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Nevada Tax Commission to review mining tax deductions but new revenue unlikely for state budget


By Sean Whaley, Nevada News Bureau: The Nevada Tax Commission today agreed to undertake a review of the exemptions granted mining companies to ensure the proper amount of taxes are being paid by the industry to the state and county governments.

The request for the review came from Senate Majority Leader Steven Horsford, D-Las Vegas, acting in the capacity as a private citizen, using a state law to request the commission to undertake an emergency rule-making process.

But the commission, which agreed the review is necessary, opted to examine the mining industry exemptions with an eye to creating new, permanent regulations clarifying what can be deducted as expenses for extracting minerals from the ground. It will meet May 16 and set up a schedule for the review process.

This decision virtually guarantees that even if the exemptions are tightened up and more taxes are collected, that no new revenue will be generated to help with what some lawmakers say is a major funding shortfall in Gov. Brian Sandoval’s proposed two-year, $5.8 billion general fund budget that will take effect July 1.

Horsford made his request regarding mining tax deductions after hearing from former Department of Taxation Executive Director Dino DiCianno that mining industry audits to check whether the companies were paying the appropriate amount of tax had not been performed for the past two years. DiCianno resigned the day after making the comment.

Chris Nielsen, interim executive director of the agency, said today a round of audits is being scheduled and mining companies have been notified that the reviews will be taking place. He said the agency also has already agreed to review the mining tax deduction regulations.

Sandoval directed the agency to pursue audits of the industry.

Horsford cited several instances going back decades where previous Tax Commissions approved expanded mining tax deductions over the objection of Tax Department staff and attorney general legal opinions.

“My request for this review of emergency rule making is not a condemnation,” he said. “It is not a condemnation on the Tax Commission, on the Legislature, on the mining industry. This is about having a fair and equitable process that the public can understand and that meets statutory intent as well as the law.”

Regulations governing deductions need to be changed to reflect what is permissible in state law, Horsford said. The review is critical as the state faces the worst revenue shortfall in state history, he said.

“We have an obligation to make sure the state is collecting every dollar of revenue to which it is entitled so that we preserve education and other vital services,” Horsford said. “I am asking the Tax Commission to help us fulfill that obligation by adopting an emergency regulation that aligns deduction regulations with state law. The Legislature may also have to act to correct the discrepancies in statute beyond what is in the authority of the commission.”

Jim Wadhams, an attorney and industry lobbyist speaking on behalf of the Nevada Mining Association, also welcomed the review.

Clarity is important both for the mining companies that pay the taxes and the Nevada public, he said.

In a letter to Nielsen, the mining association identified some types of tax deductions that are worth reviewing.

Tax Commission Chairman Robert Barengo said adopting emergency regulations, which would only be in effect for 120 days, would be problematic. It would be better to undertake a thorough review of the mining exemptions in regulation to resolve the issue in a comprehensive way, he said.

The commission voted unanimously for this option.

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