(Reprinted with amendments adopted on April 21, 2025)
FIRST REPRINT A.B. 535
- *AB535_R1*
ASSEMBLY BILL NO. 535–COMMITTEE ON REVENUE
MARCH 24, 2025
____________
Referred to Committee on Revenue
SUMMARY—Revises provisions relating to the sales tax
exemption for organizations created for religious,
charitable or educational purposes. (BDR 32-812)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State: Yes.
~
EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.
AN ACT relating to taxation; revising provisions governing the
administration of the exemption from sales and use taxes
for organizations created for religious, charitable or
educational purposes; requiring the Department of
Taxation to report to the Legislature certain information
concerning applications for such an exemption; and
providing other matters properly relating thereto.
Legislative Counsel’s Digest:
Existing law imposes upon each retailer a sales tax measured by the gross 1
receipts of the retailer from the retail sale of tangible personal property in this State, 2
and requires the retailer to collect the sales tax from the purchaser in a transaction 3
to which the sales tax applies. (NRS 372.105, 372.110, 374.110, 374.111, 374.115) 4
Existing law also imposes a use tax on the storage, use or other consumption in this 5
State of tangible personal property purchased outside of this State from a retailer in 6
a transaction that would have been subject to the sales tax in this State if it had 7
occurred within this State. (NRS 372.185, 374.190, 374.191) 8
Existing law exempts from such taxes the gross receipts from the sale of any 9
tangible personal property sold by or to a nonprofit organization created for 10
religious, charitable or educational purposes. (NRS 372.326, 374.3306) Under 11
existing law, among other requirements, an organization that claims this exemption 12
is required to establish that the sole or primary purpose of the organization is to 13
further certain specified purposes deemed to be religious, charitable or educational. 14
(NRS 372.3261, 374.3306) Sections 1 and 2 of this bill establish criteria for the 15
Department of Taxation and the Nevada Tax Commission to use to determine 16
whether an organization satisfies that requirement, including, without limitation, by 17
the organization establishing that it: (1) operates exclusively for a purpose exempt 18
under section 501(c)(3) of the Internal Revenue Code and is recognized as exempt 19
by the Internal Revenue Service under the provision of that section; or (2) furthers 20
– 2 –
- *AB535_R1*
at least one of certain specified purposes. Sections 1.5 and 2.3 of this bill require 21
the Department to: (1) provide to an organization that does not qualify for the 22
exemption a full explanation outlining the reasons why the organization does not 23
qualify and the procedure to appeal such a determination; and (2) submit to the 24
Legislature every odd-numbered year a report concerning applications for the tax 25
exemption. 26
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. NRS 372.3261 is hereby amended to read as 1
follows: 2
372.3261 1. For the purposes of NRS 372.326 [,] and 3
372.348, an organization is created for religious, charitable or 4
educational purposes if it complies with the provisions of this 5
section. 6
2. An organization is created for religious purposes if: 7
(a) It complies with the requirements set forth in subsection [5;] 8
6; and 9
(b) The sole or primary purpose of the organization is the 10
operation of a church, synagogue or other place of religious worship 11
at which nonprofit religious services and activities are regularly 12
conducted. Such an organization includes, without limitation, an 13
integrated auxiliary or affiliate of the organization, men’s, women’s 14
or youth groups established by the organization, a school or mission 15
society operated by the organization, an organization of local units 16
of a church and a convention or association of churches. 17
3. An organization is created for charitable purposes if: 18
(a) It complies with the requirements set forth in subsection [5;] 19
6; 20
(b) The sole or primary purpose of the organization , 21
considering the factors set forth in subsection 5, is to: 22
(1) Advance a public purpose, donate or render gratuitously 23
or at a reduced rate a substantial portion of its services to the 24
persons who are the subjects of its charitable services, and benefit a 25
substantial and indefinite class of persons who are the legitimate 26
subjects of charity; 27
(2) Provide services that are otherwise required to be 28
provided by a local government, this State or the Federal 29
Government; or 30
(3) Operate a hospital or medical facility licensed pursuant to 31
chapter 449 or 450 of NRS; and 32
(c) The organization is operating in this State. 33
4. An organization is created for educational purposes if: 34
– 3 –
- *AB535_R1*
(a) It complies with the requirements set forth in subsection [5;] 1
6; and 2
(b) The sole or primary purpose of the organization is to: 3
(1) Provide athletic, cultural or social activities for children; 4
(2) Provide displays or performances of the visual or 5
performing arts to members of the general public; 6
(3) Provide instruction and disseminate information on 7
subjects beneficial to the community; 8
(4) Operate a school, college or university located in this 9
State that conducts regular classes and provides courses of study 10
required for accreditation or licensing by the State Board of 11
Education or the Commission on Postsecondary Education, or for 12
membership in the Northwest Association of Schools and of 13
Colleges and Universities; 14
(5) Serve as a local or state apprenticeship committee to 15
advance programs of apprenticeship in this State; or 16
(6) Sponsor programs of apprenticeship in this State through 17
a trust created pursuant to 29 U.S.C. § 186. 18
5. In determining whether, for the purposes of subsection 3, 19
an organization is created for religious, charitable or educational 20
purposes, the Department and Commission shall consider whether 21
the organization: 22
(a) Operates exclusively for any exempt purpose under 23
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 24
501(c)(3), and the organization is recognized as exempt by the 25
Internal Revenue Service pursuant to section 501(c)(3) of the 26
Internal Revenue Code, 26 U.S.C. § 501(c)(3); 27
(b) Provides relief to the poor, distressed or underprivileged; 28
(c) Supports the advancement of religion; 29
(d) Provides for the advancement of education or science; 30
(e) Helps lessen the burden of government; 31
(f) Helps lessen neighborhood tensions; 32
(g) Supports efforts to eliminate prejudice and discrimination; 33
(h) Aids in defending human and civil rights secured by law; 34
or 35
(i) Combats community deterioration and juvenile 36
delinquency. 37
6. In addition to the requirements set forth in [subsection] 38
subsections 2 [, 3 or 4,] to 5, inclusive, an organization is created 39
for religious, charitable or educational purposes if: 40
(a) No part of the net earnings of any such organization inures to 41
the benefit of a private shareholder, individual or entity; 42
(b) The business of the organization is not conducted for profit; 43
– 4 –
- *AB535_R1*
(c) No substantial part of the business of the organization is 1
devoted to the advocacy of any political principle or the defeat or 2
passage of any state or federal legislation; 3
(d) The organization does not participate or intervene in any 4
political campaign on behalf of or in opposition to any candidate for 5
public office; and 6
(e) Any property sold to the organization for which an 7
exemption is claimed is used by the organization in this State in 8
furtherance of the religious, charitable or educational purposes of 9
the organization. 10
Sec. 1.5. NRS 372.348 is hereby amended to read as follows: 11
372.348 1. Any nonprofit organization created for religious, 12
charitable or educational purposes that wishes to claim an 13
exemption pursuant to NRS 372.326, must file an application with 14
the Department to obtain a letter of exemption. The application must 15
be on a form and contain such information as is required by the 16
Department. 17
2. If the Department determines that the organization is created 18
for religious, charitable or educational purposes, it shall issue a 19
letter of exemption to the organization. The letter of exemption 20
expires 5 years after the date on which it is issued by the 21
Department. At least 90 days before the expiration of the letter of 22
exemption, the Department shall notify the organization to whom 23
the letter was issued of the date on which the letter will expire. The 24
organization may renew its letter of exemption for an additional 5 25
years by filing an application for renewal with the Department. The 26
application for renewal must be on a form and contain such 27
information as is required by the Department. 28
3. If the Department determines that the organization is not 29
created for religious, charitable or educational purposes, or 30
otherwise does not meet the requirements to receive the exemption, 31
the Department shall provide the organization with a full 32
explanation outlining the reasons why the organization does not 33
qualify for the exemption and the procedure to appeal the 34
determination. 35
4. The Department shall, on or before January 15 of each 36
odd-numbered year, submit to Director of the Legislative Counsel 37
Bureau for transmittal to the next session of the Legislature a 38
report which must include, for the immediately preceding 39
biennium: 40
(a) Any processes and techniques for reviewing applications 41
for an exemption submitted pursuant to this section; 42
(b) The number of applications submitted pursuant to this 43
section; 44
(c) The number of applications approved; 45
– 5 –
- *AB535_R1*
(d) The number of application denied; 1
(e) The total number of organizations that received an 2
exemption pursuant to NRS 372.326; and 3
(f) Any other relevant information. 4
5. To claim an exemption pursuant to NRS 372.326 for the sale 5
of tangible personal property to such an organization: 6
(a) The organization must give a copy of its letter of exemption 7
to the retailer from whom the organization purchases the property; 8
and 9
(b) The retailer must retain and present upon request a copy of 10
the letter of exemption. 11
[4.] 6. The Department shall adopt such regulations as are 12
necessary to carry out the provisions of this section. 13
Sec. 2. NRS 374.3306 is hereby amended to read as follows: 14
374.3306 1. For the purposes of NRS 374.3305 [,] and 15
374.353, an organization is created for religious, charitable or 16
educational purposes if it complies with the provisions of this 17
section. 18
2. An organization is created for religious purposes if: 19
(a) It complies with the requirements set forth in subsection 5; 20
and 21
(b) The sole or primary purpose of the organization is the 22
operation of a church, synagogue or other place of religious worship 23
at which nonprofit religious services and activities are regularly 24
conducted. Such an organization includes, without limitation, an 25
integrated auxiliary or affiliate of the organization, men’s, women’s 26
or youth groups established by the organization, a school or mission 27
society operated by the organization, an organization of local units 28
of a church and a convention or association of churches. 29
3. An organization is created for charitable purposes if: 30
(a) It complies with the requirements set forth in subsection 5; 31
(b) The sole or primary purpose of the organization , 32
considering the factors set forth in subsection 5, is to: 33
(1) Advance a public purpose, donate or render gratuitously 34
or at a reduced rate a substantial portion of its services to the 35
persons who are the subjects of its charitable services, and benefit a 36
substantial and indefinite class of persons who are the legitimate 37
subjects of charity; 38
(2) Provide services that are otherwise required to be 39
provided by a local government, this State or the Federal 40
Government; or 41
(3) Operate a hospital or medical facility licensed pursuant to 42
chapter 449 or 450 of NRS; and 43
(c) The organization is operating in this State. 44
4. An organization is created for educational purposes if: 45
– 6 –
- *AB535_R1*
(a) It complies with the requirements set forth in subsection 5; 1
and 2
(b) The sole or primary purpose of the organization is to: 3
(1) Provide athletic, cultural or social activities for children; 4
(2) Provide displays or performances of the visual or 5
performing arts to members of the general public; 6
(3) Provide instruction and disseminate information on 7
subjects beneficial to the community; 8
(4) Operate a school, college or university located in this 9
State that conducts regular classes and provides courses of study 10
required for accreditation or licensing by the State Board of 11
Education or the Commission on Postsecondary Education, or for 12
membership in the Northwest Association of Schools and of 13
Colleges and Universities; 14
(5) Serve as a local or state apprenticeship committee to 15
advance programs of apprenticeship in this State; or 16
(6) Sponsor programs of apprenticeship in this State through 17
a trust created pursuant to 29 U.S.C. § 186. 18
5. In determining whether, for the purposes of subsection 3, 19
an organization is created for religious, charitable or educational 20
purposes, the Department and Commission shall consider whether 21
the organization: 22
(a) Operates exclusively for any exempt purpose under 23
section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 24
501(c)(3), and the organization is recognized as exempt by the 25
Internal Revenue Service pursuant to section 501(c)(3) of the 26
Internal Revenue Code, 26 U.S.C. § 501(c)(3); 27
(b) Provides relief to the poor, distressed or underprivileged; 28
(c) Supports the advancement of religion; 29
(d) Provides for the advancement of education or science; 30
(e) Helps lessen the burden of government; 31
(f) Helps lessen neighborhood tensions; 32
(g) Supports efforts to eliminate prejudice and discrimination; 33
(h) Aids in defending human and civil rights secured by law; 34
or 35
(i) Combats community deterioration and juvenile 36
delinquency. 37
6. In addition to the requirements set forth in [subsection] 38
subsections 2 [, 3 or 4,] to 5, inclusive, an organization is created 39
for religious, charitable or educational purposes if: 40
(a) No part of the net earnings of any such organization inures to 41
the benefit of a private shareholder, individual or entity; 42
(b) The business of the organization is not conducted for profit; 43
– 7 –
- *AB535_R1*
(c) No substantial part of the business of the organization is 1
devoted to the advocacy of any political principle or the defeat or 2
passage of any state or federal legislation; 3
(d) The organization does not participate or intervene in any 4
political campaign on behalf of or in opposition to any candidate for 5
public office; and 6
(e) Any property sold to the organization for which an 7
exemption is claimed is used by the organization in this State in 8
furtherance of the religious, charitable or educational purposes of 9
the organization. 10
Sec. 2.3. NRS 374.353 is hereby amended to read as follows: 11
374.353 1. Any nonprofit organization created for religious, 12
charitable or educational purposes that wishes to claim an 13
exemption pursuant to NRS 374.3305 must file an application with 14
the Department to obtain a letter of exemption. The application must 15
be on a form and contain such information as is required by the 16
Department. 17
2. If the Department determines that the organization is created 18
for religious, charitable or educational purposes, it shall issue a 19
letter of exemption to the organization. The letter of exemption 20
expires 5 years after the date on which it is issued by the 21
Department. At least 90 days before the expiration of the letter of 22
exemption, the Department shall notify the organization to whom 23
the letter was issued of the date on which the letter will expire. The 24
organization may renew its letter of exemption for an additional 5 25
years by filing an application for renewal with the Department. The 26
application for renewal must be on a form and contain such 27
information as is required by the Department. 28
3. If the Department determines that the organization is not 29
created for religious, charitable or educational purposes, or 30
otherwise does not meet the requirements to receive the exemption, 31
the Department shall provide the organization with a full 32
explanation outlining the reasons why the organization does not 33
qualify for the exemption and the procedure to appeal the 34
determination. 35
4. The Department shall, on or before January 15 of each 36
odd-numbered year, submit to Director of the Legislative Counsel 37
Bureau for transmittal to the next session of the Legislature a 38
report which must include, for the immediately preceding 39
biennium: 40
(a) Any processes and techniques for reviewing applications 41
for an exemption submitted pursuant to this section; 42
(b) The number of applications submitted pursuant to this 43
section; 44
(c) The number of applications approved; 45
– 8 –
- *AB535_R1*
(d) The number of application denied; 1
(e) The total number of organizations that received an 2
exemption pursuant to NRS 372.326; and 3
(f) Any other relevant information. 4
5. To claim an exemption pursuant to NRS 374.3305 for the 5
sale of tangible personal property to such an organization: 6
(a) The organization must give a copy of its letter of exemption 7
to the retailer from whom the organization purchases the property; 8
and 9
(b) The retailer must retain and present upon request a copy of 10
the letter of exemption. 11
[4.] 6. The Department shall adopt such regulations as are 12
necessary to carry out the provisions of this section. 13
Sec. 2.7. The provisions of subsection 1 of NRS 218D.380 do 14
not apply to any provision of this act which adds or revises a 15
requirement to submit a report to the Legislature. 16
Sec. 3. This act becomes effective on July 1, 2025. 17
H