Courts have oftentimes been asked to define the characteristics of a “tax,” and how they differ from other kinds of monetary exactions such as “fees.” The distinction is one that is not always observed with nicety in judicial decisions¹. Notwithstanding, and as elsewhere explained, just because staff and past Boards have labeled many of the District’s exactions² “fees,” doesn’t necessarily make them so. That’s because

“The nature of (a)…charge…(the) law imposes is not determined by the label given…but (rather)…its operating incidence.”³

Thus whenever the question is presented,

“Courts will determine and classify (monetary exactions) on the basis of realities”⁴ rather than labels, looking to their “operative effect.”⁵ Especially when as here, the RFF/BFF were “undoubtedly drafted with [NRS 318.197(1)’s reference to “standby service charges, for services or…the availability of service” language firmly (and disingenuouusly) in mind.”⁶

In other words, courts will not allow local governments to do what our District regularly does. That is, let “the ends justify the means” by calling their revenue exactions something they are not! And with this introduction, we ask what are the “operating incidences”³ of the District’s various exactions? What are their “operative effect?”⁵ What are their realities⁴?

The Purpose of Taxes: Generally speaking “the word ‘taxes’ is very comprehensive, and properly includes…all burdens, charges and impositions by virtue of the taxing power.”⁷ Typically they represent:

“Burdens or charges imposed by legislative authority on persons or property to raise money for public purposes, or, more briefly, an imposition for the supply of the public treasury.”⁸ Or “enforced proportional contributions from persons and property, levied by the state…or its municipal subdivisions¹…by virtue of its sovereignty for the support of government, and for all public needs…where the special benefits derived from their performance is merged in(to) the general benefit.”⁸

Traits Generally Associated With Taxes: To get an idea of those traits, let’s examine the Nevada Supreme Court’s decision in Clean Water Coalition, supra, at 127 Nev. 314-15:

“A tax…is…an exaction of money for the purpose of generating revenue⁹…(It) is compulsory¹⁰ and…entitles the taxpayer to receive nothing except the governmental rights enjoyed by all citizens.” In contrast, “a user fee is optional and applies to a specific charge for the use of…a government-provided benefit.”¹¹

The Distinction Between Exchange And Exchange–Like Versus Nonexchange Transaction Traits: and its relevance insofar as fees and taxes are concerned. Before we examine the traits which distinguish fees from taxes (see the discussion below), we point to the distinction between exchange and exchange-like and nonexchange transactions. Given NRS 318.197(1) addresses “rates, tolls (and) charges” where a particular good or service¹² is furnished in consideration of payment, as we have concluded in our What is a Fee discussion, all of the rates, charges and fees IVGID is authorized to fix are actually the product of exchange or exchange-like transactions¹³. Conversely, those which are not, must be the product of nonexchange transactions². Therefore, determine the type of transaction, and you will determine the type of exaction (i.e., fee or tax).

Traits Which Distinguish “Fees“ From “Taxes:” In Emerson College v. City of Boston, 39 Mass. 415, 424-25, 462 N.E.2d 1098 (1984) the Massachusetts Supreme Judicial Court identified three fundamental traits which distinguish fees from taxes:

Fees: “[1.] are charged in exchange for a particular government service¹⁴ which benefits the party paying the fee¹⁵ in a manner ‘not shared by other members of society[;]’¹⁶…[2.] are paid by choice¹⁷ in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge[;]”¹⁸…(and,) [3.]…are collected not to raise revenues⁹ but to compensate the governmental entity providing the service…for its expenses.”¹⁹ Only when “those criteria (expressly) fit the charge…is…it…a fee.”²⁰ “Otherwise, it is a tax!”⁹

The Limited Modification To Those Traits: “The Hawaii Supreme Court in Medeiros adopted a modified version of the above test (articulated by the Massachusetts Supreme Judicial Court in Emerson College); one which analyzes whether²¹ the charge:

“(1) Applies to the direct beneficiary of a particular service,

(2) Is allocated directly to defraying the costs of providing the service, and

(3) Is reasonably proportionate to the benefit received²².

If those criteria fit the charge, it is a fee.”²³ “Otherwise, it is a tax!”⁹

The Element of Choice: Although “the element of choice…factor (was omitted in Medeiros‘ modified what is a fee test²⁴)…as a compelling consideration…which c(ould) be used to invalidate an otherwise legitimate charge,”²⁵ this omission is not warranted when it comes to so many of the District’s exactions² which unlike expressly excepted charges for the disposal of low-level radioactive waste²⁶, emergency medical services²⁷, sewage disposal services²⁸, or drinking water services²⁹ identified in Medeiros, supra, at 89 Haw. 367, do not evidence the “very specific and (necessarily) limited circumstances” under which the element of choice can sensibly be disregarded²⁴ as a compelling consideration.

Moreover, Because Operation Of The District‘s Public Recreation Facilities³⁰ Is a Proprietary Function, Some Aspect of Contract Or Consent Remains Necessary: Because

“Adoption of a charge for the privilege of (the availability of recreation)…at…publicly owned (facilities) generally is governed by the same rules and regulations that apply to a private landowner, there must be some aspect of contract or consent.”³¹

Otherwise, the charge therefore is a tax⁹. That’s because

“The various commercial transactions by a municipality in the operation of (public recreation facilities) from which it seeks to derive revenue are only in part indicative of its commercial character, the full significance of its commercial nature (is) exemplified by the desired opportunities…for increased prosperity…secured through air commerce. This classifies the (District’s recreation facilities) with such public utilities as electric light, (sewer), water and transportation systems — universally classed as proprietary.”³²

Based upon the foregoing then, an otherwise legitimate “Fee“ May Represent A “Tax:”³³

1. When Its Proceeds Generate More Revenue Than The Reasonable Cost Government Incurs to Furnish a Specific¹⁹ Special Service, Benefit, or Privilege: Since “a fee is not a revenue measure, but a means of compensating…government for the cost of offering and regulating the special service, benefit, or privilege³⁴, [i]f the ‘fee’ unreasonably exceeds the value of the specific services for which it is charged³⁵, as a contribution toward the cost of maintaining governmental functions, where the special benefits derived from their performance is merged in the general benefit,”⁸ “it will be held (to be) invalid” as “a tax.”⁹

Moreover, even where only a portion of a “fee” represents more than the reasonable cost government incurs to furnish an alleged special service, benefit, or privilege, the entire amount will be held invalid as a tax. Because “a court cannot apportion the charge (n)or ascertain and allow (only) such portion as it may find reasonable.”³⁶ That’s a legislative function.

2. When Its “Purpose is Expressly to Raise Revenue:”³⁷ Which explains why taxes typically “exceed…the value of the specific services for which (they are arguably) charged.”³⁸

3. Because of The Manner in Which Its Proceeds Are Expended: According to Clean Water Coalition³⁹, a fee can be transformed into an impermissible special tax because of a change in the manner within which it is expended⁴⁰.” Such as,

4. When It Pays For “a General Benefit to“ Society As a Whole⁴¹: rather than “a (special) benefit (to) the (payor) not shared by other members of society.”⁴² This principle was discussed by the Washington Supreme Court in Okeson v. City of Seattle, 150 Wash.2d 540, 78 P.3d 1279, 1285 (2003) where the question presented was whether a charge assessed on landowners to provide and maintain street lighting represented “a tax or a fee to pay for those costs.” Notwithstanding money was being raised to pursuant to the permissible municipal police power⁴³ (i.e., lighting streets), the charge was declared to be an invalid tax because

“There was no relationship between the fee imposed on City Light customers and the streetlight service they received or the burden that they produced.” In other words, no “special benefit” was being furnished because those who were charged were not the only persons benefited thereby⁴⁴.

Similarly, in Lane v. City of Seattle, 164 Wash.2d 875, 194 P.3d 977, 978-79 (2008), the Washington Supreme Court addressed a fee for “providing fire hydrants…a government responsibility…which a government (rather than its utility ratepayers) must pay.”

“Here, the purpose of charging ratepayers a hydrant charge is…to increase revenue for the city and not to regulate hydrants or water usage, indicating a tax. (Although) the money goes to a hydrant fund, making it more like a fee…ratepayers pay the same fixed hydrant cost whether they use hydrants or not, indicating a tax. All benefit by having water available to put out fires⁴⁵…(And) for purposes of deciding a tax or fee, hydrants are very much like streetlights (see Okeson, supra, at 150 Wash.2d 552. Therefore,) as in Okeson, the charge here is a tax.”⁴⁶

5. When It Is Transformed By a Constitutionally (Article 4, Section 20⁴⁷) Impermissible Special⁴⁸ or Local Law⁴⁹: Although NRS 318.197(1) empowers general improvement district (“GID”) Boards to “fix, and from time to time increase or decrease (various)…rates, tolls or charges,” nowhere does it nor any other NRS authorize those Boards to selectively release persons, corporations, associations, or governments otherwise subject to assessment from the “indebtedness, liability, or obligation” created as a result of those exactions. Yet ¶I(D) to the NRS 318.201(1) written reports⁵⁰ the District regularly adopts (pursuant to ¶6) of the resolution⁵¹ which fixes the RFF/BFF and orders their collection on the county tax roll (i.e., a local or special law), provides for a series of “exceptions and exclusions…from the charges imposed.”⁵² As does ¶2.6 of Policy No. 16.1.1⁵³. Because the District is not a general government, and for this reason has no power to adopt laws nor pass legislation to fill arguable voids created by the State Legislature; and, Dillon’s Rule expressly expressly prohibits local governments like IVGID from exercising: “(a) those powers (not) granted in express terms by the Nevada Constitution or statute; (b) those powers (not) necessarily or fairly implied in (n)or incident to th(os)e powers expressly granted; and, (c) those powers (not) essential to the accomplishment of the declared objects and purposes of the (District) and not merely convenient but indispensable;”⁵⁴ these exceptions and exclusions are examples of impermissible⁵⁵ Article 4, Section 20 of the Nevada Constitution local or special laws ⁵⁶. Because

“[I]f a statute be either a special or local law, or both, and comes within any one or more of the cases enumerated in section 20, such statute is unconstitutional.”⁵⁷

So now you know the tests for determining what kinds of exaction represent a tax.

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1. See Dickson, Sheriff v. Jeff. Co. Bd. of Education, 311 Ky. 781, 786, 225 S.W.2d 672 (1949).
2. Such as its Recreation (“RFF”) and Beach (“BFF”) Facility Fees, its defensible space fee, its solid waste “franchise fee,” etc.
3. See Clean Water Coalition v. The M Resort, LLC, 127 Nev. 301, 255 P. 3d 247, 256 (2011) citing State v. Medeiros, 89 Haw. 361, 973 P.2d 736, 741 (1999).
4. See Hukle v. City of Huntington, 134 W.Va. 249, 58 S.E.2d 780, 783 (1950); Clean Water Coalition, supra, at 127 Nev. 315.
5. See Emerson College v. City of Boston, 39 Mass. 415, 462 N.E.2d 1098, 1105 (1984).
6. See Rider v. County of San Diego, 1 Cal.4th 1, 15, 820 P.2d 10 (1991).
7. See McCandless v. Campbell, 20 Haw. 411, 420 (1911).
8. See Hawaii Insurers Council v. Lingle, 120 Haw. 51, 59-60, 201 P.3d 564 (2008).
9. See Douglas Co. Contractors v. Douglas Co., 112 Nev. 1452, 929 P.2d 253, 256 (1996); State ex. rel. City of Reno v. Boyd, 27 Nev. 249, 256, 74 P. 654 (1903); also Hawaii Insurers Council, Id.; 71 Am. Jur. 2d §13, State and Local Taxation (2001).
10. An “enforced contribution for the support of government” [quoting United States v. La Franca, 282 U.S. 568, 572, 51 S.Ct. 278 (1931); City of Gary, Ind. v. Indiana Bell Tel., 732 N.E.2d 149, 156 (Ind. 2000).
11. See U.S. v. City of Huntington, W.Va., 999 F.2d 71, 74 (4th Cir. 1993).
12. Like the cost of a round of golf at one of the District’s golf courses. Or a lift ticket at Diamond Peak. Or a membership at The Recreation Center.
13. See GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions.
14. See City of Huntington, Id.; Clean Water Coalition, supra, at 127 Nev. 315.
15. See Medeiros, supra, at 973 P.2d 742; Clean Water Coalition, supra, at 127 Nev. 315.
16. See National Cable Television Ass’n v. United States, 415 U.S. 336, 341, 94 S.Ct. 1146 (1974). Because if the benefits furnished are as available to those who are not assessed, as to those who are, no “special” benefit has been furnished.
17. Although Medeiros discussed the Massachusetts Supreme Judicial Court’s subsequent to Emerson College‘s opinions [see Jones v. Water Commission of Detroit, 34 Mich 273, 275 (1876); Ripperger v. Grand Rapids, 338 Mich. 682, 62 N.W.2d 585 (1954); Nuclear Metals, Inc. v. Low Level Radioactive Waste Mgmt. Bd., 421 Mass. 196, 656 N.E.2d 563, 570 (1995); and, Rizzo v. City of Philadelphia, 668 A.2d 236, 238 (Pa. Commw. Ct. 1995)] which “weakened (rather than eliminated) its adherence to the…voluntary receipt of the service…identifying factor” [see Medeiros, supra, at 973 P.2d 741; Nuclear Metals, Id.], as we explained in our What is a Fee discussion, this weakening has no bearing on the District’s RFF/BFF because the authorities cited by Medeiros, or incorporated therein by reference, do not evidence the “very specific and (necessarily) limited circumstances” under which the element of choice can be disregarded as a compelling consideration.
18. See Vanceburg v. Federal Energy Regulatory Comm’n, 571 F.2d 630, 644 n.48 (D.C. Cir. 1977), cert. denied, 439 U.S. 818, 99 S.Ct. 79 (1978).
19. See Emerson College, supra, at 39 Mass. 424. “(T)he crucial factor in determining whether a municipal charge for services constitutes a valid…fee is whether the charge is intended to cover the (reasonable) cost of…providing a service” [see Rizzo, Id.]. Where “the ‘fee’ unreasonably exceeds the value of the specific services for which it is charged “in relation to the…cost (of the) goods or services for which they are imposed [see Resolution Trust Corp. v. Lanzaro, 140 N.J. 244, 658 A.2d 282, 288 (1995)]…it will be held (to be) invalid” [see Executive Aircraft Consulting, Inc. v. City of Newton, 252 Kan. 421, 426, 845 P.2d 57 (1993) quoting National Cable Television Ass’n v. F.C.C., 554 F.2d 1094, 1106 (D.C. Cir. 1976)].
20. See Medeiros, supra, at 973 P.2d 742-45.
21. See Clean Water Coalition, supra, at 127 Nev. 315.
22. See Medeiros, supra, at 973 P.2d at 742.
23. Id., at 973 P.2d at 742-45.
24. The fact “a person or entity may benefit from a government service even though he or she has not voluntarily requested it — seems sensible to us” (see Medeiros, supra, at 89 Haw. 367).
25. Subsequent to its opinion in Emerson College the Massachusetts Supreme Judicial Court weakened its adherence to its second identifying factor — the voluntary receipt of the service (Medeiros, supra, at 89 Haw. 366).
26. See Nuclear Metals, supra, at 421 Mass. 196.
27. See Rizzo, supra, at 668 A.2d 236-37.
28. See Ripperger, supra, at 338 Mich. 686.
29. See Jones, supra, at 34 Mich 275.
30. That would be as Commercial, “For Profit,” Recreation Businesses.
31. Executive Aircraft Consulting, supra, at 252 Kan. 431.
32. See Wendler v. City of Great Bend, 181 Kan. 753, 765-65, 316 P.2d 265 (1957).
33. See Southern Nevada Life v. City of Las Vegas, 74 Nev. 163, 166, 325 P.2d 757, 758 (1958); Eastern Diversified v. Montgomery County, 319 Md. 45, 570 A.2d 850, 854 (1990); Hillis Homes, Inc. v. Snohomish County, 97 Wash. 2d 804, 650 P.2d 193, 195 (1982).
34. See Executive Aircraft Consulting, supra, at 252 Kan. 427.
35. Id., at 252 Kan. 426 (quoting National Cable Television, supra, at 554 F.2d 1106).
36. See City of Madera v. Black, 181 Cal. 306, 315, 184 P. 397 (1919).
37. See Clean Water Coalition, supra, at 127 Nev. 315; Douglas Co. Contractors, supra, at 112 Nev. 1452, 1457; City of Reno, supra, at 27 Nev. 256; 71 Am. Jur. 2d  §13, supra.
38. See Executive Aircraft Consulting, supra, at 845 P.2d 62 quoting National Cable Television Ass’n, supra, at 554 F.2d 1106.
39. Supra, at 127 Nev. 316-18.
40. Therein the court found that “user fees collected for capital improvement projects and sewer services…from business(es) and residents…(we)re transformed into a tax (because they were)…transfer(red) into the State’s General Fund…for unrestricted general use…(and thus) no longer b(ore) any relationship to the purpose(s) for which they were (initially) assessed.”
41. Rather than just those who are assessed [see Hawaii Insurers Council, supra, at 120 Haw. 60, 201 P.3d 582; Clean Water Coalition, supra, at 127 Nev. 318].
42. See National Cable Television, supra, at 415 U.S. 340-41.
43. That would be to provide for the health, safety and general welfare of Seattle’s residents [see Berman v. Parker, 348 U.S. 26, 32, 75 S.Ct. 98 (1954)].
44. Although a “few specially benefited should not be subsidized by the general public” [see Silicon Valley Taxpayers’ Ass’n. v. Santa Clara County Open Space Authority, 44 Cal.4th 431, 455, 187 P.3d 37 (2008)], those few should not be required to pay for benefits to society as a whole. Or stated otherwise, “[i]f everything is special, then nothing is special” [Ventura Group Ventures, Inc. v. Ventura Port Dist., 24 Cal.4th 1089, 1107, 16 P.3d 717 (2001)].
45. In other words, no “special benefit” was furnished because those who were charged were not the only persons benefited thereby.
46. Lane, supra, at 194 P.3d 980.
47. “The legislature shall not pass local or special laws in any of the following enumerated cases—that is to say…for the assessment and collection of taxes for state, county, and township purposes.”
48. In Clean Water Coalition³⁷ our Supreme Court instructed “legitimate fees can be transformed into impermissible taxes (where)…later transferred to (a governing body’s) general fund …because they no longer bear any relationship to the purpose for which they were assessed once mixed into the general fund.“ The District regularly transfers portions of its RFF/BFF to its General Fund under the guise they are NRS 354.613(1)(c) central service cost allocations (see our How Central Services Costs Are Allocated discussion).
49. Also see Douglas Co. Contractors, supra, at 112 Nev. 1457, 1459; State v. Boyd, supra, at 27 Nev. 256.
50. For an example of such a report, the reader is directed to that report adopted at the Board’s May 30, 2025 meeting.
51. For an example of such a resolution, the reader is directed to Resolution No. 1917.
52. Namely “lots, parcels and areas of land used, or the portions thereof used, or intended to be used, for religious purposes or educational purposes; common areas without occupied structures appurtenant to a condominium or townhouse cluster; and publicly owned lands (and)…in addition, any parcel which is (1) undeveloped, and (2) subject to a deed restriction, acceptable to IVGID staff, preventing any and all development of the parcel in perpetuity, which deed restriction is recorded in the Washoe County Recorder’s Office, and (3) whose owner agrees to waive in perpetuity on his own behalf as well as on behalf of his successors and assigns any right to demand in the future any recreation privileges arising from or associated with said parcel.”
53. Which “exempt(s) real property…that is located within the current geographic boundaries of the District but which Washoe County has exempted from paying Washoe County property tax (as well as)…includ(ing) but…not (being) limited to, real property that is used or intended for use for religious or educational purposes, condominium and town house common areas that do not include any Dwelling Units, and publicly owned property.”
54. See NRS 244.137(3) and 268.001(3).
55. “The legislature shall not pass local or special laws in any of the following enumerated cases…releasing the indebtedness, liability, or obligation of any corporation, association, or person to the state, or to any county, town, or city of this state.”
56. See our Those Powers All GIDs Are Authorized to Exercise discussion.
57. See Conservation District v. Beemer, 56 Nev. 104, 116, 45 P.2d 779, 782 (1935); Clean Water Coalition, supra, at 127 Nev. 310.