S.B. 3 passed the state Senate by a 19-2 vote and the Assembly by a 32-10 vote Wednesday. Under the bill, an entity extracting minerals in the state would be required to temporarily pay the state's tax on net proceeds of minerals in advance, based on estimated net proceeds and royalties for the current calendar year. The current law says the state's taxation of net proceeds is based on actual net proceeds from the preceding calendar year.
The bill would also establish a tax amnesty program to allow a waiver of penalties and interest for businesses and individuals who had unpaid taxes before the program's start. Taxpayers would have to pay their debts in full to be eligible for the waiver, according to the bill. The amnesty program would last for not more than 90 days and would have to end by June 30, 2021.
The bill is currently in the Senate for enrollment, after which it will go to Democratic Gov. Steve Sisolak for his consideration.
Under S.B. 3, taxpayers would be required to pay estimated payments in 2023 that would otherwise be payable in 2024 under the original method. The state Department of Taxation would then be required to reduce the amount of tax due in 2024 by any estimated payments made in 2023 under the bill's provisions.
The bill was introduced by the Senate Committee of the Whole. The mining tax provisions are estimated to bring in $54.5 million in fiscal year 2021, and the tax amnesty program is estimated to bring in $21 million, according to Russell Guindon, a fiscal analyst with the Legislative Counsel Bureau.
The amnesty program was previously estimated to bring in $10 million in a budget proposal released by Sisolak on July 7, the day a special legislative session convened to address the pandemic's impacts.
The pandemic's effect on the state economy is expected to contribute to a $1.2 billion general fund shortfall in fiscal year 2021, according to projections by the Legislative Counsel Bureau and the Governor's Finance Office.
Under S.B. 3, the tax amnesty program would not be available to any entities with a preexisting compromise or settlement agreement with the tax department or state tax commission. It would also not be available to an entity under audit by the tax department that has not been issued a final determination.
Sen. Joe Hardy, R-Boulder City, voted against the bill, telling Law360 that he opposed it being presented to require only a majority vote to pass. Under Nevada law, any bill increasing public revenue must be passed by a two-thirds supermajority in each chamber.
The Legislative Counsel Bureau said in an opinion Wednesday that S.B. 3 did not require a supermajority to pass. However, Hardy said that a similar bill in 2010 did require a supermajority.
Hardy also noted an ongoing lawsuit by Republican senators against the Senate Democrats regarding whether a 2019 bill required a supermajority to pass, saying he had similar concerns about S.B. 3.
"I have misgivings about what this could do to the opinions of the Supreme Court," Hardy said.
He added that he did not object to the idea that the state needs revenue.
The bill was criticized during a hearing Wednesday as not doing enough to address the state's fiscal woes. J.D. Klippenstein, executive director of grassroots organization Acting in Community Together in Organizing Northern Nevada, said the Legislature should remove the deductions the mining industry can use to lower its taxable proceeds, which he said are needed to address the state's long-term revenue needs.
"It is time that the mining companies pay their fair share," Klippenstein said. "It is time that we invest in, not cut, public education, state workers, and health and human services. It is time for a new normal."
Party leadership in both chambers did not respond to requests for comment.
Klippenstein did not respond to requests for comment.
--Editing by Neil Cohen.
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