Fans beware: Nevada entertainment tax could soon expand

CARSON CITY — Fans of NASCAR, the Electric Daisy Carnival or the Burning Man countercultural event held every year in the Black Rock Desert in far Northern Nevada could soon have to pay a bit more to get their groove on.

Casino nightclubs, performances by disc jockeys and events staged around a hotel pool would also be taxed under the long-awaited measures from Assembly Minority Leader Marilyn Kirkpatrick to simplify and expand the live entertainment tax.

If Assembly Bills 392 and 393 win approval and take effect July 1, many events that have been exempted from the levy will soon be included under her proposed Luxury Discretionary Spending Tax. The tax rate would be 8 percent, or about $60 for a $700 VIP Tier 1 ticket to the 2015 Electric Daisy Carnival or $31 for a $390 ticket to Burning Man.

Many events already impose the tax. The levy brings in about $140 million a year, most from the gaming side from the major entertainment venues.

But Kirkpatrick has been working for years to close off loopholes in the tax, including outdoor concerts. She also wants to simplify the tax. There are now two different tax rates of 5 percent or 10 percent based on the size of the venue.

Kirkpatrick, D-North Las Vegas, said the idea is to capture tax revenue for costly entertainment events that most average Nevadans cannot afford to attend while excluding more modest forms of entertainment, from movies to bowling to swimming at the municipal pool to a round of golf.

“These are luxuries that no everyday, middle-class, blue-collar worker is going to be able to do,” she said.

Government-sponsored events at government facilities, such as collegiate athletics at UNLV held at the Thomas & Mack or Sam Boyd Stadium, would not be included either, Kirkpatrick said.

Nonprofit events would not be covered, but the veteran lawmaker said that could change for some types of nonprofits so their events would be assessed the tax.

Black Rock LLC, which runs Burning Man, recently transitioned to nonprofit status.

“It is really just to ensure that Nevadans who don’t go to these big extravagant things; that their quality of life is protected,” she said.

But from attending a Las Vegas 51s baseball game to a boxing match like the Floyd Mayweather vs. Manny Pacquiao event set for May 2 in Las Vegas, nearly all forms of entertainment would become subject to the 8 percent luxury tax under Kirkpatrick’s twin measures. Boxing bouts currently assess a separate 6 percent tax. The tax would go to 8 percent under her measures.

Also included would be the National Finals Rodeo and even tour operations that remained within state boundaries, Kirkpatrick said. Strip clubs must pay the tax now and would continue to do so under her measures.

Kirkpatrick has wanted to simplify the tax for years. Her proposal would set one rate and broaden the base of events. By making the litmus test for the tax an admission charge, it would also fix a problem with the imposition of the levy in some gaming-oriented situations.

Current law talks about whether music in a casino bar, for example, is background music versus a performance. One is taxed and the other is not, leading to some confusion for gaming properties.

A separate measure addressing issues on the gaming side of the tax has been introduced by Sen. Mark Lipparelli, R-Las Vegas. The uncertainty of when the tax applies on gaming properties is the issue Lipparelli is also trying to address with Senate Bill 266. He is a former chairman of the state Gaming Control Board.

Lipparelli said he supports the single 8 percent tax rate and that the intent is to try to make the changes revenue neutral.

“The main objective is to try to clarify the challenges around what is euphemistically referred to as the ‘ambient entertainment’ problem,” Lipparelli said. “So the main objective is to come to terms with a more ‘black and white’ standard.

“I think the industry is in favor of it; the regulators are in favor of it,” he said. “But it is harder to write than to do.”

Greg Ferraro, a lobbyist representing the Nevada Resort Association, said the primary goal is to get a clear definition of when the tax applies. To that end, the admission fee test appears to resolve the issue, he said.

“We want predictability and certainty,” he said. “We do end up in disputes. It’s been a problem for the taxpayer and the tax collector.”

The association has in the past supported the 8 percent tax rate, and will continue to work on other potential issues raised in the bills, Ferraro said.

Kirkpatrick, who said her measures are based on similar legislation in Florida, said she expects to see support for the bills when hearings are held in April.

But it could be an uphill battle to eliminate the exemptions many events have been granted over the past 10 years.

David Goldwater, a lobbyist who represents the Las Vegas Motor Speedway Fan Advisory Council, questioned whether a tax on NASCAR events is a good idea given the fact that attendance has stagnated or seen declines since the first race more than 10 years ago.

“The NASCAR Fan Advisory Council appreciates Assemblywoman Kirkpatrick’s efforts to find workable solutions for the challenges facing Nevada’s tax structure,” he said. “As we have shared with her, the NASCAR race held in Las Vegas has a tremendous economic benefit to our city and drives increased collection of many other state taxes, like sales, room, and gaming tax.”

Any tax would be passed through to fans and not paid by NASCAR, Goldwater said.

“Placing an additional tax burden on race attendees would serve to guarantee a further reduction in the number of fans who come to Nevada and patronize our hotels, restaurants, showrooms, casinos, car rentals and so many other businesses that create jobs in our state,” he said.

Changes to the tax are not a component of Gov. Brian Sandoval’s 2015-17 budget.

But Senate Majority Leader Michael Roberson, R-Henderson, said at a hearing earlier this session that the 2015 session will be the one where the entertainment tax is going to be “cleaned up.”

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.