In Harrah’s v. State, Dep’t of Taxation, the Nevada Supreme Court entered a ruling potentially favorable ruling on taxes for goods purchased outside of Nevada. Harrah’s, a Delaware corporation, purchased four passenger jets for purposes of transporting its employees and guests around the country. The jets were delivered to non-Nevada locations, and subsequently transported passengers around the country, including consistently flying to and from Nevada. Harrah’s paid use tax pursuant to NRS Chapter 372 but then requested a refund, which the Nevada Department of Taxation denied. Nevada’s decision was upheld by two appellate bodies before the Nevada Supreme Court took up the matter.
The Nevada use tax relates to goods purchased outside of the state but were “purchased for storage, use, or consumption, and were actually stored, used, or consumed in Nevada.” The use tax does not apply under NRS 372.258 if the goods were first used in interstate commerce or were used in interstate commerce for 12 months following their purchase. The Nevada Supreme Court ultimately found that the jets met both criteria and that the use tax did not apply to Harrah’s jets. The Court found that the amount of times the jets flew to and from Nevada was unimportant under the statute, largely because they mostly flew to other states and accordingly were involved in non-taxable interstate commerce.
Be careful before deciding not to pay use tax to the state because the specifics of the use of the asset will be important. Not paying use tax is a misdemeanor. That said, the Harrah’s case may open the door for potential challenges to the assessment of tax on certain kinds of goods used in interstate commerce.
This month, the Nevada Supreme Court ruled on the “partnership by estoppel” doctrine, and the implication is that a party may be held liable as if she/he/it were partners with another in numerous circumstances.
Partnership by estoppel in Nevada is based on a Depression-era (1931) statute, NRS 87.160. To summarize, the statute provides that, as long as certain conditions are met, a person may incur partnership liability where that person is held out as a partner, and another person gives credit to the purported partnership after believing the representation.
In the recent In re Cay Clubs case, the Nevada Supreme Court held that partnership liability may be imposed when there is a representation of a joint venture. The Supreme Court also held that consent required to impose partnership liability may be “manifestly expressed” or may be fairly implied from conduct. The Court also held that the extension of “credit” contemplated in the statute is broader than extending financial credit.
The upshot of the case? Be careful when you (or someone on your behalf) holds a business or enterprise out as a partnership or joint venture, because the law may hold you to the literal meaning of the representation.
You have a killer idea. You have heard Governor Sandoval when he says Nevada is business-friendly, and you want to open your Nevada business. Where do you start? Being “legal” by getting the necessary licenses is a good place to start.
Nevada Secretary of State Ross Miller has set up what his office calls the “SilverFlume“,which describes itself as Nevada’s business portal. Clicking through to the SilverFlume’s new business checklist will get you started in the right direction about what you will need to do to start up your business. The SilverFlume and Clark County’s business portal will not tell you what kind of a business you should start (sole proprietorship, partnership, limited liability company, corporation, or other possibilities), and may leave some other questions unanswered, but it’s a good starting point. (Last month, the Secretary of State’s office issued a press release indicating that the SilverFlume website had raised more than $100,000,000 in state revenue since it began operating in 2012, so by at least one measure it has been a success.) The SilverFlume website can even help prepare a digital operating agreement for your limited liability company, discussed in this six minute YouTube video (which repeatedly mispronounces “Nevada“, but that’s beside the point).
Clark County, home to the vast majority of Nevadans and Nevada businesses, has a helpful website to walk you through some of the first step to forming your Clark County business. It will link you through to the SilverFlume and other websites that you may need to access for information or approval. It lists several prerequisites to starting a business: obtain a Nevada state business license, register with the Nevada Secretary of State, register with the Nevada department of taxation, obtain a fictitious firm name (if necessary), and then secure a local business license. Depending on where your business will be located, you may need to register in a specific county or city. Clark County will tell you what jurisdiction you are located in with this handy jurisdiction locater tool (and just because your mailing address is “Las Vegas” does not mean you are in the city of Las Vegas.)
Washoe County has a similar website discussing licensing requirements, a guide for whether you need a business license in the first place, and has published a “10 steps” guide to starting a business.
Depending on your type of business, you may have some special hoops to jump through (read: certain types of professionals, contractors, selling/producing alcohol, and gaming, to name just a few). Contact the licensing agency or another professional that can assist you with those issues. The SilverFlume checklist may give you an idea of what regulatory agency you may have to go through for your unique business.
These tools may not get you to the finish line, but they will at least get you started in the direction of making your Nevada business legal.
In the final part of the summary on the 2013 legislative session, we discuss bills that the legislature considered but failed to pass into law. Those bills include:
Senate Bill 160, which would have barred lenders from pursuing deficiency judgments against foreclosed-upon homeowners of single family dwellings.
Senate Bill 188, which would have made English the official language of Nevada.
Assembly Bill 201, which would have increased the rate of assessment of property taxes, among other things.
Assembly Bill 369, which would have required coverage relating to the diagnosis and treatment of certain autism spectrum disorders in health insurance plans.
Additionally, there was a rash of bills relating to firearms, most relating to concealed firearms, all of which failed to become law, including: AB 143 (concerning where concealed firearms may be taken); AB 195 (concerning the renewal of concealed firearm permits; AB 232 and SB 137 (both of which would have allowed people top conceal firearms without a permit);SB 76 (which would have revised the definition of concealed and concealable firearms); SB 226 (which would have allowed for Nevada drivers licenses to include reference to concealed weapons permits and made other revisions to concealed weapons laws); SB 221 (concerning the possession of firearms by persons with mental illnesses); and SB 396, which would have limited prohibited the possession of certain high capacity ammunition magazines.
The Nevada legislature does not convene in 2014.
In In Re: David Orrin Nilsson (Van Meter v. Nilsson), the Nevada Supreme Court was asked by the United States Bankruptcy Court for the District of Nevada to clarify whether someone can properly claim a homestead exemption for his or her interest in real property when he/she does not reside at the property but his/her minor children do. The homestead exemption, a creation by statute that days back to Nevada’s founding, is a means of protecting a family home from creditors even during times of financial distress. Reasoning that the homestead exemption is conceptually tied to one’s place of residence, the Court concluded that a the person claiming the homestead exemption must actually reside on the real property to claim the homestead exemption.
We continue the summary of pertinent developments from the 2013 Nevada legislature.
Senate Bill 165, which Nicolas Cage testified in support of during committee hearings, provides for certain tax credits for the production of films in Nevada.
Senate Bill 374 established procedures relating to dispensaries of medical marijuana. Following SB 374′s passage, the Nevada Division of Public and Behavior Health issued a small business impact statement discussing the law’s impact on businesses, concluding that the law “should not impose a direct or significant economic burden upon a small business or directly restrict the formation, operation or expansion of a small business in Nevada.”
Senate Joint Resolution 15 was passed for a second time and will go to Nevada’s electorate for a direct vote in 2014. If the voters approve the bill, the provision in the Nevada constitution capping the tax rate on the mining industry would be abolished.
In the third part of the series, we will discuss bills that failed to become law during the 2013 legislative session.
Politicians and their supporters are already looking ahead to the 2014 and 2016 elections. In Nevada, executive branch elections will take place in 2014 with candidates vying to be governor, lieutenant governor, attorney general, and other positions. Many Federal congressional positions are up for election in 2014. The cycle never stops.
Several months have now passed since Nevada’s 2013 legislative session ended, and many new laws are now effective in the state. Now is as good of a time as ever to begin to reflect on how new laws from the 2013 Nevada legislative session will impact businesses. Over the next couple of months, we will post several articles discussing the new legislation. This article will begin by discussing new laws relating to employment practices and foreclosures.
Assembly Bill 181 (Employment Law): AB 181 is a law for the 21st century. Among other things, it prohibits employers from requesting or requiring employees or prospective employees from divulging their user names and passwords for personal social media accounts and other online services, and prohibits employers from taking adverse actions against employees for failing to divulge such information. The law also prohibits employers and others from requesting or considering consumers reports when evaluating employees for promotions, employment, and other possibilities. Some exceptions apply to the latter.
Assembly Bill 273 and Senate Bill 321 (Foreclosure): AB 273 (the 2013 version, not to be confused with the 2011 AB 273) modified Nevada’s Foreclosure Mediation Program, requiring lenders to send notices concerning the mediation program separate from notices of default and also automatically enrolling homeowners in the program unless the homeowner opts out or fails to pay a fee. Senate Bill 321, called a “Homeowner’s Bill of Rights”, is a long, sweeping law containing many new requirements that lenders must satisfy before foreclosing on residential properties and prohibiting lenders from engaging in certain acts. A third foreclosure-related bill, Senate Bill 160, would have prohibited deficiency judgments for homeowners whose owner-occupied homes were foreclosed on, but it did not become law.
In 2011, the Nevada Legislature passed Assembly Bill 273. AB 273 limited the amount a third party purchaser of secured debt could recover in deficiency actions following foreclosure of real property, among other provisions. Since AB 273′s enactment, numerous cases percolated in Nevada’s trial courts, with courts sometimes disagreeing on the interpretation of the law. Until this month, the Nevada Supreme Court had not decided any key issues about AB 273.
That changed last week. In Sandpointe Apartments, LLC v. Eighth Judicial District Court, the Supreme Court finally ruled on arguments about the retroactivity of AB 273′s provisions concerns deficiency judgments. The Court held that the limitations on the amounts third parties who purchased secured debts could recover following foreclosures applied only to sales, either judicial foreclosures or trustee’s sales, occurring after AB 273′s enactment on June 10, 2011. The Supreme Court’s decision settles a long-pending question of whether AB 273′s modification of contract rights would impact pre-AB 273 debts and foreclosures.
The Nevada Supreme Court has handed down a couple of decisions impacting Nevada businesses over the summer.
Khan v. Bakhsh
The statute of frauds requires that certain types of contracts be in writing and therefore that some types of oral contracts are unenforceable. On August 1, 2013, the Nevada Supreme Court found that written contracts that are later lost or destroyed are not prohibited by the statute of frauds.
Clark County v. Howard Hughes Company, LLC
The Supreme Court held that a party challenging tax valuation may pursue an action in any district court in Nevada, ratifying a long-standing practice of bring such claims before the First Judicial District Court in Carson City.
On July 2, 2013, the Obama Administration announced that employers will have an additional year to comply with the Affordable Care Act (ACA) requirement to provide health insurance for full-time* employees or pay a tax penalty.
Originally, the ACA mandated that employers with more than 50 employees provide health insurance and report to the federal government details regarding employee access to and enrollment in those insurance plans starting in 2014. The announcement pushed this deadline to 2015. The Administration essentially acknowledged that the law’s complicated reporting requirements would strain businesses and the additional year will allow the Administration to “re-vamp and simplify” the reporting process. Because the tax penalties are assessed based upon the information reported by employers, no penalties will be assessed in 2014. The Administration couched the decision as the result of feedback from businesses needing more time to comply with the law.
We expect the Administration to publish additional guidelines in the coming weeks and months. In the meantime, employers can breathe a sigh of relief and assess their options with renewed hope that compliance with the ACA will be simplified.
*Under the ACA, a full-time employee is one who works an average of thirty (30) hours per week.
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