25-year-old law may finally be used

Wednesday, June 7, 2006 | 7:37 a.m.

CARSON CITY - A state law enacted more than a quarter century ago under which retailers could be fined up to $500 for failing or refusing to file sales and use tax returns has never been applied.

That, however, may soon change.

The state Taxation Department is considering whether to begin enforcing the 1979 law, which states that the fine "shall" be imposed for those who do not submit the information.

"We were not wanting to go that far," said Dino DiCianno, newly appointed director of the Taxation Department. "It almost reads like a criminal statute."

He said that apparently is why the department has backed off on enforcement.

The development of a new computer system in the department - and an attendant examination of all tax laws - raised the issue, DiCianno said.

The lack of enforcement has not allowed a major problem to develop, he said. In addition, because companies that do not file tax returns face stiffer penalties, the failure to impose the potential $500 fines does not mean that some retailers have been able to simply ignore tax laws without consequence, officials added.

DiCianno said the filing performance by merchants has been good, noting that the department keeps an eye on those with spotty histories.

"I don't want to make it so onerous so they don't file," he said. "I don't want to use a sledge hammer (to get compliance). If I don't have to go there, I'm not going to go there."

While the law's fine of up to $500 is mandatory, the department also has discretionary powers to impose more severe penalties.

Carole Vilardo, executive director of the Nevada Taxpayers Association, said there are plenty of other laws to penalize merchants who do not file tax returns, including closing down the business.

Many of those stiffer sanctions have been enacted since the mandatory fine law was approved, Vilardo said.

"Basically, the idea is you want to get the money," she said. "The first thing to do is collect what is owed."

If the Taxation Department locates a merchant who has not paid the tax, it may make an assessment against the business and give the owner time to answer. In serious cases, Vilardo said, the department could issue a "cease and desist" order, shutting down the business.

If the department decides to impose an assessment for back taxes, it must impose 1 percent interest on the amount due and levy a 10 percent penalty, she said. The potential $500 fine established by the 27-year-old law would be on top of the other sanctions, Vilardo said.