Nebraska Bank Levy Checklist

Nebraska Bank Levy Checklist

What Collection Action Means

Collection action refers to formal steps the Nebraska Department of Revenue takes to recover unpaid state taxes, penalties, or interest. The Nebraska Department of Revenue uses specific collection tools authorized under state law when a taxpayer owes a delinquent tax account.

These tools include wage levies, bank account seizures, state tax lien filings, and property seizures in certain cases. Collection action begins only after the Department of Revenue sends required notices and the taxpayer fails to respond or arrange payment.

The Tax Commissioner has authority under the Nebraska Revenue Act to pursue these actions through established legal procedures. State revenue laws mandate that a written demand for payment must precede any collection action.

Why the Department Takes Collection Action

Nebraska law requires the Department of Revenue to collect taxes owed to the state through authorized means. Initiating collection action occurs when a taxpayer receives a balance due notice or notice of proposed deficiency determination and does not pay the amount owed or establish payment arrangements.

State revenue laws mandate specific collection procedures before any action begins. The Tax

Commissioner must first mail a written demand for payment to the taxpayer.

Collection actions cannot commence until this demand for payment has been sent and the taxpayer has failed to respond within the required timeframe. Required timeframes vary depending on the type of tax assessment and whether the taxpayer was located outside the

United States.

Consequences of Ignoring Collection Action

Continuing to ignore collection action typically results in escalation of the Department’s collection efforts. Additional notices of levy against wages or bank accounts may be issued by the state, which can also file a state tax lien against real property or personal property, or proceed with seizure and sale of assets.

Each additional collection action may add fees, interest, or other costs to your delinquent taxes.

Authorization for a writ of seizure against personal property or real property may come from the

Tax Commissioner if the debt remains unresolved due to accruing interest at the rate specified in state law.

What Collection Action Does Not Mean

Receiving a collection notice does not mean criminal charges have been filed against you or that criminal prosecution will automatically follow. Collection action is an administrative process designed to recover money owed, not a criminal investigation.

Steps to Take After Receiving a Collection Notice

1. Verify the Notice

Check that the notice came directly from the Nebraska Department of Revenue by confirming that the official contact information appears on the document. Verify the notice includes your correct name, address, and tax identification information along with a case number or reference number.

Do not respond to suspicious emails or calls claiming to represent the state without first confirming legitimacy through the official state website contact information. Scammers often impersonate state agencies to obtain personal information or money from unsuspecting taxpayers.

2. Review Notice Details

Read the entire notice carefully, identifying the tax year or period being addressed and noting all deadline dates for payment, response, or required action. Write down the case number, contact name, or reference number provided on the notice. Keep the original notice and all supporting documents in a secure location for future reference. Missing a deadline on a balance due notice may result in immediate escalation to more aggressive collection tools.

3. Gather Your Records

Locate your tax return for the year mentioned in the notice and collect any payment records, receipts, or proof of prior payments you have made. Find any previous

correspondence you received from the Department of Revenue about this delinquent tax account.

4. Determine Amount Owed

Review the balance due notice to identify the original tax amount, penalties, interest, and any additional fees included in the total. Check whether the amount listed differs from what you believe is owed based on your records.

5. Contact the Department

Call or visit the Nebraska Department of Revenue using the contact information printed in the notice. Provide your case number and tax identification information when speaking with a representative about your specific account.

6. Explore Resolution Options

• Inquire whether installment payment plans are available under Nebraska

regulations, as individual income tax payment plans up to twenty-four months may be granted without submitting financial statements if you agree to electronic payments.

• Business payment plans for taxes other than individual income tax, up to twelve

months, may be granted without financial statements if electronic payments are used.

• Ask whether penalty abatement or an offer in compromise is possible by

submitting Form 21, Request for Abatement of Penalty, after paying the tax and interest owed.

• The Tax Commissioner evaluates requests for an offer in compromise on a

case-by-case basis, and an offer in compromise allows qualifying taxpayers to settle their debt for less than the full amount owed in hardship cases.

• Trust fund tax liabilities related to corporate officer assessments may not qualify

for an offer in compromise under certain circumstances.

• Hardship cases require documentation showing that payment would create

severe financial difficulty for you and your dependents.

7. Respond Within the Required Timeframe

Send any requested information or documentation by the deadline stated in the notice using certified mail with return receipt requested. Keep a copy of everything you send to the Department, and include your case number and tax identification information on all correspondence.

8. Request Written Confirmation

Ask the Nebraska Department of Revenue to confirm receipt of your response in writing and request a current account statement showing the balance due. Request a written explanation of the next steps and any timeline for resolution.

9. Monitor Your Financial Accounts

Watch your bank accounts for any levy activity and review your pay stub if employed to check for wage garnishment. Under Nebraska law, wage garnishment is limited to fifteen percent of disposable earnings if you are head of a family or twenty-five percent if you are not head of a family.

• The Consumer Credit Protection Act protects employees from termination

because wages are garnished for any one debt, and your employer cannot legally terminate your employment solely because the state has issued a notice of levy against your wages for a single tax debt.

• Protection does not extend to multiple separate debts that result in multiple

garnishments from different creditors.

• Nebraska law provides specific exemptions from levy to protect essential

property, including personal possessions such as necessary clothing, household goods up to specified dollar amounts, and professionally prescribed health aids.

• These protections also cover certain retirement accounts, workers' compensation

benefits, and personal possessions needed for daily living.

• You must file a written claim within twenty days of receiving the notice of levy, as

these exemptions do not apply automatically and require you to demonstrate that the property qualifies under Nebraska exemption statutes.

What Happens After You Respond

After you respond to a collection notice, the Department of Revenue acknowledges receipt and processes your information according to established collection procedures. The state may propose an installment payment plan, request additional documentation, or continue with collection action if the account remains unresolved.

A signed payment agreement is considered a current demand for payment for the duration of the agreement. If you default on the payment agreement, the Department may proceed with collection action without further notification to you.

Common Mistakes to Avoid

Missing deadlines or ignoring notices often results in immediate escalation of collection action.

Sending incomplete records or illegible documents delays resolution and creates confusion about your account status.

Failing to document phone calls, letters, or agreements makes it difficult to verify what was discussed or agreed upon with the Department. Sending payment without identifying which tax year or account it applies to may result in misapplication of funds.

Understanding Your Rights and Special Circumstances

You have the right to request in writing a determination that a notice of levy or state tax lien is not valid against your rights to property within twenty days after service of the notice. The

Department must respond to your request in writing within ten days of receipt.

• Appeals of the Department’s decision fall under Nebraska Revised Statutes Section

84-917, which governs administrative appeals through the Administrative Procedure Act.

• State tax liens no longer appear on consumer credit reports as of April 2018, when the

three major credit bureaus eliminated all tax liens from credit reporting, and tax liens remain public records but do not affect your credit score or appear on reports from

Equifax, Experian, or TransUnion.

• If you file a bankruptcy petition, an automatic stay takes effect immediately upon filing,

and the automatic stay prohibits the Department from continuing most collection

activities while your bankruptcy case is pending.

• Chapter 7 bankruptcy may discharge certain tax debts that meet specific age and filing

requirements, but Chapter 7 does not discharge recent tax debts, trust fund tax liabilities, or debts arising from fraudulent returns.

• The county sheriff may execute a writ of seizure against personal property or real

property if the Tax Commissioner authorizes seizure through proper legal process, allowing the sheriff to take possession of your rights to property to satisfy the delinquent tax debt.

• Before issuing this writ, the Department must identify the property, verify title, and notify

all known lienholders on the property.

• Corporate officer assessments may result in personal liability for business taxes if you

had authority over financial decisions and willfully failed to pay trust fund taxes.

Facing State Enforcement or Payroll Tax Issues?

If you’ve received a state tax notice and aren’t sure how to respond, we can help you review your options and next steps.