Department of Taxation

UPDATE ON NEVADA SUPREME COURT
DECISION INVOLVING COMPLIMENTARY FOOD

The Nevada Supreme Court, in Sparks Nugget v. State, Dep’t of Taxation, 179 P.3d 570, ___ Nev. ___ (2008), concluded that the complimentary meals given to patrons and meals provided by the casino to its employees were not subject to use tax.  However, the Court stated, “we do not foreclose the possibility that complimentary meals such as the ones at issue…may be subject to sales tax where consideration is properly demonstrated.”  Id. at Footnote 15. 

A sale is defined as a transfer of tangible personal property for a consideration.  NRS 372.060(1).  Sale includes the furnishing…for a consideration of food, meals or drinks.”  NRS 372.060(3)(c).  Sales price is “the total amount for which tangible property is sold, valued in money, whether paid in money or otherwise…”  NRS 372.065(1). 

Given the existing statutory scheme and the guidance from the Nevada Supreme Court in Sparks Nugget v. State, Dep’t of Taxation, the Department of Taxation believes that meals which a casino provides to its customers in exchange for gaming play are given “for consideration” and are therefore subject to sales tax.  Additionally, where an employer gives an employee the benefit of a meal during working hours, the meal constitutes a transfer of tangible personal property for consideration.  Therefore, these meals are also subject to sales tax.

When it is determined that these meals are given for consideration, the Department will request that all entities which are providing complimentary meals to patrons and meals to employees for consideration begin collecting and remitting sales tax on the full retail value of complimentary meals given to patrons and on the total cost to supply the meals which are given to employees.