Courtesy of Harrah's
Monday, May 14, 2012 | 6:04 p.m.
The Nevada Tax Commission has denied the petition of Caesars Entertainment for a refund of $31 million paid on complimentary meals for gamblers and employees.
The $31 million is a tentative figure as the commission will decide next month if the state is barred in retaining part of the amount by the statute of limitations.
After an extended hearing Monday, Commissioner David Turner said the decision of the administrative law judge should be upheld, rejecting the petition of Caesars.
Commission Chairman Bob Barengo indicated an appeal to the court would probably be made. After the decision, he told Caesars lawyer Norman Azevedo, "I understand you will want to appeal." Azevedo declined comment after the hearing.
The Nevada Supreme Court in 2008 said the state could not impose the use tax on the free meals provided by casinos to players. But it said the sales tax could be imposed.
This has opened a controversy, and the first payments of the sales tax are due June 1.
Turner, in making his motion to uphold the sales tax assessment, said, "Gaming in Nevada has had a pretty good deal. They were paying the use tax on the comps and employee meals."
"Whoever raised this issue raised a Pandora's box," he said.
The commission sided with state Deputy Attorney General Blake Doerr who argued the sales tax was due on meals provided to players but also on coupons given by the casinos for potential players to enjoy free meals.
On the sales tax on free meals given to employees, Doerr said it's a "bargain for exchange." The employee can only get the free meal on the day they are working and they are limited in the restaurants they can eat at.
But Azevedo argued the meals provided employees by casinos should not be subject to the sales tax. And the meals purchased on coupons should be exempt.
These coupons are issued for such things as a birthday wish. In Las Vegas alone, Caesars issues 150,000 coupons a month.
Doerr said, however, that this is a taxable sale.
Tax Commissioner John Marvel wanted to send the issue of statute of limitations back to the administrative law judge for further consideration. Instead the commission ordered the lawyers for both sides to submit briefs and the commission will consider the issue in June.
It was not immediately known how much will be affected if the commission rules in favor of Caesars. Azevedo said the state should be barred from imposing the tax because it was too late in answering for the money.