Nevada casinos seek tax refunds on comped meals

CARSON CITY, Nev. >> Nevada casinos are pressing the state Department of Taxation to halt the collection of more than $200 million in back sales taxes due on past complimentary meals given to casino patrons and employees until various legal issues are decided.

The issue surfaced at a public hearing last week in Carson City held by taxation department officials, the Las Vegas Sun reported.

The department said earlier this year it would begin imposing a sales tax on comped meals as of Feb. 15 and assess a 25 percent penalty as well as 9 percent annual interest on all taxes not paid by July 31.

The agency, however, is still trying to adopt regulations on how to collect the sales tax.

Attorney Josh Hicks, who represents casinos and retail interests, noted litigation over the sales tax on complimentary meals has been going on for a long time.

He said Boyd Gaming already has appealed one Nevada Tax Commission decision concerning the issue, and Harrah's is likely to appeal another. The tax commission has denied Boyd Gaming a refund of $21 million and Caesars Entertainment a refund of $31 million.

Hicks urged the department to delay any decision until the Nevada Supreme Court rules on the matter. The case is still pending in district court.

But department officials say they'll move forward with processing the regulations on how to collect the sales tax, and the issue will then be up to the tax commission.

The department said earlier this year it would begin imposing a sales tax on comped meals as of Feb. 15 and assess a 25 percent penalty as well as 9 percent annual interest on all taxes not paid by July 31. But the regulations are needed before that can happen.

The tax commission, at a June 25 meeting, is expected to consider the regulations and whether the statute of limitations applies to some of the back taxes.

The issue has dragged on for years and has huge consequences for state coffers and casino companies in particular, as well as other businesses such as restaurants and taverns that provide meals to employees.

In 2008, the Nevada Supreme Court, in a ruling favoring John Ascuaga's Nugget in Sparks, struck down imposing a use tax on free meals but left unresolved the question of whether such meals are subject to sales tax.

Since then, casinos around the state have petitioned for refunds of those use taxes totaling hundreds of millions of dollars.