Sales tax on invoices in Nevada

Nevada treats construction contractors as the consumers of their materials. You pay the tax when you buy them, and the Department’s construction contractors bulletin says your invoice for the finished construction work should carry no sales tax and no wording about sales tax.

Nevada sales tax and your seller’s permit

Nevada’s sales tax, local school support tax and city/county relief tax are imposed on retailers for the privilege of selling tangible personal property at retail. Use tax applies to tangible personal property bought from a retailer and stored, used or consumed in Nevada.

If you sell tangible personal property, apply to the Nevada Department of Taxation for a seller’s permit, with a $15 fee for each location; each place of business needs its own permit.

Construction contracts: you’re the consumer of the materials

A construction contract for improvement to real property covers erecting, constructing or affixing a structure or improvement, and remodeling, altering, adding to or repairing one.

• Every contract type: under NAC 372.190 and 372.200, a construction contractor, including a subcontractor or specialty contractor, is the consumer of all the tangible personal property it buys to improve real property under such a contract, and the tax applies to the property’s total sales price to the contractor. The regulation’s definition takes in all types of contract, fixed price, cost reimbursable, lump-sum and time and material among them.
• Where you buy: pay sales tax to an in-state vendor, and use tax on materials from an out-of-state vendor that doesn’t collect Nevada tax.
• Exempt customers: under NRS 372.340, the tax still applies to property you buy and use as a contractor for an otherwise exempt governmental, religious or charitable entity, unless you’re a constituent part of that entity.

Improvement to real property, or a retail sale?

Under the Department’s construction contractors bulletin, whether something you furnish and install is an improvement to real property is decided case by case. The Department asks whether a reasonable person would consider the item a permanent part of the land or improvement, for example because removing it would destroy the item or significantly damage the real property.

• An improvement: the bulletin says you pay use tax on the materials.
• Not an improvement: it’s a retail sale, and you collect sales tax from your customer. Furniture, equipment and display racks that don’t become part of the real property and are sold separately are retail sales.
• Resale certificates: you can use one only if you’re registered with the Department and hold a valid Sales Tax Permit, and even then not for construction materials, supplies or tools ordinarily used on a construction contract, unless you actually sell that property without using it first.

Services: separately listed labor isn’t taxed

The Department’s Sales Tax FAQs say most tangible personal property transferred for value in Nevada is taxable, and so are the services needed to complete such a sale. Installation, repair and reconditioning labor isn’t taxable if it’s listed separately on the invoice, but fabrication labor, which creates tangible personal property sold at retail, is.

When you repair appliances, machinery or other tangible personal property, NAC 372.390 makes you a retailer of parts and materials whose value is substantial compared with your total charge. State their retail price apart from your labor and service charges, and you collect tax on the parts only; if the labor and service charges aren’t stated separately, the tax applies to the entire charge. When the parts are insubstantial and you don’t charge for them separately, you’re their consumer and pay the tax when you buy them.

Tax line on the invoice: none on construction jobs

• Construction contracts: Tax Bulletin SUT 14-0002 says there should be no sales tax on your invoice for finished construction work, because you already paid the tax on the materials. If tax shows on the invoice, the Department treats the job as a retail sale rather than a construction contract, and you’re liable to it for that tax. Adding sales tax, or any wording about sales tax, to your construction contracts, invoices or receipts can turn use tax on your materials cost into sales tax on the full retail price, and all sales tax you charge must be remitted.
• Retail sales: NRS 372.210 requires the tax to be displayed separately from the price on the sales check or other proof of sale. To include it in the price instead, NAC 372.760 requires a sign visible to all customers, or a statement printed on the receipt, saying the sales tax is included; without that notice, the total you charge is deemed the item’s price.
• No absorbing: it’s unlawful to advertise or tell a customer that you’ll absorb the tax, won’t add it to the price, or will refund it.

Large appliances: installer or contractor

Under NRS 372.7265, a large appliance, such as a washer, dryer, range, dishwasher, refrigerator, freezer or ice maker, sold alone or with installation or replacement is taxed on its retail price to your customer. Installation and replacement charges aren’t taxed if they’re stated separately on the receipt or contract. When the appliance is part of a contract to build or refurbish an improvement to real property, you pay the tax on your own purchase price instead.

Local tax: county rates on top

The state rate on this page is also Nevada’s minimum statewide rate. The Department’s Components of Sales and Use Tax Rates table lists the counties that add local taxes; counties it doesn’t list charge only the minimum statewide rate. As a Streamlined Sales Tax member, Nevada uses a destination-based local sales tax system.