Bill to exempt payroll processors from money-transmission rules draws split testimony in Nevada hearing

Assemblywoman Tanya Flanagan presented Assembly Bill 430 during the Senate Commerce and Labor hearing on May 1, asking lawmakers to exempt persons engaged solely in payroll processing services from Nevada's money-transmission statutes enacted by AB21 in 2023.

"Payroll processing services handle tasks like calculating wages, managing tax withholdings, and making payments to employees and taxing authorities," Flanagan said. She told the committee the services are provided in a distinct, regulated context — an employer–employee financial relationship — and that treating payroll processors the same as traditional money transmitters imposes new burdens on small local firms.

Representatives of the Independent Payroll Processors Association, the Payroll Group and the Nevada Society of CPAs described costs and compliance steps they said would be required if payroll companies remained classified as money transmitters. Robin Imbronio and Michael Hillerby said typical additional costs would include quarterly KYC and credit reviews (described in testimony at roughly $10,000 per year), a NACHA audit (about $7,500), a SOC audit (about $35,000), a compliance officer salary (roughly $75,000), audited financial statements (roughly $25,000) and the expense of surety bonds and multi-state registration. One witness estimated initial compliance costs could approach three-quarters of a million dollars with ongoing annual costs in the hundreds of thousands for a small payroll provider.

"It would take away more than three quarters of the small business payroll community and CPAs and can take away our ability to provide education and high touch service," Robin Imbronio testified, saying the practical effect would be to shrink the small-provider marketplace.

Proponents contrasted payroll processors' existing federal and industry oversight — including IRS agent-of-the-employer forms (referred to in testimony as "86 55"), Automated Clearing House (ACH) processing through NACHA and bank-imposed controls — with the costs and inconsistent state-by-state regulatory approaches that followed the model money-transmitter act.

Opposition testimony came from ADP and other firms that told the committee the bill would re-open a gap in consumer protections. Amy Miller of ADP said payroll providers handle large volumes of wages and taxes and that money-transmitter oversight provides protections — criminal background and credit checks for principals, liquidity requirements and regulators' examination powers — that can reduce risk to small employers and their workers. ADP's written testimony and Miller's oral remarks cited recent cases of payroll-provider misuse of client funds nationally that produced large losses for small businesses.

Committee members asked technical questions during the hearing. Senator Hillerby asked whether paycheck-stub and related wage statement requirements would still be met under other statutes; Flanagan stated she would research cross-references to NRS sections on pay stubs and follow up with committee staff. Senators also questioned whether exemptions would leave gaps for consumer protection; proponents said other federal and banking safeguards address most risks.

No committee vote or formal action on AB430 was recorded in the hearing transcript. The committee received both supporting and opposing witnesses and closed the hearing, leaving the matter for further consideration and any staff follow-up on statutory cross-references and technical drafting.

Quotes from the hearing included: "The costs in this bill are prohibitive for our industry and for our accounting community alike," Robin Imbronio said. Amy Miller of ADP said, "Payroll companies handle large volumes of funds, wages, taxes, and benefits on behalf of businesses. Without oversight, fraud and consumer protection risks increase."