CARSON CITY — Despite listening to seven hours of testimony in a case they have heard before, members of the state Tax Commission decided Tuesday they want more information before deciding in public whether Southern California Edison receives a $70 million tax rebate.
Chairman Thomas Sheets asked lawyers for the utility, Clark County, the state attorney general’s office and others to submit additional legal briefs by Oct. 27.
Members will decide in a Dec. 1 hearing whether Edison receives the rebate in a case in which the commission was found to have violated the state open meeting law.
In 2005, commissioners in a private meeting decided Edison was entitled to $40 million in rebates on sales taxes it paid on coal bought to fire its now closed Mohave Generating Station in Laughlin.
But the state Supreme Court ruled last year that the closed meeting violated the open meeting law and voided the commission’s decision in 2005 and a similar decision in 2007.
Because of interest, commissioners now might be deciding whether the refund should be as high as $70 million.
During a break in the hearing, Sen. Randolph Townsend, R-Reno, said the decision is crucial for state and local governments because other utilities could make similar requests for sales tax refunds.
He said legislative analysts fear as much as $500 million in refunds might be made if the commission rules for Southern California Edison.
The state, school districts and local governments receive sales taxes. All could be harmed at a time when tax revenues are declining because of the economic downturn.
Edison lawyer Norm Azevedo argued during Tuesday’s meeting that his company deserved the refund because the state Department of Taxation unfairly assessed sales taxes on coal the company bought from an Arizona mine but would not levy the taxes on coal mined in Nevada.
He said the state law allowing sales tax exemptions only for Nevada-produced minerals is discriminatory and violates the interstate commerce clause of the Constitution.
Southern California Edison bought its coal from a Peabody Coal Co. mine in eastern Arizona and shipped it 273 miles in a slurry pipeline to Laughlin.
Under Nevada law, minerals extracted in the state are not subject to sales taxes, but companies must pay a 5 percent tax on their net earnings. Traditionally, the law has been applied to gold, silver, copper and other minerals mined in Nevada, but not to coal.
Chief Deputy Attorney General Gina Session said no coal is mined in Nevada, and therefore no Edison competitor receives the sales tax exemption. Thus, no discrimination is occurring, Session said.
“They have the burden of showing that someone in Nevada is benefiting from our laws,” Session said.
Regardless of whether Nevada produces coal or not, Azevedo argued, the state cannot impose a tax on out-of-state products shipped to Nevada if the same tax is not assessed on Nevada products.
Paul Johnson, a lawyer for Clark County, said Edison’s call for the tax exemption was “irrational.”
He said only mining companies in Nevada that pay the state’s net proceeds of minerals tax are entitled to sales tax exemptions.
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