Virtual purchases may change Douglas’ tax status
The Carson Valley and Clear Creek plazas were promoted by Douglas County to generate sales tax.
Photo by Kurt Hildebrand.
In 1991, Douglas and other rural counties were faced with the possibility of having to survive on the sales tax revenue they collected in their own territory.
The debate over the fair distribution of sales tax began when it was learned that Washoe County received up to $100 million that should have gone to Clark County. In turn, Washoe County said rural counties that were subsidized should support themselves.
The possibility that Douglas will need to find additional sales tax revenue to support itself has spurred efforts to develop retail projects along the Highway 395 corridor.
All of the big box stores on Jacks Valley Road on the county line were built for the purpose of raising county sales tax revenue.
But it wasn’t the big box stores or the legislature that ultimately got Douglas to the point where his subsidy could end. It was something that was virtually unheard of in 1991, online shopping.
On Thursday, Douglas County commissioners will hear a presentation on a Nevada Tax Commission proposal to eliminate the county’s guaranteed status. The commissioners meet at 10 a.m. Thursday at the Douglas County Courthouse, 1616 Eighth St., Minden.
The Tax Commission must take up the issue at its meeting on March 7.
Nevada funds counties through a consolidated tax that includes tobacco, alcohol, and other sources in addition to sales tax, which accounts for the lion’s share of revenue.
According to the Nevada Tax Department, merchants in the county collected $17.6 million in sales and other taxes, which is $1.96 million more than the $15.64 million the county received from the state.
“Douglas County receives a pre-determined distribution from the state each year, regardless of actual tax revenue,” according to Chief Financial Officer Terri Willoughby. “Douglas County has met the generation threshold of 10% more than the county is receiving, necessitating removal of guaranteed status.”
The county could have requested a one-year waiver from the Nevada Tax Commission, but would have had to prove that there was a one-time taxable sale event.
A U.S. Supreme Court ruling requiring out-of-state internet sellers to collect sales tax credited to the buyer’s location contributed to the increase.
“Douglas County therefore collects more tax revenue from Internet sales that are not based on a physical store located in Douglas County.”
At 11.15%, Douglas has the lowest annual tax income on his grant. Lyon County is 15.48% and Pershing County has a 58.38% lead.
If Douglas or Lyon relied solely on state collections, both would be below the threshold.
According to a table provided by the state, Douglas raised $14.3 million from in-state sources and $3.28 million from out-of-state, much of which came from online sources. The county received a total of $15.6 million through guaranteed revenue based on its population.
Lyons only raised $11.1 million within the Silver State, while securing $3 million from out-of-state sources. He received $11.9 million in total revenue for the state.