B.460 and which was sold at retail by the seller during the immediately preceding tax year or business fiscal year, as applicable;

(2) The total dollar value of all retail sales of food which is described in subsection 2 of NRS 360B.460 and which was sold at retail by the seller during the immediately preceding tax year or business fiscal year, as applicable; and

(3) The total dollar value of all retail sales of food which is incapable of being transferred to the purchaser without the use of a plate, bowl, glass or cup, including, without limitation, soft drinks dispensed from a fountain and food dispensed at a salad bar, and which was sold at retail by the seller during the immediately preceding tax year or business fiscal year, as applicable; and

(b) Dividing the amount calculated pursuant to paragraph (a) by the total dollar value of all retail sales of food by the seller, including, without limitation, prepared food, candy, soft drinks and dietary supplements.

Ê If, during a tax year or business fiscal year, as applicable, a seller made retail sales of any type of food described in paragraph (a) at more than one establishment, the seller must perform the calculation required by this subsection for each establishment and, for the purposes of this section, use the average of those calculations as the percentage of the seller’s sales of food that were sales of prepared food.

2. If a seller did not make any retail sales of prepared food during the immediately preceding tax year or business fiscal year, whichever is selected by the seller, or is a new business and the seller intends to make retail sales of prepared food during the seller’s current tax year or business fiscal year, the seller must calculate a percentage by:

(a) Calculating the sum of:

(1) An estimate of the total dollar value of all retail sales of food which is described in subsection 1 of NRS 360B.460 and which the seller expects to sell at retail during the current tax year or business fiscal year, as applicable;

(2) An estimate of the total dollar value of all retail sales of food which is described in subsection 2 of NRS 360B.460 and which the seller expects to sell at retail during the current tax year or business fiscal year, as applicable; and

(3) An estimate of the total dollar value of all retail sales of food which is incapable of being transferred to the purchaser without the use of a plate, bowl, glass or cup, including, without limitation, soft drinks dispensed from a fountain and food dispensed at a salad bar, and which the seller expects to sell during the current tax year or business fiscal year, as applicable; and

(b) Dividing the amount calculated pursuant to paragraph (a) by an estimate of the total dollar value of all retail sales of food, including, without limitation, prepared food, candy, soft drinks and dietary supplements, which the seller expects to make during the current tax year or business fiscal year, as applicable.

Ê If a seller described in this subsection intends to make retail sales of any type of food described in paragraph (a) at more than one establishment, the seller must perform the calculation required by this subsection for each such establishment and, for the purposes of this section, use the average of those calculations as the percentage of the seller’s sales of food that will be sales of prepared food. If the actual retail sales of prepared food by a seller described in this subsection during the first three months of such sales materially affect the calculation required by this subsection, the seller must perform the calculation required by this subsection using reasonable revised estimates and, for the purposes of this section, use that calculation as the percentage of the seller’s sales of food that will be sales of prepared food.

3. If the percentage calculated by a seller pursuant to subsection 1 or 2, as applicable, is 75 percent or less, food sold at retail by the seller is deemed to be food sold with eating utensils provided by the seller:

(a) If the practice of the seller for sales of that food, as represented by the seller, is to directly give or hand a utensil to the purchaser to use to consume the food being sold; or

(b) If the food being sold is incapable of being transferred without the use of a plate, bowl, glass or cup and the practice of the seller, as represented by the seller, is to make plates, bowls, glasses or cups available to the purchaser of such food, including, without limitation, by permitting a purchaser to obtain such plates, bowls, glasses or cups at a kiosk or common area.

4. If the percentage calculated by a seller pursuant to subsection 1 or 2, as applicable, is more than 75 percent, food sold at retail by the seller is deemed to be food sold with eating utensils provided by the seller if the seller:

(a) Directly gives or hands a utensil to the purchaser to use to consume the food being sold; or

(b) Makes utensils available to the purchaser, including, without limitation, by permitting the purchaser to obtain utensils at a kiosk or common area.

5. A seller who makes retail sales of prepared food shall maintain records in accordance with NRS 372.735 which are adequate to substantiate the calculations made by the seller pursuant to this section.

(Added to NAC by Tax Comm’n by R056-18, eff. 6-8-2020)

REVISER’S NOTE.

The regulation of the Nevada Tax Commission filed with the Secretary of State on June 8, 2020 (LCB File No. R056-18), the source of this section, contains the following provision not included in NAC:

“Sec. 3. This regulation, LCB File No. R056-18, is hereby amended by adding thereto the following transitory language which has the force and effect of law but which will not be codified in the Nevada Administrative Code:

1. Notwithstanding the provisions of section 1 of this regulation [NAC 372.607], a seller who made retail sales of prepared food during the tax year or business fiscal year, whichever is selected by the seller, immediately preceding the tax year or business fiscal year, as applicable, in which this regulation becomes effective shall, not later than 90 days after the date on which this regulation becomes effective [June 8, 2020], perform the calculation required by subsection 1 of section 1 of this regulation [NAC 372.607].

2. The Department of Taxation will enforce the provisions of subsections 3 and 4 of section 1 of this regulation [NAC 372.607] beginning 90 days after the date on which this regulation becomes effective [June 8, 2020]. The Department will not enforce the provisions of subsections 3 and 4 of section 1 of this regulation [NAC 372.607] prior to that date.

3. The Department shall post notice of:

(a) The date by which a seller who made retail sales of prepared food during the tax year or business fiscal year, whichever is selected by the seller, is required to make the initial calculation required by subsection 1 of section 1 of this regulation [NAC 372.607]; and

(b) The date on which the Department is required to begin enforcing the provisions of subsections 3 and 4 of section 1 of this regulation [NAC 372.607] pursuant to subsection 2,

Ê on the Internet website of the Department and make such other efforts to notify sellers of those dates as the Executive Director of the Department deems appropriate. The failure of a seller to receive notice of the dates pursuant to this subsection does not exclude the seller from compliance with any requirement relating to the imposition, collection and remittance of sales and use taxes.”

NAC 372.620 Food: Records maintained by retailers. (NRS 360.090, 372.725, 372.735) Retailers shall maintain records which separately indicate the amount of sales of food items exempt from and subject to the tax.

(Added to NAC by Tax Comm’n, eff. 1-8-86; A by R021-08, 4-17-2008)

NAC 372.625 Textbooks. (NRS 360.090, 372.287, 372.725, 372.735, 374.292, 374.725, 374.740)

1. To qualify for an exemption pursuant to NRS 372.287 and 374.292, a book must be:

(a) Authorized for use as a textbook within the Nevada System of Higher Education by the Board of Regents or its designee; and

(b) Purchased from a retailer in Nevada by a student who is enrolled at a university or college that is a part of the Nevada System of Higher Education.

2. Each retailer shall:

(a) Maintain the records of sales of exempt textbooks separately from the records of sales of other tangible personal property; and

(b) Ensure that the records of sales of exempt textbooks are adequate to substantiate the exemption.

(Added to NAC by Tax Comm’n, eff. 9-13-91)

NAC 372.630 Newspapers: Sales of property for resale; exempt transactions. (NRS 360.090, 372.315, 372.725) A sale to a publisher of tangible personal property which becomes a part of a newspaper may be deducted in computing the measure of tax either:

1. As a sale for resale if the newspaper is to be resold; or

2. As an exempt transaction if the newspaper is to be distributed by the publisher without charge.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 32, eff. 5-1-68; A 1-16-71]

NAC 372.640 Newspapers: Resale certificates. (NRS 360.090, 372.165, 372.235, 372.725)

1. A certificate in the following form may be taken from publishers by their vendors to support deductions taken pursuant to NAC 372.630:

I hereby certify that I hold valid seller’s permit number .......... issued pursuant to chapters 372, 374 and 377 of the Nevada Revised Statutes; that I am engaged in the business of selling or publishing ................................(name and type of newspaper); that the tangible personal property described in the second paragraph of this certificate, which I purchase from ................................, will be resold by me in the form of tangible personal property or will become a part of a newspaper regularly issued at average intervals not exceeding 1 week. I further certify that, in the event any of the property is used for any purpose other than that specified above or other than retention, demonstration or display while holding it for sale in the regular course of business, I will report and pay the tax measured by the purchase price of the property.

Description of the property to be purchased:

..................................................................................................................................................

Purchaser...................................................................

Address

Dated: .......... (day) of ............ (month) of ........ (year)

at.....................................................

........................................................

Signature of Authorized Purchaser

2. A publisher who makes no sales other than newspapers included within the exemption provided in section 61 of chapter 397, Statutes of Nevada 1955, (NRS 372.315) is not required to hold a seller’s permit. The above certificate form may be used with a reference in the space for the permit number to a footnote which states:

No permit held since the oversigned sells no tangible personal property other than newspapers.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 32, eff. 5-1-68; A 1-16-71]—(NAC A by Dep’t of Taxation, 9-19-90)

NAC 372.650 Newspapers: Paper and ink; photographs; type metals. (NRS 360.090, 372.315, 372.725)

1. Paper or newsprint and printer’s ink are exempt from the tax as ingredients or component parts of newspapers.

2. Photographs which are reproduced in exempt newspapers are not ingredients or component parts of the newspapers.

3. The tax applies to sales of type metals to publishers.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 32, eff. 5-1-68; A 1-16-71]

NAC 372.660 Newspapers: Advertising books, mats and mat accessories. (NRS 360.090, 372.315, 372.725)

1. Advertising mat service companies are the consumers of the mats and books which they supply to publishers. The tax applies to the sale to the companies of the mats or books, or if the companies prepare the mats or books, to the sale of the materials which become part of the mats or books.

2. Columnists and syndicators of columns, comic strips and photographs are the consumers of the mats which they supply to publishers. The tax applies to the sale of the mats to the columnist or syndicate.

3. Advertisers are the consumers of the mats which they furnish to newspapers for advertising purposes. The tax applies to the sale of the mats to the advertisers. If the advertiser acts through an advertising agency which acquires the mats for his or her account the tax applies to the sale of the mats to the agency. If the advertising agency acts as the principal in obtaining and furnishing mats to advertisers, the sale to the agency is exempt as a sale for resale, and the sale by the agency is taxable.

4. A person who obtains mats for the purpose of providing newspapers with a ready means of preparing a cut of the person’s photograph is the consumer of those mats, and tax applies to the sale of the mats to the person.

5. When a newspaper publisher purchases blank mat stock which he or she makes into mats from engravings or type for use in the newspaper, the newspaper publisher is the consumer of the stock and the tax applies to the sale of the stock to him or her. The tax also applies to sales of raw plastic materials to a publisher who uses a Fairchild, Continental or other plastic mat machine to produce the mats which he or she consumes.

6. A person who makes mats either by the mat stock process or the Fairchild, Continental or similar type process and sells them to others, without also providing an advertising, news or other service, must pay the tax on the selling price of the mats to the consumers.

7. Sales to publishers of accessories or equipment necessary to the making of mats, such as chases holders, mat backing and casting material for curved plates, are sales to consumers and the tax must be paid to the State on the selling price of the accessories and equipment.

8. Persons who sell mats to consumers are required to pay to the State the tax on the total selling price of the mats, including the charges for typography, cuts and other manufacturing aids necessary to produce and fabricate the mats, even though the aids do not become a component part of the mats.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 32, eff. 5-1-68; A 1-16-71]

NAC 372.680 Sales to United States: Unincorporated instrumentalities; incorporated instrumentalities. (NRS 360.090, 372.325, 372.725)

1. The tax does not apply to sales to:

(a) The departments of the United States such as the Department of Defense and Department of the Navy and to the various unincorporated independent offices, agencies and establishments of the government.

(b) Corporations which are wholly owned either by the United States or by other corporations which are wholly owned by the United States.

2. The tax applies to sales to such corporations as national banks, joint stock land banks, federal reserve banks, federal savings and loan associations, and federal land banks, which are not wholly owned by the United States, or which are not wholly owned by other corporations wholly owned by the United States.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 54, eff. 3-1-68; A 5-26-78]—(NAC A by R181-99, 5-16-2000)

NAC 372.690 Sales to United States: Army, Navy and Selective Service System. (NRS 360.090, 372.325, 372.725)

1. The tax applies to sales to persons in the Army or Navy service of the United States, whether or not the merchandise is billed through a ship’s service store, post exchange or similar organization.

2. The tax does not apply to sales to:

(a) Army post exchanges;

(b) Navy ships’ service stores;

(d) Officers’ messes established pursuant to Navy Regulations, Articles 1435-1440;

(e) The Army or Navy of merchandise purchased from unit and similar funds if the expenditures are made:

(1) In accordance with Army or Navy regulations; and

(2) For the general benefit of Army or Navy personnel; and

(f) State procurement officers for the Selective Service System or to chairs of the local boards or boards of appeal of the Selective Service System when made pursuant to purchase orders (DSS-Form 258) prescribed by paragraph 523 et seq. of the Selective Service regulations.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 54, eff. 3-1-68; A 5-26-78]

NAC 372.695 Sales to State of Nevada: Applicability to credit union. (NRS 360.090, 372.325, 372.725)

1. The exemption provided in subsection 3 of section 50 of chapter 397, Statutes of Nevada 1955, (NRS 372.325), applies to a credit union chartered by this State pursuant to the provisions of chapter 672 of NRS as an instrumentality of the State.

2. This exemption does not extend to a vendor who finances purchases through the credit union.

(Added to NAC by Tax Comm’n, eff. 8-2-90)

NAC 372.698 Sales of certain medical devices to governmental entities: “Medical device” construed. (NRS 360.090, 360B.110, 372.725, 372.7285, 374.725, 374.731) For the purpose of carrying out NRS 372.7285 and 374.731, the Department will construe the term “medical device” to include durable medical equipment and mobility enhancing equipment.

(Added to NAC by Tax Comm’n by R021-08, eff. 4-17-2008)

NAC 372.700 Charitable, religious or educational organizations: Letters of exemption. (NRS 360.090, 372.348, 372.725)

1. An organization requesting exempt status must submit to the Department an application on a form prescribed by the Department and copies of:

(a) Its bylaws;

(b) Its articles of incorporation;

(c) Financial information which provides verifiable sources of income and expenditures, which may include, without limitation, financial statements and independent audit reports;

(d) Letters of exemption issued to it by any governmental agency;

(e) If the application is for a charitable organization, an outline of its charitable activities, fund raisers and goals, and a copy of its business or strategic plan must be attached; and

(f) Any other information which the Department deems relevant.

2. Upon approval of an application, the Department will issue a letter of exemption. The letter is not transferable. The organization must notify the Department of changes to the name, address, telephone number or responsible person of the organization. Each organization must apply for the renewal of its letter of exemption every 5 years. The Department will mail a renewal application to the last known address of the organization at least 90 days before the expiration of the letter of exemption. Failure to receive a renewal application does not extend the validity of the exemption beyond the 5 years.

3. The Department may deny an application for exemption if it finds that:

(a) The organization has failed to submit sufficient information on which to grant an exemption; or

(b) The organization does not meet the standards for exemption.

4. The Department may withdraw the letter of exemption issued to any organization if the Department finds that:

(a) The organization is no longer engaged in charitable, religious or educational pursuits;

(b) The organization has ceased to comply with the standards for exemption; or

5. A charitable, religious or educational organization may petition the Commission for reconsideration of any action by the Department denying or withdrawing a letter of exemption. Upon reconsideration, the Commission may grant or reissue the letter of exemption if the organization has presented satisfactory evidence that it complies with the standards for exemption.

6. As used in this section, “standards for exemption” means the criteria set out in this section and NRS 372.326 and 372.3261.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 78, eff. 9-17-80]—(NAC A by R084-97, 11-26-97; R181-99, 5-16-2000)

NAC 372.701 “Church, synagogue or other place of religious worship” construed. (NRS 360.090, 372.3261, 372.725) The Department will construe the term “church, synagogue or other place of religious worship” as used in paragraph (b) of subsection 2 of NRS 372.3261 to mean a place which:

1. Is properly zoned for religious worship; and

2. Has unrestricted public access on scheduled days of worship.

(Added to NAC by Tax Comm’n by R181-99, eff. 5-16-2000)

NAC 372.702 Apprenticeship programs. (NRS 360.090, 372.3261, 372.725) A program of apprenticeship in this State that requests exempt status must be eligible for registration and approval by the State Apprenticeship Council pursuant to NRS 610.144.

(Added to NAC by Tax Comm’n by R181-99, eff. 5-16-2000)

NAC 372.704 Application of exemption to property sold, shipped pursuant to sales contract or delivered outside State; application of tax to property sold or delivered to purchaser within State. (NRS 360.090, 372.335, 372.725)

1. The sales tax applies to every retail sale of tangible personal property in this State unless the sale is exempt from taxation pursuant to a statutory exemption or taxation of the sale is prohibited by the United States Constitution. A retail sale in this State is not exempt from taxation for the reason that the sale follows a movement of the property into this State or the sale precedes the removal of the property sold from this State. If title to the property sold passes to the purchaser at a point outside this State, or if for any other reason the sale occurs outside this State, the sales tax does not apply, regardless of the extent of the retailer’s participation in this State in relation to the transaction. The retailer has the burden of proving facts establishing the right to an exemption.

2. Except as otherwise provided in subsection 4, sales tax applies when the property sold is delivered to the purchaser or the purchaser’s representative in this State, whether or not the disclosed or undisclosed intention of the purchaser is to transport the property to a point outside this State, and whether or not the property is actually so transported. When the property is delivered to the purchaser in this State, it is immaterial that the:

(a) Contract of sale called for the shipment by the retailer of the property to a point outside this State.

(b) Property was made to specifications for out-of-state jobs.

(d) Goods are delivered to the purchaser in this State via a route a portion of which is outside this State.

3. Regardless of the documentary evidence held by the retailer to show delivery of the property was made to a carrier for shipment to a point outside the State, the tax will apply if the property is diverted in transit to the purchaser or his or her representative in this State, or for any other reason the property is not delivered outside this State.

4. Sales tax does not apply when the property pursuant to the contract of sale is required to be shipped and is shipped to a point outside this State by the retailer, by means of:

(a) Facilities operated by the retailer; or

(b) Delivery by the retailer to a carrier, customs broker or forwarding agent, whether hired by the purchaser or not, for shipment to the out-of-state point.

5. As used in subsection 4, the term:

(a) “Carrier” means a person or firm regularly engaged in the business of transporting for compensation tangible personal property owned by other persons, and includes both common and contract carriers, and the United States Mail.

(b) “Forwarding agent” means a person or firm regularly engaged in the business of preparing property for shipment or arranging for its shipment.

6. A person or firm not otherwise so engaged does not become a “carrier” or “forwarding agent” within the meaning of this section solely by being designated by a purchaser to receive and ship goods to a point outside this State.

7. When property is delivered to a point outside this State to a purchaser known by the retailer to be a resident of this State or to have a business in this State, the retailer must obtain a written statement from the purchaser or the purchaser’s authorized representative that the property is not being purchased for storage, use or other consumption in this State. The sale is subject to the sales tax if the retailer does not obtain such a statement or provide other satisfactory evidence to the Department establishing that the property was not purchased for storage, use or other consumption in this State.

(Added to NAC by Tax Comm’n by R081-97, eff. 11-14-97)

NAC 372.708 Vehicle delivered to nonresident purchaser within State; attached accessories and specialty items. (NRS 360.090, 372.335, 372.725, 372.7263)

1. The Department will consider the sale of a vehicle in this State by a vehicle dealer to a nonresident which is delivered to the nonresident purchaser in Nevada to be exempt from the gross receipts subject to the sales tax if at the time of the sale the purchaser:

(a) Purchases a special permit issued by the Department of Motor Vehicles pursuant to subsection 1 of NRS 482.3955 for the purpose of removing the vehicle from Nevada; and

(b) Executes an affidavit in a form prescribed by the Department in which the purchaser affirms under oath that the purchaser is not a resident of Nevada and will be physically removing the vehicle from the State permanently within 15 days after delivery of the vehicle to the purchaser.

2. Any accessory or specialty item affixed or attached to a vehicle to which the provisions of subsection 1 apply is also exempt from the tax. To qualify for this exemption, the dealer must sell the accessory or specialty item and prepare an invoice of those items at the time the dealer sells the vehicle. For the purposes of this subsection, the term “accessory or specialty item” includes, without limitation, floor mats, custom wheels and wheel covers, accessory lights, roll bars, campers, stereo components, trailer hitches and tinted windows.

3. The vehicle dealer shall retain in his or her permanent records a copy of the special permit and the original affidavit for each sale of a vehicle pursuant to subsection 1 for the period specified in NRS 372.735.

4. As used in this section, “vehicle” has the meaning ascribed to it in NRS 482.135. The term does not include a vehicle that is not required to be registered by the Department of Motor Vehicles.

(Added to NAC by Tax Comm’n by R080-97, eff. 11-14-97)

NAC 372.712 Proof of delivery outside State. (NRS 360.090, 372.335, 372.725) The following types of documentation will be accepted by the Department as proof of delivery out-of-state:

1. For companies making regular deliveries out-of-state, sales invoices showing the address to which the merchandise was shipped or delivered. As used in this subsection, the term “regular deliveries” means daily, weekly, biweekly or monthly deliveries.

2. A notarized affidavit signed by the purchaser, where the notary is not a Nevada notary, taken at the time of delivery.

3. A truck log establishing the trip into another state, that corresponds to the dated sales invoice.

4. Invoices, from out-of-state, for costs related to deliveries, including, but not limited to, meals, lodging and fuel, that correspond to the date and place of delivery. Invoices for fuel must indicate the license number of the vehicle used for delivery.

5. Tax charged for another state and remitted to that state by the seller.

6. Purchase orders showing how and where the merchandise is to be delivered out-of-state.

(Added to NAC by Tax Comm’n, eff. 11-20-87; A 9-6-96, eff. 7-1-97)

NAC 372.715 Application by air carrier. (NRS 360.090, 372.317, 372.725, 374.725) An air carrier which desires to be exempt from the tax imposed pursuant to chapter 372, 374, 377, or 377A of NRS must file a written application on a form prescribed by the Department and submit evidence of its eligibility for the exemption. Upon approval of the application, the Department will issue a certificate of exemption.

(Added to NAC by Tax Comm’n, eff. 9-13-85; A by Dep’t of Taxation, 1-18-90)

ADMINISTRATION OF TAX

NAC 372.720 Revocation, suspension and reissuance of sellers’ permits. (NRS 360.090, 372.145, 372.725)

1. Upon the receipt of a notice of the suspension or revocation of a permit, the seller shall, upon demand, immediately surrender the permit to any employee of the Department.

2. Any subsequent violation of the laws or the regulations of the Commission may be cause for the permanent revocation of a seller’s permit for habitual violations. The suspension or revocation of temporary or provisional permits shall be deemed prima facie evidence of habitual violations.

3. A new permit will only be issued for a previously suspended or revoked account if the seller:

(a) Pays all outstanding amounts, including the amounts of tax, penalties, interest and costs, if any costs were incurred;

(b) Files all returns due and outstanding;

(d) Provides the security demanded to the full extent provided by law; and

(e) Confirms in writing that he or she will henceforth comply with all of the provisions of the laws and the regulations prescribed by the Commission.

4. A permit issued for a previously suspended or revoked account will be prominently marked temporary or provisional and will include an effective date and an expiration date no earlier than 1 calendar year later.

5. If during the 1-year period the taxpayer becomes delinquent or otherwise fails to comply with the applicable statutes and regulations, the Department may immediately initiate proceedings to permanently revoke the permit.

6. Full compliance with applicable laws and regulations for the period of the temporary or provisional permits entitles the holder to apply for and receive a regular seller’s permit upon request without an additional fee.

7. No previous holder of a seller’s permit which has been permanently revoked may be issued a permit without the express action of the Commission.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 70, eff. 6-7-76]

NAC 372.730 Resale certificates. (NRS 360.090, 360.200, 360B.110, 372.725, 374.725)

1. The Commission, pursuant to NRS 372.165, 372.235, 374.170 and 374.240 and chapter 377 of NRS, prescribes for use as a resale certificate:

(a) The following general form:

I hereby certify that I hold valid seller’s permit number .......... issued pursuant to chapters 372, 374 and 377 of the Nevada Revised Statutes; that I am engaged in the business of selling ..........; and that the tangible personal property described in the second paragraph of this certificate, which I purchase from: ................................, will be resold by me in the form of tangible personal property. I further certify that in the event any of the property is used for any purpose other than retention, demonstration or display while I am holding it for sale in the regular course of business, it is understood that I am required by chapters 372, 374 and 377 of the Nevada Revised Statutes to report it and pay the tax measured by the purchase price of the property.

Description of the property to be purchased:

..................................................................................................................................................

Purchaser....................................................................

Address

...................................................................................

Signature of Authorized Purchaser

Dated: .......... (day) of ............ (month) of ........ (year)

at.....................................................

(b) Any form which:

(1) Indicates that property is to be purchased for resale; and

(2) The Department determines:

(I) Satisfies the requirements of the Streamlined Sales and Use Tax Agreement; and

(II) Is suitable for this State.

2. For the purposes of using a form prescribed pursuant to paragraph (a) of subsection 1:

(a) For the description of the property to be purchased there may appear either:

(1) An itemized list of the property to be purchased for resale; or

(2) A general description of the kind of property to be purchased for resale.

(b) If the seller is not required to hold a permit because he or she sells only property of a kind the sale of which is exempt from the tax, or because he or she makes no sales in this State, the seller should make an appropriate notation to that effect on the certificate in the space designated for the seller’s permit number.

3. For the purposes of NRS 372.155, 372.170, 372.225, 374.160, 374.175 and 374.230 and chapter 377 of NRS, a seller shall be deemed to have received a resale certificate from a purchaser if:

(a) Not later than 90 days after the date of the pertinent sale, the seller obtains from the purchaser:

(1) A fully completed resale certificate; or

(2) The information required to complete fully a resale certificate; or

(b) Not later than 120 days after receiving a request for substantiation from the Department, the seller obtains from the purchaser a fully completed resale certificate.

4. A resale certificate need not be provided in a paper format. If provided in a paper format, the document must be signed by the purchaser.

5. A separate resale certificate need not be taken for each sale. The Commission will recognize blanket certificates if given in advance to cover all orders except those orders which specify otherwise. A resale certificate in the form prescribed pursuant to paragraph (a) of subsection 1 which contains a general description of the kind of property to be purchased for resale is valid as a blanket certificate until it is revoked in writing.

6. A fully completed resale certificate or the information required to complete fully a resale certificate must be maintained in the taxpayer’s file and provided to the Department upon request.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 50, eff. 3-1-68]—(NAC A by Dep’t of Taxation, 9-19-90; A by Tax Comm’n by R106-09, 11-25-2009)

NAC 372.735 Establishment of exemption; improper claim of exemption. (NRS 360.090, 360.200, 360B.110, 372.725, 374.725)

1. To establish that the gross receipts from a sale of tangible personal property or the sales price of such property is not subject to the sales or use tax, a seller may:

(a) Not later than 90 days after the date of the pertinent sale, obtain from the purchaser:

(1) A copy of the appropriate letter of exemption issued by the Department;

(2) A fully completed certificate of exemption; or

(3) The information required to complete fully a certificate of exemption; or

(b) Not later than 120 days after receiving a request for substantiation from the Department:

(1) Obtain from the purchaser a fully completed certificate of exemption; or

(2) Prove by other means that the transaction was not subject to the tax.

2. A certificate of exemption need not be provided in a paper format. If provided in a paper format, the document must be signed by the purchaser.

3. A separate certificate of exemption need not be obtained for each sale. The Commission will recognize blanket certificates of exemption if given in advance to cover all orders except those orders which specify otherwise.

4. A fully completed certificate of exemption or the information required to complete fully a certificate of exemption must be maintained by the seller and provided to the Department upon request.

5. If a purchaser improperly claims an exemption:

(a) The purchaser is liable for the payment of the applicable tax; and

(b) A seller who complies with the provisions of this section is not liable for the payment of the applicable tax unless:

(1) The purchaser fails to pay the tax; and

(2) The seller fraudulently failed to collect the tax or solicited the purchaser to participate in an unlawful claim of an exemption.

6. For the purposes of this section, “certificate of exemption” means any form for a certificate of exemption which the Department has determined:

(a) Satisfies the requirements of the Streamlined Sales and Use Tax Agreement; and

(b) Is suitable for this State.

Ê The term does not include a certificate claiming an exemption on the basis that the property is purchased for resale.

(Added to NRS by Tax Comm’n by R106-09, eff. 11-25-2009)

NAC 372.750 Certificate of authority for collection of use tax by retailers from out of State. (NRS 360.090, 372.725) A retailer who does not maintain a place of business in this State may obtain a certificate of authority from the Commission, authorizing the retailer to collect the tax from purchasers, give receipts and pay the tax to the Commission in the same manner as a retailer who maintains a place of business in this State.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 41, eff. 3-1-68]

NAC 372.760 Determination of amount of tax due; inclusion of tax in sales price of item. (NRS 360.090, 360B.110, 372.725)

1. A taxpayer shall determine the amount of the sales or use tax due on a retail sale or purchase of tangible personal property as provided in NRS 360.299.

2. A retailer may include the tax in the sales price of an item, but if he or she does so, the retailer shall notify:

(a) The public by posting a sign which is visible to all customers and states that the sales tax is included in the sales price; or

(b) The customer by printing on the receipt for the item a statement that the sales tax is included in the sales price.

Ê In the absence of such a notification, the total amount charged to the customer shall be deemed to be the price of the item.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 1, eff. 8-21-81]—(NAC A 10-10-83; 9-13-91; R021-08, 4-17-2008)

NAC 372.765 Over-collection of tax. (NRS 360.090, 372.725)

1. Any over-collection must, if possible, be refunded by the retailer to the person from whom it was collected.

2. If an audit deficiency exists involving any over-collection and the amount over-collected has not been paid to the Department, the Department will credit the retailer if it is furnished with satisfactory proof that a refund has been given as required by subsection 1. The Department will not provide a credit for interest assessed on any over-collection that is not reported or that is under-reported, but the Executive Director may approve a credit of not more than 75 percent of the penalty assessed if a refund is given as required by subsection 1.

3. A retailer shall:

(a) Use all practical methods to determine the amount to be refunded pursuant to subsection 1 and the name and address of the person to whom the refund is to be made.

(b) Within 60 days after receiving notice from the Department that a refund must be made, make an accounting to the Department of all refunds paid. The accounting must be accompanied by any supporting documents required by the Department.

4. Any over-collection that cannot be refunded for any reason must be paid to the Department.

5. As used in this section, “over-collection” means any money that is collected as tax on an exempt transaction or that exceeds the amount provided in NAC 372.760.

(Added to NAC by Dep’t of Taxation, eff. 8-2-90)

NAC 372.770 Receipts for tax paid to retailer. (NRS 360.090, 372.195, 372.725)

1. Each retailer who is required or authorized to collect sales or use tax from purchasers must give a receipt to each purchaser for the amount of the tax collected.

2. The receipt must show the following:

(a) The name and place of business of the retailer;

(b) The date on which the property was sold;

(d) The amount of tax collected by the retailer from the purchaser.

3. A sales invoice which contains the data required in subsection 2 and evidence of payment constitutes a receipt.

4. Each purchaser is liable for the payment of the tax to the Commission unless he or she obtains and retains for inspection the receipts which are required by this section.

[Tax Comm’n, Combined Sales and Use Tax Ruling No. 42, eff. 3-1-68]—(NAC A 8-26-96)

NAC 372.780 Deduction for property resold after being purchased for purpose other than resale. (NRS 360.090, 372.025, 372.725) A retailer who takes a deduction pursuant to section 12 of chapter 397, Statutes of Nevada 1955, (NRS 372.025) for property which was resold after being purchased for a purpose other than resale shall:

1. Hold a valid permit issued pursuant to NRS 372.135;

2. Take the deduction on the retailer’s tax return which covers the period in which he or she resold the property; and

3. Maintain complete records which are adequate to substantiate the deduction.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 68, eff. 6-14-68]

NAC 372.790 Receipt by Commission of reports, returns and remittances. (NRS 360.090, 372.725)

1. Any report, return or remittance which is transmitted through the United States mail shall be deemed to have been received on the date shown by the post office cancellation mark stamped upon the envelope containing it, or on the date it was mailed if proof satisfactory to the Commission establishes that the document or remittance was timely deposited in the United States mail, postage prepaid, and properly addressed to the Commission.

2. A receipt for material sent by certified or registered mail, if different than the post office cancellation mark, will prevail if the date on the receipt is earlier than the cancellation date.

3. A record authenticated by the post office that the cancellation date on certain batches of mail was erroneous is proof satisfactory to the Commission that the mailing was made on a date other than the post office cancellation date.

4. If it is known that the postal service was inoperative at a certain time due to strikes, riots, warfare, acts of God or other reasons, the Commission will consider the circumstances, and if there is other evidence of timely mailing, will accept the evidence and deem the return or payment timely.

5. Under no circumstances will:

(a) The cancellation date affixed by a postage meter in the possession of the taxpayer or other person; or

(b) Statements by the taxpayer or his or her employees,

Ê be considered sufficient to refute the post office cancellation date as the date of mailing.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 71, eff. 9-17-70; A 3-29-75]

NAC 372.825 Security required for payment; waiver of security; habitually delinquent persons. (NRS 360.090, 360.200, 372.510, 372.725, 374.515, 374.725)

1. Except as otherwise provided in subsection 2 and NRS 377B.210, a person who obtains a permit to collect sales tax after July 1, 1985, shall deposit with the Department security in an amount equal to twice the estimated average tax due quarterly if the person files returns for quarterly periods, three times the estimated average tax due monthly if the person files returns for monthly periods or four times the estimated average tax due annually if the person files returns for annual periods.

2. A person is not required to deposit security with the Department pursuant to subsection 1 if the amount of security required pursuant to subsection 1 does not exceed $1,000.

3. The Department may reexamine the amount of security required by subsection 1 after a business has been in operation for at least 6 months to determine if the original estimated average tax due is accurate. If the Department determines that the original estimated average tax due is not accurate, the Department may adjust the amount of security required pursuant to subsection 1.

4. Except as otherwise provided in subsection 5, after a business that files returns for quarterly or monthly periods has been in operation for at least 12 months, the Department shall not increase the amount of security required pursuant to subsection 1 based solely on business volume or an increase in the tax rate.

5. If the Department determines that a person knowingly made false statements relating to sales volume to minimize the amount of security required pursuant to subsection 1, the Department may increase the amount of security required pursuant to subsection 1 based on the actual tax due quarterly, monthly or annually.

6. The Department shall require any person who is habitually delinquent to deposit with the Department additional security pursuant to NRS 372.510 and 374.515.

7. If a person who files returns for quarterly periods becomes habitually delinquent, the Department shall require the person to file returns for monthly periods.

8. A person may, if the person’s business has been in operation for at least 12 months, submit a written request to the Department for a reexamination of the person’s tax-filing history to determine if a reduction in security is warranted pursuant to subsection 1.

9. The Department will accept as security pursuant to this section only:

(a) Cash.

(b) Surety bonds executed by an insurance company.

(c) Irrevocable letters of credit which are issued or confirmed by a bank, savings bank, credit union or savings and loan association situated in the State of Nevada upon the conditions prescribed by the Department.

10. A person may submit a request for a waiver of the security required by this section to the Executive Director of the Department, who shall forward the request to the Commission. The Commission will consider the request and may grant such a waiver if the person satisfies the following requirements:

(a) If the person is not a corporate taxpayer, the person must have a satisfactory payment record.

(b) If the person is a corporate taxpayer, the person must have a satisfactory payment record and substitute for any other form of security required by this section:

(1) The personal surety of not less than two principals of the corporate taxpayer; or

(2) If the corporate taxpayer consists of only one principal, the personal surety of that principal in his or her individual capacity.

11. A waiver granted by the Commission pursuant to this section may be cancelled if the person becomes habitually delinquent.

12. If a business structure changes through incorporation or otherwise, but the principals or officers of the business remain substantially the same, the Department shall consider the reporting history of the previous business structure in determining the security requirements applicable to the new business structure.

13. As used in this section, unless the context otherwise requires:

(a) “Corporate taxpayer” includes, without limitation, a corporation, limited-liability company, business trust and limited partnership, including a partnership that consists of corporations.

(b) “Satisfactory payment record” means a record of tax payments that includes not more than one delinquency, late return, returned check or return filed without full payment of the tax due during the immediately preceding 36-month period.

(Added to NAC by Tax Comm’n, eff. 9-13-85; A by Dep’t of Taxation, 10-18-89; A by Tax Comm’n, 9-6-96; R101-97, 11-14-97; R203-08, 10-15-2010; R110-12, 11-1-2012)

NAC 372.826 Interpretation of “habitually delinquent.” (NRS 360.090, 372.510, 372.725, 374.515, 374.725) As used in NRS 372.510 and NAC 372.825, the Commission will interpret the term “habitually delinquent” to mean having two or more delinquencies, late payments, returned checks or returns showing tax due that were filed without payment of the full tax due, or any combination thereof, in the 12 consecutive months immediately preceding the date on which the Department investigates the matter.

(Added to NAC by Tax Comm’n, eff. 9-6-96; A by R203-08, 10-15-2010)

NAC 372.827 Sale of capital goods: Security required for deferral of tax. (NRS 360.090, 372.397, 372.510, 372.725)

1. Each person who qualifies for the deferral of taxes pursuant to NRS 372.397 shall establish with the Department security that is equal to the person’s tax liability.

2. The Department may accept as security pursuant to subsection 1:

(a) The security set forth in subsection 9 of NAC 372.825; or

(b) A perfected, first priority security interest that designates the State of Nevada as the secured party and is created pursuant to the provisions of NRS 104.9101 to 104.9709, inclusive, in personal property that is located in this State.

(Added to NAC by Dep’t of Taxation, eff. 10-18-89; A by Tax Comm’n by R090-97, 11-14-97; R021-08, 4-17-2008; R203-08, 10-15-2010)

RETAILERS LOCATED OUTSIDE OF THIS STATE

NAC 372.841 “Component member” defined. (NRS 360.090, 372.725, 374.725) As used in NAC 372.841 to 372.856, inclusive, unless the context otherwise requires, “component member” has the meaning ascribed to it in NRS 372.7243 and 374.7243.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016)

NAC 372.844 “Activity that is significantly associated with a retailer’s ability to establish or maintain a market in this State for the retailer’s products or services” interpreted. (NRS 360.090, 372.725, 374.725) For the purpose of NAC 372.841 to 372.856, inclusive, the Commission interprets an “activity that is significantly associated with a retailer’s ability to establish or maintain a market in this State for the retailer’s products or services” to mean any activity in this State that is necessary for the establishment or maintenance of the retailer’s market for sales of tangible personal property and the protection of the retailer’s interests in this State. Such an activity includes, without limitation:

1. Soliciting sales of goods in this State.

2. Installing, assembling or repairing goods in this State.

3. Constructing, installing, repairing or maintaining real property or tangible personal property in this State.

4. Delivering products into this State other than by mail or common carrier.

5. Having an exhibit at a trade show to maintain or establish a market for products in this State. This subsection must not be construed to include merely attending a trade show.

6. Selling products online and having a brick and mortar store in this State that accepts returns of such online sales.

7. Performing activities designed to establish or maintain customer relationships, including, without limitation:

(a) Meeting with customers in this State to gather or provide product or marketing information, evaluate customer needs or generate goodwill; or

(b) Being available to provide services associated with a product sold, including, without limitation, warranty repairs, installation assistance or guidance, and training on the use of a product, if the availability of any such service is referenced in the retailer’s marketing materials, communications or other information accessible to customers.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016)

NAC 372.846 Purpose of sections is to reduce disparate impact of responsibility to collect taxes. (NRS 360.090, 372.724, 372.725, 374.724, 374.725) The purpose of NAC 372.841 to 372.856, inclusive, is to reduce the disparate impact of the responsibility to collect taxes on retailers located in this State and remote retailers located outside this State who utilize residents of this State and businesses with a physical presence in this State to establish presence in this State by proxy or who avail themselves of the substantial privilege of carrying on business in this State.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016; A by R189-18, 9-27-2018)

NAC 372.848 Presumption of applicability to retailer that is part of controlled group of entities that has a component member in this State: Rebuttal of presumption; written certification by each component member; retention of certifications by retailer. (NRS 360.090, 372.725, 374.725)

1. For the purpose of rebutting the presumption set forth in subsection 1 of NRS 372.7243 and subsection 1 of NRS 374.7243 and, pursuant to subsection 2 of NRS 372.7243 and subsection 2 of NRS 374.7243, providing proof satisfactory to the Department that, during the calendar year in question, the activities of a component member with physical presence in this State are not significantly associated with a retailer’s ability to establish or maintain a market in this State for the retailer’s products or services, a retailer may provide to the Department a written certification obtained from each component member if the written certification is obtained from the component member and provided to the Department in good faith.

2. The written certification described in subsection 1:

(a) May be submitted in paper or electronic form;

(b) Must contain a statement that the activities of the component member were not significantly associated with the retailer’s ability to establish or maintain a market in this State for the retailer’s products or services;

(c) Must be signed, either manually or electronically, as applicable, by the component member or, if the component member is an organization, by a person who has the authority to execute binding contracts on behalf of the organization; and

(d) Must include the name and address of the component member and, if the component member is an organization, the name and address of the person signing the certification.

3. A retailer shall retain physical or electronic copies of all written certifications obtained from a component member and make such copies available to the Department upon request.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016)

NAC 372.851 Presumption of applicability to retailers that enter into agreements with residents of this State for referral of customers through Internet links: Rebuttal of presumption; written certification by each resident; retention of certifications by retailer. (NRS 360.090, 372.725, 374.725)

1. For the purpose of rebutting the presumption set forth in subsection 1 of NRS 372.7247 and subsection 1 of NRS 374.7247 and, pursuant to subsection 2 of NRS 372.7247 and subsection 2 of NRS 374.7247, providing proof satisfactory to the Department that each resident with whom a retailer has an agreement did not engage in any activity in this State that was significantly associated with the retailer’s ability to establish or maintain a market in this State for the retailer’s products or services during the preceding four quarterly periods ending on the last day of March, June, September and December, a retailer may:

(a) Provide to the Department a written certification obtained from each resident, on a form provided by the Department, if the written certification is obtained from the resident and provided to the Department in good faith; or

(b) Show that the agreement between the retailer and each resident prohibits the resident from engaging in any solicitation activities in this State that refer potential customers to the retailer and, if the resident is an organization, requires the organization to maintain on its Internet website information alerting its members to the prohibition.

2. The written certification described in paragraph (a) of subsection 1:

(a) May be in paper or electronic form;

(b) Must contain a statement that the resident did not engage in any solicitation activities in this State on behalf of the retailer during the preceding four quarterly periods ending on the last day of March, June, September and December and, if the resident is an organization, a statement certifying that the organization’s Internet website includes information alerting its members to the prohibition against engaging in solicitation activities in this State that refer potential customers to the retailer;

(c) Must be signed, either manually or electronically, as applicable, by the resident or, if the resident is an organization, by a person who has the authority to execute binding contracts on behalf of the organization; and

(d) Must include the name and address of the resident and, if the resident is an organization, the name and address of the person signing the certification.

3. A retailer shall retain physical or electronic copies of all written certifications obtained from a resident and make such copies available to the Department upon request.

4. As used in this section:

(a) “Advertisement” means any announcement of goods for sale through the use of purchased space or time in print or electronic media for the purpose of communicating information to the general public. The term includes online advertising generated as the result of a generic algorithmic function that is anonymous and passive in nature, including, without limitation, advertisements associated with Internet search engines, banner advertisements, click-through advertisements, cost-per-action advertisements and links to a retailer’s website.

(b) “Solicitation activities” means direct or indirect communication with a specific person in this State in a manner that is intended to incite the person to purchase tangible personal property from a specific retailer and establish or maintain a market in this State for the products or services offered by the retailer. The term includes, without limitation, distributing flyers, coupons, newsletters or other printed promotional materials or the electronic equivalents thereof, initiating telephone calls and sending emails. The term does not include an advertisement.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016)

NAC 372.856 Factors for determining whether activities of retailer have sufficient nexus with this State. (NRS 360.090, 372.724, 372.725, 374.724, 374.725)

1. For the purpose of determining whether the activities of a retailer located outside this State have a sufficient nexus with this State to satisfy the requirements of the United States Constitution, except as otherwise provided in NRS 372.7243, 372.7247, 374.7243 or 374.7247 or NAC 372.848 or 372.851, the activities of a retailer have a sufficient nexus with this State if the retailer is making a sale of tangible personal property, whether at retail or for storage, use or other consumption in this State, and the retailer:

(a) Is part of a controlled group of corporations that has a component member with physical presence in this State and the activities performed in this State by the component member are:

(1) Listed in paragraph (b) of subsection 1 of NRS 372.7243 or paragraph (b) of subsection 1 of NRS 374.7243; or

(2) Significantly associated with the retailer’s ability to establish or maintain a market in this State for the retailer’s products or services;

(b) Enters into an agreement with a resident of this State under which the resident, for a commission or other consideration based upon the sale of tangible personal property by the retailer, directly or indirectly refers potential customers to the retailer, and the cumulative gross receipts from sales by the retailer to customers in this State who are referred to the retailer by all residents with such an agreement with the retailer is in excess of $10,000 during the preceding four quarterly periods ending on the last day of March, June, September and December;

(c) Does not have a physical presence in this State, does not have a sufficient nexus with this State pursuant to paragraph (a) or (b) and in the immediately preceding calendar year or the current calendar year:

(1) The gross revenue of the retailer from the retail sale of tangible personal property delivered in this State is greater than $100,000; or

(2) The retailer made 200 or more retail sales of tangible personal property for delivery in this State; or

(d) Engages in any other activity that establishes a sufficient nexus with this State to satisfy the requirements of the United States Constitution.

2. If a retailer is unable to determine which sales to customers in this State were the result of an agreement with a resident of this State as described in paragraph (b) of subsection 1, all gross receipts from sales by the retailer to customers in this State will be considered for purposes of establishing that the activities of a retailer have a sufficient nexus with this State pursuant to paragraph (b) of subsection 1.

3. If the activities of a retailer located outside this State have a sufficient nexus with this State pursuant to:

(a) Paragraph (a), (b) or (d) of subsection 1:

(1) The provisions of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of the sales tax and the collection and remittance of the use tax apply to the retailer; and

(2) The retailer shall register with the Department pursuant to NRS 360B.200 before, or at the time of, making the sale.

(b) Paragraph (c) of subsection 1:

(1) Beginning on the first day of the first calendar month that begins at least 30 calendar days after the retailer satisfied the criteria set forth in subparagraph (1) or (2) of paragraph (c) of subsection 1, the provisions of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of the sales tax and the collection and remittance of the use tax apply to the retailer; and

(2) Not later than the first day of the first calendar month that begins at least 30 calendar days after the retailer satisfied the criteria set forth in subparagraph (1) or (2) of paragraph (c) of subsection 1, the retailer shall register with the Department pursuant to NRS 360B.200.

4. As used in this section, “commission or other consideration based upon the sale of tangible personal property” includes, without limitation, an agreement to pay an amount of money based on the level of sales completed, cost per mille advertising, the payment of a flat fee in exchange for a referral, the payment of a fixed price in exchange for providing a referral link, or any other item of value given in exchange for a referral.

(Added to NAC by Tax Comm’n by R137-15, eff. 11-2-2016; A by R189-18, 9-27-2018)

REVISER’S NOTE.

The regulation of the Nevada Tax Commission filed with the Secretary of State on September 27, 2018 (LCB File No. R189-18), which amended this section to impose the requirements of existing law for determining whether the activities of a retailer have sufficient nexus with this State, contains the following provision not included in NAC:

“Sec. 3. This regulation, LCB File No. R189-18, is hereby amended by adding thereto the following transitory language which has the force and effect of law but which will not be codified in the Nevada Administrative Code:

1. The Department of Taxation shall establish the date on which the Department will begin to enforce the provisions of this regulation which impose requirements relating to the imposition, collection and remittance of sales and use taxes on retailers who satisfy the criteria set forth in paragraph (c) of subsection 1 of section 7 of LCB File No. R137-15, as amended by section 2 of LCB File No. 189-18 [NAC 372.856]. The Department shall post notice of the date established pursuant to this subsection on the Internet website of the Department and make such other efforts to notify retailers of that date as the Executive Director of the Department deems appropriate. The failure of a retailer to receive notice of the date established by the Department pursuant to this subsection does not excuse the retailer from compliance with any requirement relating to the imposition, collection and remittance of sales and use taxes.

2. Notwithstanding the provisions of section 7 of LCB File No. R137-15, as amended by section 2 of LCB File No. 189-18 [NAC 372.856], and except as otherwise provided in subsection 3, before the date established by the Department of Taxation pursuant to subsection 1, the Department shall not require a retailer who satisfies the criteria of paragraph (c) of subsection 1 of section 7 of LCB File No. R137-15, as amended by section 2 of LCB File No. 189-18 [NAC 372.856], to comply with the requirements of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of sales and use taxes.

3. The provisions of subsection 2 do not prohibit a retailer who satisfies the criteria set forth in paragraph (c) of subsection 1 of section 7 of LCB File No. R137-15, as amended by section 2 of LCB File No. R189-18 [NAC 372.856], from voluntarily complying with the requirements of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of sales and use taxes before the date established by the Department of Taxation pursuant to subsection 1. If, before the date established by the Department pursuant to subsection 1, a retailer who satisfies the criteria set forth in paragraph (c) of subsection 1 of section 7 of LCB File No. R137-15, as amended by section 2 of LCB File No. R189-18 [NAC 372.856], voluntarily complies with the requirements of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of sales and use taxes, the provisions of chapter 360 of NRS relating to the payment, collection, administration and enforcement of taxes, and the provisions of chapters 360B, 372 and 374 of NRS relating to the imposition, collection and remittance of sales and use taxes, apply to the retailer.”

COMPUTER SOFTWARE

NAC 372.875 Applicability of tax to custom computer software and custom programming services. (NRS 360.090, 360B.110, 372.725)

1. The preparation of custom computer software constitutes the rendering of a professional service.

2. The tax does not apply to:

(a) The sale, lease, rental or licensing for use of custom computer software, regardless of the form in which the custom computer software is transferred.

(b) Any charges for future updates or upgrades to or support services for custom computer software.

3. The tax does not apply to the transfer of custom computer software, or to custom programming services performed in connection with the sale or lease of computer equipment, if the charges for the custom computer software or programming are separately stated.

(Added to NAC by Tax Comm’n, eff. 9-30-88; A by R021-08, 4-17-2008; R104-09, 11-25-2009)

NAC 372.880 Applicability of tax to prewritten computer software and computer software maintenance contracts. (NRS 360.090, 360B.110, 372.725)

1. Unless it is delivered electronically or by load and leave, prewritten computer software is tangible personal property. The tax applies to:

(a) The sale, lease, rental or licensing for use of such prewritten computer software.

(b) A mandatory computer software maintenance contract for such prewritten computer software.

(c) An optional computer software maintenance contract for such prewritten computer software which obligates the vendor to provide future updates or upgrades to the prewritten computer software. Except as otherwise provided in subsection 2, the tax does not apply to an optional computer software maintenance contract for such prewritten computer software which only obligates the vendor to provide support services.

2. If an optional computer software maintenance contract is part of a bundled transaction which includes both taxable and nontaxable or exempt products that are not separately itemized on the invoice or similar billing document, the tax applies to the entire transaction.

3. For the purposes of this section:

(a) “Bundled transaction” has the meaning ascribed to it in NAC 372.045.

(b) “Computer software maintenance contract” means a contract that obligates a vendor of prewritten computer software to provide a customer with future updates or upgrades to prewritten computer software, support services with respect to prewritten computer software, or both.

(c) “Mandatory computer software maintenance contract” means a computer software maintenance contract that a customer is obligated by contract to purchase as a condition to the retail sale of prewritten computer software.

(d) “Optional computer software maintenance contract” means a computer software maintenance contract that a customer is not obligated to purchase as a condition to the retail sale of prewritten computer software.

(Added to NAC by Tax Comm’n, eff. 9-30-88; A by R021-08, 4-17-2008; R104-09, 11-25-2009)

NAC 372.885 Prewritten computer software: Charges for modifications; taxable basis. (NRS 360.090, 360B.110, 372.725) Except as otherwise provided in NAC 372.880, charges for modifications to prewritten computer software are exempt from the tax if such charges are separately stated. The taxable basis for the prewritten computer software is the recognized retail sales price charged by the seller to develop the prewritten computer software for use by more than one customer or the cost paid by the seller to purchase the prewritten computer software from another retailer, plus any markup.

(Added to NAC by Tax Comm’n, eff. 9-30-88; A by R021-08, 4-17-2008; R104-09, 11-25-2009)

DIRECT SALES ORGANIZATIONS

NAC 372.900 Definitions. (NRS 360.090, 372.725) As used in NAC 372.900 to 372.912, inclusive, unless the context otherwise requires, the words and terms defined in NAC 372.902, 372.904 and 372.906 have the meanings ascribed to them in those sections.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.902 “Direct sales organization” defined. (NRS 360.090, 372.725) “Direct sales organization” means a business in which an independent salesperson sells at retail tangible personal property obtained from the business and not at a location owned by the business.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.904 “Independent salesperson” defined. (NRS 360.090, 372.725) “Independent salesperson” means a person who sells at retail tangible personal property obtained from a direct sales organization and not at a location owned by the direct sales organization.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.906 “Sales tax collection agreement” defined. (NRS 360.090, 372.725) “Sales tax collection agreement” means an agreement entered into pursuant to NAC 372.910 between the Department and a direct sales organization in which the direct sales organization agrees to report and remit taxes due for the sales made by independent salespersons of tangible personal property obtained from the direct sales organization.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.908 Sales of tangible personal property by independent salesperson. (NRS 360.090, 372.725) Except as otherwise provided in NAC 372.910, an independent salesperson who sells tangible personal property obtained from a direct sales organization to a customer at retail:

1. Is considered a retailer with respect to such sales and the gross receipts from those sales are subject to the sales tax.

2. Shall obtain a permit to engage in or conduct business as a seller pursuant to NRS 372.125.

3. Shall obtain a state business registration to conduct business in this State pursuant to NRS 76.100.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.910 Sales tax collection agreement: Authority of Department; contents. (NRS 360.090, 372.725)

1. The Department may enter into a sales tax collection agreement with a direct sales organization.

2. A sales tax collection agreement must provide that:

(a) Before a direct sales organization may report and remit taxes due for the sales made by independent salespersons of tangible personal property obtained from the direct sales organization, the direct sales organization will obtain a permit to engage in or conduct business as a seller pursuant to NRS 372.125.

(b) Tangible personal property sold to an independent salesperson for personal use is taxed based on:

(1) The actual sales price paid by the independent salesperson; or

(2) If the direct sales organization does not have evidence that the tangible personal property was purchased for personal use by the independent salesperson, the sales price determined pursuant to paragraph (c).

(c) Tangible personal property obtained from a direct sales organization and sold by an independent salesperson at retail is taxed based on:

(1) The actual sales price paid by the retail customer; or

(2) If the direct sales organization does not have evidence as to the actual sales price paid by the retail customer, the suggested retail price.

(d) The tax due on the sale of tangible personal property is computed at:

(1) The tax rate in effect at the location of the sale to the retail customer; or

(2) If the direct sales organization does not have evidence as to the actual location of the sale to the retail customer, the tax rate in effect at the location to which the tangible personal property is shipped or delivered.

(e) The direct sales organization is entitled to the same deductions, allowances and collection credits to which an independent salesperson would be entitled if the sales tax collection agreement were not in effect.

(f) The direct sales organization will make available to the Department, upon request, such books and records as may be reasonably required by the Department to conduct an audit of the direct sales organization.

3. The Department shall not regard a sales tax collection agreement as a factor in determining whether or not the direct sales organization has a nexus with this State for the purpose of imposing any tax or tax collection obligation except for the sales or use tax collected by the direct sales organization pursuant to the sales tax collection agreement.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

NAC 372.912 Sales tax collection agreement: Termination. (NRS 360.090, 372.725)

1. If a direct sales organization does not comply with the terms of a sales tax collection agreement, the Department may terminate the sales tax collection agreement.

2. Before terminating a sales tax collection agreement pursuant to subsection 1, the Department shall send to the direct sales organization a notice of the proposed decision to terminate the sales tax collection agreement in the manner described in NRS 360.350.

3. A direct sales organization may petition the determination to terminate a sales tax collection agreement in the manner described in NRS 360.360. Any hearing and subsequent appeal to the Commission must be conducted in accordance with the provisions of NRS 360.300 to 360.400, inclusive.

4. Until a sales tax collection agreement is finally terminated pursuant to this section, the direct sales organization shall continue to comply with the terms of the sales tax collection agreement and continue to report and remit the tax on the tangible personal property that is the subject of the sales tax collection agreement. If the direct sales organization does not comply with the terms of the sales tax collection agreement or fails to continue to report and remit the tax on the tangible personal property that is the subject of the sales tax collection agreement, the Department may assess a deficiency determination pursuant to NRS 360.300 against an independent salesperson who sold, stored, used or otherwise consumed tangible personal property that is the subject of the sales tax collection agreement.

(Added to NAC by Tax Comm’n by R021-05, eff. 10-31-2005)

LEASES, RENTALS AND CERTAIN OTHER TRANSFERS

General Provisions

NAC 372.920 Applicability. (NRS 360.090, 360B.110, 372.725)

1. Except as otherwise provided in subsection 2, the provisions of:

(a) NAC 372.922 to 372.932, inclusive:

(1) Apply to tangible personal property purchased on or before June 15, 2005, for lease or rental in this State; and

(2) Do not apply to tangible personal property purchased after June 15, 2005, for lease or rental in this State.

(b) NAC 372.934 to 372.946, inclusive:

(1) Apply to tangible personal property purchased after June 15, 2005, for lease or rental in this State; and

(2) Do not apply to tangible personal property purchased on or before June 15, 2005, for lease or rental in this State.

2. If a person engaged in the lease or rental of tangible personal property acquired by that person after June 15, 2005, and before November 25, 2009, has complied with the provisions of NAC 372.922 to 372.932, inclusive, with respect to that property before November 25, 2009, the provisions of NAC 372.922 to 372.932, inclusive, apply to that property and the provisions of NAC 372.934 to 372.946, inclusive, do not apply to that property.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

Property Purchased On or Before June 15, 2005

NAC 372.922 Collection and payment of tax when tangible personal property is purchased for lease or rental within this State. (NRS 360.090, 360B.110, 372.170, 372.240, 372.385, 372.725) Except as otherwise provided in NAC 372.932:

1. A person who purchases tangible personal property outside of this State for lease or rental within this State shall pay the use tax due in this State measured by:

(a) The cost of the property to the person; or

(b) The person’s gross lease or rental charges for the lease or rental of the property within this State.

2. A person who purchases tangible personal property within this State for lease or rental within this State shall:

(a) Pay the sales tax to the person’s vendor on the sales price of the property to him or her; or

(b) Give the seller a resale certificate for the property and elect to pay the tax measured by the gross lease or rental charges for the lease or rental of the property within this State.

3. If a person who sells and rents or leases tangible personal property within this State gives a resale certificate to the vendor from whom he or she purchases property, when the property is:

(a) Sold, the tax applies to the sales price.

(b) Committed to lease or rental transactions in this State, he or she shall pay the use tax due in this State measured by:

(1) The cost of the property to him or her; or

(2) His or her gross lease or rental charges.

4. If the purchaser:

(a) Pays the tax to his or her vendor on the sales price of the property to him or her, no further tax is due and tax must not be collected from the customer on the gross lease or rental charges.

(b) Elects to measure the use tax by his or her gross lease or rental charges, the purchaser may seek reimbursement for the tax from his or her customers measured by the lease or rental charges.

5. The tax applies to the sales price of the property within this State following its use in rental or lease service, without any deduction or credit for the tax paid on the original cost of the property or the taxes paid on the gross lease or rental charges.

6. A person who elects to pay the tax measured by his or her gross lease or rental charges pursuant to this section is not required to pay the sales tax for the purchase of parts or other equipment for the tangible personal property which is committed to lease or rental use in this State if the person gives a resale certificate to the vendor from whom he or she purchases the property.

7. A person who initially elects to pay the tax measured by his or her gross lease or rental charges and later wishes to pay the use tax may pay that tax measured by the cost of the property to him or her. The Department shall not grant a refund or credit for any taxes paid or due before he or she makes such an election.

8. Mandatory charges, whether or not separately stated, for any service, activity or function made in conjunction with the lease or rental of tangible personal property will be considered a part of the gross lease or rental charge and are subject to the tax. The term “mandatory charges” may include for example, without limitation:

(a) A fee or charge for mileage.

(b) A fee or charge for the return of the property, commonly referred to as a “drop-off charge.”

(d) Reimbursement for fixed costs or expenses, including, without limitation, management fees, interest, financing fees and carrying charges, collection call charges, repossession charges and billing charges.

9. Optional charges, separately stated, made in connection with the lease or rental of tangible personal property are not subject to the tax. The term “optional charge” may include for example, without limitation, a:

(a) Fee or charge for the installation, erection, assembly or disassembly of the property.

(b) Charge for a collision damage waiver or a similar instrument that acts as a waiver of the lessor’s right to collect from the lessee for any damage to the property.

(d) Charge for fuel used to operate the property.

(e) Fee or charge for the delivery, transportation or other handling of the property.

(f) Fee or charge for maintaining, cleaning or altering the property.

(g) Fee or charge for insurance, such as personal accident, extended protection or coverage for personal property.

10. The Department will determine whether a charge is mandatory or optional according to the terms of the agreement under which the charges are paid.

11. The fee for access to an airport and the charge for reimbursement of property taxes will not be considered part of the gross lease or rental charge if separately stated.

12. A gross lease or rental charge must represent a fair market value of the leased or rented property.

13. Any charges assessed for damages or loss for which the lessee is held responsible are exclusive of the original rental or lease contract, including those commonly referred to as a “charge-back fee,” “damage reimbursement,” “loss charge” or “replacement charge.” The Department will treat such charges as a taxable sale of tangible personal property from either the person making the repair or providing the replacement for the lessor or from the lessor for the responsible party.

14. A lessor may discontinue charging use tax on the basis of gross lease charges when a lease agreement is terminated. Periodic billing statements for amounts which are past due at the time the agreement is terminated may continue after termination for collection purposes.

15. Evidence that a lease agreement has been terminated includes:

(a) Documentation showing that the leased property has been repossessed or returned to the lessor.

(b) A formal notice of termination that has been personally served upon the lessee or served upon the lessee by certified mail, return receipt requested, or registered mail.

(d) A new agreement to lease the same equipment to the same or another lessee.

(e) Any other evidence or documentation which is acceptable to the Department and shows that a lease agreement has been terminated.

Ê Such evidence must be maintained pursuant to NRS 372.735.

16. Except as otherwise provided in subsection 17, if a lease is terminated and the property is returned, any payments, penalties or other charges or fees collected by the lessor as a result of a breach of contract are not subject to taxation as gross lease charges.

17. Any portion of the payments, penalties, fees or other charges described in subsection 14 which represents sales or use taxes must be reported and remitted to the Department.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 61, eff. 3-1-68]—(NAC A 9-16-92; R058-02, 1-17-2003; R023-07, 12-4-2007; R021-08, 4-17-2008; R123-18, 6-8-2020)—(Substituted in revision for NAC 372.080)

NAC 372.924 Election by lessor to pay tax on use of tangible personal property rather than cost of acquisition. (NRS 360.090, 372.170, 372.240, 372.725)

1. If a lessor of tangible personal property elects to pay the tax on the use of that property as measured by the amount of the rental charged for the property rather than the cost of the acquisition of that property pursuant to NRS 372.170 or 372.240, the lessor shall notify the Department of that election on a form prepared by the Department. The lessor shall file a copy of the form with his or her records and make the copy available to the Department for inspection upon request.

2. A lessor who notifies the Department of his or her election pursuant to subsection 1 may choose to apply the election:

(a) Separately to the item of tangible personal property that the lessor identifies on the form and submit the form within 10 days after acquiring that item; or

(b) To all the tangible personal property he or she acquires within the next ensuing year and submit the form on an annual basis.

3. A lessor who applies the election to separate items of tangible personal property pursuant to paragraph (a) of subsection 2 may include more than one item of tangible personal property on the form if the form is submitted within 10 days after the earliest date of acquisition of an item of tangible personal property that is identified on the form.

4. The failure of a lessor to notify the Department of his or her election pursuant to this section creates a rebuttable presumption that the lessor did not elect to pay the tax on the use of the tangible personal property rather than the cost of the acquisition of that property pursuant to NRS 372.170 or 372.240. The rebuttable presumption may be overcome if the lessor presents evidence that he or she intended to pay the tax on the use of the tangible personal property rather than the cost of the acquisition of that property pursuant to NRS 372.170 or 372.240.

(Added to NAC by Tax Comm’n by R058-02, eff. 1-17-2003)—(Substituted in revision for NAC 372.088)

NAC 372.926 Sale of tangible personal property designated as lease or rental for purpose of retaining security interest. (NRS 360.090, 372.385, 372.725)

1. If tangible personal property is sold, but the transaction is designated as a lease or rental for the purpose of retaining a security interest in the property, the transaction is a sale and the tax applies to the transaction in the same manner as a conditional sale described in NAC 372.050. A security interest in the property is created if the consideration paid by the lessee for the right of possession and use of the property is an obligation for the term of the lease and is not subject to termination by the lessee, and:

(a) The original term of the lease is equal to or greater than the remaining economic life of the property;

(b) The lessee is required to renew the lease for the remaining economic life of the property or purchase the property;

(c) The lessee has an option to renew the lease for the remaining economic life of the property without the payment of any additional consideration or with the payment of nominal additional consideration if he or she complies with the terms of the lease; or

(d) The lessee has an option to purchase the property without the payment of any additional consideration or with the payment of nominal additional consideration if he or she complies with the terms of the lease.

Ê For the purposes of this subsection, the economic life of the property will be determined with reference to the facts and circumstances at the time of the transaction.

2. An agreement does not create a security interest merely because it provides that:

(a) The present value of the consideration the lessee is obligated to pay the lessor for the right to possession and use of the property is substantially equal to or is greater than the fair market value of the property at the time the lease is entered into;

(b) The lessee assumes the risk of loss of the property, or agrees to pay taxes, insurance, filing, recording or registration fees, or service or maintenance costs with respect to the property;

(d) The lessee has an option to renew the lease for a fixed amount that is equal to or greater than the reasonably predictable fair market rent for the use of the property for the term of the renewal at the time the option is to be performed; or

(e) The lessee has an option to become the owner of the property for a fixed price that is equal to or greater than the reasonably predictable fair market value of the property at the time the option is to be performed.

3. Except as otherwise provided in subsection 4, additional consideration shall be deemed nominal if:

(a) It is less than the lessee may reasonably expect to pay for the property if it were purchased at fair market value when the option is exercised.

(b) The original sales price of the property is less than $1,000 and the amount of the additional consideration is not more than $150.

(1) The lease is for not more than 4 years; and

(2) The amount of the additional consideration is not more than $150 or 10 percent of the original sales price, whichever is greater.

(d) The original sales price of the property is $1,000 or more and:

(1) The lease is for more than 4 years; and

(2) The amount of the additional consideration is less than 20 percent of the original sales price.

4. Additional consideration shall not be deemed nominal if:

(a) When the option to renew the lease is granted to the lessee, the amount stated in the lease is the fair market value for the use of the property for the term of the renewal of the lease; or

(b) When the option to become the owner of the property is granted to the lessee, the price stated in the agreement is the fair market value of the property.

[Tax Comm’n, Combined Sales and Use Tax Ruling part No. 61, eff. 3-1-68]—(NAC A 9-16-92)—(Substituted in revision for NAC 372.070)

NAC 372.928 Sale of tangible personal property designated as finance lease. (NRS 360.090, 372.170, 372.240, 372.725)

1. If tangible personal property is sold, but the transaction is designated as a finance lease:

(a) The transaction is a sale;

(b) The tax applies to the transaction in the same manner as a conditional sale described in NAC 372.050;

(d) If applicable, the purchaser may elect, pursuant to NRS 372.170 or 372.240, to pay the tax on the use of that property as measured by the amount of the rental charged for the property rather than the cost of the acquisition of that property.

2. For the purposes of this section, a transaction is a finance lease if the only use of the tangible personal property that the lessee is authorized to make pursuant to the lease is the leasing of the tangible personal property as a sublessor to another party as a sublessee. If the lessee uses or has the right to use the tangible personal property in any other manner, the transaction is not a finance lease. The following factors indicate that a transaction is a finance lease:

(a) The lessee never had possession of the tangible personal property; and

(b) The lessee is required, pursuant to the lease, to:

(1) Pay any applicable fees assessed against the tangible personal property;

(2) Assume all risk of loss of the tangible personal property; and

(3) Maintain insurance on the tangible personal property.

3. As used in this section, “possession” does not include the maintenance, licensing or registration of the tangible personal property.

(Added to NAC by Tax Comm’n by R058-02, eff. 1-17-2003)—(Substituted in revision for NAC 372.086)

NAC 372.930 Sale and lease back of tangible personal property. (NRS 360.090, 372.385, 372.645, 372.725)

1. The sale of tangible personal property to a person who is in the business of leasing tangible personal property to others and who leases the property back to the seller within 90 days after the date on which the property was sold is not a taxable sale if the lessor is registered with the Department to collect and report the tax pursuant to NAC 372.922 and 372.926.

2. A person who paid the sales or use tax on a sale of tangible personal property that meets the requirements of subsection 1 may apply to the Department for a refund in the amount of the tax paid if the transaction is properly documented.

3. To document properly such a transaction, the documentation must establish that:

(a) The purchaser gave a resale certificate to the vendor at the time of sale, unless the vendor was out of state and was not required to be registered in Nevada.

(b) The purchaser sold the property to a second purchaser who is in the business of leasing tangible personal property and accepted the second purchaser’s resale certificate.

(c) The second purchaser leased the property back to the first purchaser within 90 days after the date on which the property was sold to the second purchaser.

(d) The lessor was registered with the Department to collect and report the tax pursuant to NAC 372.922 and 372.926 at the time of the transaction.

(Added to NAC by Tax Comm’n, eff. 9-13-91)—(Substituted in revision for NAC 372.085)

NAC 372.932 Certain transfers of tangible personal property to governmental entities or nonprofit organizations. (NRS 360.090, 372.385, 372.725)

1. If a lease of tangible personal property to an entity exempt from taxation pursuant to NRS 372.325 or 372.326 constitutes a sale pursuant to NAC 372.926, the sale is exempt from taxation.

2. Any transfer of tangible personal property described in NRS 372.7283 or 372.7287 shall be deemed to constitute a sale of the tangible personal property and is exempt from taxation.

3. If a lease of tangible personal property to an entity exempt from taxation pursuant to NRS 372.325 or 372.326 does not constitute a sale pursuant to subsection 2 or NAC 372.926, the original sale of the tangible personal property to the lessor is not exempt from taxation and the lessor must pay the tax.

(Added to NAC by Tax Comm’n by R058-02, eff. 1-17-2003; A by R021-08, 4-17-2008)—(Substituted in revision for NAC 372.075)

Property Purchased After June 15, 2005

NAC 372.934 “Lease or rental” and “retailer” defined. (NRS 360.090, 360B.110, 372.725) As used in NAC 372.934 to 372.946, inclusive, unless the context otherwise requires:

1. “Lease or rental” has the meaning ascribed to it in NRS 360B.450.

2. “Retailer” includes every person who engages in the lease or rental of tangible personal property to another for any purpose other than sublease or subrent.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

NAC 372.936 Lease or rental of tangible personal property constitutes sale. (NRS 360.090, 360B.110, 372.060, 372.725)

1. A lease or rental of tangible personal property shall be deemed to constitute a transaction in lieu of a transfer of title, exchange or barter pursuant to the provisions of subsection 2 of NRS 372.060.

2. A lease or rental of tangible personal property for any purpose other than sublease or subrent constitutes a retail sale.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

NAC 372.938 Collection and payment of sales tax on lease or rental of tangible personal property; sale of property following its use in lease or rental service. (NRS 360.090, 360B.110, 372.385, 372.725)

1. The legal incidence of the sales tax on a lease or rental of tangible personal property falls upon the person who leases or rents the property from the retailer.

2. A retailer engaged in the lease or rental of tangible personal property shall collect and remit the sales tax measured by:

(a) The gross lease or rental charges for the lease or rental of that property; or

(b) The cost of that property to the retailer.

3. A retailer engaged in the lease or rental of tangible personal property who desires to pay the tax measured by the cost of the property to the retailer must make that election not later than the date upon which the first tax return is due following the purchase of that property for lease or rental. If the retailer fails to make that election by that date, the retailer shall be deemed to have elected to pay the tax measured by the gross lease or rental charges for the lease or rental of the property. An election pursuant to this subsection may not be changed after the date upon which the first tax return is due following the purchase of the property for lease or rental.

4. A retailer who elects to pay the tax measured by the gross lease or rental charges pursuant to this section is not required to pay the sales tax for the purchase of parts or other equipment for the tangible personal property which is committed to lease or rental use in this State if the retailer gives a resale certificate to the vendor from whom the retailer purchases the property.

5. If the property is sold following its use in lease or rental service to a purchaser who receives delivery of the property within this State, the tax applies to the sales price of the property without any deduction or credit for the tax paid on the original cost of the property or the taxes paid on the gross lease or rental charges.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

NAC 372.940 Treatment of various charges made in connection with lease or rental of tangible personal property. (NRS 360.090, 360B.110, 372.385, 372.725) For the purposes of NAC 372.938:

1. The gross lease or rental charges for the lease or rental of tangible personal property include any mandatory charges, whether or not separately stated, for any service, activity or function made in conjunction with the lease or rental of the tangible personal property. The term “mandatory charges” may include, for example and without limitation, any:

(a) Fee or charge for mileage.

(b) Fee or charge for the return of the property, commonly referred to as a “drop-off charge.”

(d) Reimbursement for fixed costs or expenses, including, without limitation, management fees, documentation fees, interest, financing fees and carrying charges, collection call charges, repossession charges and billing charges.

2. Optional charges made in connection with the lease or rental of tangible personal property, if separately stated on the applicable invoices, contracts or other documents, are not subject to the tax. The term “optional charge” may include, for example and without limitation, any:

(a) Fee or charge for the installation, erection, assembly or disassembly of the property.

(b) Charge for a collision damage waiver or a similar instrument that acts as a waiver of the lessor’s right to collect from the lessee for any damage to the property.

(d) Charge for fuel used to operate the property.

(e) Fee or charge for the delivery, transportation or other handling of the property, including, without limitation, for the original delivery of the property.

(f) Fee or charge for maintaining, cleaning or altering the property. If maintenance of the property is required by the lease agreement and the lessee has any options regarding the person who may perform that maintenance, any charge for that maintenance shall be deemed to be optional and is not subject to the tax.

(g) Fee or charge for insurance, such as personal accident, extended protection or coverage for personal property.

(h) Legal fees for the negotiation of lease terms.

3. The gross lease or rental charges for the lease or rental of tangible personal property do not include any of the following charges, if separately stated on the applicable invoices, contracts or other documents:

(a) Any fee for access to an airport.

(b) Any charge for the reimbursement of property taxes.

(d) Any late payment penalty.

(e) Any disposition fee.

4. Any charges assessed for damages or loss for which the lessee is held responsible are exclusive of the original rental or lease contract, including those commonly referred to as a “charge-back fee,” “damage reimbursement,” “loss charge” or “replacement charge.” The Department will treat such charges as a taxable sale of tangible personal property from either the person making the repair or providing the replacement for the lessor or from the lessor for the responsible party.

5. The gross lease or rental charges for the lease or rental of tangible personal property between related or affiliated persons must be reported at fair market value. If a party to such a transaction significantly understates those charges, that action creates a rebuttable presumption that the party made that understatement with the intent to evade the payment of the tax, and the Department may, pursuant to NRS 360.300, compute the gross lease or rental charges at fair market value. As used in this subsection, “fair market value” means the amount for which property could be leased or rented in an open competitive market.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009; A by R123-18, 6-8-2020)

NAC 372.942 Termination of lease. (NRS 360.090, 360B.110, 372.385, 372.725) For the purposes of NAC 372.938:

1. A retailer may discontinue charging sales tax on the basis of gross lease charges when a lease agreement is terminated. Periodic billing statements for amounts which are past due at the time the agreement is terminated may continue after termination for collection purposes.

2. Evidence that a lease agreement has been terminated includes:

(a) Documentation showing that the leased property has been repossessed or returned to the lessor.

(b) A formal notice of termination that has been personally served upon the lessee or served upon the lessee by certified mail, return receipt requested, or registered mail.

(d) A new agreement to lease the same property to the same or another lessee.

(e) Any other evidence or documentation which is acceptable to the Department and shows that a lease agreement has been terminated.

Ê Such evidence must be maintained pursuant to NRS 372.735.

3. Any payments, penalties or other charges or fees collected by a retailer upon termination of a lease and return of the property as a result of a breach of contract or a mutually agreed-upon early termination of the contract, if separately stated on the applicable invoices, contracts or other documents, are not subject to taxation as gross lease charges. Any portion of those payments, penalties, fees or other charges which represents sales or use taxes must be reported and remitted to the Department.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

NAC 372.944 Sale of tangible personal property designated as lease or rental for purpose of retaining security interest. (NRS 360.090, 372.385, 372.725) If tangible personal property is sold, but the transaction is designated as a lease or rental for the purpose of retaining a security interest in the property, the transaction constitutes a sale and the tax applies to the transaction in the same manner as a conditional sale described in NAC 372.050. A security interest is created in the property if the transfer of possession or control of the property is made under:

1. A security agreement or plan for deferred payment that requires the transfer of title upon completion of the required payments; or

2. An agreement that requires the transfer of title upon completion of required payments and payment of an option price that does not exceed the greater of $100 or 1 percent of the total required payments.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)

NAC 372.946 Purchase, sale and lease back of tangible personal property. (NRS 360.090, 360B.110, 372.385, 372.645, 372.725)

1. If tangible personal property is sold to an initial purchaser who then sells the property to a person who is in the business of leasing tangible personal property to others, that second purchaser then leases the property back to the initial purchaser within 180 days after the date of the initial sale of the property to the initial purchaser or within such a longer period as may be authorized by the Department, and these transactions are properly documented pursuant to subsection 2:

(a) That initial sale of the property to the initial purchaser constitutes a sale for the purpose of resale;

(b) That subsequent sale of the property to the second purchaser constitutes a sale for the purpose of resale;

(d) If the initial purchaser paid any sales or use tax on that initial sale of the property to that initial purchaser, that initial purchaser is entitled to a refund of the amount of the tax paid to this State.

2. To document properly the transactions described in subsection 1, the documentation must establish that:

(a) The initial purchaser:

(1) Gave a resale certificate to the vendor at the time of the initial sale and did not report and remit the applicable tax directly to the Department; or

(2) Paid the applicable tax to the vendor at the time of the initial sale or, if the vendor was located outside of this State and was not required to be registered in Nevada, reported and remitted the applicable tax directly to the Department;

(b) The initial purchaser sold the property to a second purchaser who is in the business of leasing tangible personal property and accepted the second purchaser’s resale certificate; and

(c) The second purchaser leased the property back to the initial purchaser within 180 days after the date of the initial sale of the property to the initial purchaser or within such a longer period as may be authorized by the Department.

(Added to NAC by Tax Comm’n by R105-09, eff. 11-25-2009)