Reno Casinos Off the Hook for Nearly $5 Million in Back Taxes, Washoe County Takes Responsibility

Posted on: April 14, 2016, 12:28h. 

Last updated on: April 14, 2016, 12:51h.

Casino.org Staff Writer Read More
Expertise: Commercial Gaming.

Reno casinos and other gambling venues spread throughout Washoe County won’t be held responsible for $4.8 million in unpaid taxes that the county is technically owed.

Reno casinos Washoe County taxes
Reno casinos won’t need to find a way to pay nearly $5 million in back taxes stemming from calculation errors on the part of Washoe County Commissioners. (Image: reno.com)

The Washoe County Commission voted unanimously on Tuesday to forego trying to recoup back taxes from the jurisdiction’s casinos that stem from the county’s miscalculation and under-collecting of gaming taxes accrued over the last seven years.

In early February, accounting and audit firm Grant Thornton LLP notified the Washoe Board of County Commissioners that it had been under-billing casinos in the county dating back to the 2008-09 fiscal year. Washoe District Attorney Christopher Hicks ruled that the county had the legal right to retroactively bill the $4.8 million to casinos and collect those funds.

But Christmas came in April for Washoe casinos, as the local leaders opted to take responsibility and not punish the venues for their own wrongdoing.

“We believe that any attempt to retroactively collect . . . will be met with legal challenges with collections delayed for many years and involve a significant amount of staff time,” Washoe County Budget Manager Mark Mathers said.

“For the County to retroactively attempt to collect millions of dollars of revenues from business owners who paid the amount they were billed, have closed their financial books and made a multitude of decisions based on their financial situation since then, which now could be severely disrupted, raises many questions and concerns.”

Cross County Impact

Washoe’s decision to waive the due revenue comes at a steep price, however. Of the $4,833,930, Washoe would have actually collected $3,221,467, with the remaining $1.6 million distributed to other local government departments.

The City of Reno, for instance, would have stood to receive $743,265, should the county have gone after the lost monies. The City of Sparks is due $367,425, while the Truckee Meadows and North Lake Tahoe fire protection district departments are owed a collected $346,960.

According to the Washoe County Commission report, more than 340 commercial businesses receive gaming tax bills each quarter.

“During the seven-year period that gaming taxes were under-billed, many of these operators have ceased operating, changed ownership (sometimes more than once), and the basis for their bill may have changed,” Mathers further explained.

AC Dicey

But 2,700 miles east of Reno, the casino and tax climate is vastly different back in Atlantic City, New Jersey. The eight remaining casinos that are still calling the financially strapped gambling mecca of the East home assert they’re being overtaxed at rates still being imposed from the region’s heyday.

Tourism to the area has slowly declined over the last decade amid the Great Recession that started a decade ago. Casino legislation being passed in nearby states has also impacted Atlantic City’s influx of resort visitors.

In February, the Borgata, the area’s most profitable resort, stopped paying taxes to the local government after a judge ruled that Atlantic City owed the resort $62.5 million for taxes paid between 2009-2010.

A tax assessor valued the Borgata at $2.2 billion in 2009, and the venue paid taxes based on that assessment. However, a tax court reduced that valuation to $880 million in 2013, after the Borgata challenged the initial assessment, meaning the casino operator paid $62.5 million more than it should have.