One interpretation of tax law causing a stir

Erin Neff and Cy Ryan

Tuesday, July 29, 2003 | 10:30 a.m.

One tax commissioner's interpretation of a section of the new tax law has created a slight firestorm of rumor in the gaming and business communities.

David Turner, a Certified Public Accountant in Reno and one of the state's tax commissioners, expressed concern that the financial institution tax included in the tax law might sweep in holding companies or gaming properties.

The 2 percent tax applies to financial institutions, which as defined in the tax law, are any businesses engaged in lending, securities, brokerage services or banking. Federal credit unions are excluded.

Turner said that since gaming companies extend lines of credit they could be considered financial institutions.

"If we had a legislative history," hearings in which there was testimony expounded on wording in the bill, "that might help," Turner said. "But we don't. We're stuck with the bare law."

Chuck Chinook, director of the state Department of Taxation that will administer the tax law, said the Tax Commission is going to adopt regulations better defining to whom the law applies.

"It would be nice to have regulations and guidance before Oct. 1 so taxpayers and accountants know the situation," Chinook said.

Sen. Randolph Townsend, R-Reno, and chairman of the Legislative Commission, said he has been working with tax commissioners, legislative attorneys and lobbyists to determine whether the interpretation requires additional clarification of the tax law.

"Whether it's a stretch or not, it's something we needed to look at," Townsend said.

Republican activist Dan Burdish, who is chairman of Nevadans for Tax Restraint, sent two e-mail notices Monday about the potential "unintended consequences" of the $836 million tax law.

Burdish at first said that gaming would likely have to pay the 2 percent financial institutions tax on top of its 7.5 percent gross gaming tax and the 0.7 percent payroll tax. Several hours later he retreated from that suggestion, saying only that some considered it possible.

Gaming lobbyist Greg Ferraro said Burdish's concerns raised some hackles in his industry.

"Anytime someone interprets something, even in the narrowest way, we're concerned about it," said Ferraro, a Reno-based lobbyist with R&R Partners. "In these cases you've got to be triple-sure."

Ferraro said that while he considers the interpretation "a reach," he wanted to be certain that other lawyers agree with him.