TAX BREAK

Nebraska Enacts Tax Amnesty Program

by Andrew T. Schlosser

 

As Nebraska taxpayers were busy trying to meet the April 15th deadline for filing individual income tax returns, the Unicameral was busy enacting a new tax amnesty program to help out those taxpayers who may not have been quite so diligent about paying taxes in prior years. The new amnesty program, which was part of L.B. 1017, was signed into law by the Governor on April 15th, and will run from August 1, 2004, through October 31, 2004.

 

The program allows all taxpayers, including corporate entities, to avoid civil and criminal penalties, interest, and prosecution for delinquent taxes that were originally due on or before April 1, 2004. Taxes covered by the program include state and local sales and use tax, individual income tax, corporate income tax, financial institutions deposit tax, motor vehicle fuel, diesel fuel, and compressed fuel tax, cigarette tax, transfer taxes, charitable gaming tax, and any other tax collected by the Department of Revenue.

 

Taxpayers who were already under audit, investigation, or prosecution for nonpayment of taxes as of April 15, 2004, will not be eligible for the program. This exclusion appears to apply regardless of whether the existing audit or investigation relates to the taxes for which amnesty is being sought. On the other hand, the statute only excludes taxpayers who are under audit/investigation/

prosecution by the state of Nebraska or the federal government, not by other state governments.

 

The first step to receiving amnesty under the program is to submit an application to the Nebraska Department of Revenue between August 1, 2004, and October 31, 2004. The taxpayer will then need to file a return for any unreported taxes no later than December 31, 2004, and pay all of the unpaid taxes along with the return. If the taxpayer has previously filed the applicable return but simply hasn’t paid the taxes, the unpaid taxes are instead due within 30 days of submitting the amnesty application.

 

While the taxpayer does avoid potential penalties, interest, and prosecution by participating in the amnesty program, the taxpayer will automatically forfeit any right to challenge the amount of the tax or its imposition. This is likely to make some taxpayers think twice before committing to the program, especially since the Department of Revenue still maintains its ability to adjust the return pursuant to an audit.

 

One very troubling provision of the statute is a reference to the Tax Commissioner needing to “accept” an application before amnesty is granted. Presumably, this language was intended merely to enforce the eligibility requirements of the program, but it seems to leave open the possibility that an application could be rejected on other unforeseen grounds. Because of this potential pitfall, it may be wise to wait for regulations clarifying the issue prior to submitting an amnesty application. Please feel free to contact any member of our Tax Department if you have other questions about unpaid taxes, or if you would like additional information concerning Nebraska’s tax amnesty program. 

 

 

 

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Andy Schlosser is a member of our Tax Department who practices in the field of general business representation.

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