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May 5, 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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  1. Comped meal yes...should be taxed as they are getting something in return (gambled money), employee meals...NO, is part of the typical work for a hotel/restaurant and meals are included (not like they get a Filet).......I personally have never been a big Boyd gaming fan, as their houses typically pay at a lower return than other non-strip casinos. You don't hear about Station Casinos complaining about it. Boyd got caught NOT paying taxes for two years and is trying to get it cleared via a slight of hand instead of owning up to their obligations.

  2. Of course, Mark, since it's the "other" guy being taxed, you're all for it. But this ruling may come back to bite you and the rest of us on the butt as it gets expanded into other areas which will affect our pocket books. This is a "camel's-nose-in-the-tent" moment. Every "other" guy pays the tax BS somehow expands into a Frankensteinian monster that engulfs us all. Next, they will be taxing us on the trade-in value of our old cars when we buy a newer one. Impossible? That's what American's thought when the federal income tax was said to be never highers tham 1% and then, only on the "RICH." You "RICH," Mark? Pay any federal income taxes, Mark? Take heed from the past and be very skeptical of bureaucratic drones and their fellow travelers, folks.

  3. Yes, a meal is a meal and the party paying for it should be taxed. Casinos in Las Vegas pay less than half the taxes they pay anywhere else on the planet. Macau is at 40%. Where do you think they made the money to build in all the other locations. What "Public Works" can you see in Las Vegas that these very wealty individuals, that own the Casinos, built? Museums, Public Hospitals, Parks, Schools,etc... None are vested in the community, they make money and move it elsewhere. A Fair Tax should be insited on by the General Public.

  4. When people state "fair" when it comes to taxes you have to wonder what that really means. They compare it to other countries to try to justify raising the taxes here.

    In Macau the average construction worker building those casinos makes $68 per day. Less then workers at Burger King make here in Vegas.

    If we make the casinos pay the fair amount of 40% should they also get to pay the same "fair" wages they pay in other countries?

    Las Vegas casinos pay over 50% of the state budget between gaming taxes and sales taxes collected.

    What is really fair?