State may be losing millions

Auditors told the Executive Branch Audit Committee on Tuesday there is a $23 million gap between what the state gets in insurance premium taxes and what they believe it should receive.

Bill Chisel, head of the audit division, said as many as 2,000 insurance providers report to the Insurance Division and pay taxes to the state based on their annual premiums. That provides the state with about $260 million a year in revenue to the General Fund.

But, according to the audit report, a survey of 35 states that audit premium tax returns each year showed those states generated a lot more money.

The audit compared what those insurance companies report to the national Association of Insurance Commissioners to the premiums reported to the state of Nevada. Auditors say the result is an average annual difference between the taxes Nevada receives and what it should get is $23.3 million a year.

"We were unable to find out why that is," said Chisel. "All the other states have these desk audits and, on average, they're pulling in a half million per auditor."

He said there is a chance Nevada isn't losing anywhere near that much, but the only way to find out is to audit insurers.

Chisel said by law, the state can go back seven years and bill companies for taxes owed the state. During the course of seven years, auditors say that could bring in as much as $163 million.

In most states, the report said, two or three auditors handle the task. They said each of those auditors costs about $100,000 a year but generates an average of $581,000 in additional revenue.

The committee, which includes the governor, controller and treasurer, accepted the audit. To hire auditors, the insurance division would need legislative approval.