Rushing to enact a tax package, the Nevada Legislature inadvertently exempted Union Pacific Railroad from a new payroll levy, a railroad lobbyist says.
Because the railroad pays into a federal unemployment fund, not the state fund, the law doesn't require it to pay the 0.7 percent tax on gross payroll, Joseph Guild Jr. told the state Tax Commission.
"I feel embarrassment," Guild said at a hearing Friday as tax officials worked on rules to put the new taxes into effect Oct. 1.
Guild said it looks like the railroad will get a free ride on the payroll tax until the law can be fixed by the 2005 Legislature, and also will get a break when the new levy goes into effect Oct. 1 and the existing $100-per-year per employee tax is repealed.
Union Pacific, which has been paying the old tax, has fewer than 200 employees in Nevada.
Barbara Campbell, chairwoman of the Tax Commission, said staff lawyers will check to see if Guild's analysis is correct.
The railroads have paid into a federal program to cover unemployment benefits instead of separate state ones since 1939.
"We stand willing to pay a corrected tax" if the 2005 Legislature enacts one, Guild said.
But as a public corporation, Guild said the railroad has a "fiduciary duty to its stockholders" and isn't going to pay anything it's not required to pay.