RSS 2.0 FeedVol. 4, No.9, September 2008, Tumbling Dice
Meal tax battle back on
Nevada Governor Jim Gibbons has once again decided to engage in a battle over taxes collected on meals that casinos comp to players and workers.
During a special session last month designed to address a serious budget shortfall, Gibbons initially asked lawmakers to pass legislation that would strengthen the state’s case that taxes are owed on complimentary meals. That legislation, which had bipartisan support, was ultimately killed by Republican lawmakers after Gibbons threatened to veto the bill if it reached his desk.
At the time, Senator Bill Raggio said Democrats were hijacking the bill to achieve political gains, while the governor said the issue was becoming too big of a distraction. At the time, he said that the state could still win on appeal, and that if that fails, the legislature can address the issue in 2009.
Now, Gibbons wants the state to use new legal arguments in an effort to avoid the estimated $142 million in refunds the taxation department owes the state’s casinos.
Gibbons wants the state to argue that the meals are comped in exchange for something else of value—a player who wagers enough is given a free meal or points they can use for the meal. Because that tract was not used in the original case brought by the Sparks Nugget, the state would have to bring a challenge against one of the other casinos seeking a refund.
Carson City attorney John Bartlett said the new approach will not work. If the state succeeds in arguing that comped meals are sales, the Tax Commission would have to institute a new regulation to cover the transactions. The new regulation could not be applied retroactively to the refund claims already filed.
The majority of casinos in Nevada have stopped collecting taxes on comped meals. Many seeking rebates say they are willing to work out a deal for tax credits rather than force governments to start writing checks. The $142 million in refunds includes $37 million from the state general fund, $41 million from the K-12 schools, with the rest coming from local governments, according to Gibbons spokesman Ben Kieckhefer.
During a special session last month designed to address a serious budget shortfall, Gibbons initially asked lawmakers to pass legislation that would strengthen the state’s case that taxes are owed on complimentary meals. That legislation, which had bipartisan support, was ultimately killed by Republican lawmakers after Gibbons threatened to veto the bill if it reached his desk.
At the time, Senator Bill Raggio said Democrats were hijacking the bill to achieve political gains, while the governor said the issue was becoming too big of a distraction. At the time, he said that the state could still win on appeal, and that if that fails, the legislature can address the issue in 2009.
Now, Gibbons wants the state to use new legal arguments in an effort to avoid the estimated $142 million in refunds the taxation department owes the state’s casinos.
Gibbons wants the state to argue that the meals are comped in exchange for something else of value—a player who wagers enough is given a free meal or points they can use for the meal. Because that tract was not used in the original case brought by the Sparks Nugget, the state would have to bring a challenge against one of the other casinos seeking a refund.
Carson City attorney John Bartlett said the new approach will not work. If the state succeeds in arguing that comped meals are sales, the Tax Commission would have to institute a new regulation to cover the transactions. The new regulation could not be applied retroactively to the refund claims already filed.
The majority of casinos in Nevada have stopped collecting taxes on comped meals. Many seeking rebates say they are willing to work out a deal for tax credits rather than force governments to start writing checks. The $142 million in refunds includes $37 million from the state general fund, $41 million from the K-12 schools, with the rest coming from local governments, according to Gibbons spokesman Ben Kieckhefer.
Please login to post your comments.