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October 9, 2015

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Boyd Gaming to fight tax ruling on comped meals

Attorney John Bartlett says he wasn’t surprised by the decision of the Nevada Tax Commission to reject the request for a $21 million refund from his client Boyd Gaming, owner of 12 casinos in Clark County.

Bartlett says a suit will be filed in District Court in Clark County after the written decision of the tax commission is completed.

“They were just kicking the can up the road,” said Bartlett, suggesting the tax commission wanted to get rid of the case and send it into the courts. He said the commission already had its mind made up before the several-hour hearing Monday.

And the outcome of this case could affect the $225 million refund other casinos are seeking.

Tax Commissioner David Turner said after the decision the case would end up in the Nevada Supreme Court.

The commission upheld the decision of Administrative Law Judge Dena Smith, who ruled that Boyd’s employee meals and complimentary meals to customers were retail sales and subject to the sales tax.

Bartlett said he was “actually encouraged” by the ruling since the tax commissioners did not come up with anything unique. “They had no intention of giving away that money.”

Boyd paid the state’s use tax from 2000 to 2008 on food purchased for use in complimentary meals served to customers and meals served to employees.

In 2008, the Nevada Supreme Court ruled in a case of the Sparks Nugget that the sales tax could not apply to complimentary meals where there was “no consideration” in the transfer of personal property.

But the court left open a door for the state. It said, “Still we do not foreclose the possibility that complimentary meals such as the ones at issue in this case may be subject to sales tax where consideration is properly demonstrated.”

Blake Doerr, deputy attorney general representing the taxation department, maintained that there is “consideration” because the customer agrees to gamble and the casino provides a meal in return.

The employee agrees to work and Boyd agreed to provide a meal. These are transactions for “consideration.”

Boyd sought a refund in 2008 and was denied. The department in 2010 sent out deficiency notices that sales tax was due.

Bartlett said, however, the state has never collected any sales and use tax on the complimentary meals and employee meals since the 2008 decision.

The court decision has not been enforced, said Bartlett, because the state doesn’t have confidence in the ruling. He said the state hasn’t even collected from the Sparks Nugget.

“That’s one of the odd things about this case,” said Bartlett.

Bartlett estimates it will be two or more years before the Supreme Court makes a final decision. He says he has many other clients seeking the same thing.

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