Department of Taxation seeks authority to match bank records with financial institutions to collect tax debts

The Nevada Department of Taxation asked the Assembly Committee on Revenue on the assembly floor to approve Assembly Bill 557, which would authorize the department to enter agreements with financial institutions doing business in Nevada to match taxpayer-identifying information with account records and, for final tax debts, encumber and surrender assets to the department.

Yvonne Navarz Goodson, chief deputy executive director of the Nevada Department of Taxation, told the committee the bill is modeled on an existing State Controller statute and is intended to modernize and streamline the department’s existing authority to seek bank withholds under current law. “This bill is brought forward to provide the statutory authorization in support of the department's budget request and the legislature's approval for the required software necessary to implement a data matching system with financial institutions in Nevada for the collection of certain tax liabilities owed to the Department of Taxation,” she said.

The bill would require financial institutions regulated in Nevada to provide names, addresses, Social Security numbers or other taxpayer identifiers for account holders identified by the department. The department would use vendor software to automate lien and levy processing and would follow existing notice and demand procedures under NRS 360.51, according to Goodson. The bill also contains language to require vendor compliance with IRS Publication 1075 security and confidentiality protocols and to provide civil and criminal immunity to participating financial institutions for disclosures under the agreements.

Department witnesses presented out‑of‑state examples to the committee. Guy Childers, deputy executive director for the Department of Taxation, said several states use the software and reported successful recoveries. Citing Georgia, presenters said the state collected $5,000,000 since implementation in 2022, matched records for more than 30,000 taxpayers, located about $2.2 billion in funds and recorded roughly 225,000 liens. Childers also said Wisconsin had recovered about $16,000,000 and that Indiana reported about $140,000,000 in recoveries, with roughly 44% of that coming via bank levies.

Testimony in opposition came from a coalition of industry and taxpayer groups. Brian Walker, senior vice president of the Retail Association of Nevada, said the bill would create a harmful precedent and that seizure of funds held for payroll or operating expenses could jeopardize small businesses. “If that money is taken out without your notice, very quickly from your bank account, you may be unable to make your payroll,” Walker said.

Other opponents raised legal and privacy objections. Carrie Kramer of NAHOP said the proposal risks violating due process by allowing seizure without a court order and argued existing court processes are adequate for obtaining bank records after a debt is proven. Andrew McCame, executive director of the Nevada Franchise Auto Dealers Association, said some auto dealers are treated as financial institutions under federal law and expressed concern about potential conflicts with the Gramm‑Leach‑Bliley Act and the federal Safeguards Rule. Nick Schneider, director of government affairs for the Vegas Chamber, and Russell Rowe of 1 Nevada Credit Union echoed due‑process and consumer‑privacy concerns and flagged the bill’s hold‑harmless language for wrongful seizures.

Department officials told the committee the matches would apply only to final tax debts that have exhausted appeal rights. “These are going to be considered final debts of the taxpayer that have already proceeded through the entire appeal and due process efforts,” Goodson said, listing administrative hearings, redeterminations, appeals to the Nevada Tax Commission and judicial review as steps already available to taxpayers before levies would issue under the bill.

Committee members pressed the department on expected yield for Nevada and scope. Goodson and Childers said the department did not have an estimate for Nevada collections from the program and that the statute as drafted would require agreements with financial institutions doing business in Nevada; agreements with federally regulated or out‑of‑state institutions could be permissive only to the extent not preempted by federal law.

Opponents asked about clawbacks and the frequency of returned funds in other states; Childers said his survey of other states did not surface systemic problems or frequent returns. The department also said vendor contracts would include standard state contractual requirements for indemnity, governing law and data‑security breach provisions.

The committee took public testimony and did not record a formal vote during this hearing. The hearing record contains statements both supporting more efficient collection and urging stronger guardrails to protect small businesses, consumer privacy and due process. The department said it will negotiate details with financial institutions and that agreements would cover data retention, privacy protections and other operational matters.

The Assembly Committee on Revenue closed the hearing on AB557 and proceeded to its next agenda item.