Nevada Department of Taxation Sales Tax Audit Protest

The situation

Desert Build LLC is a 14-person general contractor in Las Vegas specializing in commercial tenant improvements. Annual revenue: $4.2M. In January 2026 Nevada DOT concluded a 3-year sales and use tax audit and issued a Notice of Deficiency: $94,500 in sales/use tax + $9,450 penalty + $7,100 interest = $111,050 total.

NVDOT's theory: Desert Build performed $2.8M in construction work under "fixed-price" contracts that the auditor reclassified as "lump sum" contracts, meaning Desert Build should have paid sales tax on all materials purchased at cost, rather than collecting sales tax from customers on the materials component. Desert Build had been treating its contracts as "time-and-materials" (collecting 8.375% Clark County sales tax from clients on the itemized materials invoices), which the auditor says is incorrect because the contracts did not give clients an itemized breakdown of material vs. labor costs.

What Desert Build doesn't know: Nevada's lump sum vs. time-and-materials distinction turns on whether the contract SEPARATELY stated the materials cost or whether it included materials in a fixed price. Desert Build's contracts used fixed "per project" prices, but they also provided clients with itemized invoices showing materials separately. The audit finding may be vulnerable to challenge: if the invoices gave clients sufficient transparency into the materials cost, the time-and-materials treatment may be defensible. The NV Tax Commission has accepted after-the-fact contract reclassification arguments where the factual record supports it.

Who receives this

Nevada construction contractors, retailers, and businesses receiving NVDOT sales/use tax audit deficiency notices. Primary segment: commercial construction contractors in Clark County and Washoe County with lump sum/time-and-materials contract classification disputes; and Nevada retailers and food service businesses with resale exemption or prepared food classification disputes.

Why the agency will not advise you

NVDOT cannot advise businesses on contesting its own assessments. My Nevada Tax is compliance-only. The construction contractor contract classification issue (lump sum vs. T&M) is a distinctively Nevada complexity that requires state-specific guidance. No self-serve NV DOR protest navigator found.

Key facts, with sources

• Nevada imposes sales and use tax under NRS Chapter 372. The combined state + county rate varies by county: Clark County (Las Vegas) 8.375%; Washoe County (Reno) 8.265%; other counties range from 6.85% to 8.375%. The Nevada Department of Taxation (NVDOT) audits business sales and use tax compliance. When NVDOT issues a Notice of Deficiency after an audit, the business has 45 days from the Notice date to file a Petition for Redetermination with NVDOT. If the redetermination hearing results in an adverse decision, the business can appeal to the Nevada Tax Commission, which is the independent state appellate body for tax matters. My Nevada Tax (nevadatax.nv.gov) is NVDOT's online portal for filing, payment, and account management, not audit protest strategy. Professional alternatives: Jeffrey Burr Law Firm handles NV Department of Taxation tax controversy; Sales Tax Helper (salestaxhelper.com/nevada) offers human consulting on NV sales tax audits ($3,000–$8,000 for audit defense). No self-serve NV DOR sales tax audit protest navigator was found. Common NV audit findings: (1) construction contractor contract classification disputes; (2) resale exemption certificate deficiencies; (3) hotel/transient lodging room tax issues; (4) food service prepared vs. unprepared food classification. Source: Audits — Nevada Department of Taxation · Nevada Sales Tax Defense — Sales Tax Helper · Nevada Department of Taxation Tax Controversy — Jeffrey Burr Law Firm

When to bring in a professional

Self-serve responses fit routine cases: clear facts, amounts a business can absorb, and a deadline still ahead of you. Bring in a licensed professional when the amount at stake is large relative to their fee, the facts are genuinely disputed, criminal exposure is possible, or the deadline has already passed. A short paid consultation to sanity-check your plan is often worth it even when you handle the filing yourself.

All sources for this guide

1. Audits — Nevada Department of Taxation
2. Nevada Sales Tax Defense — Sales Tax Helper
3. Nevada Department of Taxation Tax Controversy — Jeffrey Burr Law Firm