Trump casinos in Atlantic City lose appeal to recover $2.7M in overpaid taxes

Trump casinos lose appeal on $2.7M tax overpayment

NEWARK, N.J. — Already facing decreasing revenue along with Atlantic City’s other gambling halls, Donald Trump’s three casinos there lost an appeal Friday to recover nearly $3 million from the state in overpaid utility taxes.

The taxes were charged in error by Atlantic City Electric between 1998 and 2001. The three-judge panel sided Friday with a state tax court that rejected the casinos’ argument that the four-year statute of limitations for filing for reimbursement should have been extended.

The filing was made in July 2006 for taxes paid through March 2001. Trump attorneys had argued the deadline should have been extended because the tax wasn’t clearly stated on the bills but was embedded in the service charges.

“An inquiry into the basis for that discrepancy would have revealed, and in fact did reveal, the embedded sales tax charges,” the judges wrote. “The error was discoverable because plaintiffs’ counsel discovered the error, albeit after the statute of limitations had passed for the periods raised in this appeal.”

The casinos’ contract with ACE exempted them from a 6 percent utility sales and use tax imposed by the state Legislature in 1998. However, ACE mistakenly collected the tax from January 1998 to March 2004 and didn’t itemize it separately on invoices, according to court papers.

The statute allows the tax to be contained “within the purchase price of the tangible personal property or service.”

The casinos wound up overpaying by about $2.7 million: $539,000 by Trump Plaza, $670,000 by Trump Marina and $1.5 million by Trump Taj Mahal.

The appeals court agreed with the tax court that the embedded tax did not offer grounds for extending the filing limit.

“To claim that the statutory requirement that the tax not be separately stated somehow entitled the Trump Entities to an unlimited time to seek a refund is absurd,” the judges wrote in quoting the tax court ruling.

A lawyer for the casinos said Friday that his client is reviewing the ruling.

The casinos successfully filed for refunds in 2005 on overpaid taxes assessed by the utility between 2001 and 2004. By the time they filed for the earlier overpayment, however, the statute of limitations had run out.

Revenue figures released by the casinos this week showed a 17.1 decrease for Trump Plaza in July compared to a year ago; revenue at table games fell 30.9 percent at Trump Marina as Pennsylvania and Delaware began offering table games at their casinos. Overall revenue at Trump Taj Mahal was up 7.1 percent, however.

Trump Plaza’s revenues suffered when the casino was forced to close for two days when a power plant failure left it without air conditioning.

For the first seven months of the year, revenue at Atlantic City’s 11 casinos was down 7.9 percent compared to the same period in 2009.