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Taxman looking at meal comps

Discussion in 'North American Land Based Casinos' started by jetset, Apr 10, 2008.

    Apr 10, 2008
  1. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    TAXMAN CHASING MEAL COMPS

    Nevada Supreme Court to reconsider ruling that freebie meals are non-taxable

    In a climate of a slowing economy and rising fuel costs, US land casino operators could soon feel the pain of another tax hit if the Nevada Attorney General's Office has its way. The Las Vegas Gaming Wire reported this week that the AG is to ask the Nevada Supreme Court to reconsider a March 27 ruling that free meals provided by casinos to patrons are not subject to taxation.

    Governor Jim Gibbons and state legislators are apparently concerned at the ongoing budget shortfall in the state and the possibility that it could grow by tens of millions of dollars, leading them to seek tax additional revenues, the report notes.

    The decision to ask the court to rehear the case of the Sparks Nugget versus the state Department of Taxation came after a closed-door meeting between the Tax Commission and the attorney general's office. Nicole Moon, a spokeswoman for Attorney General Catherine Cortez Masto, said a legal analysis of why the court should grant a request to reconsider its ruling will be filed early next week.

    The Tax Department has been collecting taxes on the free meals provided by casinos to patrons and employees. The ruling said the tax should not be collected, opening up the state to the potential of tens of millions of dollars in refunds.

    The ruling would result in about a $1.3 million refund to the Sparks Nugget. Other casinos have applied for refunds from the tax as well.

    If the decision stands, future tax collections would be lower because the meals are exempted.

    Rehearings can be granted if the court is found to have overlooked or misunderstood a relevant fact or if a question of law has been overlooked or misapplied.

    The news comes against a worrying slowdown in tourism to the gambling and entertainment capital of America. The Las Vegas Sun carried a long article this week on lower hotel prices and more aggressive promotions as casino resorts try to entice business.

    Quoting room rates of $75 at Harrah's, $69 at Bally's and just $199 at the Wynn Las Vegas and the Venetian, the article concludes that it doesn't take a Harvard MBA to figure out that Las Vegas is not currently firing on all eight cylinders.

    Even one of the Strip's most exclusive hotels, the Four Seasons, is offering a $50 credit on hotel services as well as rooms for less than $400 a night, the newspaper reports, and there's a blitz of promotions, from two-for-one meal and show offers to free cocktails and concierge services. Even the just-opened Palazzo is offering a $20 food credit and a $25 gambling credit.

    Airline and car traffic is down, and figures from the Las Vegas Convention and Visitors Authority largely show flattening growth in key indicators such as room rates and visitor traffic, although most casino bosses have yet to publicly acknowledge any slowdown in business.
     
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