Nebraska Payroll Tax Payment Plan Options Checklist

Nebraska Income Tax Withholding Payment Plan

Options

Understanding Income Tax Withholding Obligations

Income tax withholding is the state income tax that employers deduct from employees' paychecks and remit to the Nebraska Department of Revenue. This obligation represents a required employer responsibility that operates separately from federal payroll taxes.

When your business owes unpaid withholding taxes to Nebraska, the state may offer payment plan options to help you settle the debt over time rather than in one lump sum—understanding these options matters because unpaid taxes can result in penalties, interest, and enforcement action by the Nebraska Department of Revenue.

Income tax withholding is the state income tax that employers deduct from employees' paychecks and remit to the Nebraska Department of Revenue. The state treats unpaid income tax withholding as a serious compliance issue because these funds become state property upon withholding.

What a Nebraska Withholding Tax Payment Plan Involves

A Nebraska withholding tax payment plan creates an agreement between your business and the

Nebraska Department of Revenue to repay unpaid state withholding in scheduled installments.

Businesses typically use this arrangement when they have fallen behind on withholding deposits or filings and cannot pay the full amount immediately.

How Payment Plans Function Under State Regulations

The Nebraska Department of Revenue offers payment plan options as a formal regulatory tool to collect unpaid withholding while allowing businesses to remain operational. Payment plans become relevant after the state identifies unpaid withholding liability through failed deposits, unfiled returns, or state audits.

Nebraska regulations in Chapter 36 establish specific procedures for payment agreements. At the time the first demand for payment is issued, you may pay delinquent taxes in installments by executing a payment agreement within the regulatory limits.

Consequences of Ignoring Payment Obligations

When withholding taxes remain unpaid, and you establish no payment agreement or fail to maintain one, the Nebraska Department of Revenue escalates collection efforts. The state may pursue wage garnishments, place liens against business or personal assets, suspend tax permits, or refer the debt to a collection agency.

Penalties and interest continue to accumulate on unpaid balances at an annual rate of 8% for the period from January 1, 2025, through December 31, 2026. Failing to meet payment obligations can also affect future business operations and may result in personal liability for responsible officers under Nebraska law.

What Payment Plan Information Does Not Mean

Receiving information about payment plan options does not mean the state has filed a lien against your property or garnished your wages. A payment agreement does not guarantee penalty relief or forgiveness of interest charges, although the Tax Commissioner has statutory authority to waive penalties and interest under certain circumstances.

Steps to Take After Identifying Unpaid Income Tax

Withholding

Gather Your Documentation

Collect all payroll records, deposit receipts, and state tax correspondence related to your withholding account. Identify the tax periods for which payments are missing or incomplete and note the amounts owed if the state has provided them.

Contact the Nebraska Department of Revenue

Reach out to the Department of Revenue’s Income Tax Withholding Section at 800-742-7474 for

Nebraska and Iowa callers or 402-471-5729 to confirm the current balance owed. Ask specifically about payment plan options available to your business and verify which tax periods are delinquent.

Review State Notices Carefully

Review any notice, letter, or statement from the state carefully for deadlines, specific amounts owed, and instructions about payment options. Look for contact information, case numbers, or references that will help when you speak with a revenue representative.

Understand Current Payment Requirements

Ask the Department of Revenue whether you must continue making regular withholding deposits while also addressing the past-due balance. Any payment agreement must require you to make timely payments and to file all future returns and pay all future taxes timely.

Request Written Payment Plan Information

Ask the Department of Revenue to provide written information on available payment agreements, including the types of plans offered, eligibility requirements, and payment structures. For business taxes, including withholding, arrangements up to 90 days do not require a written agreement.

Arrangements for more than 90 days must be in writing and provide for electronic payments when possible. For taxes other than individual income tax, arrangements that provide for electronic funds transfers and satisfy the delinquency within 12 months do not require a financial statement.

Review Agreement Terms Thoroughly

Once you receive written information or a proposed payment agreement, review the total payment amount, the number of installments, and the due date for each payment. Understand that interest continues to accrue on unpaid balances until fully paid at the current rate of eight percent per year.

Submit Required Applications

Complete any required written application or agreement according to the state’s instructions and submit it before any stated deadline. Keep copies of everything you submit and obtain written confirmation of receipt from the Department of Revenue.

Establish Your Payment Method

Arrange how you will make payments under the payment agreement by confirming with the

Department of Revenue whether you can pay by check or electronic transfer. Electronic payment options are available through the Department’s website and are strongly encouraged for all taxpayers.

Common Mistakes to Avoid

Missing a scheduled payment under your payment agreement can result in the contract being terminated and enforcement action resuming. If you cannot make a scheduled payment, contact the Department of Revenue immediately to discuss options and potential modifications.

You must maintain current withholding compliance while working through a payment agreement for past-due amounts. A payment agreement for past-due taxes does not eliminate the requirement to file and pay current withholding on time.

When making payments under a payment agreement, always include your business name, tax identification number, and any case or account number provided by the state. Proper identification ensures payments are credited correctly to your account and prevents processing delays.

Facing State Tax Enforcement Action?

If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.