The two sides had begun discussing a long term contract last season, but because of uncertainty with Karl's health, the coach is currently under a one-year contract extension that is set to expire at the end of the season.
According to the report, new Nuggets executive president of basketball operations Masai Ujiri made signing and keeping the coach one of his first, and top priorities when he joined the organization.
"We've said it from Day 1 that George is our guy and we want him here for a long time," Ujiri said. "George is a future Hall-of-Famer. He has earned a contract extension."
The Nuggets and Karl have stated that there isn't a definitive date set in place when the extension will be signed, but that they both hope to have one in place within the next few months.