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Department of Taxation and Finance

Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update


1. Basis for taxation:

Ad valorem valuation and assessment authority and practices are defined in Nevada Revised Statutes (NRS) 360, 361, 361a and 362. Centrally assessed properties are enumerated in NRS 361.320.

2. Property subject to taxation:

All real and personal property, except that specially exempted, such as pollution control equipment and intangible personal property.

3. Classification (if applicable):

There are no classification differentials in Nevada.

4. Level of government which determines basis for tax liability - ad valorem property tax:

All operating property of interstate and inter county utility and railroad companies are centrally assessed and taxed by the Nevada Tax Commission through the Department of Taxation. Non-operating and intracounty utility and railroad property are assessed and taxed by county assessors.

5. Report filing and valuation method(s) required by statute for ad valorem taxation:

Annual reports for centrally assessed properties are due in March each year for the prior calendar year's operations. Construction work in progress reports are due in September. Unitary values for utilities and railroads are determined by a reconciliation of value, using a net book cost indicator and an income indicator with a limitation that the value cannot exceed cost of replacement as appropriately depreciated. All property is assessed at 35% of taxable value.

6. Practical application of valuation method(s):

Currently, under Nevada statutes and regulations generally two indicators of value are developed and then reconciled to a final value. These indicators include net book value and capitalized income. No specific or assigned weighting is given to either indicator.

7. Valuation treatment of large facilities such as power plants, dams, or rail yards:

All facilities of centrally assessed properties are considered in the unitary valuation method and are integrated in the final value and assessment. Locally assessed properties are valued according to the market value of the land and replacement cost less statutory depreciation of improvements.

8. Apportionment method(s) required by statute:

Apportionment is required to be done on a mile unit basis.

9. Practical application or apportionment requirements:

The Nevada assessed value is allocated to the various local taxing jurisdictions throughout the state based on the mileage in each jurisdiction as reported by the company. The allocated assessment is then taxed at the ad valorem rate of the jurisdiction by the Department of taxation. The department then collects the taxes from the various companies and distributes it to the various jurisdictions.

10. Apportionment treatment of large facilities such as power plants, dams, or rail yards:

These facilities would generally be apportioned along with the other operating property of the centrally assessed company. New legislation requires the value and taxes of generation facilities with reseller's license to remain in the county where it is located.

11. Description of assessment appeals system:

After notice of value is determined and sent, companies are first encouraged to contact the department staff to discuss value related issues. On the first Monday of October each year centrally-assessed values are certified by the tax commission, and official appeals on valuation may be heard at this meeting. After certification, appeals must be filed with the State Board of Equalization by January 25 the following year. Taxes for contested values at this point should be paid under protest to preserve legal rights in filing with district court, which would be the next step in the appeal.

12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:

Due to deregulation issues and changes in Nevada statutes under certain condition interstate and intercounty generating facilities could be assessed and allocated or reallocated partially or completely to the county where it is located. Conversely, in certain situations where a generating facility may have been locally assessed, it may fit criterion to be centrally assessed and allocated to various counties based on wire mileage of the company distributing to the final customer.

During the 71st Nevada Legislative Session (2001 Legislative Session), the Nevada Legislature repealed most of the previous codified deregulation/restructuring language for the Nevada electric utility industry. Specifically, Assembly Bill 369 revised and repealed various provisions governing the regulation of public utilities; preventing certain electric utilities from disposing of certain generation assets other than disposal of generation assets pursuant to certain mergers and acquisitions. Assembly Bill 661 authorized certain eligible customers (large user of one megawatt or more) to purchase electric energy, capacity and certain ancillary services from providers of new electric resources with very restrictive requirements attached. Subsequently, Nevada Revised Statutes codified these changes in NRS 704B. The end result is that no major customers (Casinos, etc.) have left the system which might require some changes to resource planning in the future for the Nevada utilities and ultimately impact valuation and apportionment. Nevada Revised Statutes 704.7585 through 704.7591 describes the disposal of generation assets. Basically, this indicates that the utilities can not dispose of their generation assets unless it is in the public interest.

13. State Government Staffing:

The central assessment staff consists of 3 mining appraisers, 2 utility analysts, 1 management analyst, 1 tax examiner and a supervisor.

Law Source(s):     Nevada Revised Statutes (NRS) Chapter 361, Nevada Administration Codes (NAC) Chapter 361

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