Widespread failure to pay business fees prompts plan

By Jeff German

Monday, May 11, 2009 | 2 a.m.

The revelation that Assembly Ways and Means Committee Chairman Morse Arberry let his companies slip into default with the state for not paying annual corporation fees has highlighted Nevada’s struggle to recoup millions of dollars in uncollected fees.

This month, following a Sun story disclosing that Arberry owed the secretary of state’s office $200 in fees for each of his two companies, the Las Vegas lawmaker paid up and brought the companies back into good standing.

But for months, the Las Vegas Democrat’s mortgage and investment firms were among tens of thousands of corporations doing business in the state that failed to pay annual fees.

As of last week, more than 76,000 corporations were in default, owing as much as $14 million, said the office of Secretary of State Ross Miller.

In addition to fees owed to the secretary of state each year for incorporating or renewing their corporate status, corporations must pay an annual $100 business license fee to the Nevada Taxation Department. State officials have estimated that 127,000 of the more than 300,000 active corporations in Nevada have not been paying the $100 business fee.

Miller said he hoped legislation would be enacted this year to improve greatly the way the state keeps track of companies that owe money to his office and other state agencies.

Assembly Bill 146, sponsored by Assembly Majority Leader John Oceguera, D-Las Vegas, would create a high-tech business portal on the Web under the direction of the secretary of state. The idea is to provide a one-stop shop for businesses dealing with state agencies.

“We would be the first in the country to implement this,” Miller said. “It would revolutionize how we do business in the state and prove that this is the most efficient and friendly business jurisdiction in the country.”

Oceguera said even more is involved. “What this does is streamline government, allow for more accountability, and capture revenues that so far are not being collected,” he said.

At moment, the state is losing millions of dollars in uncollected fees in part because agencies don’t communicate with one another, Miller said.

When a company renews incorporation papers each year, for example, the secretary of state has no way of checking to see whether the company has also paid its business license fee to the Taxation Department. The department likewise can’t determine whether a company paying a business license fee is up to date with the secretary of state’s office.

That would change with the business portal, which Miller said would work the way Amazon.com allows online customers to do business with a variety of vendors. A company could log on to the business portal and learn exactly what fees it must pay to each agency to continue doing business in the state.

The portal’s software also would make it easier for the agencies to see which fees haven’t been paid by companies, Miller said.

At the outset, the portal would link the secretary of state and the Taxation Department and require businesses to pay both corporation and business license fees.

A fiscal note attached to AB146 says it would cost $6.5 million over the next two fiscal years to set up the business portal, but it would bring in a net gain of nearly $19 million in additional business license fees.

Eventually other state agencies would be linked to the Web site, creating the potential to bring in more uncollected fees, Miller said. Other plans would include municipalities’ licensing agencies, broadening the one-stop approach for the companies.

AB146 is in Arberry’s Ways and Means Committee, and Oceguera said he expects a vote this week.

Miller is hoping the Legislature sees the merits of the measure.

“At a time when the private and public sectors alike are focused on managing shrinking budgets and economic survival, it would be a mistake to not also be investing, in some way, in the future,” he wrote recently in an opinion piece.