New law, payment resolves Nev. casino meals tax

Aug 19, 2013 6:07 PM

For the past decade, the state of Nevada and the state’s casino operators have been at odds over the issue of whether the state could tax the casinos on the cost of free meals given by the properties both to its customers and to its employees.

The issue has finally been resolved.

This past week, the state’s Board of Examiners authorized $4.5 million in payments to casinos that had paid the tax but are no longer in business.

It said if the state had been determined to be liable for the amount of taxes collected from casinos on these free meals, it would have been liable for a potential $233 million. That possibility was eliminated during the most recent session of the legislature. The lawmakers approved a bill that supported an agreement between the state and the casinos absolving the state of any liability.

According to the AP’s Sandra Chereb, the problem gained prominence about 10 years ago when a casino operator sued the state, claiming it did not have to pay taxes on free meals. Complications developed in 2008 when the Nevada Supreme Court struck down imposing a user tax on free meals but left unresolved the question of whether such meals are subject to sales taxes.

Then several casinos filed for refunds on taxes paid on meals served to employees. The issue obviously was becoming a major burden for the state with the possibility court rulings could place the state in serious jeopardy.

In the bill passed earlier this year and signed by Gov. Brian Sandoval, the state agrees not to tax free meals in the future. And, the casinos agreed to withdraw their claims for refunds.

There was also relief for the casinos that paid the taxes erroneously; they will be granted tax credits. 

Ray Poirier is the longtime executive editor at GamingToday.

Contact Ray at [email protected].

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