Nevada’s growing “bad debt” write-offs
Nevada has written off more than $106 million in “bad debt” since the start of 2023, according to The Nevada Independent analysis distributed by The Associated Press. Nevada officials categorize debts as “bad” when they determine it is impossible or impractical to collect them.
The analysis identified four businesses that each failed to pay off more than $1 million in debt, with two of those businesses filing for bankruptcy. It also found four people who failed to pay off more than $1 million each. The biggest offender was described as a Las Vegas man convicted of Medicaid fraud in 2013.
Taxpayer concerns and the write-off decision timeline
Nevada’s Deputy Controller James Smack acknowledged concerns about the scale of the write-offs. “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 process is designed to remove uncollected debts from state books, but debts can take years before they are deemed uncollectible. The reporting said the state’s goal is to get unpaid debts off the books after a decade, but no limit is enshrined in Nevada law, and some of the latest write-offs relate to debts from more than 30 years ago.
Board of Examiners approvals in 2023 and 2025
Write-offs require final approval from the Nevada Board of Examiners, a panel of the governor, attorney general and secretary of state. In September 2023, the Board of Examiners approved about $85 million in bad debts from more than 50,000 accounts with minimal discussion. In August 2025, the Board signed off on an additional $16 million of bad debt, also with no discussion, the reporting said.
Over the past few years, the Board has also written off about $5 million in bad debts from Nevada’s Division of Industrial Relations.
How Nevada’s debt collection process works
According to the reporting, agencies determine which outstanding payments are collectible or not, while Nevada’s controller’s office is largely responsible for collecting the payments. If the controller’s office determines criteria to write off unpaid debt have been met, it submits the payment to the Board of Examiners for final approval to write off the debt as uncollectible.
Some agencies perform their own collection efforts without involving the controller’s office, including the Gaming Control Board and the Department of Business and Industry’s Division of Industrial Relations. The reporting said unpaid debts have not disrupted any state programs or services, and that money collected from debts typically goes into a separate account that helps pay for collection services but is rarely tapped into.
Why debts become uncollectible
The analysis said almost all write-offs occurred after collectors exhausted all possible efforts to secure payment. Smack said the process typically includes the controller’s office sending a letter to the debtor requesting payment, along with attempts by two collection agencies.
Other reasons for write-offs included that the debt was discharged in bankruptcy, the debt was found to be legally without merit, the debtor died, and in some cases the company filed for bankruptcy or went out of business.
The reporting said much of the uncollected debt stemmed from fines and fees due to state agencies. It also cited that the second-most common reason—more than $13 million—was related to wages businesses did not pay to employees despite a decision requiring them to do so from the state’s labor commissioner. In those cases, the labor commissioner provides payment to the affected employee.
Additionally, the reporting said more than $12 million of bad debt involved overpayments on items ranging from Medicaid to child care, where the state allegedly paid out too much money and did not recover the differences.
License suspensions and continuing collections
A 2021 law, the reporting said, provides that businesses with unpaid debt will have their licenses suspended. It also described write-offs that span decades and noted that agencies often wait years before officially determining a debt as uncollectible.
Smack suggested the peak of bad debts that produced payments due in the early 2010s could have been because of the financial crisis, according to the report.
Using artificial intelligence in collections
Smack said the controller’s office is interested in exploring an artificial intelligence chatbot that could interact with a debtor and complete necessary transactions. He said the office is in talks with multiple vendors about an arrangement he thinks would improve collection rates.
Expected uncollectible payments: a different measure
The reporting said write-off data offers an incomplete picture of current collections because it takes years for the state to formally determine a debt is uncollectible. Each year, the controller’s office releases agency-level data on debts expected to be collected or not.
In fiscal year 2025, agencies reported $387 million in expected uncollectible payments in preliminary projections released in December, described as the lowest amount since 2021. The reporting said the majority came from the Department of Taxation, which saw a surge from fiscal year 2024, and that the agency attributed the increase to guidance from the state’s auditor that required determining collectability with a more immediate time frame.
The Department of Taxation emphasized that payments not expected to be collected are still being pursued and have not been written off, the reporting said.