SERVICE AND MAINTENANCE CONTRACTS
LIFE, A & H AND GAP INSURANCE
NRS 372.025 defines gross receipts subject to sales tax as the total amount of
the sale without any deduction for the cost of material used, labor or service cost,
interest paid, losses, or other expenses. As such, service contracts and the
charges for policies of insurance included in the total selling price of tangible
personal property are subject to sales tax.
There has been some confusion recently regarding optional service contracts
and charges for insurance policies sold in conjunction with vehicles and other
tangible personal property. Consequently, the Department will be initiating the
regulation process in the near future to clarify this issue. Until then the
Department will treat mandatory service contracts and charges for insurance
policies as a taxable portion of gross receipts, whether or not invoiced
separately. Optional service contracts and insurance policies, when separately
stated as non taxable, will not be treated as a taxable portion of gross receipts.