Vegas merchants complain about wholesaler shows

Monday, Oct. 4, 1999 | 10:04 a.m.

Nevada officials, concerned about a loss of tax revenue and complaints from retailers, are cracking down on wholesalers who pitch their wares at conventions and fail to pay sales taxes.

Some jewelers such as John Fish have complained for years that the industry is hurt by conventions that come to town and sell wholesale to retail customers.

He cites one incident in which one of his customers went to a convention at a Strip hotel, bought a $12,000 ring, and completed the exchange in the hotel bathroom to avoid paying the state sales tax of $840.

With a state sales tax of 7.25 percent, there is no estimate as to the amount of money lost by such transactions.

Dave Pursell, who became executive director of the state Taxation Department in February, is listening to complaints and taking a more active position.

"It's something we need to pay more attention to," he said.

In mid-August, he sent a revenue officer and an auditor to monitor the Associated Surplus Dealers/Associated Merchandise Dealers convention. He told convention promoter Sam Bundy they would be watching to ensure exhibitors followed state regulations and monitored who was allowed to enter the show.

The show, which meets at the Sands Expo and various hotels, draws almost 50,000 people and includes military surplus, gifts and housewares. One segment has hundreds of booths offering loose gemstones, watches and estate pieces.

"We left the table feeling everyone was comfortable and the promoter was willing to cooperate and comply," Pursell said. "By the second day, it became apparent exhibitors weren't filling out invoices and weren't paying sales taxes."

State officials met again with the promoter and reminded him violations would be subject to an audit, a procedure no business enjoys.

"From that point forward, transactions were documented," Pursell said.

Larry Scott, chief of the Taxation Department's Revenue Division, said the state would watch more of the jewelry shows if he had a bigger staff. Southern Nevada has 10 field revenue officers. In 1998, he estimated, the officers monitored about 12 or 15 conventions.

"There are thousands of one-time events that take place each year," Scott said. "We went to this one based on information we had received, but we also look for ads.

"Often what happens is they are advertised as closed shows and retailers are purchasing for resale, but in reality that doesn't happen."

He said people wander in and buy at wholesale prices, adding "It's unfair competition."

Carole Vilardo, president of the Nevada Taxpayers Association, applauded the idea of the state cracking down.

"All of us in Nevada's retail business have to comply with the law," she said. "The people who come in here for trade shows and flea markets should have to comply the same way we do."