Nevada Mining Association President Tim Crowley wrote a letter to the state tax director Chris Nielsen saying that mines operating in the state have routinely claimed illegal tax deductions. The state laws allow for deduction of any expense that is related to the removal of gold ore and processing it into a marketable product.
However some deductions not mentioned by the NRS 362 (Method of taxation of patented mine or mining claims) but still allowed by the commission were employee housing, exploration, corporate or regional costs and payments to the World Gold Council. Other deductions that the mining companies have made are miscellaneous travel and severance pay to employees. Crowley said a review by mining industry accountants found regulators were approving these questionable deductions.
These are not allowable deductions and neither the writer of the letter nor the receiver is sure why they were permitted. The Nevada Tax Commission is now to rule if legislation to end these deductions is to be allowed. This will further reduce the exemptions that the mining industry has available.
The lawmakers and the public have been arguing that the state’s only booming industry in the recession should pay more taxes to help the budget shortfall. The mining industry is likely to see a number of its tax deductions swept away in the near future if the lawmakers have their way.