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Lawmakers consider proposal to suspend business licenses over unpaid debt

Riley Snyder
Riley Snyder
Behind the BarEconomyLegislature
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Lawmakers frustrated with the state’s slow collection of unpaid debt want to start suspending business licenses of entities that owe money to the state.

The bill to do that, AB482, was heard in the Assembly Ways and Means Committee on Tuesday and would require the secretary of state’s office to not renew a business licenses if they are informed by the state controller’s office that the business in question has an outstanding debt owed to a state agency that is currently in collections with the controller’s office. 

It’s intended to capture fees and fines most commonly related to OSHA violations or worker’s compensation premiums, but would include any kind of debt to the state that’s been referred to the controller’s office.

“We don't want to necessarily put people out of business,” Assembly Ways and Means Chair Maggie Carlton said during the hearing. “We just want them to fulfill their responsibility in paying their fines.”

But there was one small problem — the agency charged with enforcing provisions of the bill, the secretary of state’s office, said the bill had come as a “surprise” and the office still had outstanding questions about how the legislation would work.

Deputy Secretary of State for Commercial Recordings Kim Perondi told the committee that the office had liability concerns about potentially suspending a business license as opposed to placing a business on an administrative hold, or if it could lead to corporations being unable to operate because of a single individual’s debt owed to the state.

“While overall the secretary absolutely supports the concept of preventing debt write off and preventing those owing money to the state from continuing to profit from state contracts and such, we will be testifying in neutral on this bill because of the way it's drafted,” she said.

Perondi said the office would continue to work with supporters on the bill, who said it would add more teeth to existing state law on debt collection.

Rusty McAllister, head of the Nevada State AFL-CIO and appointed member of the state’s Industrial Relations Division advisory board, said the legislation came from a general frustration between the division and state Controller’s Office (which handles debt collection) over businesses opting to refuse to pay or decline to pay any fines or fees owed as workers’ compensation premiums and OSHA violations.

McAllister said the division currently has more than $20 million in uncollected fees and fines, and regularly shifts off accumulated debt as “uncollectible” even as businesses continue to operate in the state. He said most fines are within the $500 to $1,000 range, but some continue to accrue to the tens of thousands of dollars range.

“Every time that we're asked to write off this debt and send it to the Board of Examiners as a write-off, this is money that the state could use,” he said. “And at the same time, we're tired of seeing these businesses stay in business, doing business here in the state with no ramifications.

Editor’s Note: This story first appeared in Behind the Bar, The Nevada Independent’s newsletter dedicated to comprehensive coverage of the 2021 Legislature. Sign up for the newsletter here.

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