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Free food is tax free says Nevada Supreme Court

By Chris Rizo | Mar 28, 2008

CARSON CITY -- The Nevada Supreme Court has ruled that food provided for free to casino patrons and some employees is exempt from the state sales and use taxes.

The high court sided with John Ascuaga's Nugget, a mega casino resort in Sparks that sought a tax refund from the state that the casino paid on complimentary, or so-called "comped" meals, for a period between April 1999 and February 2002.

The casino is requesting a $1.3 million refund from the Silver State, which is confronting a budget shortfall.

The court's 6-1 opinion overturns a decision by Washoe County District Judge Brent Adams, who sided with the state Department of Taxation. The Supreme Court ruling returns the case to Adams for "further proceedings with respect to the requested refund."

The majority opinion, signed by Chief Justice Mark Gibbons and five other justices, said "no taxable event occurred when the Nugget provided complimentary meals to its patrons and employees."

The majority ruling said the state constitution exempts most "food for human consumption" from sales and use taxes.

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

Justice Michael Douglas dissented, arguing that the state Legislature intended the tax exemption to apply to the purchase of food for preparation and consumption at home, not meals provided free of charge or otherwise by a restaurant.

"Thus Nevada law unequivocally requires a tax to be paid on meals that are provided free of charge to patrons and employees," he wrote.

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