Las Vegas Sun

April 24, 2014

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Courts:

Utilities, strip clubs fighting for tax refunds in court

The Nevada Treasury is facing some big hits in cases winding their way through the courts.

Southern California Edison began presenting evidence in district court in Carson City on Tuesday for a refund of more than $100 million on the use tax on coal it imported from Arizona for the Mohave Generating Station near Laughlin, and the Nevada Supreme Court has under study a request from NV Energy for a $25 million refund of the use tax it paid on the coal it brought from out of state.

Southern California Edison's non-jury trial before District Judge Todd Russell is scheduled to take about eight days.

Russell said the claims of Southern California Edison and NV Energy have overlapping issues. Russell; Charles Reid, representing Southern California Edison; and Senior Deputy Attorney General Gina Sessions, representing the Nevada Tax Commission, all agreed that any decision in the district court would probably be appealed to the Nevada Supreme Court and perhaps to the federal court system.

Reid said the refund amount includes interest. The state Tax Commission denied the refund and the utility filed suit in 2001.

Anthony Smith, the first witness for Southern California Edison, which operated the Mohave plant until it closed in 2005, said the company owned 56 percent of the plant. The Los Angeles Water and Power Department owned 10 percent, the Salt River Project Agricultural Improvement and Power District controlled 20 percent, and Nevada Power Co. of Las Vegas held 10 percent.

Russell asked whether customers get any money back if the refund was approved. Smith said a refund would be distributed to the partners and ratepayers may see a reduction over time.

About 20 witnesses are scheduled to testify in all.

In the NV Energy case, District Judge Janet Berry of Reno ruled that the use tax imposed on NV Energy violated the federal commerce clause, but she refused to grant the refund to the utility that owns Nevada Power Co. and Sierra Pacific Power Co. of Reno. A use tax is typically imposed when items are purchased from out of state and therefore are not subject to Nevada's sales tax.

The state could also take a hit in a case in which strip clubs in Las Vegas want an $8 million refund of their payments for the live entertainment tax, which they contend is unconstitutional. The clubs argue that topless or nude dancing constitutes free speech and expression that cannot be taxed. The Department of Taxation counters the state's live entertainment tax is a levy on business transactions and not First Amendment activities. The case is currently before the Nevada Supreme Court.

The Associated Press contributed to this report.

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