State tax director out after admitting no audit of mining industry taxes

Nevada's top tax man abruptly retired Friday, a day after he revealed his agency hadn't audited mining industry tax collections in two years and lacked trained staff to determine if the mining companies were paying proper net proceeds taxes.

In a statement, Gov. Brian Sandoval thanked Dino DiCianno for his years of service and wished him well in his retirement.

"He has been a loyal and dedicated public servant for three decades," Sandoval said.

The governor said Chris Nielsen, taxation deputy director, will lead the agency until a permanent replacement is found.

Sandoval asked Nielsen to prepare a transition plan and immediate strategy to resume auditing mine operators to ensure the proper payment of the net proceeds of minerals tax. He also directed the state's Internal Audit Division to assist the tax agency.

In a hearing Thursday before the Senate Revenue Committee, DiCianno told lawmakers that his department only had two-and-a-half people to conduct audits, and that they relied largely on the companies' revenue projections and reports in calculating taxes.

It prompted a terse exchange with Senate Majority Leader Steven Horsford, D-North Las Vegas, who at one point said he may "need to start taking blood pressure medication."

DiCianno also said the governor was unaware of the lack of audits, but that he had asked his staff to "dust off the internal audit manual" and get up to speed.

Nevada's mining industry, with gold prices soaring to record highs, is a shining target in the gloom of the state's budget battles as the state tries to claw its way out of the Great Recession while leading the nation in joblessness, foreclosures and bankruptcies.

Also revealed during Thursday's hearing were the business deductions the mining industry is allowed to take before declaring their taxable net income. The deductions include an array of expenses including advertising costs, severance payments, employee or worker bonuses and sales tax.

According to the taxation department, deductions for Barrick Gold Corp. will amount to $1.7 billion this year. These deductions lower the mining company's taxable income to $1 billion. Were taxation based on gross income instead of net, the tax department's report shows Barrick would face taxes on almost $2 billion in 2011.