State Lawmaker Asks Tax Commission To Tighten Regulations On Mining Tax Deductions

By Sean Whaley / Nevada News Bureau
CARSON CITY – State Sen. Steven Horsford asked the Nevada Tax Commission today to act immediately to tighten up regulations on the deductions allowed to mining companies before they must pay the net proceeds on minerals tax to the state and counties.
Appearing as a Nevada citizen rather than as the Senate majority leader, Horsford, D-Las Vegas, submitted a petition asking for the review.
Horsford highlighted discrepancies between Nevada law and regulations relating to mining deductions. He cited the rising price of gold and gross proceeds of mines, yet a decline in net proceeds on which mining companies pay taxes.
“We need to make sure that the mining industry is paying their fair share under existing state law,” he said. “However, there is another apparent discrepancy between the law and actual regulation, and it appears that ambiguity may be contributing to a widening gap between gross and net proceeds.”
Horsford requested the commission commence with an emergency rule-making proceeding to amend and clarify the net proceeds of mines regulations. He also urged a speedy review, saying lawmakers are looking for any potential revenues that could help offset major program cuts in Gov. Brian Sandoval’s proposed budget.
Based on a time-line presented to the Tax Commission by interim Executive Director Christopher Nielsen for beginning field audits in May, this appears unlikely, however.
The state’s general fund revenue estimates will be revised on May 1, and the Legislature will then begin the process of finalizing the budget over the following 30 days.
“As a legislative leader seeking to resolve our state’s unprecedented budget shortfall, I am committed to making sure we are doing everything that we can to collect revenues due to the state,” Horsford said. “As a citizen, I am exercising my right to petition the Nevada Tax Commission at this time to make changes in the regulation that interprets how state law applies to deductions taken by mining companies and determining the net proceeds of minerals tax they owe the state.”
Earlier this month it was disclosed at a Senate hearing that audits of mining company reports on net proceeds tax payments had not been performed for two years. Nielsen today outlined to the commission the plan to begin those field audits.
Sandoval, appearing on the Face To Face television program today, said of mining: “I think they pay their fair share.”
He also said: “The mining industry is going to receive notice that they’re going to be audited in the very near future.”
“They’ve been following the law. These audits will determine whether or not they’re paying what they’re supposed to.”
Horsford said his review of the law and regulations implementing the law show some ambiguities that may be widening the gap between the gross proceeds and net proceeds used as the basis to pay taxes to the state.
The law says the deductions allowed to mining companies are limited to those related to actual costs of mineral extraction, transportation, refining and sale, he said. But the regulation supporting the statute goes much further, Horsford said.
“It allows for deductions for out out-of-state corporate salaries not directly connected to miming operations,” he said.
Other questionable deductions are also allowed, Horsford said.
“What I’m proposing will give Nevadans greater confidence the mining industry is paying what is required under state law,” he said.
Audio clips:
Sen. Horsford says the Tax Commission needs to move quickly to help ensure revenues owed to state by mining companies are collected:
032111Horsford1 :12 to the state.”
Horsford says the Tax Commission needs to change state regulations to ensure all appropriate taxes are collected:
032111Horsford2 :18 owe the state.”
Horsford says ambiguities between state law and regulation may explain the gap between gross and net proceeds:
032111Horsford3 :13 their deduction claims.”