Last January the Nevada Tax Commission upheld a decision requiring a major casino company (Boyd Gaming) to collect and remit sales tax on the value of complementary meals provided to its gamblers. Boyd apparently plans to take the case to the Nevada Supreme Court.
In the meantime, the Nevada Tax Commission passed regulations on Monday requiring the state’s casinos and restaurants to pay sales tax on complementary meals provided to its employees and its patrons, reports the Las Vegas Review-Journal.
The Nevada Tax Department issued the regulations last February; casinos and restaurants must remit to the state, by July 15, taxes on meals comped as of February 15, 2012.
The tax base for comped employee meals is the cost of the food when purchased by the employer. The tax base for comped patron meals is the menu price.
Some implicated businesses may stop offering comped meals. Others may refuse to pay up awaiting a court decision and could face a possible 25 percent penalty, plus interest.
Last August, I wrote about a tax case in Nevada requiring Boyd Gaming to collect and remit sales tax on the value of complementary meals provided to its gamblers. Boyd Gaming then appealed the decision to the Nevada Tax Commission.
The Las Vegas Sun is reporting that the Nevada Tax Commission affirmed the ALJ determination. The millions paid by Boyd to the State representing the sales tax at issue for certain periods will stay with the state. At least for now.
This issue isn’t significant only for Boyd Gaming. According to the article, every casino in the state has a similar appeal pending. I have no reason to believe the results of pending appeals will be any different.
The issue is whether the comped meals are provided in exchange for the player’s agreement to gamble. If so, the transaction is considered a retail sale subject to sales tax in the state. The Nevada Supreme Court is likely to examine the issue.
If the Nevada Tax Department prevails, we may see a major change to how casinos approach providing rewards to its patrons.