Comped Food In Casinos Not Taxable

By: AP
By: AP

CARSON CITY, Nev. (AP) - The high court's decision favors John Ascuaga's Nugget in Sparks, which had sought a tax refund from the state - and appears to extend to any other hotel-casinos that have paid taxes on such "comped" meals and decide to push for refunds.

It wasn't immediately apparent how much the ruling would cost the state, which is now trying to deal with a huge shortfall in projected tax revenues.

The majority ruling, which overturns a decision by Washoe County District Judge Brent Adams, was signed by Chief Justice Mark Gibbons and five other justices. Justice Michael Douglas dissented.

Describing the case as one of constitutional importance, the majority opinion states the Nevada Constitution exempts most "food for human consumption" from sales and use taxes," and "no taxable event occurred when the Nugget provided complimentary meals
to its patrons and employees."

Douglas wrote that by accepting the Nugget's arguments, "the
majority creates a loophole within Nevada's tax law that is
contrary to the plain language of the Nevada Constitution, the
pertinent statutes and the food exemption's purpose."

The majority ruling states that the food used to prepare the
"comped" meals qualified as nontaxable "food for human
consumption" when it was initially purchased by the Nugget, and
"no taxable event" occurred between that time and the time the
food was given away.

"Whether this exemption is the best approach is not for us to
decide," the majority opinion states. "We are bound to follow the
constitution's plain language even though a different result might
be desirable in some circumstances."

The Nugget claimed the refund for a period between April 1999
and February 2002. Its initial claim was rejected by the state
Taxation Department. After that, the resort sued but lost in lower
court. The high court's ruling returns the case to Judge Adams for
"further proceedings with respect to the requested refund."

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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