AB557 - Revises provisions relating to the Department of Taxation. (BDR 32-1131)

EXEMPT A.B. 557 - *AB557* ASSEMBLY BILL NO. 557–COMMITTEE ON WAYS AND MEANS (ON BEHALF OF THE OFFICE OF FINANCE IN THE OFFICE OF THE GOVERNOR) MAY 14, 2025 ____________ Referred to Committee on Revenue SUMMARY—Revises provisions relating to the Department of Taxation. (BDR 32-1131) FISCAL NOTE: Effect on Local Government: No. Effect on the State: Yes. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to taxation; requiring the Department of Taxation to develop and operate with financial institutions a system for matching data for the collection of certain debts owed to the State; authorizing the Department to disclose certain confidential information to certain financial institutions for certain purposes; revising certain provisions relating to certain information held by financial institutions; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law creates the Department of Taxation, which has various powers and 1 duties related to the administration and collection of certain taxes, fees, assessments 2 and other amounts of money. (Chapter 360 of NRS) If a person owes delinquent 3 taxes or has a deficiency determination against him or her with respect to any tax 4 administered by the Department, existing law authorizes the Department to attempt 5 collection of the tax or deficiency in certain ways. (NRS 360.4193, 360.420, 6 360.473, 360.483) Section 1 of this bill requires the Department to develop and 7 operate a system for matching data to collect certain outstanding debts owed to the 8 State. Pursuant to section 1, financial institutions in this State must: (1) provide to 9 the Department information on persons who maintain accounts at the financial 10 institution and are identified by the Department as owing outstanding debts to the 11 State; and (2) encumber certain assets held in the financial institution by the debtors 12 to pay their debts. 13 Existing law makes the records and files of the Department of Taxation 14 concerning the administration and collection of taxes, fees, assessments and other 15 amounts and the imposition of disciplinary action confidential and privileged, but 16 – 2 – - *AB557* authorizes the disclosure of such records and files under certain circumstances. 17 (NRS 360.255) Section 2 of this bill provides that the Department may disclose 18 certain confidential information to certain financial institutions for the purpose of 19 carrying out the provisions of section 1. 20 Existing law prohibits, with certain exceptions, a governmental agency from 21 requesting, and a financial institution from providing, certain financial records of 22 certain customers. (NRS 239A.070, 239A.080) Section 3 of this bill provides that 23 the Department may request, and a financial institution may provide to the 24 Department in response to such a request, certain financial records of certain 25 customers of the financial institution who owe outstanding debts to the State. 26 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 360 of NRS is hereby amended by adding 1 thereto a new section to read as follows: 2 1. The Department shall enter into agreements with financial 3 institutions doing business in this State to coordinate the 4 development and operation of a system for matching data, using 5 automated exchanges of data to the maximum extent feasible. 6 2. In addition to any other remedy provided for in this 7 chapter, the Department may use the system for matching data 8 developed and operated pursuant to subsection 1 to collect a debt, 9 plus any applicable penalties and interest. 10 3. A financial institution in this State shall: 11 (a) Cooperate with the Department in carrying out the 12 provisions of subsection 1. 13 (b) Use the system to provide to the Department for each 14 calendar quarter the name, address of record, social security 15 number or other number assigned for taxpayer identification of 16 each person who maintains an account at the financial institution, 17 as identified by the Department by name and social security 18 number or other number assigned for taxpayer identification. 19 (c) In response to the receipt from the Department of 20 notification of debt that a person owes the State, encumber on 21 behalf of the Department a portion of the assets of the person held 22 by the financial institution sufficient to cover the debt and 23 surrender those assets to the Department. A financial institution is 24 not required to encumber or surrender any assets received by the 25 financial institution on behalf of the person after the financial 26 institution received the notice of the debt from the Department. 27 4. A financial institution may not be held liable in any civil or 28 criminal action for: 29 (a) Any disclosure of information to the Department pursuant 30 to this section. 31 – 3 – - *AB557* (b) Encumbering or surrendering any assets held by the 1 financial institution pursuant to this section. 2 (c) Any other action taken in good faith to comply with the 3 requirements of this section. 4 5. If a court issues an order to return to a person any assets 5 surrendered by a financial institution pursuant to subsection 3, the 6 Department is not liable to the person for any of those assets that 7 have been provided to the Department in accordance with the 8 order for the payment of a debt. 9 6. All information provided to the Department by a financial 10 institution pursuant to this section may only be used by the 11 Department for use in the collection of a debt owed to the State. 12 7. As used in this section, “financial institution” has the 13 meaning ascribed to it in NRS 239A.030. 14 Sec. 2. NRS 360.255 is hereby amended to read as follows: 15 360.255 1. Except as otherwise provided in this section and 16 NRS 239.0115, 360.250 and 607.217, the records and files of the 17 Department concerning the administration or collection of any tax, 18 fee, assessment or other amount required by law to be collected or 19 the imposition of disciplinary action are confidential and privileged. 20 The Department, an employee of the Department and any other 21 person engaged in the administration or collection of any tax, fee, 22 assessment or other amount required by law to be collected or the 23 imposition of disciplinary action or charged with the custody of any 24 such records or files: 25 (a) Shall not disclose any information obtained from those 26 records or files; and 27 (b) May not be required to produce any of the records or files for 28 the inspection of any person or governmental entity or for use in any 29 action or proceeding. 30 2. The records and files of the Department concerning the 31 administration and collection of any tax, fee, assessment or other 32 amount required by law to be collected or the imposition of 33 disciplinary action are not confidential and privileged in the 34 following cases: 35 (a) Testimony by a member or employee of the Department and 36 production of records, files and information on behalf of the 37 Department or a person in any action or proceeding before 38 the Nevada Tax Commission, the State Board of Equalization, the 39 Department, a grand jury or any court in this State if that testimony 40 or the records, files or information, or the facts shown thereby, are 41 directly involved in the action or proceeding. 42 (b) Delivery to a person or his or her authorized representative 43 of a copy of any document filed by the person pursuant to the 44 provisions of any law of this State. 45 – 4 – - *AB557* (c) Publication of statistics so classified as to prevent the 1 identification of a particular business or document. 2 (d) Exchanges of information with the Internal Revenue Service 3 in accordance with compacts made and provided for in such cases, 4 or disclosure to any federal agency, state or local law enforcement 5 agency, including, without limitation, the Cannabis Compliance 6 Board, or local regulatory agency that requests the information for 7 the use of the agency in a federal, state or local prosecution or 8 criminal, civil or regulatory investigation. 9 (e) Disclosure in confidence to: 10 (1) The Governor or his or her agent in the exercise of the 11 Governor’s general supervisory powers; 12 (2) The Budget Division of the Office of Finance for use in 13 the projection of revenue; 14 (3) Any person authorized to audit the accounts of the 15 Department in pursuance of an audit; 16 (4) The Attorney General or other legal representative of the 17 State in connection with an action or proceeding relating to a 18 taxpayer or licensee; or 19 (5) Any agency of this or any other state charged with the 20 administration or enforcement of laws relating to workers’ 21 compensation, unemployment compensation, public assistance, 22 taxation, labor or gaming. 23 (f) Exchanges of information pursuant to an agreement between 24 the Nevada Tax Commission and any county fair and recreation 25 board or the governing body of any county, city or town. 26 (g) Upon written request made by a public officer of a local 27 government, disclosure of the name and address of a taxpayer or 28 licensee who must file a return with the Department. The request 29 must set forth the social security number of the taxpayer or licensee 30 about which the request is made and contain a statement signed by 31 the proper authority of the local government certifying that the 32 request is made to allow the proper authority to enforce a law to 33 recover a debt or obligation owed to the local government. Except 34 as otherwise provided in NRS 239.0115, the information obtained 35 by the local government is confidential and privileged and may not 36 be used or disclosed for any purpose other than the collection of a 37 debt or obligation owed to that local government. The Executive 38 Director may charge a reasonable fee for the cost of providing the 39 requested information. 40 (h) Disclosure of information as to amounts of any unpaid tax or 41 amounts of tax required to be collected, interest and penalties to 42 successors, receivers, trustees, executors, administrators, assignees 43 and guarantors, if directly interested. 44 – 5 – - *AB557* (i) Disclosure of relevant information as evidence in an appeal 1 by the taxpayer from a determination of tax due if the Nevada Tax 2 Commission has determined the information is not proprietary or 3 confidential in a hearing conducted pursuant to NRS 360.247. 4 (j) Disclosure of the identity of a person and the amount of tax 5 assessed and penalties imposed against the person at any time after a 6 determination, decision or order of the Executive Director or other 7 officer of the Department imposing upon the person a penalty for 8 fraud or intent to evade a tax imposed by law becomes final or is 9 affirmed by the Nevada Tax Commission. 10 (k) Disclosure of the identity of a licensee against whom 11 disciplinary action has been taken and the type of disciplinary action 12 imposed against the licensee at any time after a determination, 13 decision or order of the Executive Director or other officer of the 14 Department imposing upon the licensee disciplinary action becomes 15 final or is affirmed by the Nevada Tax Commission. 16 (l) Disclosure of information pursuant to subsection 2 of 17 NRS 370.257. 18 (m) With respect to an application for a registration certificate to 19 operate a medical marijuana establishment pursuant to chapter 453A 20 of NRS, as that chapter existed on June 30, 2020, or a license to 21 operate a marijuana establishment pursuant to chapter 453D of 22 NRS, as that chapter existed on June 30, 2020, which was submitted 23 on or after May 1, 2017, and on or before June 30, 2020, and 24 regardless of whether the application was ultimately approved, 25 disclosure of the following information: 26 (1) The identity of an applicant, including, without 27 limitation, any owner, officer or board member of an applicant; 28 (2) The contents of any tool used by the Department to 29 evaluate an applicant; 30 (3) The methodology used by the Department to score and 31 rank applicants and any documentation or other evidence showing 32 how that methodology was applied; and 33 (4) The final ranking and scores of an applicant, including, 34 without limitation, the score assigned to each criterion in the 35 application that composes a part of the total score of an applicant. 36 (n) Disclosure of the name of a licensee and the jurisdiction of 37 that licensee pursuant to chapter 453A or 453D of NRS, as those 38 chapters existed on June 30, 2020, and any regulations adopted 39 pursuant thereto. 40 (o) Disclosure of the identity of a person and the amount of tax 41 assessed, plus any applicable penalties and interest, for the 42 purpose of carrying out the provisions of section 1 of this act. 43 3. The Executive Director shall periodically, as he or she 44 deems appropriate, but not less often than annually, transmit to the 45 – 6 – - *AB557* Administrator of the Division of Industrial Relations of the 1 Department of Business and Industry a list of the businesses of 2 which the Executive Director has a record. The list must include the 3 mailing address of the business as reported to the Department. 4 4. The Executive Director may request from any other 5 governmental agency or officer such information as the Executive 6 Director deems necessary to carry out his or her duties with respect 7 to the administration or collection of any tax, fee, assessment or 8 other amount required by law to be collected or the imposition of 9 disciplinary action. If the Executive Director obtains any 10 confidential information pursuant to such a request, he or she shall 11 maintain the confidentiality of that information in the same manner 12 and to the same extent as provided by law for the agency or officer 13 from whom the information was obtained. 14 5. As used in this section: 15 (a) “Applicant” means any person listed on the application for a 16 registration certificate to operate a medical marijuana establishment 17 pursuant to chapter 453A of NRS, as that chapter existed on 18 June 30, 2020, or a li [Text truncated for display. Full text available on LegiScan.]