Car dealer move sparks tax concern

Tuesday, Oct. 21, 2003 | 11:22 a.m.

CARSON CITY -- A move by a Reno car dealer onto Indian land has caused a ripple of concern about loss of tax revenue both for the state and local government.

A Mercedes dealership is building its new headquarters on acres in the south of Reno that is owned by the Reno-Sparks Indian Colony.

Michael Pennington, a representative of the Reno-Sparks Chamber of Commerce, said today this will have a "definite impact" on tax collections. He said it would result in the loss of $4 million a year in sales tax.

Senate Majority Leader Bill Raggio, R-Reno, has asked for a legal opinion on the issue. He said that Legislative Counsel Brenda Erdoes feels that the car dealership would be exempt from the state sales tax if the tribe charged the same rate of taxation.

Erdoes said the law prohibits the state from collecting the tax if it has an agreement with a tribe to charge the same level on the Indian land.

The tribes in Washoe and Clark County have agreed to do so, state officials said. The tribes collect the taxes but keep those taxes.

There is some concern that this could expand statewide, not only to car dealers, but to other businesses. And that money, lost to the state, would end up in the coffers of Indian tribes.

Raggio said the law, allowing the agreement between the tribes and the state over taxation, may have to be re-considered. Asked about a special session of the Legislature, he said that point has not been reached.

"But if it is necessary, there would be a one-day session," he said.

A spokesman for Gov. Kenny Guinn said "There has not been any talk about a special session." Press Secretary Greg Bortolin said he has not heard about the issue so far.

In Clark County, the Las Vegas Paiute Tribe has land in downtown and also has land along U.S. 95 near Mount Charleston. The Moapa Paiute Band of the Moapa Indian Reservation had land about 55 miles northeast of Las Vegas off Interstate 15.

Tribal officials in Clark County couldn't be reached this morning to discuss if there were any plans to bring commercial ventures onto their land.

Despite having to charge the same in sales taxes, a company could see some serious advantages. The tribes could lease the land either for free or a reduced rate and the company would not have to pay as much as on private land. The company may not be charged property tax by the tribes.

Erdoes said she was not sure whether the Mercedes dealership would be exempt from property taxes under the arrangement in Reno.

Arlan Melendez, tribal chairman in Reno, was at a conference and could not be reached for comment. Neither could Chuck Rosenow, economic development director for the tribe or a representative of the Mercedes dealership.

Mercedes Benz does not have a dealership in Reno but has a service center now. The new dealership would be located on the Indian land and the service center would move its location to the tribal property.

Pennington said talks have been held with Reno city officials and will be held with state officials. He said Attorney General Brian Sandoval will be contacted for a legal opinion.

Chuck Chinnock, director of the state Department of Taxation, said the Reno-Sparks Indian Colony has an agreement with the state to charge the same level of taxation that allows the tribe to keep the money.

But if the sales tax was not charged on Indian land, than the state could collect it when the vehicle is registered, he said.

Sales of autos are the second largest generator in sales tax collection, behind only bars and restaurants.

The receipts from the sales tax are divided between the state, school districts and local governments.

This new development comes at a time when Nevada casinos are worried about the impact of gaming on Indian lands in California. Reno-Sparks casinos are concerned that a new casino near Auburn, Calif., could siphon off as much if not more than 15 percent of its business.

In Las Vegas, that is not expected to be a problem, said David Colvin, attorney for the Las Vegas Paiute Tribe, which has an 18-acre reservation downtown and has 3,800 acres of land held in U.S. government trust north of Las Vegas -- land that includes three 18-hole golf courses and a smoke shop/gas station.

"The Las Vegas Paiute Tribe's compact with the state deals with tribally-owned businesses," Colvin said. "The smoke shops (downtown and at the Snow Mountain reservation) and golf courses are all tribally owned.

"The tribe has not sought to attract outside businesses to conduct business on tribal land. And, if the tribe should do that, we would not expect that those non-tribally owned businesses would be tax-free, per our agreement with the state."

Colvin said that could change with the plans to build a resort and casino on the 3,800 acres north of town, but he noted such a resort would be tribally owned, possibly with outside gaming-experienced management running it.

Still, he said, nontribally owned businesses that could be allowed to build up around the planned resort on tribally owned land, probably would still pay taxes to the state under the Paiute's compact with the state, as he understands it.