By Cy Ryan

Sun, Mar 30, 2008 (2 a.m.)

Carson City — The Nevada Supreme Court has given wider protection to whistleblowers who report their employers’ illegal activities.

The court has ruled there must be a district court trial in Reno to allow James McAndrews to prove he was fired after he claimed that International Game Technology fraudulently concealed sales and use tax money owed to the state.

McAndrews sued in 2003, claiming that the giant slot machine company and its subsidiaries owed up to $50 million in back taxes to the state. Under the law, he would have been entitled to a percentage of that figure if he proved his case.

But the Nevada Supreme Court rejected McAndrews’ suit in 2006. Shortly after that, McAndrews was fired.

He then filed another suit claiming the company had improperly fired him. He sought back wages, special damages, costs and attorney fees. The company argued the law allows employees to collect damages only if they are pressured into performing illegal acts and report the activities to authorities.

District Judge Connie Steinheimer of Reno ruled against the company, which appealed to state Supreme Court.

In a unanimous decision written by Justice James Hardesty, the state high court also ruled against the slot machine company. The company’s interpretation, Hardesty said, would void the Legislature’s policy “to protect employees who have acted lawfully” under the Nevada False Claims Act’s anti-retaliation section.

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In a victory for casinos, the Nevada Supreme Court has ruled that the state’s sales and use tax cannot be imposed on complimentary meals for guests and employees.

In a 6-1 decision, the court said no taxable event occurs when a casino buys tax-exempt food and then gives it away to patrons or workers.

As a result, the Sparks Nugget is entitled to a $501,369 refund on taxes paid to the state from April 1, 1999, to Feb. 28, 2002, the court said.

The ruling overturns the decision of District Judge Brent Adams, who had sided with the taxation department in ruling the company owed the taxes.

Although the Nugget taxes meals purchased by patrons, it does not tax complimentary meals to customers and employees. The state, however, thought the complimentary meals were taxable.

The court, though, agreed with the Nugget’s position that giving away tax-exempt food does not constitute a taxable event.

Justice Michael Douglas dissented, noting that a prior court decision held that “tax exemptions are strictly construed in favor of finding taxability and that any reasonable doubt about whether an exemption applies must be construed against the taxpayer.”