Las Vegas Sun NewsBoyd sues over ruling that it must pay tax on comped meals
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The French Market Buffet inside Boyd Gaming’s Orleans resort. The Nevada Tax Commission ruled in January 2012 that casinos must pay sales tax on comped meals given to gamblers and employees.
Friday
17 February 2012
8:57 a.m.
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Gaming coverageBoyd Gaming Corp. of Las Vegas, as expected, has filed a lawsuit to overturn rulings by the state Tax Commission requiring it to pay sales taxes on complimentary meals provided to employees and customers.
The Tax Commission ruled in January that the comped meals were taxable "retail sales." The decision came as the panel rejected a $21 million refund sought by Boyd Gaming, a big casino operator with such properties as Sam's Town and the Orleans.
It's believed the ruling against Boyd will also result in the rejection of $225 million in potential refunds for other casino operators.
Carson City attorney John Bartlett, representing Boyd Gaming, this week filed a "petition for judicial review" of the decision in Clark County District Court in Las Vegas.
The court hasn't set a briefing schedule or arguments in the case. Whatever happens at the District Court level is likely to be appealed to the Nevada Supreme Court, attorneys say.
In his earlier unsuccessful arguments to the Tax Commission, Bartlett said complimentary meals were not taxable because cash transactions were not involved in them. He says there is no sale, and therefore there can’t be a tax.
The Tax Commission, however, found there is "consideration" provided in exchange for the meals — that is, gamblers spend money to earn points they exchange for food, while employees work partly in exchange for their meals.
"The definition of a retail sale in Nevada is broad and simply excludes items sold for resale," the Tax Commission ruling said. "A retail sale requires consideration. Consideration is merely value received, which can be measured and does not depend upon a monetary payment."
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As a frequent visitor to LV, I can understand why Boyd is contesting this. But I would suggest that NV is taking too much of a loss in tax revenue. I used to live in NV and understand the value of comps, but also understand the need for tax revenue, trying to balance the two so NV does not lose visitors.
Here in New Jersey where I recently retired to, comp rooms and comp meals means that you do not pay for the room or the meal, but you always pay the tax that the state collects, the same as if you did pay for the room or meal as a non comped customer.
For example, in order to get a comp room at Harrah's in Atlantic City, it still costs me around $11 a night in tax, based on a room rate of $200 per night. A meal might cost me $3.00 in tax, based on a ticket of $40 for the meal.
If NV would call the slate clean and start fresh with the casinos, it would be a win-win for both. Making this change to the tax collection process, it would stand to make millions a year.
In order to collect the tax, there are two options that can be used: 1) Have the customer pay the tax in cash at the time of check in or meal service - or - 2) Have the customer utilize cash back from their players club account, having that cash back deducted from their account to pay the tax.
Nevada would be able to collect needed funds and customers would not stop coming to Nevada to play in the casinos.