Enacts provisions relating to the use of artificial intelligence by the Department of Taxation. (BDR 32-420)

A.B. 537

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ASSEMBLY BILL NO. 537–COMMITTEE ON REVENUE

(ON BEHALF OF THE JOINT INTERIM STANDING
COMMITTEE ON REVENUE)

MARCH 24, 2025
____________

Referred to Committee on Revenue

SUMMARY—Enacts provisions relating to the use of artificial
intelligence by the Department of Taxation.
(BDR 32-420)

FISCAL NOTE: Effect on Local Government: No.
Effect on the State: Yes.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

AN ACT relating to the Department of Taxation; requiring, under
certain circumstances, the Department to ensure that a
person is informed when the person is communicating or
interacting with artificial intelligence; clarifying that
records and files of the Department that are generated by
artificial intelligence used by the Department are
confidential and privileged ; and providing other matters
properly relating thereto.
Legislative Counsel’s Digest:
Existing law creates the Department of Taxation, which has various powers and 1
duties related to the administration and collection of certain taxes, fees, assessments 2
and other amounts of money or the imposition of disciplinary acti on. (Chapter 360 3
of NRS) Section 1 of this bill provides that if the Department uses artificial 4
intelligence to communicate or interact with a person concer ning the administration 5
and collection of certain taxes, fees, assessments and other amounts of money or 6
the imposition of disciplinary action, the Department must ensure that the person is 7
informed that the person is communicating or interacting with artificial intelligence. 8
Existing law makes confidential and privileged the records and files of the 9
Department concerning the administration or collection of any tax, fee, assessment 10
or other amount required by law to be collected or the imposition of discip linary 11
action, but authorizes the disclosure of such records and files under certain 12
circumstances. (NRS 360.255) Section 2 of this bill clarifies that these 13
requirements concerning confidentiality and privilege apply to any records and files 14
that are generated by artificial intelligence used by the Department. 15

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THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. Chapter 360 of NRS is hereby amended by adding 1
thereto a new section to read as follows: 2
1. If the Department uses artificial intelligence to 3
communicate or interact with a person concerning the 4
administration and collection of any tax, fee, assessme nt or other 5
amount required by law to be collected or the imposition of 6
disciplinary action, the Department shall ensure that the person is 7
informed that the person is communicating or interacting with 8
artificial intelligence. 9
2. As used in this section , “artificial intelligence” means a 10
machine-based system that can, for a given set of human -defined 11
objectives, make predictions, recommendations or decisions 12
influencing real or virtual environments. 13
Sec. 2. NRS 360.255 is hereby amended to read as follows: 14
360.255 1. Except as otherwise provided in this section and 15
NRS 239.0115, 360.250 and 607.217, the records and files of the 16
Department , including, without limitation, any records and files 17
that are generated by artif icial intelligence used by the 18
Department, concerning the administration or collection of any tax, 19
fee, assessment or other amount required by law to be collected or 20
the imposition of disciplinary action are confidential and privileged. 21
The Department, an employee of the Department and any other 22
person engaged in the administration or collection of any tax, fee, 23
assessment or other amount required by law to be collected or the 24
imposition of disciplinary action or charged with the custody of any 25
such records or files: 26
(a) Shall not disclose any information obtained from those 27
records or files; and 28
(b) May not be required to produce any of the records or files for 29
the inspection of any person or governmental entity or for use in any 30
action or proceeding. 31
2. The records and files of the Department concerning the 32
administration and collection of any tax, fee, assessment or other 33
amount required by law to be collected or the imposition of 34
disciplinary action are not confidential and privileged in the 35
following cases: 36
(a) Testimony by a member or employee of the Department and 37
production of records, files and information on behalf of 38
the Department or a person in any action or proceeding before the 39
Nevada Tax Commission, the State Board of Equalization, the 40
Department, a grand jury or any court in this State if that testimony 41

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or the records, files or information, or the facts shown thereby, are 1
directly involved in the action or proceeding. 2
(b) Delivery to a person or his or her authorized representative 3
of a copy of any document filed by the person pursuant to the 4
provisions of any law of this State. 5
(c) Publication of statistics so classified as to prevent the 6
identification of a particular business or document. 7
(d) Exchanges of information with the Interna l Revenue Service 8
in accordance with compacts made and provided for in such cases, 9
or disclosure to any federal agency, state or local law enforcement 10
agency, including, without limitation, the Cannabis Compliance 11
Board, or local regulatory agency that req uests the information for 12
the use of the agency in a federal, state or local prosecution or 13
criminal, civil or regulatory investigation. 14
(e) Disclosure in confidence to: 15
(1) The Governor or his or her agent in the exercise of the 16
Governor’s general supervisory powers; 17
(2) The Budget Division of the Office of Finance for use in 18
the projection of revenue; 19
(3) Any person authorized to audit the accounts of the 20
Department in pursuance of an audit; 21
(4) The Attorney General or other legal representative of the 22
State in connection with an action or proceeding relating to a 23
taxpayer or licensee; or 24
(5) Any agency of this or any other state charged with the 25
administration or enforcement of laws relating to workers’ 26
compensation, unemployment compensation, public assistance, 27
taxation, labor or gaming. 28
(f) Exchanges of information pursuant to an agreement between 29
the Nevada Tax Commission and any county fair and recreation 30
board or the governing body of any county, city or town. 31
(g) Upon written request ma de by a public officer of a local 32
government, disclosure of the name and address of a taxpayer or 33
licensee who must file a return with the Department. The request 34
must set forth the social security number of the taxpayer or licensee 35
about which the request is made and contain a statement signed by 36
the proper authority of the local government certifying that the 37
request is made to allow the proper authority to enforce a law to 38
recover a debt or obligation owed to the local government. Except 39
as otherwise pro vided in NRS 239.0115, the information obtained 40
by the local government is confidential and privileged and may not 41
be used or disclosed for any purpose other than the collection of a 42
debt or obligation owed to that local government. The Executive 43
Director may charge a reasonable fee for the cost of providing the 44
requested information. 45

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(h) Disclosure of information as to amounts of any unpaid tax or 1
amounts of tax required to be collected, interest and penalties to 2
successors, receivers, trustees, executors , administrators, assignees 3
and guarantors, if directly interested. 4
(i) Disclosure of r elevant information as evidence in an appeal 5
by the taxpayer from a determination of tax due if the Nevada Tax 6
Commission has determined the information is not propriet ary or 7
confidential in a hearing conducted pursuant to NRS 360.247. 8
(j) Disclosure of the identity of a person and the amount of tax 9
assessed and penalties imposed against the person at any time after a 10
determination, decision or order of the Executive Di rector or other 11
officer of the Department imposing upon the person a penalty for 12
fraud or intent to evade a tax imposed by law becomes final or is 13
affirmed by the Nevada Tax Commission. 14
(k) Disclosure of the identity of a licensee against whom 15
disciplinary action has been taken and the type of disciplinary action 16
imposed against the licensee at any time after a determination, 17
decision or order of the Executive Director or other officer of the 18
Department imposing upon the licensee disciplinary action become s 19
final or is affirmed by the Nevada Tax Commission. 20
(l) Disclosure of information pursuant to subsection 2 of 21
NRS 370.257. 22
(m) With respect to an application for a registration certificate to 23
operate a medical marijuana establishment pursuant to chapter 453A 24
of NRS, as that chapter existed on June 30, 2020, or a license to 25
operate a marijuana establishment pursuant to chapter 453D of 26
NRS, as that chapter existed on June 30, 2020, which was submitted 27
on or after May 1, 2017, and on or before June 3 0, 2020, and 28
regardless of whether the application was ultimately approved, 29
disclosure of the following information: 30
(1) The identity of an applicant, including, without 31
limitation, any owner, officer or board member of an applicant; 32
(2) The contents o f any tool used by the Department to 33
evaluate an applicant; 34
(3) The methodology used by the Department to score and 35
rank applicants and any documentation or other evidence showing 36
how that methodology was applied; and 37
(4) The final ranking and scores of an applicant, including, 38
without limitation, the score assigned to each criterion in the 39
application that composes a part of the total score of an applicant. 40
(n) Disclosure of the name of a licensee and the jurisdiction of 41
that licensee pursuant to cha pter 453A or 453D of NRS, as those 42
chapters existed on June 30, 2020, and any regulations adopted 43
pursuant thereto. 44

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3. The Executive Director shall periodically, as he or she 1
deems appropriate, but not less often than annually, transmit to the 2
Administrator of the Division of Industrial Relations of the 3
Department of Business and Industry a list of the businesses of 4
which the Executive Director has a record. The list must include the 5
mailing address of the business as reported to the Department. 6
4. The Executive Director may request from any other 7
governmental agency or officer such information as the Executive 8
Director deems necessary to carry out his or her duties with respect 9
to the administration or collection of any tax, fee, assessment or 10
other amount required by law to be collected or the imposition of 11
disciplinary action. If the Executive Director obtains any 12
confidential information pursuant to such a request, he or she shall 13
maintain the confidentiality of that information in the same manner 14
and to the same extent as provided by law for the agency or officer 15
from whom the information was obtained. 16
5. As used in this section: 17
(a) “Applicant” means any person listed on the application for a 18
registration certificate to operate a medical marijuana establishment 19
pursuant to chapter 453A of NRS, as that chapter existed on June 20
30, 2020, or a license to operate a marijuana establishment pursuant 21
to chapter 453D of NRS, as that chapter existed on June 30, 2020. 22
(b) “Artificial intelligence” has the me aning ascribed to it in 23
section 1 of this act. 24
(c) “Disciplinary action” means any suspension or revocation of 25
a license, registration, permit or certificate issued by the Department 26
pursuant to this title or chapter 453A or 453D of NRS, as those 27
chapters existed on June 30, 2020, or any other disciplinary action 28
against the holder of such a license, registration, permit or 29
certificate. 30
[(c)] (d) “Licensee” means a person to whom the Department 31
has issued a license, registration, permit or certificate pursuant to 32
this title or chapter 453A or 453D of NRS, as those chapters existed 33
on June 30, 2020. The term includes, without limitation, any owner, 34
officer or board member of an entity to whom the Department has 35
issued a license. 36
[(d)] (e) “Records” or “files” means any records and files 37
related to an investigation or audit or a disciplinary action, financial 38
information, correspondence, advisory opin ions, decisions of a 39
hearing officer in an administrative hearing and any other 40
information specifically related to a taxpayer or licensee. 41

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[(e)] (f) “Taxpayer” means a person who pays any tax, fee, 1
assessment or other amount required by law to the Department. 2

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