How Nebraska Collects Taxes & the Programs Available for Tax Help
Nebraska’s Tax Commissioner, through the Department of Revenue, is responsible for administering the State’s tax laws. This includes making sure that residents file their tax returns and pay what they owe in taxes on time. When taxpayers are delinquent in filing and/or paying their taxes, the Department of Revenue uses all legal means to collect those taxes, as follows:
If you do not file your returns or do not pay the full amount you owe in taxes on time, the Department may charge you with the following penalties, which will continue until your taxes are fully paid:
For an individual filing his/her income tax return late: 5% of the unpaid tax charged per month late or beyond extended filing date (up to 25%) until tax is paid in full.
For paying income tax late or making a partial payment: 5% will be charged of the amount unpaid at due date or unpaid by extended filing date.
For filing sales tax return late: a 10% tax penalty or $25, whichever is greater.
Notices & Appeals
After reviewing the information on a taxpayer’s tax return and bookkeeping records or due to a tax audit, the Department may determine that additional taxes are owed. As a result, a Notice and Demand for Payment or a Notice of Deficiency may be sent requesting the additional tax be paid. If you disagree with this assessment, you can file a petition for redetermination. At this point it might make sense to hire a tax professional or CPA for their tax help and expertise. You will need to file your appeal within 60 days of the date the Notice is postmarked, except for jeopardy assessments and drug taxes.
If you do not dispute your Notice within the 60-day period, the debt is considered to be due and payable. If you dispute the added assessment, you can arrange for an informal conference to try and resolve the discrepancy. If the issue cannot be resolved in an informal conference, you can advance your appeal to a formal hearing in front of the Tax Commissioner.
Tax Liens & Wage Garnishment
When a taxpayer fails to pay the taxes they owe to the State, the Department of Revenue may file a lien on the assets and/or property owned or partly owned by the taxpayer. This lien will allow the Department to legally seize and sell the assets to satisfy the tax debt. When a lien is placed on property or other assets, it prevents it from being sold or transferred to someone else. These assets may include real estate, bank accounts, personal property or accounts receivable. Wages may also be garnished to enforce the lien.
Personal Responsibility for Business Taxes
Any corporate officer or the employee whose duty it is to account for, collect or pay the corporate taxes, or any employee, manager or member of a limited liability company (LLC) whose duty it is to account for, collect or pay the taxes may be held personally responsible and liable for paying the taxes, including interest and penalties. Also, if you plan on buying a business, make sure that it doesn’t owe any unpaid back taxes; otherwise you could be held responsible and liable for paying any unpaid taxes. Every business should have an experienced tax professional a phone call away to provide tax help and advice on a regular basis.
Sales Tax Permit Suspension or Revocation
If the sales tax permit holder does not collect, report or pay the correct amount of sales tax to the Nebraska Department of Revenue, the business is at risk of having its sales tax permit suspended or revoked. The same goes if the business does not provide the information asked for during an audit or does not reveal an important fact regarding its sales and use tax liability. Under either condition, the business will be given a 20-day Notice to Appear for a formal hearing on the matter.
During the formal hearing the sales tax permit holder is required to provide a valid reason for failing to comply with Nebraska state tax codes or forfeit the permit. A new permit will not be issued until all tax liabilities plus interest and penalties have been paid in full. To ensure that the business remains compliant with tax codes, the Department has the right to require sufficient financial security, which could amount to three times the average amount due for each reporting period.
Every business should retain the services of a reputable tax professional for advice and tax help as needed so that the business is not at risk due to tax issues. The Tax Commissioner may require repeat tax offenders to post an amount of money equal to five times the average amount due per reporting period.
Private Collection Agencies
The Nebraska Tax Commissioner has the authority to hire a private collection agency located anywhere in the country to collect unpaid taxes. Once a delinquent tax debt has been owed for more than six months and the taxpayer has been notified in writing by mail at least three times, the case may be sent to a collection agency. Any fees associated with collecting this debt will be added onto the balance owed.
Programs for Nebraska Taxpayers that Provide Tax Help & Tax Relief
People who owe back taxes to the federal government have to resolve their issues with the Internal Revenue Service. Like the IRS, the Tax Commissioner through Nebraska’s Department of Revenue is responsible for administering the State’s tax laws, which includes collecting unfiled and/or unpaid taxes.
The Department of Revenue does not discuss any specific programs for paying off back taxes, but they do have a Taxpayer Assistance line set up at (800) 742-7474 or (402) 471-5729 offering tax help to those with unresolved tax issues, which are typically resolved as follows:
If you cannot pay the full amount of taxes you owe the State, tax help is available because the State allows you to choose from 3 different payment options:
If you are able to pay the full amount within 90 days in 4 equal payments you can make your first payment electronically using the Department of Revenue’s online payment portal or by sending a money order or check with your tax return to the Department of Revenue. The remainder should be sent in 3 equal payments in 30-day increments thereafter. This option requires no paperwork and each month you will get an updated statement from reflecting your payments and the balance remaining.
You can use your credit card to pay your taxes via the Official Payments Corporation. You will be charged 2.49% of the payment as a convenience fee.
If you cannot pay your full tax debt within 90 days, you may ask for an Installment Payment Plan that extends beyond 90 days. To arrange for this form of tax help, your request must be in writing using the Payment and Authorization Agreement Form 27D. When you’ve completed Form 27D send it to the address on the bottom of page 1 of the form. Once the Department reviews your request they will notify you whether they accept or deny your proposed payment plan.
All installment payments are required to be made via Electronic Funds Transfer (EFT), which means you must provide your bank account information so the Department can arrange for this. Your payments can be taken out of your bank account weekly, biweekly or monthly. Until your tax debt is fully paid, you will continue to be charged interest on the unpaid balance.
Offer in Compromise
If there is no way for you to pay the full amount you owe in taxes, you may want to consider an Offer in Compromise. Under this agreement, you would offer to settle your entire tax debt by paying a lump sum, which is less than what you owe. If the Department of Revenue agrees to your offer, the balance remaining would be forgiven. For the best chance of getting the tax relief you seek through an Offer in Compromise, it might be wise to hire a reputable tax professional for their expertise in these matters.
The process requires you to submit your proposed offer to the Department of Revenue with a written explanation as to why you are unable to pay the full amount you owe in taxes.
To be eligible for the Offer in Compromise tax relief program:
You are certain that you do not owe the entire amount you’ve been assessed or your financial situation is such that the Department would find it impossible to collect any more money than the amount you’re offering to pay. You are not involved in any bankruptcy procedure at the current time.
There are no specific forms to use for an Offer in Compromise so you would need to write a detailed statement explaining why you cannot pay the full amount you owe in taxes. Your letter should also include a proposed offer to satisfy your tax debt.
Submit your statement and offer to the following address:
Nebraska Department of Revenue
P.O. Box 94818
Lincoln, NE 68509-4818
You can also phone the Department of Revenue at (402) 471-5729 or (800) 742-7474 if you want to discuss the matter.
Not only will you be charged interest on your unpaid taxes, you may also be charged penalties, which can add up quickly. The penalties for delinquent state taxpayers are as follows:
- Filed return late: 5% each month the taxes remain unpaid
- Paid late: 5% of the unpaid taxes
- Made partial payment: 5% of the unpaid taxes
If you’re at risk of being charged penalties, you are within your rights to ask for tax relief through penalty abatement. If approved, this would eliminate some, if not all of the penalty charges. The first step is to complete Request for Abatement of Penalty Form 21. You also need to explain to the Department of Revenue why you didn’t pay your taxes and your reasons why the penalties you’ve been charged should be forgiven or waived.
Power of Attorney
You have the right to have an accountant or lawyer represent your interests before the State of Nebraska regarding your tax issues. A non-lawyer would be allowed to appear on your behalf on a limited basis. To arrange for this type of tax help you need to complete Power of Attorney Form 33 or an equivalent document that provides for written authorization. Once completed and signed, it must be submitted to the Department of Revenue.
Additional Tax Help
If the Nebraska Department of Revenue has sent you a tax bill and you have no idea what you should do about it, you can phone them at (402) 471-5729 or (800) 742-7474 or email them through the contact page on their website. If you would like to write a letter or apply for a payment plan or request penalty abatement, you should use this address:
Nebraska Department of Revenue
P.O. Box 94609
Lincoln, NE 68509-4609