Courtesy of MGM
Tuesday, Feb. 14, 2012 | 4:08 p.m.
CARSON CITY — The state Tax Department has started notifying Nevada casinos to start paying sales tax on complimentary meals given to players and employees.
The department filed its official decision Tuesday on the long dispute with Boyd Gaming and its 12 casinos in Southern Nevada, stating that they must pay the taxes on the retail price of the meals given away for free. Taxation Director William Chisel said this serves as official notice to other casinos that they must also pay the tax which could bring in hundreds of millions of dollars.
Chisel said letters would be going out today or Wednesday giving notice to all the other casinos they are also bound by the decision on Boyd.
John Bartlett, an attorney for Boyd, could not be reached for comment Tuesday. But he said last month that a lawsuit would be filed in Clark County District Court as soon as the department's written decision is issued.
Chisel said the tax department issued a memo in 2008, calling for casinos to stop paying the taxes while the state and Boyd fought out the issue in court. Boyd asked for a refund on $21 million in taxes it had paid and other casinos are seeking $225 million in refunds.
The refunds were denied.
Before the dispute Boyd Gaming and other casinos paid a use-tax based on the purchase price of the food used in complimentary meals.
In a case involving the Sparks Nugget, the Nevada Supreme Court decided that if the casino prepared the food but gave it away, no taxable event had occurred. The tax department changed its position that these complimentary meals for players and free meal for employees were taxable at the retail level.
The department said a retail sale requires consideration. Here there is a change of value that defines a retail sale. Boyd Gaming has player clubs. Customers enter the club, provide the casino information and then gamble. In return they are eligible for prizes or free meals. "Consequently, the complimentary meals provided to Boyd's patrons were sales," according to the tax department decision prepared by Senior Deputy Attorney General Blake A. Doerr.
On the issue of meals for employees, the department said they were "a result of a bargained-for-employment contract whether under union contract or otherwise." This was an exchange between the casino and the employee and subject to the sales tax.
The decision by the tax department said Boyd Gaming received notification of the new policy on assessing sales tax years after the taxes in question were due. It said it would be unfair for the department to now assess an additional amount of tax to Boyd. "Consequently a waiver of the sales tax, penalty and interest which was assessed over and above the use taxes which were remitted by Boyd is warranted," said the department.
Chisel said the department is still considering its options.