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Bill

AB 537

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

2025 Regular Session

Requires the tax department to notify individuals when AI is used in tax-related communications and clarifies AI-generated records are confidential and privileged.

(Pursuant to Joint Standing Rule No. 14.3.1, no further action allowed.)
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Bill Summary · AB 537

AB 537 — Summary (As Introduced)

Title: Enacts provisions relating to the use of artificial intelligence by the Department of Taxation (BDR 32‑420)
Introduced: Feb 11, 2025
Status: Referred to Committee on Revenue; (record indicates “no further action allowed” pursuant to Joint Standing Rule No. 14.3.1 as of April 12, 2025)
Fiscal note: Effect on Local Government: No. Effect on the State: Yes.

Purpose / Intent

AB 537 would (1) require the Department of Taxation to notify people when they are communicating or interacting with an artificial intelligence (AI) system in matters related to tax administration, collection, or disciplinary actions, and (2) make explicit that Department records and files generated by AI are confidential and privileged under existing law (NRS 360.255).

Key provisions

  • Notification requirement (new section to Chapter 360 of NRS):
    • If the Department uses artificial intelligence to communicate or interact with a person concerning administration or collection of any tax, fee, assessment or other legally collectible amount, or concerning imposition of disciplinary action, the Department must ensure the person is informed they are interacting with AI.
    • Defines “artificial intelligence” as a machine‑based system that, for human‑defined objectives, can make predictions, recommendations, or decisions influencing real or virtual environments.
  • Confidentiality clarification (amendment to NRS 360.255):
    • Explicitly states that the Department’s records and files "including, without limitation, any records and files that are generated by artificial intelligence used by the Department" are confidential and privileged.
    • Retains the existing enumerated exceptions to confidentiality in NRS 360.255 (for example: testimony or document production when directly involved in a proceeding; delivery to a taxpayer or authorized representative; publication of de‑identified statistics; authorized exchanges with federal/state/local law enforcement or other state agencies; audits; certain local government requests; disclosure to successors/representatives in limited circumstances, etc.).

Who would be affected

  • Department of Taxation operations that employ AI tools for taxpayer communication, case handling, analysis, or decision support.
  • Taxpayers and other persons interacting with the Department: they would have a right to be informed when AI is being used in communications that concern collection/administration or disciplinary matters.
  • Department employees and contractors (procedures and record‑handling practices would need to account for AI‑generated records under confidentiality rules).

Procedural / timeline notes

  • Introduced in February 2025 and referred to the Assembly Committee on Revenue (per the As Introduced version).
  • Fiscal note indicates state fiscal effect (unspecified amount).
  • Record shows the bill was noted as having “no further action allowed” under Joint Standing Rule No. 14.3.1 on April 12, 2025, which typically signals procedural constraints or that timely further action was not permitted under the chamber’s rules.

Considerations / potential impacts

  • Operational: Departments using AI would need policies and processes for (a) notifying persons when AI is used in relevant communications and (b) classifying, storing, and protecting AI‑generated records consistent with NRS 360.255.
  • Legal/privacy: Reinforces confidentiality protections for AI outputs, but existing statutory exceptions still permit disclosure in specific circumstances; agencies will need to map AI outputs to those disclosure pathways.
  • Transparency: The notification requirement increases transparency about the Department’s use of automated systems in taxpayer interactions.

Compiled from official sources — confirm details with the bill’s official record.

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