An executive audit of Nevada’s business license filings has found that a significant number of businesses are falsely claiming they are exempt from paying the annual business license fee.

Source: Quarterly increases in claimed exemptions (Nevada Secretary of State)

The state stands to lose nearly $11 million in revenue in the next fiscal year due to the number of businesses that claim to be exempt but in fact do not qualify for exemption under current state statutes, according to a summary report provided by Secretary of State Ross Miller.

Miller says he has accepted the audit’s recommendations and will take steps in the coming months to ensure that businesses that are required to obtain a state business license in Nevada come in to and stay in compliance with the law.

“It’s just too easy right now to get away with false or fraudulent filings that cost the state millions in lost revenue and penalize the thousands of businesses that diligently remain in good standing in Nevada,” said Miller.

Miller said he will file a report with auditors that will detail his intended approach to determining whether businesses that claim exemptions from business license requirements do in fact qualify.

Nevada law requires any person or entity that performs a service or engages in a trade for profit to obtain an annual state business license.

Home-based businesses that bring in less than $27,000 a year in net earnings are exempt from the requirements, as are non-profits and a limited number of other types of business.

The audit also identified the likelihood that a significant number of businesses in the state have neither filed for an exemption nor obtained a business license.

By comparing local government business license records to the Secretary of State’s records, auditors found 22.5% of locally-licensed businesses do not have a state license, constituting another nearly $4 million in lost revenue to the state (nearly $2 million if the current sunset provision is enacted on June 30).