Perspectives

Nevada Supreme Court upholds margin tax initiative

Multistate Tax

The Nevada Supreme Court’s decision may be viewed as one of several incremental steps toward what could eventually become Nevada’s first margin tax, a levy similar to the Margin Tax currently applicable in Texas.

Understanding Nevada’s proposed margin tax

In a unanimous opinion issued on January 31, 2013, the Nevada Supreme Court reversed an earlier Carson City District Court (the "District Court") decision that had ruled invalid an initiative petition that seeks to amend the Nevada Revenue and Taxation Code to add a new state-level margin tax.1 By overruling the lower court, the Supreme Court’s decision upholds the initiative, thus sending the matter to the Nevada Legislature for further consideration. If legislators reject the initiative or fail to act, it would go before voters in 2014. Liability for the tax would begin to accrue on January 1, 2014, if the initiative is enacted by the Legislature and approved by Nevada Gov. Sandoval; or on Jan. 1, 2015, if approved by voters.

The Nevada Supreme Court’s decision may be viewed as one of several incremental steps toward what could eventually become Nevada’s first margin tax, a levy similar to the margin tax currently applicable in Texas.

In this article, Fred Paladino and Dave Rennie of Deloitte Tax LLP:

  • Describe the proposed Nevada margin tax
  • Outline Nevada’s initiative process
  • Review the lower court rulings, and
  • Summarize the Nevada Supreme Court’s decision

By Fred Paladino and Dave Rennie of Deloitte Tax LLP, originally published in Bloomberg BNA "Tax Management Weekly State Tax Report" on February 15, 2013

1 The Education Initiative PAC v. Committee to Protect Nevada Jobs and Ross Miller, Nevada Secretary of State, Supreme Court of the State of Nevada, Case # 61996, 129 Nev., Advance Opinion 5 (Jan. 31, 2013), slip op. at 23.

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