Overlooked problem with the margin tax
“Affiliated group” language could be devastating for Nevada businesses
By: Geoffrey Lawrence
By now, most business owners have heard that the state teacher union has qualified a new tax proposal for the November ballot. The proposed business “margin tax” is a modified version of a gross receipts tax. In other words, businesses would face a new tax liability even if they aren’t profitable.
But most are not aware that key language in the tax might force firms to file taxes jointly with firms with which they have never done business. A business owner may not even know the business owners with whom the tax would force them to file jointly, should the tax become law.
While the proposed margin tax is loosely based on a Texas tax, the proposal’s authors deviated from some key legal definitions in the Texas statute when they drafted their proposal for Nevada. Of particular interest is the way they changed the definition of “affiliated group.”
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