Senate committee hears bill letting heavy-equipment renters add 2% recovery fee to offset property taxes

Senate Majority Leader Nicole Cannizzaro introduced Senate Bill 196 on behalf of the sponsor and told the Senate Committee on Revenue and Economic Development that the bill would let heavy-equipment rental companies charge a recovery fee to offset their tangible personal property tax liability.

"Senate Bill 196 authorizes a heavy equipment rental company to charge a recovery fee to offset taxes levied on certain heavy equipment," Cannizzaro said, noting the bill has been presented in prior sessions. She described the proposal as a remedy to Nevada's current rule that assesses a full year of personal property tax where the equipment is located on July 1, even if it is only in state for a short period.

Brian Gordon, principal at Applied Analysis, told the committee the recovery fee would be permissive and, if used by a rental company, would be limited to 2% of rental revenues. "This allows heavy equipment rental companies to charge if they choose to a recovery fee in the amount of 2% of rental revenues to offset their personal property tax liability that they currently incur," Gordon said. He said the bill requires the fee to be shown plainly on invoices, held in a separate account, and used only to offset personal property tax liability.

Proponents from the rental and business community testified in support. Kevin Gurn, vice president of government affairs for the American Rental Association, said Nevada has 22 ARA-member companies across 51 rental locations and urged the committee to advance the bill. "This will allow the ability for our members and companies to keep equipment in Nevada and offset property tax liability," Gurn said. Ed Noonan of United Rentals said the company operates 27 locations in Nevada and employs nearly 500 people and also expressed support.

Representatives of small-business groups and trade associations also supported the measure, saying it creates predictability for budgeting and may reduce incentives to physically move equipment out of Nevada around the July 1 assessment date. Trey Abney of the National Federation of Independent Business said the bill "applies to very small businesses as well" and gives them the choice to participate.

County officials testified they were neutral on the bill as amended. Joanna Jacob for Clark County and Cadence Matejevich for Washoe County said a recently proposed conceptual amendment removing certain subsections of section 15 addressed the counties' fiscal concerns and made the county fiscal notes neutral. Jacob said the amendment "removes all of the impacts to the county and potential having to redistribute the funds" that generated concern in earlier drafts.

Committee members asked about details including why the 2% ceiling was chosen, how assessors would validate equipment location and counts, and whether the change would reduce the incentive to move equipment out of state on July 1. Gordon said the 2% figure was derived from confidential rental revenues and tax liabilities provided by industry over several years and that county assessors would retain existing audit authority through the Nevada Department of Taxation to verify reporting.

No formal committee vote was taken during the hearing. The committee closed the hearing after receiving testimony and indicated the bill will return at work session with the amendment under consideration.