State fails to collect $290 million owed by businesses, individuals
Action News at 6pm It's no secret that Nevada is strapped for cash and struggling to fund vital programs and services. So, you'd think if someone owes our state a debt, they'd be forced to pay up.Photo: Video by ktnv.com
Las Vegas, NV (KTNV) -- $290 million, that staggering amount of money is the pot of gold Nevada has failed to collect. It's debt owed by businesses and as Contact 13 Chief Investigator Darcy Spears found the state is as much to blame as the deadbeat debtors.
You can do the math as many ways as you want, but the end result is always the same. Hundreds of millions in debt owed to our state that's been uncollected for as long as 21 years. So why have these deadbeat debtors been able to get away with not paying for so long? We took our questions to the state capitol and into the office of Controller Kim Wallin.
"What should the taxpayers think about this burden that they're saddled with," asked Chief Investigator Darcy Spears.
"Well, as a business owner, I think I'd be very mad," said Kim.
She says part of the problem is the age of the debt, by the time the state agencies turn them over to her office. The older the debt, the slimmer the chance of collecting.
"You get to 120 days you're slipping down to 50% and you get to a year it's 20%, two years it's 10%," explained Kim.
"It's just a landslide," said Darcy.
"Right," explained Kim.
All the debts on the state's top ten list are way older than that, even though in 2009 Assembly Bill 87 made it mandatory for state agencies to turn debts over to the controller when they're 60 days past due.
"But taxation is the agency that, what's this 2013, so we're talking four years, that still has not come into compliance with AB 47," said Kim.
"What can be done about that because what incentive do people have to pay their taxes," asked Darcy.
"Well, that's a good point," said Kim.
The state Department of Taxation has more than $216 million in uncollected debt. We set out to track down the debtors. United Homecenter that used to be on South Maryland Parkway owes the state $1.4 million in taxes dating back to 2003. There's now a whole new business getting ready to open where they once were.
TJ Wholesale is another top ten debtor who owes the state $644,000. The debt has gone uncollected for so long that the weeds in the parking lot are essentially shrubs and the building is just a boarded up cinder block shell.
In 2006, TJ Wholesale's CEO was buying mattresses from the state's prison industry and re - selling them to hotels for a higher profit.
"Shame on prison industries for letting him run up a $600,000 debt. I mean, what business do you keep extending credit to if they aren't paying you," said Kim.
The TJ Wholesale name is now on a new business in Henderson. The state says the guy who racked up the debt sold TJ Wholesale and now they believe he's hiding somewhere out of the country. They say he literally took the money and ran.
Ron Knowlton bought the assets to the business and is dealing with the fallout.
"What have you had to deal with because of this could hanging out there over the name," asked Darcy.
"There was a lot of frustration from prior manufacturers, suppliers, customers that we had to smooth out through time and prove our position and our identity as the new company that we are," said Ron.
Kim says debtors like the Mattress Man at the Old TJ Wholesale often play a shell game sending the state on a paper chase.
"Why is it so easy just to change names on paper and avoid millions of dollars in debt," asked Darcy.
"It happens everywhere just because Nevada is a very easy state to incorporate in and we don't have laws on the books that say you can't go and open under another name," explained Kim.
Many of the state's top debtors are not in Nevada. In several cases, the debts are so old that the numbers on state records are disconnected and no longer in service.
The state's top debtor is Depressurized Technologies International. A 2001 explosion at their aerosol can recycling plant in Minden, Nevada killed one worker and severely burned others. Inadequate insurance left Nevada taxpayers footing $1.8 million in medical bills.
"So you weren't covered for the employee who was killed and the other who was injured," asked Darcy in a telephone call.
The company's former owner told us he wanted to rebuild and reopen the plant, sharing profits with the state to pay down his debt. But he says the state wouldn't work with him.
"Is it fair to say that in some cases, the state's own stubbornness prevents them from collecting debt," asked Darcy.
"Mmm hmm. Because people like to stand on principle instead of common sense," said Kim.
She says our state government cast common sense aside in the last legislative session when lawmakers followed the governor's recommendation to eliminate the assistant controller, who oversaw debt collection for the state.
"In the infinite wisdom, we save $200,000 in salary and benefits, but I estimate we probably lost $2.7 million in the last two years in collections," said Kim.
She says the state could do better if they just did the math. We'll be sending this story to the Governor's Office to find out why state agencies aren't turning their debts over soon and why businesses that owe money are allowed to continue dodging their debt.
Want to know who owes the state money? Just click here to find out.