Casinos want to block collection of back sales tax
25 May 2012
Nevada casinos have called on the state Department of Taxation to halt collection of more than $200 million in back sales taxes due on past complimentary meals until the legal issues are decided.
But the department says it is going forward with the processing of the proposed regulation and it will be up to the Nevada Tax Commission, which meets next month.
And casinos wanted more answers on such questions as if the sales tax has to be charged on the free coffee provided their workers or how to treat coupons used by customers to get free or reduced-price meals.
The public hearing Wednesday was enlightened by Andre Rochat, chef and operator of a restaurant in the Monte Carlo in Las Vegas. He accused the taxation department of making it more miserable for business.
He said the department operates like a Gestapo. He told state officials, "You should be ashamed of it."
Josh Hicks, an attorney representing casino and retail interests, told tax department officials that the litigation on the complimentary meals on sales tax has been going "quite a while."
He said Boyd Gaming has already appealed one tax commission's decision and Harrah's is likely to appeal another. The tax commission had denied Boyd Gaming a refund of $21 million and Caesars Entertainment $31 million.
He suggested the tax department delay any decision until the Nevada Supreme Court rules. The case is not out of district court yet.
Chris Nielsen, deputy director of the tax department, answered numerous questions at the hearing. For instance if a patron buys 10 drinks and gets the 11th free, does the sales tax have to be charged.
Nielsen said it does not because the use tax had already been imposed on the liquor.
One speaker said that would be welcomed by Starbucks if it gives away an 11th cup of coffee after the customer buys 10.
Norman Azevedo, attorney for Caesars Entertainment, said it would be a major administrative cost in tracking the coupons. The Las Vegas operation issues 150,000 a month, he said.
The sales tax would also be imposed on meals given employees.
Azevedo also said the regulation may be premature in view of the pending litigation.
The Tax Commission will meet June 25 to consider adopting the regulations and also on the issue if the statute of limitations applies to some of the back taxes.
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