CARSON CITY, Nev. — The Nevada Tax Commission agreed Monday to review mining regulations concerning deductions taken by the industry from net proceeds taxes.
Senate Majority Leader Steven Horsford, acting as a private citizen, had petitioned the commission to adopt emergency regulations to clarify the kinds of deductions that are allowed to be taken by mining companies under state law and regulations.
But during Monday's hearing, commission Chairman Robert Barengo noted that emergency regulations are only good for 120 days, and that if adopted, could lead to more confusion when the companies and Department of Taxation try to figure out what is owed.
Barengo asked that the commission take the more lengthy route necessary to implement permanent regulations.
Horsford, D-Las Vegas, said resolution is needed quickly because legislators are grappling with an estimated $2.5 billion revenue gap under Republican Gov. Brian Sandoval's proposed $5.8 billion budget plan. But he ultimately agreed with the chairman, asking that it be done "as expeditiously as possible."
"We need congruity between our laws and regulations," Horsford said.
The commission will begin the process at its next meeting May 16.
Last month, the Nevada Department of Taxation said it would step up audits of the industry after Nevada's former tax chief, Dino DiCianno, conceded his agency hadn't audited mines for at least two years and had no trained staff to do so. DiCianno retired the next day.
With gold selling at record highs, the mining industry has come under intense scrutiny this legislative session as lawmakers look for revenue. Horsford said he's not singling out the industry, but wants to make sure all businesses are paying their fair share.
Neither Horsford nor industry representatives could estimate how much the state may be losing to questionable deductions.
The Nevada Constitution limits mining taxes to 5 percent of net proceeds — an amount calculated after deductions are taken. State law restricts those deductions to actual costs of extraction and refining minerals.
But Horsford said those deductions have been stretched, and regulations passed by the commission to allow some write-offs are in conflict with state law.Comment on this story
Some commission members, however, took exception to his comments, saying the Legislature itself could be blamed for ambiguity in the laws they've written.
In a letter to the commission, Nevada Mining Association President Tim Crowley agreed there were areas that needed review and possible clarification, such as deductions for employee housing, exploration, corporate expenses and dues to the World Gold Council.
"Please understand that, to the best of their ability, association members comply with the statutes and regulations administered by the Tax Department," Crowley wrote.
Mining association lawyer Jim Wadhams told the commission Monday that the industry welcomes the review, but added that Crowley's letter should not be interpreted to mean such deductions are improper. Reconsidering the regulations, he said, could net the same result as existing practice.