Details emerge on AT&T's $27 million tax mistake

The Nevada Tax Commission will decide Tuesday whether to approve a significant tax refund for AT&T, which inadvertently paid sales and use taxes it didn't actually owe to the state of Nevada.

Tax Commission Chairman Jim DeVolld said Wednesday that AT&T had been paying Nevada sales and use tax on equipment it stored in its Reno warehouse but sold out of state. Nevada's tax code provides an exemption for goods sold out of state, even if they are first stored in Nevada, DeVolld said.

AT&T had paid the taxes from October 2013 to December 2014, resulting in the high amount of the refund, DeVolld said.

"It looks like it was an innocent accounting mistake by an AT&T accounting person," DeVolld said. "But it looks like a reasonable and fair request to me. It just kind of shocked me what the amount was."

State tax auditors are recommending the commission approve a total of $26.6 million paid to two AT&T subsidiaries.

DeVolld said he plans to have a robust conversation about the refund during Tuesday's tax commission meeting.

"We don't want to look like we are glossing over this," he said, particularly given one of the eight tax commissioners is the lobbyist for AT&T.

Randy Brown, director of External and Regulatory Affairs for AT&T, was appointed to the tax commission by Gov. Brian Sandoval in November.

DeVolld said Brown was told he must recuse himself from voting on the refund for his employer.

Word of the potential tax refund became public in October when the Nevada Department of Taxation warned local governments that AT&T may be due a $27 million refund, a move that could strain local government budgets.

The refund likely will be paid through credits to AT&T spread over several years in order to reduce the impact on government coffers.

This story has been updated with the recommended refund amount.