Nebraska Notice of Bank Levy: What to Do After Receiving This Notice
Introduction
A Notice of Bank Levy from the Nebraska Department of Revenue is a formal warning that the state intends to freeze and take money directly from your bank account to satisfy unpaid Nebraska taxes. This notice provides you with an opportunity to respond before the levy is actually served to your financial institution.
The notice itself does not mean your money has already been taken. Understanding your rights and response options can help you resolve the debt or prevent the levy from occurring. Taking immediate action is crucial to protect your financial accounts and fulfill your tax obligations under the Nebraska Revised Statutes.
What This Notice Means
The Notice of Bank Levy informs you that the Tax Commissioner has decided to collect your unpaid tax debt by instructing your bank to freeze and surrender funds from your account. This notice typically follows earlier collection efforts, including balance due notices and demand letters for payment.
The notice provides a specific timeframe for you to respond, request a determination that the levy is invalid, or arrange payment before the Department serves the levy on your bank. This is a serious collection action that requires your immediate attention and response under revenue laws.
Understanding Collection Procedures
The Nebraska Department of Revenue follows systematic collection procedures before issuing a Notice of Bank Levy. The Tax Commissioner typically sends multiple notices, including a Final Notice of Intent to Levy, before taking enforcement action against your checking accounts, savings accounts, or other financial accounts.
These collection efforts are designed to give you time to resolve your delinquent tax account before the state takes direct action. Understanding these procedures helps you recognize where you are in the collection process and what actions you can still take.
Step-by-Step Response Checklist
Step 1: Read the Entire Notice Immediately
Review the notice carefully to identify the notice date, total amount owed, tax type and year, and the contact information for the Nebraska Department of Revenue. Write down all critical dates and deadlines. Look for any instructions about how to respond or request a determination that the levy is not valid against your property.
Step 2: Verify the Amount and Tax Debt
Compare the amount shown on the notice with your own records of the tax debt, including any payments you have already made to the Department. If the amount appears incorrect, the tax year is inaccurate, or you believe you do not owe this debt, gather supporting documentation, such as payment receipts, bank statements, prior correspondence, or tax returns, that support your position.
Step 3: Determine If You Can Pay the Debt in Full
If you have the funds available and can pay the full amount before the deadline, contact the Nebraska Department of Revenue immediately to make payment. Provide your case number or account number and specify that the payment is for the tax debt listed in the levy notice. Request written confirmation that the levy will not be served to your bank once payment is received.
Step 4: Contact the Department Before the Deadline
If you cannot pay in full, call the Nebraska Department of Revenue at the number on the notice or at 402-471-5729 before the deadline expires. Explain your situation and ask about installment payment options, structured payment plans, or considerations for hardship cases. The Department may agree to pause collection action if you enter into written payment arrangements before the levy is served.
Step 5: Submit a Written Request If You Dispute the Levy
You have the right to request in writing a determination that the notice of levy is not valid against your interest in property within 20 days after service of process. Send your written request to the address on the notice, explain why the levy is invalid or incorrect, and attach copies of supporting documents. Send your request by certified mail with a return receipt requested to prove delivery to government agencies.
Step 6: Document All Communications and Actions
Keep copies of everything you send to the Nebraska Department of Revenue, including letters, payment receipts, and supporting documents. If you call the Department, write down the date, time, name of the person you spoke with, and a summary of what was discussed. These records are essential if you need to prove you responded or if disputes arise later.
Step 7: Monitor Your Bank Account After the Deadline
If the deadline passes without resolution, watch your checking accounts and savings accounts closely for any freeze or hold placed by the Department. If a freeze occurs, contact your receiving bank to confirm the action and inquire about the transfer of funds to the state. Contact the Nebraska Department of Revenue immediately to discuss resolution options, even after the levy has been served to your bank.
Understanding Your Rights and Exemptions
Nebraska Revised Statutes provide certain exemptions from levy to protect essential assets and income. Exempt property includes Social Security benefits, disability payments, necessary personal possessions, household goods, and certain retirement accounts protected under the Employee Retirement Income Security Act.
If you believe your funds are exempt, you must file a written list of income sources and property within 20 days, showing which items you claim as exempt with their values. The Department must respond to your exemption request within 10 days. If your request is denied, you may appeal the decision.
Other Collection Actions and Related Issues
The Tax Commissioner may pursue other collection actions beyond bank levies, including wage garnishment, recording a state tax lien with the Secretary of State, or issuing a writ of seizure for personal property or real property. A notice of lien may be recorded to secure the debt against your assets. If you are facing multiple collection actions, consider consulting legal counsel about options such as an offer in compromise for debt settlement. In hardship cases, the Department may consider alternative resolution methods based on your financial situation.
Bankruptcy and Automatic Stay Protection
If you file a bankruptcy petition with the United States Bankruptcy Court, an automatic stay immediately stops most collection efforts, including bank levies and wage garnishment. Both Chapter 7 liquidation and Chapter 13 reorganization provide this protection, though certain tax debts may survive bankruptcy depending on their age and type.
A judgment creditor or government agency must cease collection activity once the bankruptcy petition is filed. However, tax debts related to trust fund tax or corporate officer assessments may receive different treatment under federal law and the Internal Revenue Code.
Common Mistakes to Avoid
● Ignoring the notice: Failing to read or respond to the notice does not make the levy go away and will result in the Department serving the levy on your bank.
● Missing the response deadline: You have 20 days after service of the notice of levy to request a determination that the levy is invalid, and waiting too long removes your ability to respond before funds are frozen.
● Not specifying the tax debt when making payment: Sending a payment without clearly identifying which tax debt, tax year, and case number it applies to can delay processing and fail to stop the levy.
● Assuming the levy is automatic, the notice serves as a warning, giving you time to respond. Taking action before the deadline can prevent the levy from being served to your bank.
● Failing to claim exemptions: Not asserting your rights to exempt property, such as Social Security benefits or disability payments, can result in the loss of protected funds.
Frequently Asked Questions
Does the notice mean my money is already gone?
The notice serves as a warning that the state intends to levy against your account, not confirmation that funds have been taken. The actual freeze occurs when the Department serves the levy on your bank, which typically happens after the response deadline passes if you do not respond.
Can I appeal or dispute the levy?
You may request in writing a determination that the notice of levy is not valid against your interest in property within 20 days after service of the notice. The Department must respond within 10 days; you may also appeal the decision under Nebraska law.
Will arranging a payment plan stop the levy?
Entering into written payment arrangements with the Nebraska Department of Revenue generally stops collection action, as the signed agreement is considered a current demand for payment. However, you must contact the Department before the deadline to arrange the installment payment agreement.
What happens if I also owe federal taxes?
State tax levies are separate from Internal Revenue Service collection actions. If you owe both state and federal taxes, you may receive collection notices from both government agencies, and you will need to address each debt separately with the appropriate agency.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance
