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You Sing, We Tax

November 21st, 2011 Leave a comment Go to comments

The state of Nevada is one of seven states that does not impose a tax on any personal income. To generate revenue, Nevada imposes a host of other taxes. Today we examine the reach of a particular excise tax. VEGAS INC is reporting the Nevada Gaming Commission recently determined that some restaurants are subject to the state’s live entertainment tax.

Chapter 368A of the Nevada Revised Statutes imposes an excise tax of 10 percent on admission charges and food purchases at facilities with a maximum occupancy of less than 7,500 if live entertainment is provided. One exception from the definition of “live entertainment”:

Instrumental or vocal music, which may or may not be supplemented with commentary by the musicians, in a restaurant, lounge or similar area if such music does not routinely rise to the volume that interferes with casual conversation and if such music would not generally cause patrons to watch as well as listen.

Last week, the Nevada Gaming Commission heard arguments regarding whether the exception applied to food and drinks sold at the Range Steakhouse in Harrah’s Las Vegas. The Nevada Gaming Control Board told Caesar’s Entertainment, which owns Harrah’s, that the steakhouse was providing entertainment interfering with casual conversation, and sought to collect over $500,000 in back taxes. Caesar’s filed a petition for redetermination to dispute the board’s findings.

via VEGAS INC

Like many Las Vegas restaurants, the Range Steakhouse has a bar. Pictured to the right, the bar is incorporated with a portion of the dining area. According to testimony, musicians performed on an elevated stage and took requests from customers. If a band is better than dreadful, I’d submit a request without hesitation. That point goes against Caesar’s, I suppose.

After painstakingly intense deliberations, the board held that the eight tables in the restaurant’s “Diamond Section” are exempt from the tax. To ascertain the winner of this ruling, I called the restaurant to find out the number of tables at Range Steakhouse. The pleasant woman who took the call actually hand-counted for me[1]: Seventy-one total tables. As a result of the Commission’s ruling, the food purchases at eighty-nine percent of the Range Steakhouse tables are subject to the live entertainment tax.

Now consider the number of restaurants in Las Vegas with live entertainment. It goes without saying the Nevada Gaming Control Board is exclaiming “winner, winner, chicken steak dinner.”


[1] No, I didn’t tell the woman I was calling to evaluate a tax ruling. I told her I was calling to settle a bet. And it worked like a charm.

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