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July 26, 2014

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Casinos warned to start paying taxes on comped meals

Image

Courtesy of MGM

The MGM Grand Buffet inside MGM Grand.

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.

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  1. I just wonder how they determine the cost of an employee meal, especially for people like me who usually take a pass on buffet style food that has very little to offer for diabetics?

  2. Chunky says:

    Really? Where will it stop? Where will the government stop digging around our pockets for loose change? Sure, let's beat down the casino industry even farther that the economy has already!

    Does this mean the employees who received comped meals in the EDR are going to be taxed on it as income by the IRS?

    This is prime example of an over-zealous Department of Revenue and State government beating us down and taking OUR money instead cutting THEIR expenses!

    That's what Chunky thinks!

  3. Better watch out, Chunky, you're starting to sound like a Republican. :)

  4. Something that most forget, even the folks in Carson city.

    Businesses don't pay taxes, people pay taxes.

    They make them pay sales tax on the retail amount of these comps then it will be made up somehow. Either in cost cutting or raising prices. It has to be, that is business.

  5. C'mon, Chisel, -- chisel money at the top of the corporations, not at the local player level!

    I'm all for the casinos paying their fair share of taxes, but this is going to HURT business, not help it. Sometimes, as a player, I feel the only thing I can "win" (smirk) is a meal or a perk. To start taxing them is going to make them go away...along with the local players.

    What's next? Taxing the sunshine at the pools?

  6. Hang on, the Casino Executives are working to define a source for the money from which to pay the comps - do they lay off some of the valets, maids, janitors, cooks, waitresses, bar tenders, bar maids, security personnel, window washers, etc. or do the owners and stockholders take a cut in dividends?

    "Did you ever have to finally decide?
    And say yes to one and let the other one ride?
    There's so many changes and tears you must hide.
    Did you ever have to finally decide?"

    Thanks guys, those were great words from greater thoughts, always relevant.

  7. Another linguist magic trick by the state of Nevada, change the definition. Kind of like how we have no more prostitutes in Nevada any more, they are all Sex Workers now. Anything to help collect a buck. Time to shrink government, BIG TIME.

  8. Hello, again the politician speaks out of both sides of their mouth. When they run for office you hear how they will work with business to grow. Then when they get in they vote to tax them and the people who do business with them. Other states do this taxing thing and it is a failure. So Nevada it is Monkey see Monkey do. Comps are not free you earn them. Comps are a reward and not everyone gets a comp. There are enough fee's on the other things in life and fee's are a hidden word for Tax. The government needs to figure out how to use the $$$ from the existing tax moneys more efficient and not spend their time figuring how to tax more to waist more $$$.

  9. I'm thinking that when we eat at the Gold Coast Buffet using the 2 for 1 coupon, they make us pay tax on the retail value of both meals. I think this is the case at every buffet we've eaten at in Las Vegas. I wonder if any news organizations have done any field research into how the casinos currently charge tax for comped and discounted meals?

  10. State level, federal level - it's all the same. Overpaid elected fools stealing our money in every way they can, while enjoying their own tax-free perks. Some day this nation will really get fed up with the shafting we've benn taking for decades and it's not going to be pretty sight. I wonder how long you can treat 300 million people like dirt and get away with it? I'm ready for the real revolution.

  11. Casinos are coming out way ahead anyway in Nevada even if they have to pay this stupid sales tax on comps. Their overall tax rate on casinos in Nevada is ridiculously low to begin with. Casinos in most other states pay anywhere from 15 to 50% on gambling win...Nevada casinos pay single digits. No wonder Nevada's state finances are a mess.

  12. ...it's common sense and logical...to be fair ..employees meal should be tax free because are given in good faith...patrons on the other hand should be consider as a cost of doing bussines!!...simple