Official wants LV Monorail’s tax-exempt status revoked

Tuesday, Aug. 2, 2005 | 10:57 a.m.

CARSON CITY -- A Las Vegas member of the Nevada Tax Commission is challenging the tax-exempt status granted to the Las Vegas Monorail Co., saying the status should be revoked.

Commissioner George Kelesis of Las Vegas said it is a "travesty" that the state granted the tax-exempt status in March 2003, giving the monorail tax breaks that were designed mainly for charitable organizations.

Kelesis said the tax exemption for the monorail was "repugnant" and "should not have been granted."

Todd Walker, a spokesman for the company, said it "welcomes a review" and he noted that the monorail is a nonprofit company.

Kelesis said there is a world of difference between the monorail and other nonprofit groups that have been granted the tax exemption.

The Nevada Cancer Institute, for example, deserved the exemption because it is "trying to save people's lives."

In contrast, he said, the monorail stops at seven hotel-casinos and the Las Vegas Convention Center. It charges "top dollar" to ride and it recently signed another "multi-million dollar advertising contract."

The cancer institute isn't able to sell advertising in front of its center for a million dollars, Kelesis said.

The issues arose in the discussion by the tax commission on whether sales and use tax should be imposed on items purchased by contractors for projects for governments, religious and other tax-exempt groups.

Bombardier Transit Corp., the contractor for the monorail, wanted an advisory opinion from the tax commission that certain purchases for the monorail system -- such as computers and the rail cars -- should be exempt from sales and use taxes.

Paul Bancroft, representing Bombardier Transit, declined to comment whether the firm had paid sales and use tax on the rail cars and the computers. He said he did not know the costs of the rail cars. "I can't tell you how the cost was determined." He said it may have been "what the market will bear."

Walker said the monorail has not paid the taxes on those items mentioned.

The commission unanimously approved the advisory opinion, but reserved the right to examine whether the monorail company should be granted the tax-exempt status.

Senior Deputy Attorney General Greg Zunino and Deputy Attorney General Dean James both said that the tax commission could approve an advisory letter setting out what should be taxed. They said, however, that the commission could make a separate decision on the status of the monorail company.

"The tax commission can take the exemption away," Zunino said.

Zunino told the commission that a contractor should be required to pay the sales and use tax on items that improve the project such as the steel, wiring and drywall used in construction.

But on such things as personal property, such as the computers and rail cars, Zunino said the contractor acts as a retailer and the consumer pays the sales and use tax. In this case, the monorail is tax-exempt because of its nonprofit status and would not have to pay.

The commission initially rejected the suggestion of Kelesis that it withhold approval of the sales and use advisory opinion until the next meeting, when it again would consider the full issue including the tax status of the monorail company.

The commission then decided to approve the advisory opinion but said it would look at its next meeting whether the monorail rail company qualified for the tax decision.

The commission set Sept. 19 for its next meeting and it will be held in Las Vegas to consider the monorail issue.

Chuck Chinnock, executive director of the Nevada Taxation Department, said the monorail "falls under the broad spectrum of a charitable organization," a company that provides a service that government usually provides.

He said the application for the tax-exempt status from the monorail was received with hundreds of others at the time. A committee in the Taxation Department, including an attorney, agreed that the tax-exempt status should be granted.

He said the list of those seeking the tax-exempt status was submitted to the Tax Commission in a public meeting and there were no objections.

At the time, Chinnock said the department was receiving hundreds of applications and the commission did not want to go through every one so a staff review was started with the final approval from the commission.