Jenny Kane

jkane@rgj.com

The Nevada Department of Taxation has pretty much sealed the deal: Burners for the first time will be paying the state's live entertainment tax in 2016.

On Tuesday, the taxation department sent Burning Man a written response to the San Francisco organization's December letter arguing that the 9 percent tax applied to ticket sales did not encompass the arts nonprofit which hosts an 80,000-person annual celebration in the Black Rock Desert, about two hours northeast of Reno.

"The activities that take place during Burning Man constitute live entertainment, whether or not those activities are provided by patrons of the event. Because Black Rock City is located on public land and access to the area during the event is limited to those who have purchased tickets, it meets the definition of a facility," wrote Nevada Department of Taxation Executive Director Deonne Contine. "Because Burning Man collects the taxable receipts from those attending the event, Burning Man is the taxpayer and responsible for paying (Live Entertainment Taxes) to the State of Nevada."

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Burning Man received the letter late Thursday, according to Burning Man spokeswoman Megan Miller, although the organization declined to comment about the taxation department's response on Friday.

Last year, legislators amended the live entertainment tax, a state law originally passed in 2004, to include a broader definition of entertainment, including outdoor festivals such as Las Vegas's Electric Daisy Festival and Northern Nevada's Burning Man. As is, the tax brought in about $137 million annually, most of which went toward the state’s general fund.

Although the money will not necessarily come straight from Burning Man's collected taxes, the state also revised the law so that about $150,000 would go toward the Nevada Arts Council in the future.

Burning Man, which expects to sell 72,000 tickets priced between $190 and $1,200 without tax this year, as an organization has not been on board with the tax, arguing that it does not provide the entertainment, its attendees do. Attorneys also argued that Black Rock City, the weeklong population that gathers in the desert each year for the event, is an experimental city instead of a festival.

The Nevada Department of Taxation shot each of the organization's theories down.

"A threshold question is whether the activities that take place during the week-long Burning Man event constitute live entertainment. The statue defines live entertainment as '...any activity rovided for pleasure, enjoyment, recreation, relaxation, diversion or other similar purpose by a person or persons who are physically present when providing that activity to a patron or group of patrons who are physically present,'" Contine stated.

She also argued that, while the department recognized that participants sometimes provided the entertainment, the number of tickets to the event exceeded 15,000, another qualifier for the tax.

In the past, the organization has expressed its opposition to the tax, which pegs Burning Man as a cash tap, according to the organization's December letter.

"From our perspective, this is the latest attempt by an outside entity to unfairly tap the resources of Burning Man and its participants,” wrote Burning Man's legal counsel, Elizabeth Stallard, in December. “Some seem to view Burning Man as the ‘golden goose’ they can turn to when they want money for other projects.”

Stallard wrote that exemptions made for schooling, sporting and racing events were unfair, and noted too that Burning Man, along with its participants, spend about $50 million in the state. Burning Man released comprehensive tax documents for the first time in December to the public, revealing that the organization netted about $2.4 million in 2014.

At the same time, Burning Man estimated that the state would collect about $2.8 million from ticket sales at Burning Man 2016, were the tax to apply to Burning Man. Although, that was before Burning Man announced an increase in ticket prices earlier this week, meaning $2.8 million is a likely lowball estimate.

Either way, the tax will be collected at the time of the purchase, so it's not really out-of-pocket for Burning Man, but instead for the ticketholders. Some Burners were hopeful that they would be reimbursed for the tax if the state taxation department decided to turn over the tax for Burners, which Burning Man suggested might still happen it its online journal Wednesday night.

Burning Man is required to register with the state for the live entertainment tax, according to its letter, before the first series of ticket sales begin later this month.