Outsourcing Nevada tax returns to Ariz. bank questioned

Monday, July 7, 2003 | 9:24 a.m.

CARSON CITY -- Tax payments from Nevada interests are now being processed through an Arizona firm instead of in Nevada -- and the state Taxation Department is fielding calls from state residents seeking an explanation.

"Our phones are ringing off the hook with concerns about using a company from out of state," said Chuck Chinnock, director of the department.

About 600,000 sales and use and business tax returns with collections of more than $2 billion a year are handled through a so-called "lock box," or processing center, that had been run by the Bank of America in Las Vegas.

Chinnock said Bank of America decided not to continue its lock box operation, so the department and state Treasurer Brian Krolicki searched for 18 months for a replacement.

As of July 1, Bank One of Phoenix is processing the returns and depositing the money, he said. Bank One is not a Nevada bank.

Chinnock said Krolicki received several proposals, including two from Nevada firms. But the Nevada companies would have subcontracted with out-of-state businesses to do the work, he said. Chinnock said he is well aware of the policy of Gov. Kenny Guinn to award state contracts to Nevada firms.

Preliminary results show Bank One is depositing 97 percent of the tax proceeds in the bank on the day the money is received. That compares with the 50 to 60 percent achieved by Bank of America, Chinnock said.

Chinnock said a tax return mailed in Las Vegas will arrive in Arizona as quickly as if it was to be delivered in Las Vegas.

The price of the contract is $414,000 based on the 600,000 returns. But it could go higher if the Legislature passes a new tax that will generate more returns, Chinnock said. Other bids came from California, Colorado, Oregon and Pennsylvania.

The faster deposit of the tax receipts will help the state with its cash flow and allow the state to generate more interest, Chinnock said. After processing by Bank One, the money is still being deposited into the Bank of America, he said.

Chinnock said the taxation department handled the job until about 10 years ago, when it was decided to outsource the job.