Nevada – Cash vs. Accrual

2/21/2013

SALT Report 2175 – In the latest edition of Nevada Tax Notes, the Department of Taxation addressed the sales tax implications of cash and accrual accounting methods.  Pursuant to NAC 372.040, retailers who accept terms other than “cash on delivery” must report their sales to the Department on the accrual basis.

In other words, a sale that takes place in January 2013 must be reported on the January 2013 Sales/Use Tax Return even though the total sales price may not have been received yet.  If your business is audited, and it is found that sales were reported later than the date of the sale; you will be charged interest on the late reported sales.

Retailers that are unable to collect all or part of the sales price of a sale that has been reported to the Department may claim the bad debt as a deduction on the Sales/Use Tax Return that covers the period during which the bad debt is written off as long as a bad debt deduction will be taken on the federal tax return.

The same is true with purchases subject to use tax. These purchases must be reported when the item is received or in some cases first used, not when the item is paid for.

For Further Information

Nevada Department of Taxation – Nevada Tax Notes