Nevada has written off $106 million in bad debt since 2023, controller says

The total underscores gaps in a debt-collection process that has changed little over the past decade, even as tens of millions of dollars have gone unrecovered. State officials say no programs or services have been disrupted by the uncollected funds, but Deputy Controller James Smack said the numbers reinforce the need for improvement — and his office is now exploring whether an AI chatbot could boost collection rates.

Nevada has formally written off more than $106 million in bad debt since the start of 2023, according to an analysis by the Nevada Independent, with the state’s deputy controller acknowledging that the scale of uncollected funds demands attention even as his office explores whether artificial intelligence could improve collection rates.

The write-offs — covering debts deemed impossible or impractical to collect — were approved by the Nevada Board of Examiners, a panel consisting of the governor, attorney general, and secretary of state. Deputy Controller James Smack said the uncollected funds have not disrupted any state programs or services, though money from collected debts typically flows into a separate account that helps fund collection services rather than the general fund.

“If I’m looking at it from a taxpayer perspective … that seems like an awfully large number when you compare it to the percentage of the revenues we take in on an annual basis,” Smack said. “And so I can understand the concerns when constituents bring it to me.”

The write-offs in detail

The bulk of the total — approximately $85 million — came in September 2023, when the Board of Examiners approved write-offs across more than 50,000 accounts with minimal discussion. In August 2025, the board signed off on an additional $16 million, also without discussion. About $5 million more came from the Division of Industrial Relations.

Four businesses failed to pay off more than $1 million in debt each, two of which filed for bankruptcy. Four individuals fell into the same category. The largest individual debtor was a Las Vegas man convicted of Medicaid fraud in 2013.

More than $13 million of the uncollected debt involved wages that businesses failed to pay employees despite orders from the state’s labor commissioner. If a payment is eventually made, the labor commissioner provides it to the affected worker. More than $12 million related to overpayments — cases where Nevada disbursed too much money for programs such as Medicaid or child care and never recovered the difference.

A process without hard deadlines

Nevada law sets no firm deadline for how long a debt must remain outstanding before it is deemed uncollectible. The stated goal is to get debts off the books within a decade, but some of the most recent write-offs involved debts from more than 30 years ago. Smack said the peak of bad debts reflected payments due in the early 2010s, which he attributed to the financial crisis of that period.

Almost all of the write-offs occurred after collectors exhausted available options — typically a letter from the controller’s office followed by two collection agencies attempting to recover the payment. Debts were also written off when a debtor filed for bankruptcy or died, a company went out of business, or the debt was found to be legally without merit.

A 2021 state law allows Nevada to suspend business licenses for companies with outstanding unpaid debts.

What comes next

Because debt determinations often take years to finalize, the write-off data offers an incomplete picture of the current state of collections. The controller’s office separately tracks estimated uncollectible payments not yet formally written off. In fiscal year 2025, agencies reported $387 million in expected uncollectible payments — the lowest figure since 2021, when pandemic-era disruptions produced a surge in such estimates.

The Department of Taxation accounted for a large share of that total, driven partly by updated guidance from the state auditor that led the agency to categorize more recent payments as uncollectible more quickly. The agency said those payments are still being actively pursued and have not been written off.

Smack said the controller’s office is in talks with multiple vendors about deploying an AI chatbot capable of interacting with debtors directly and completing transactions — an arrangement he said he believes would improve collection rates.

The Nevada Independent originally reported this story; the Associated Press distributed it through a content partnership.