Washoe County lets casinos off the hook for USD 4.8M in back taxes

The Commission recognized that the county had been significantly miscalculating a portion of their gaming tax for seven years.

The commission voted unanimously to bill casinos for the correct amount, $994,696, this year but took staff's recommendation that it would be too complicated to collect the back taxes now.

The miscalculation of the complicated gaming tax formula referred to as "Chapter 491" taxes was discovered by the county's new budget manager and confirmed by an independent audit earlier this year.

The auditor found the miscalculation was shorting county government an average of $400,000 a year, while the city of Reno was being shorted an average of $100,000 and the city of Sparks was being shorted an average of $50,000 a year in gaming tax revenue.

Other local governments that rely on the tax, including local fire districts and general improvement districts, also have been losing money.

Fixing the mistake means local casinos and other gaming establishments will see a 30-fold increase in that portion of their gaming tax bills starting July 1, when the county will begin billing the legally required amount. The mistake applied only to what's referred to by the county as the "Chapter 491" tax, which accounts for a small portion of a gaming property's overall gaming license fee.

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The miscalculation of the complicated gaming tax formula referred to as Chapter 491 taxes was discovered by the county's new budget manager and confirmed by an independent audit earlier this year

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The casinos will have a year to pay the additional amount owed on their 2015-16 tax bill, the commission decided.

The Washoe County District Attorney said the commission legally could collect the back taxes, but county staff found that could be too complicated, according to a report given to the commission.

"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 many times," Mathers' staff report said.

Mathers also wrote that attempting to bill casinos for the back taxes could result in lawsuits that would be expensive and time consuming for the county.

The county still has to negotiate with other local governments such as the cities of Reno and Sparks over the $1.6 million owed to them from correcting the miscalculation, Mathers' report said.