Nevada Sales Tax Does not Apply to an Auctioneer Involved in the Sale of the United States Property

The Supreme Court of Nevada in Reynolds Elec. &Eng'r Co. v. Nevada Dep't of Taxation,113 Nev. 71 , 930 P.2d 746 (Nevada 1997) held that an auctioneer involved in the sale of the United States (“U.S.”) property is not a retailer within meaning of the Nevada sales tax law. Therefore, it is not liable to pay state sales tax. 

This case involves sales tax liability of an auctioneer that conducts auction sales of U.S. government property.  In the instant case, Appellant Reynolds Electrical & Engineering Company, Inc.’s (“Appellant”) liability to pay Nevada sales tax was questioned.  Appellant manages auctions of surplus federal government property under a management and operating contract with the U.S. The Nevada Department of Taxation (“Department”) ordered Appellant to pay state sales tax on sales of U.S. property. Appellant appealed the order, and a Department hearing officer affirmed Appellant's liability. The Nevada Tax Commission reviewed

Appellant's appeal and affirmed the hearing officer's determination. Appellant sought judicial review, and the district court affirmed the Commission's order. Id at 74. This appeal followed. 
The Appellant contended that section 372.105 of the Nevada Revised Statutes (NRS) imposes sales tax only on "retailers" selling tangible personal property. The Appellant not being a retailer is exempted from Nevada sales tax.  

Section 372.055(1)(a) of NRS  defines a "retailer" as "every seller who makes any retail sale or sales of tangible personal property, and every person engaged in the business of making retail sales at auction of tangible personal property owned by the person or others." Id. at 73. The statute further provides that "person" shall include "any individual, firm,  corporation, but shall not include the United States, this state or any agency thereof, or any city, county, district or other political subdivision of this state." NRS 372.040 (emphasis added). Id. The court found that "others" in NRS 372.055(1)(a)("every person engaged in the business of making retail sales at auction of tangible personal property owned by the person or others") is intended to refer to other persons. See Wilshire Westwood Assoc. v. Atlantic Richfield Corp., 881 F.2d 801, 804 (9th Cir. 1989).  The Wilshire court held that the doctrine of "last antecedent" provides that qualifying words, phrases and classes must be applied only to words immediately preceding them. Id

The court noted that, by specifically excluding government entities from the definition of the term "person," the legislature intended to keep the government entities apart from other entities. Id. The court further stated that, by choosing to use the term "person" in defining a "retailer," the legislature exempted sales of government property, including that owned by the U.S., from state sales tax liability. Id.

In light of the above discussions, the Supreme Court found that the Appellant does not sell its own property, but sells property of the U.S. Because the U.S. is not a "person" or an "other" as defined in NRS 372.040, Appellant does not come within the  term “retailer” as used in the state sales tax statute. Id. Therefore, because the Appellant is not a retailer when it sells U.S. property at auction, the Department is without statutory authority to levy sales tax on these sales. Id.