STATE OF NEVADADEPARTMENT OF TAXATION

AutomotiveIndustry

LAWS GOVERNING AUTO INDUSTRY

Two of the main chapters of the Nevada Revised Statutes and Nevada Administrative Code discussed herein are:

•Chapter 372: Sales and Use Taxes

•Chapter 482: Motor Vehicles and Trailers: Licensing, Registration, Sales and Leases

Also referenced will be chapter 374, Local School SupportTax and chapter 360B, streamline sales and use tax.

Automobile Industry

The Department of Taxation administers the sales/use tax laws and regulations while the Department of Motor Vehicles (DMV) administers laws and regulations governing the licensing, selling, titling and other related issues involving vehicles which are required to be licensed to drive on a public highway

(NRS 482.135)

Automobile Industry

The Department of Taxation looks to some of the definitions contained in NRS Chapter 482 for guidance in making determinations of taxability.

Automobile IndustrySome useful sources of information can be found at:DMV main website: http://www.dmvnv.com/index.htm

DMV Registration/Title Guide: http://www.dmvnv.com/pdfforms/regtitle.pdf

Department of Taxation: http://www.tax.state.nv.us

Statutes and Nevada Administrative Code at http://www.leg.state.nv.us/law1.cfm

Automobile Industry

Laws affecting automobile industry

• Trade Ins

• Trade down

• Dealer Special Plates – they are gone

Automobile Industry - Sales

• NRS 372.025, “Gross Receipts” is a primary statute describing what is included in gross receipts and what is not included:

• Included

All receipts, cash, property

Manufacturer’s discounts, or rebates

Mandatory warranties

Services that are part of the sale

Automobile Industry - Sales

• NRS 372.025, “Gross Receipts” - what is not included:

Dealer issued discounts

Luxury Tax imposed by the U.S.Government

Drive-away permit costs

Optional Warranties

Automobile Industry-Sales

•Sales to Military: Generally taxable

• Sales to Students: Generally taxable

• Sales to Native Americans: Generally taxable

• Sales to Snowbirds: Sometimes taxable

•Sales to Active Nevada National Guard members: Generally exempt

Automobile Industry – Taxable Sales

•Tire Sales

•Smog fees

•Doc(ument) fees

•Parts Sales

•Repairs

•Shop Supplies

Automobile Industry-Sales

Giveaway cars in casino promotions

Transaction between dealership & casino

= Nevada sale

Casino posts contest rules-winner pays tax

= Winner paying Casino tax burden

= Nevada sale (not eligible as drive-away)

Automobile Industry - Sales

Trade-Ins are reportable at full county tax rate (Clark County = 8.1% as of 7/1/2009)

Trade-Downs (Trade-in allowance reportable limited to amount of new vehicle purchase) (Example: New vehicle purchase: $15,000

Trade-down amount: $20,000. Trade-in allowed on sales/use tax return = $15,000)

NEVADA DEPT OF TAXATION

VEHICLE/VESSEL TRADE-IN/TRADE-DOWN SUPPLEMENTAL REPORTING FORM

Permit No.:

Mail Original with your Sales/Use Tax Return

Due on or before

FOR DEPARTMENT USE ONLY

TRADE IN

For month ending

RATE COUNTY TRADE IN VALUE

1. County Rate 6.5% Calc Tax @ 4.5%

2. County Rate 6.75% Calc Tax @ 4.75%

3. County Rate 7% Calc Tax @ 5%

4. County Rate 7.125% Calc Tax @ 5.125%

5. County Rate 7.25% Calc Tax @ 5.25%

6. County Rate 7.375% Calc Tax @ 5.375%

7. County Rate 7.5% Calc Tax @ 5.5%

Sub Total

Less .5% Collection Allowance

(A) Total Allowance Subtract (A) from Line 25 of your regular Sales/Use Tax Return

TRADE DOWN (use when vehicle/vessel sold is worth less than vehicle/vessel taken in trade)

1. Selling Price of New Vehicle/Vessel

2. Selling Price of New Vehicle/Vessel

3. Selling Price of New Vehicle/Vessel

Sub Total

Tax @ 2%

Less .5% Collection Allowance

(B) Total Allowance

Add (B) to Line 25 of your regular Sales/Use Tax Return

SIGNATURE PHONE NUMBER

PRINT NAME FEDERAL ID OR SOCIAL SECURITY NUMBER

TITLE DATE

NOTE: This form is no longer needed for a VEHICLE trade-in; however, trade-in of a vessel will require use of this form.

Trade-ins of vessels do not get the full tax credit; in using this form to record a vessel trade-in, use the full county tax rate less 2%. (Example: Clark County full tax rate as of 7/1/2009 is 8.1%. Vessels trade-in tax rate is 6.1%)

Trade-Down Transactions

• Reporting requirements

………………..as of 1/1/2007

Trade-DownTransaction:

Car sale……………………………………………….$20,000 report in Column A of sales tax return

Trade-in……………………………………………….$25,000 report only $20,000 in Column B of sales tax return

Automobile Industry - Sales

• Unwinds – Not Taxable

• Repossessions – Taxable

• Lemon Law returns - Taxable

This form should be in the deal file whenever a repossession occurs. Note this form also includes a notary section.

Automobile Industry-Leases

• Leases

True lease: NAC 372.070(1)(2)

Capitalized Cost Reduction

First Payment

Other advance

payments all taxable

Automobile Industry-Exempt Sales

Exempt Sales to: – State of Nevada– U. S. Government– Government fees (title fees, luxury tax)– Religious or charitable organizations (exemption

letter needed)

– Resale (resale certificate needed)– Out of State (Notarized Drive away affidavit needed)

– Active members of the Nevada National Guard & Family (exemption letter needed)

This is the drive away affidavit. It must be completed in full and customer’s signature must be notarized at time of sale.

Vehicle Dealers can transport the vehicle to another state, if the transaction is ineligible to issue a drive-away affidavit

Nevada residents are not allowed Drive-away permits

• Beware of Drive-away permits to these states

• Oregon

• Montana

• Delaware

• Alaska

• New Hampshire

MILITARY SALESSales to Military personnel are generally subject to sales tax.

Occasionally a dealer may get this Active Duty Military Governmental Services Tax Exemption Affidavit.

NOTE THAT THIS FORM DOES NOT EXEMPT THE TRANSACTION FROM SALES TAX…..it only exempts the Governmental Services tax.

Automobile Industry – Use Tax

• Giveaway items

• Self-use items purchased ex-tax

• Internet ex-tax purchases for self use

• Vehicles placed in service for

use by dealership

• Parts for company vehicles

RECORDS TO BE KEPT

• Purchase invoices• Sales journals• General ledgers• Deal files• Affidavits and Drive–away permits

Must keep records for four (4) years

Electronic Filing RequirementsAll payments of money for taxes, interest, penalties or other obligations in the aggregate amount to $10,000 or more MUST be made by electronic transfer….*

For more information and to register and pay your taxes, go to:

http://www.nevadatax.nv.gov/web

*SB 517, 2007 Legislative Session

Written Response

Most tax issues can be addressed by the Department of Taxation. Please be advised that any responses to inquires made to the Department are only binding if put in writing, such as Nevada Revised Statutes, Administrative Code, Nevada Tax Notes, or in written correspondence.

DEPARTMENT OF TAXATION Contact Information

Our offices are open Monday-Friday 8:00 AM – 5:00 PM

Southern Nevada:Grant Sawyer Office Building555 E. Washington AvenueSuite 1300Las Vegas, NV 89101 OR2550 Paseo Verde ParkwaySuite 180Henderson, NV 89074

Carson City:1550 College ParkwaySuite 115Carson City, NV 89706-7937

Reno:4600 Kietzke LaneBuilding L, Suite 235Reno, NV 89502

Contact our Call Center at1-866-962-3707

(closed during lunch)