Taxation moves to audit Nevada mines

Gov. Brian Sandoval's new taxation director laid out plans to begin auditing Nevada mining companies as soon as possible.

The plan came just a week after Chris Nielsen's predecessor Dino DiCianno told lawmakers no such audits had been performed for upward of two years.

Nielsen confirmed no audits were conducted last year despite record earnings by Nevada miners - especially gold miners with the price of that mineral now above $1,400 an ounce.

But he told the Nevada Tax Commission those audits won't start tomorrow because they have to assemble a staff of auditors capable of going through the books of large, multi-national corporations.

Nielsen said to do the job, the state has enlisted the help of Dennis Neilander, former longtime head of the Nevada Gaming Control Board. In a statement, Sandoval pointed to Neilander's extensive experience in managing audits of complex corporations - specifically major international gaming corporations.

He said taxation also will be borrowing some skilled auditors from Gaming Control.

In the short term, Nielsen said all mining operators have been notified there will be audits. He said the audit team will be put together and start training as soon as possible with audits beginning as soon as May.

Senate Majority Leader Steven Horsford, however, said that does little good for the current legislature, which ends in June. He urged the commission to take emergency action to make some changes in existing regulations he said are apparently being exploited by miners.

"The industry may very well be paying its taxes in full but we don't know," he said.

Horsford said even though the price of gold has leaped upward dramatically over the past couple of years, there was a decline in net proceeds of mines tax collections "that can only be attributed to deductions."

Horsford said the problem appears to be regulations that permit many more deductions than state law contemplated. State law, he said, allows deductions of direct cost of mining operations, refining and transportation. Regulations, he said, allow deductions for reclamation costs, out of state corporate salaries, pension plans and other things, "even though nothing in statute authorizes that."

He called on the commission to change those regulations immediately.

Commission Chairman Bob Barengo said Horsford's recommendations will be turned over to Nielsen but that the open meeting law precluded any action on them Monday.

Nielsen also said the taxation budget is being reviewed to see if more money is needed to hire additional auditors.

He said the long term plan will aim for 20 major audits of mining companies a year, regular updates to the commission and governor's office on the program and a thorough review of tax regulations on the subject.

The mining tax generates only a small portion of state revenues - about 4 percent or, this past year, $60 million. But Horsford said the state needs to ensure it is getting the revenue it is entitled to from every source, especially in these economic times.