Nevada Casinos Get Refund on Sales Tax on Comps, Court Says
In a decision which may set precedent far beyond state boundaries, the Nevada Supreme Court affirmed its judgment forcing the refund of over $100 million to state casinos from tax coffers.
The court supported its ruling in March that declared no taxes were due the state regarding complimentary meals and drinks given patrons by the casinos. Previous policy had been that all comps were still subject to sales tax, a position the court rejected.
The Nevada Taxation Department had filed a petition asking the court to reconsider its judgment, but the justices held firm. State and local governments are now responsible for returning monies collected.
The court held that sales tax is due on meals sold, but not those given away, and that no consideration was in fact received by the casinos in exchange for the freebies.
Bars and restaurants nationwide are required to pay sales taxes on comped drinks and food, including discounts for employees or meals given away as response to complaint or as thanks for loyalty. It remains to be seen what effect the Nevada ruling will have on laws throughout the country.
The court's decision leaves Nevada facing even more problems with a budget already facing a major deficit.
Casinos may want to consider how far they push the tax issues in Nevada; the state needs money, voters are strenuously against raising their own taxes, and the teachers' union has already begun calls for increasing the minimal taxes (compared to other states) Nevada casinos face.
