I-Team: Nevada Must Pay for Costly Tax Mistake - 8 News NOW

I-Team: Nevada Must Pay for Costly Tax Mistake

Posted: Updated:

LAS VEGAS -- A costly tax mistake will end up costing the state more than $1 million in back taxes. According to the IRS, Nevada has failed to file state employee tax forms correctly since 1986 and now the IRS wants its money.

Some state employees, including local judges, are getting emails from Carson City because the state messed up when filing their taxes. The employees owe as much as several thousand dollars each.

Nevada's Department of Administration learned the hard way it made a huge mistake on taxes going back to 1986. It handles state employee Medicare taxes. A state internal audit uncovered the mistake that had existed for 27 years.

The state blames misinterpreted legal advice it received nearly three decades ago. It affects 527 state employees, including judges, justices, and members of state boards and commissions. State officials and the IRS made a deal which calls for the state to pay back taxes for the past three years, and the rest will be forgiven. The total cost is $1.7 million. The state is making the full payment and the employees impacted will have three years to pay the state back.

"This is obviously not a place we're pleased to be at because we don't like to have mistakes and we certainly don't like to have mistakes for that many years," said Jeff Mohlenkamp, director of the state Department of Administration.

The majority of employees impacted owe less than $200. But an email obtained by the I-Team shows local judges may owe the state as much as several thousand dollars because of the state's mistake.

"We own the fact that we didn't make the proper deductions and proper remittances. For that, we're sorry. We're not happy that occurred," Mohlenkamp said.

But by settling with the IRS, the state and its employees avoid federal penalties. The state expects to dip into multiple funds, including the legislature's "contingency fund," to pay off the tax bill.

Assembly speaker Marilyn Kirkpatrick tells the I-Team it was difficult enough for Nevada to find more money for mental health emergencies and paying an old tax bill is going to be even more challenging.

The local district court released a statement Thursday. 

"The Medicare tax issue is unexpected. Each judge will have to determine the best way to address this issue for their circumstances."

The State Board of Examiners is expected to debate the proposed IRS settlement at their meeting next Tuesday.

  • Las Vegas NewsLas Vegas NewsMore>>

  • BREAKING NEWS: North Las Vegas Police investigate double shooting, one dead

    BREAKING NEWS: North Las Vegas Police investigate double shooting, one dead

    Saturday, April 19 2014 12:49 AM EDT2014-04-19 04:49:04 GMT
    North Las Vegas, NV. --North Las Vegas police are investigating a double shooting Friday night shortly before 8 p.m.Investigators said two men were shot at a home on Arbor Crest Street, near East Tropical Parkway and Donna Street.A 60-year-old man was taken to UMC Trauma with his condition unknown at this time. The second victim, a 37-year-old man, sustained non-life threatening injuries and treated on scene.Police are investigating the shooting as a domestic violence incident.More>>
    North Las Vegas, NV. --North Las Vegas police are investigating a double shooting Friday night shortly before 8 p.m.Investigators said two men were shot at a home on Arbor Crest Street, near East Tropical Parkway and Donna Street.A 60-year-old man was taken to UMC Trauma with his condition unknown at this time. The second victim, a 37-year-old man, sustained non-life threatening injuries and treated on scene.Police are investigating the shooting as a domestic violence incident.More>>
  • BREAKING NEWS: UMC lays off 100 employees

    BREAKING NEWS: UMC lays off 100 employees

    Friday, April 18 2014 9:52 PM EDT2014-04-19 01:52:41 GMT
    University Medical Center laid off more than 100 employees Friday and announced it will close four care centers.More>>
    University Medical Center laid off more than 100 employees Friday and announced it will close four care centers.More>>
  • Police investigate double stabbing

    Police investigate double stabbing

    Friday, April 18 2014 9:17 PM EDT2014-04-19 01:17:18 GMT
    Two people suffering stab wounds were rushed to the hospital Friday afternoon, Metro Police said.More>>
    Two people suffering stab wounds were rushed to the hospital Friday afternoon, Metro Police said.More>>
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and KLAS. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.