NAC372.825. Security required for payment; waiver of security; habitually delinquent persons.

     1. Except as otherwise provided in subsection 2 and NRS 377B.210, a person who obtains a permit to collect sales tax after July 1, 1985, shall deposit with the Department security in an amount equal to twice the estimated average tax due quarterly if the person files returns for quarterly periods, three times the estimated average tax due monthly if the person files returns for monthly periods or four times the estimated average tax due annually if the person files returns for annual periods.

     2. A person is not required to deposit security with the Department pursuant to subsection 1 if the amount of security required pursuant to subsection 1 does not exceed $1,000.

     3. The Department may reexamine the amount of security required by subsection 1 after a business has been in operation for at least 6 months to determine if the original estimated average tax due is accurate. If the Department determines that the original estimated average tax due is not accurate, the Department may adjust the amount of security required pursuant to subsection 1.

     4. Except as otherwise provided in subsection 5, after a business that files returns for quarterly or monthly periods has been in operation for at least 12 months, the Department shall not increase the amount of security required pursuant to subsection 1 based solely on business volume or an increase in the tax rate.

     5. If the Department determines that a person knowingly made false statements relating to sales volume to minimize the amount of security required pursuant to subsection 1, the Department may increase the amount of security required pursuant to subsection 1 based on the actual tax due quarterly, monthly or annually.

     6. The Department shall require any person who is habitually delinquent to deposit with the Department additional security pursuant to NRS 372.510 and 374.515.

     7. If a person who files returns for quarterly periods becomes habitually delinquent, the Department shall require the person to file returns for monthly periods.

     8. A person may, if the person’s business has been in operation for at least 12 months, submit a written request to the Department for a reexamination of the person’s tax-filing history to determine if a reduction in security is warranted pursuant to subsection 1.

     9. The Department will accept as security pursuant to this section only:

     (a) Cash.

     (b) Surety bonds executed by an insurance company.

     (c) Irrevocable letters of credit which are issued or confirmed by a bank, savings bank, credit union or savings and loan association situated in the State of Nevada upon the conditions prescribed by the Department.

     10. A person may submit a request for a waiver of the security required by this section to the Executive Director of the Department, who shall forward the request to the Commission. The Commission will consider the request and may grant such a waiver if the person satisfies the following requirements:

     (a) If the person is not a corporate taxpayer, the person must have a satisfactory payment record.

     (b) If the person is a corporate taxpayer, the person must have a satisfactory payment record and substitute for any other form of security required by this section:

          (1) The personal surety of not less than two principals of the corporate taxpayer; or

          (2) If the corporate taxpayer consists of only one principal, the personal surety of that principal in his or her individual capacity.

     11. A waiver granted by the Commission pursuant to this section may be cancelled if the person becomes habitually delinquent.

     12. If a business structure changes through incorporation or otherwise, but the principals or officers of the business remain substantially the same, the Department shall consider the reporting history of the previous business structure in determining the security requirements applicable to the new business structure.

     13. As used in this section, unless the context otherwise requires:

     (a) “Corporate taxpayer” includes, without limitation, a corporation, limited-liability company, business trust and limited partnership, including a partnership that consists of corporations.

     (b) “Satisfactory payment record” means a record of tax payments that includes not more than one delinquency, late return, returned check or return filed without full payment of the tax due during the immediately preceding 36-month period.

     (Added to NAC by Tax Comm’n, eff. 9-13-85; A by Dep’t of Taxation, 10-18-89; A by Tax Comm’n, 9-6-96; R101-97, 11-14-97; R203-08, 10-15-2010; R110-12, 11-1-2012)