Tax challenges could cost $350 million

A series of cases challenging Nevada's tax laws could cost the state $350 million.

The case farthest along is the Southern California Edison demand for refunds of taxes the utility paid on coal imported to Nevada and burned at its Southern Nevada generating station.

The company originally sought refunds totaling $36 million, arguing the use tax "does not apply to the use or consumption of property acquired outside of Nevada in a transaction that would not have been a taxable sale if it had occurred within Nevada."

NV Energy filed a similar refund case for coal it burns at the Valmy and Reid-Gardner power plants.

With years of interest added on at a rate of 7 percent, the total amount the state would have to pay on those two claims if it loses in court is now about $138 million, according to Deputy Director of Taxation Chris Nielsen.

That issue, however, isn't the largest potential bill Nevada faces. As a result of the Supreme Court's decision saying the state can't collect sales tax on free meals Nevada resorts provide to employees and high rollers, the state could be forced to pay back more than $210 million to a long list of casinos.

The newest case on the list, however, was filed by Harrah's seeking refunds of sales taxes paid when they purchased three aircraft. When interest is added to the $8.5 million originally paid in sales taxes on the planes, the state would owe some $10.4 million.

The Southern California Edison case is currently before Judge Todd Russell in Carson District Court. No hearing is scheduled at this point. The Nevada Tax Commission originally approved the award for Southern California Edison but the Nevada Supreme court tossed it out because the commission violated Nevada's open meeting law by hearing the entire case behind closed doors.

The Sparks Nugget originally challenged the sales tax it had been paying on comp meals and won a judgment from the Nevada Supreme Court saying that it no longer had to pay the tax.

Following that opinion, a long list of casinos which had been providing comp meals to customers and employees demanded refunds for the taxes they had been paying. Neilsen said the total could surpass $210 million.

The Harrah's petition for a refund of sales taxes paid on three corporate aircraft was rejected by the Tax Commission. The company went to court arguing the planes were in continuous use in interstate commerce before they were brought to Nevada. They argue since the planes were taken to other states before being stationed in Nevada, no Nevada tax is owed on them and Harrah's is entitled to the refunds.