Navigating Nebraska State Tax Problems: Solutions and How to Find Help

Are you facing Nebraska state tax debt for yourself or your business? Wondering what will happen if you don't pay? Curious about resolution options? Or perhaps, you're dealing with a state tax audit, unfiled returns, or another state tax problem. 

This post outlines taxes in Nebraska, common tax problems, consequences of paying late, and how to get back into compliance with the Nebraska Department of Revenue (DOR). Keep reading to learn more, or use TaxCure to find a tax professional who has experience with Nebraska state taxes. Start your search now, and then filter the results to see pros who have experience with the NE DOR or even the particular tax problem or solution you need. 

Nebraska Taxes: What Can You Owe?

Taxpayers who work, run a business, or live in Nebraska may face the following taxes:

• Individual income tax
• Property tax
• Inheritance tax
• Sales and Use Tax
• Corporate Income Tax
• Withholding Tax (state income tax withheld by employers for employees)
• Excise Taxes (e.g., motor fuel, tobacco, alcohol)

Note that the DOR doesn't collect property tax. Instead, that's collected on the local level, and if you get behind, collection processes are handled by local governments.

Individuals who are required to file a federal income tax return must also file an individual income tax return with the state. Nebraska also imposes an inheritance tax. Although the DOR administers the tax, it's collected by county governments. Inheritance tax is handled through the probate process, or through special court proceedings if assets are passing to heirs outside of probate. 

Partnerships and corporations must file a business return with the state. Then, corporations face Nebraska's corporate income tax at the entity level, while partnerships report their profits on their personal state returns. Businesses must file sales tax returns if they sell taxable goods or services and deal with payroll taxes, including state withholding if they have employees.

Audits and Tax Assessments

The NE DOR has the right to audit any return filed with the state. If the auditor determines that you underreported, they will adjust your return accordingly. Similarly, if the IRS adjusts your return, the NE DOR will generally adjust your state return in the same way. 

Then, the state will send a Notice of Proposed Deficiency. If you don't respond, the tax will be assessed against you and due in full, and the Department will start the collections processes as outlined below. If you disagree with the deficiency notice, you have 60 days (150 days if you're out of the country) to file a Petition for Redetermination to ask the Commission to reconsider the tax assessment. The petition creates a contested case with the Nebraska Administrative Procedures Act. 

The state also uses this process to assess tax against you if you haven't filed and the DOR believes you should have. In the case of unfiled returns, the DOR uses the information available to them to determine your tax liability.

Nebraska Department of Revenue: Collection Actions

If you don't pay your tax when you file your return, the Department will send you a Balance Due notice. Then, they'll send a Demand for Payment if you don't respond. If you don't pay, the state can use a variety of involuntary collections against you, including the following:

State tax liens

The DOR can issue a tax lien against your assets in the amount of your unpaid state tax debt, including interest, penalties, and collection costs. The Department must send you a demand for payment first. You have 10 days from the postmark date to appeal if the lien was issued in error. The lien takes priority over any liens that are recorded afterward, and if the IRS also issues a federal tax lien against you, priority is based on the date of assessment.

Levies/seizures

The state may levy (seize) your assets for unpaid taxes, but they must send you a demand for payment at least 60 days before doing so. Then, they must send you a levy notice that gives you 20 days to respond if the levy was issued in error. 

The DOR may seize the funds in your bank accounts, Individual Retirement Accounts (IRA), CDs, and many other financial instruments. If the Nebraska DOR seizes the funds in your bank account, the levy will attach to all funds on the day of the levy, and the bank will not be able to withhold anything for outstanding loan payments, loan balances, or checks that were honored in spite of insufficient funds. The state can also seize real and personal property, such as real estate, vehicles, etc. 

There are only a few items that are exempt from seizure, such as immediate personal possessons, necessary clothing, up to $1500 in household furniture or goods, up to $2400 worth of supplies used for business such as tools or a vehicle to commute to work, and homesteads as defined in Nebraska State law worth up to $60,000. The state also exempts an additional $2500 in personal property on top of the items listed. Before seizing physical property, the state will send you a writ of seizure, which gives you 20 days to protest.

Wage garnishments

If the state levies your wages (aka wage garnishment), they will also send you and your employer a notice which gives you 20 days to respond if the levy was issued in error. The garnishment will stay in place until the full debt is paid, the Department voluntarily removes the levy, or you file bankruptcy. 

Note that bankruptcy may not eliminate your tax debt, as only certain taxes can be discharged in bankruptcy, but when you file, the courts will issue a stay which prevents creditors, including the IRS and state revenue agencies, from levying your assets. 

Loss of licenses and permits

The Department can revoke your business permits and licenses if you don't pay your sales tax. That can prevent you from operating and force you to close. 

Solutions for Nebraska State Tax Problems

If you have unpaid taxes in Nebraska, the DOR offers the following resolution options. When you talk with an experienced Nebraska tax pro, they can help you find the best type of relief for your unique situation.

Installment agreements

The Department will approve a request for a payment plan in these situations:

• You owe individual state income tax, set up automatic payments, and can pay off the balance within 24 months. 
• You owe any other type of tax; set up automatic payments, and you can pay off the balance within 12 months. 

If you don't fall within either of those groups, the Department may still be willing to approve a payment plan. But you must provide them with detailed information about your finances to get approved. In all cases, if you default on your payment plan, the Department can start involuntary collections without providing you any advance warning.

Offer in compromise

The Nebraska DOR accepts offers in compromise (settling tax for less than owed) on a case-by-case basis. The state generally accepts offers that are in the best interest of the state, and to get approved, you must show that you don't have enough income or assets to pay the tax liability in full. 

Penalty abatement

The Department may waive penalties in certain cases, but generally, you must request abatement. Common reasons for penalty waivers include excessive assessments, collection costs that don't warrant collection, and erroneous penalty assessments such as assessments after the statute of limitations. 

Dealing with state tax liens

If you disagree with the tax lien or believe that it's not valid, you have 20 days to protest after receiving a demand for payment. Then, the DOR must reply to you in writing within 10 days of receiving your request. If the DOR disagrees and wants to move forward with the lien, you have the right to appeal.

The DOR will terminate the tax lien if you pay the tax or get it abated or reduced to less than $50. The department will release the lien from you or from a specific piece of property if:

• The tax due is secured by a lien on other property.
• You post a surety bond or other satisfactory security to cover the amount due.
• Releasing the lien won't compromise the collection of taxes. 

The department will also subordinate the lien, meaning they allow another creditor to take priority -- for example, if you want to take out a loan against an asset to pay your taxes due. 

Hardship

The Nebraska DOR does not advertise a currently not collectible status like the IRS has. Instead, the state may accept a settlement (offer in compromise) on your tax liability if you're suffering financial hardship. 

How to Contact the Nebraska Department of Revenue

Here's the contact information if you want to reach out to the Nebraska DOR directly:

• Main Phone Numbers:(800) 742-7474, (402) 471-5729

State and regional DOR offices for in-person help:

Use the number above to make an appointment for in-person payments or assistance at the following offices:

Lincoln
Nebraska State Office Building
301 Centennial Mall S
Lincoln, NE 68508

Omaha
Nebraska State Office Building
1313 Farnam St Ste 100
Omaha, NE 68102-1836

Scottsbluff
505A Broadway Ste 800
Scottsbluff, NE 69361

Norfolk
304 N 5th St Ste D
Norfolk, NE 68701-4091

North Platte
200 S Silber Ave
North Platte, NE 69101-4200

Where to mail Nebraska tax returns

Send state returns without payments to:

Nebraska Department of Revenue
PO BOX 98912
Lincoln, NE 68509‑8912

If including a payment, send the return to:

Nebraska Department of Revenue
PO BOX 98934
Lincoln, NE 68509‑8934

How to file or pay taxes online

Individuals can use Nebraska's NebFile system to file and pay state taxes online. The DOR also offers NebFile for businesses. 

FAQs

Here are some additional questions about Nebraska state taxes. Reach out to a pro directly if you have additional questions.

Will the Nebraska DOR seize my tax refund for unpaid taxes?

Yes, the DOR can seize your state or federal tax refund for unpaid taxes, but they will not seize any portion of the refund due to an earned income tax credit.

Can the NE DOR hold you personally liable for business tax debt?

Yes, the DOR may hold you personally liable for business tax debt if they determine that you were responsible for paying or remitting the taxes and you willfully chose not to pay. That includes corporate officers and employees. For example, if you paid a vendor instead of remitting sales tax, the state may hold you personally liable.

Does Nebraska use collection agencies to collect unpaid state taxes?

Yes, the Tax Commissioner has the right to contract with third-party collection agencies to collect unpaid state taxes. Generally, the state will not assign your account to a collection agency unless it's at least six months behind, and the DOR has sent you at least three notices. 

Why should you consider professional help for NE tax problems?

Working with an experienced professional ensures that you understand all of your options and that you move forward in the most effective way possible, whether you're dealing with audits, assessments, unpaid taxes, or unfiled returns. Nebraska tax pros will negotiate with the NE DOR on your behalf, help you understand your options, provide you with peace of mind, and help you avoid costly mistakes. 

Finding a Qualified Nebraska Tax Professional

TaxCure makes it easy to find a qualified tax professional. Start your search now, and use the filters to narrow down the results so that you find a pro with the experience you need. For instance, you can select pros that have experience with the NE DOR, and then, you can also specify that they must have experience with unpaid taxes, liens, or other specific concerns. 

Don't wait – use TaxCure to find professional help today.