No Mining Tax Audits in NV

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"Lack of Nevada mining-taxation audits prompts governor to 'retire' tax chief."

Nevada Taxation Director Dino DiCianno abruptly "retired" Friday after he told legislators he had no one trained to audit Nevada mining industry's net proceeds tax returns for at least two years. During a hearing before Senate Revenue Committee Thursday, DiCianno said he did not inform Gov. Sandoval of the staffing situation during the budgeting process.

DiCianno's admission to members of Nevada's Legislature couldn't have come at a worse time for Nevada mining operations, which have been targeted for additional taxation by teachers' unions and special interest groups.

Coincidentally, Barrick Gold issued a news release Thursday announcing it had paid record state taxes on its Nevada operations, prepaying $101 million in net proceeds of minerals taxes to the state on March 1, based on estimated 2011 operating results.

However, Nevada Department of Taxation (NDT) projected figures published by the Las Vegas Review Journal reveal Barrick's Nevada operations are expected to earn gross revenue of $3.72 billion this year with allowable deductions of $1.73B for net proceeds of ~$2B. Net tax after credits is projected to be $101.9M this year.

In total, the NDT projected miners would claim $4.2B in tax deductions in 2011 as many global miners proclaimed record earnings last year, thanks to record metals prices.

The Nevada Mining Association contends that increasing taxes on a single industry like mining, "is not a sustainable, long-term solution and would further expose Nevada's economy to the natural market fluctuations that affect the value of minerals."

Acting Tax Director Appointed

In the wake of DiCianno's admission of the lack of net proceeds tax audits, State Senator Majority Leader Steven Horsford demanded corporate projections for mining company profits.

Jan Gilbert of the Progressive Leadership Alliance of Nevada called the scope of allowable deductions astounding. The alliance hoped to triple the proceeds tax on the state's mines.

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