Under existing law, financial institutions and other employers are required to pay an excise tax (the modified business tax) on wages paid by them. (NRS 363A.130, 363B.110) Existing law provides for the imposition and administration of sales and use taxes pursuant to the Sales and Use Tax Act and the Local School Support Tax Law. (Chapters 372 and 374 of NRS) Any amendment to the Local School Support Tax Law also applies to other sales and use taxes imposed under existing law. (NRS 354.705, 374A.020, 376A.060, 377.040, 377A.030, 377B.110, 543.600; and various special and local acts) Sections 2-13 of this bill authorize the Housing Division of the Department of Business and Industry to approve applications for the issuance of transferable tax credits and granting of abatements of the excise tax on employers other than financial institutions or local sales and use taxes imposed pursuant to the Local School Support Tax Law that are submitted by a project sponsor engaged in a project for the acquisition, development and construction of single-family residences to be sold for the direct cost of the residences to households who will occupy the residences and whose income is less than 130 percent of the area median income. Section 9 authorizes the project sponsor, on behalf of the project, to apply to the Division for these tax incentives. Sections 9 and 19 of this bill provide for the confidentiality of certain information in the application and for the adoption of regulations. Section 9 authorizes the Division to approve such an application if the Division finds that the project meets the qualifications. If the Division approves an application for transferable tax credits, section 10 requires the Division to issue to the project sponsor in the qualified project a certificate of eligibility for transferable tax credits. Section 10 provides that a project is eligible for transferable tax credits in an amount equivalent to the costs of financial assistance provided by the project sponsor to purchasers of single-family residences. Section 10 also provides that the expiration of the transferable tax credits is 4 years after the date of issuance to the project sponsor. If the Division approves an application for an abatement, section 11 provides that the project sponsor is entitled to an abatement of: (1) employer excise taxes for a period of not more than 10 years in an amount equal to the amount of the employer excise taxes that would otherwise be owed for the project; and (2) certain local sales and use taxes for a period of not more than 20 years and in an amount equal to those local sales and use taxes that would otherwise be owed in the county in which the project is located. Sections 15 and 16 of this bill make conforming changes as a result of the authorization of these abatements. Section 12 requires the project sponsor to repay any portion of transferable tax credits and any portion of an abatement to which the project sponsor is not entitled if the Division determines that the project sponsor becomes ineligible for the incentives. Section 13 requires the Division to prepare and submit to the Legislature certain reports concerning any tax incentives provided to a project pursuant to sections 2-13. Existing law provides for the assessment of ad valorem taxes on certain real and personal property and provides certain exemptions from those taxes. (Chapter 361 of NRS) Section 14 of this bill provides an exemption from the tax on real property for the initial owner of a single-family residence constructed as part of a project approved pursuant to sections 2-13. The Nevada Constitution requires the Legislature to provide a specific date on which an exemption from property taxes will cease to be effective. (Nev. Const. Art. 10, § 6) To comply with this requirement, section 14 prohibits an application for an exemption pursuant to that section from being submitted on or after July 1, 2055. However, an exemption granted pursuant to an application submitted before July 1, 2055, would continue to be in effect until the owner of the residence no longer qualifies for the exemption. Existing law provides for the imposition of taxes on transfers of real property and exempts certain transfers from such taxes. (NRS 375.020, 375.023, 375.026, 375.090) Section 17 of this bill exempts the initial transfers of single-family residences constructed in a project approved pursuant to sections 2-13 from the real property transfer tax. Section 18 of this bill prohibits the initial purchaser of a single-family residence in a project approved pursuant to sections 2-13 from selling the single-family residence to a corporation, limited-liability company or affiliate of such an entity. The Nevada Constitution prohibits the Legislature from enacting an exemption from property taxes and sales and use taxes unless the Legislature makes certain findings regarding the benefits and effects of the exemption. (Nev. Const. Art. 10, § 6) Section 20 of this bill sets forth such findings of the Legislature with respect to any such exemption provided in this bill.

Statutes affected:
As Introduced: 375.090, 239.010
BDR: 375.090, 239.010