When will the Nebraska Tax Commissioner abate interest charged on delinquent taxes?

Plain-English summary

When a Nebraska tax is paid late, interest is charged on top of the tax. This ruling explains the narrow situations in which the Tax Commissioner will forgive ("abate") that interest.

The bottom line: interest is abated only in very limited circumstances -- generally when the interest is due to an error by the Department of Revenue, or in cases of extreme hardship.

What changed in 2008. Before 2008, the Commissioner could abate interest only on the income tax or motor fuels programs. LB 914, enacted in 2008 and effective July 18, 2008, extended that authority to any tax program administered under the Nebraska Revenue Act of 1967. So interest abatement is now discretionary for delinquent sales and use taxes and other taxes administered the same way as sales tax -- local option sales and use tax, lodging tax, other tobacco products tax, litter fee, and tire fee -- as well as the income tax programs. Motor fuels abatement was not affected by LB 914.

You must pay first. A request for abatement of interest will not be considered until the tax has been paid.

Grounds the Commissioner will consider. Interest abatement will be considered when:

• interest was assessed due to an error or unreasonable delay by the Department;
• interest was assessed due to erroneous written advice from the Department, when the advice was a direct response to the taxpayer's request and the taxpayer reasonably relied on it;
• interest was attributable to an amount that was previously refunded for the period interest was not allowed by law;
• interest was assessed because of an amount erroneously refunded to the taxpayer (abated only up to 90 days); or
• interest on a related federal amount was abated by the IRS.

The Commissioner may also consider: voluntary compliance by filing delinquent returns for prior periods; family illness or death that prevented timely filing (including discovery of a deceased taxpayer's unfiled returns); and destruction of records due to a natural disaster.

What this means for you

If you owe interest on a late Nebraska tax

Abatement is the exception, not the rule -- expect it only if the interest traces to a Department mistake or a genuine hardship on the listed grounds. Pay the underlying tax first, then submit a written request (the ruling notes Form 21A, Application for Abatement of Interest) documenting the amount of interest and the reason with backup information.

If your business owes sales/use or related trust-fund taxes

Since LB 914, these programs are eligible for discretionary interest abatement too -- a change from the pre-2008 rule that limited abatement to income tax and motor fuels. Motor fuels interest remains outside LB 914's expansion.

Common questions

Q: Can I get interest abated just because paying is difficult?
A: Only in cases of extreme hardship, or where the interest was caused by a Department error. Ordinary inability to pay is not enough; the ruling describes the specific grounds considered.

Q: Do I have to pay the tax before asking for abatement?
A: Yes. A request for abatement of interest will not be considered until the tax has been paid.

Q: Does this cover sales tax and motor fuels tax?
A: Sales and use tax (and similarly administered taxes) became eligible under 2008's LB 914. Motor fuels interest abatement was not affected by LB 914 and continues under its own prior rules.

Citations and references

• Neb. Rev. Stat. §§ 77-2711 and 77-2792 -- provisions allowing the Tax Commissioner to abate interest for all tax programs other than motor fuels.
• LB 914 (2008) -- extended interest-abatement authority to any tax administered under the Nebraska Revenue Act of 1967, effective July 18, 2008.
• Form 21A, Application for Abatement of Interest -- the Department form used to request abatement.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr990803.pdf

Original ruling text

Revenue Ruling 99-08-3
All Nebraska Taxes

October 6, 2008

ABATEMENT OF INTEREST ASSESSED ON DELINQUENT TAXES
Issue:
What guidelines will the Tax Commissioner use when considering whether to grant interest
abatements?
Conclusion:
Interest on delinquent taxes will only be abated in very limited circumstances; generally when the
interest is due to an error by the Department of Revenue, or in cases of extreme hardship.
Analysis:
Prior to 2008, abatement of interest on delinquent taxes was only authorized for the income tax
or motor fuels tax programs. In 2008, LB 914 was enacted by the Legislature allowing for the
abatement of interest on any tax programs administered under the Nebraska Revenue Act of 1967.
These changes became effective on July 18, 2008.
Abatement of interest is at the Tax Commissioner’s discretion for interest assessed on delinquent
sales and use taxes, and other taxes and fees administered in the same manner as the sales tax
(e.g., local option sales and use tax, lodging tax, other tobacco products tax, litter fee, tire fee), as
well as the income tax programs. Abatement of interest for motor fuels programs was not affected
by LB 914.
A request for abatement of interest will not be considered until the tax has been paid.
The following list includes statutory criteria that previously granted the Tax Commissioner authority
to abate interest for the income tax programs. These criteria will continue to be considered by the
Tax Commissioner for purposes of granting abatement of interest. In each case, the amount of
interest requested to be abated shall be documented with appropriate backup information. Interest
abatement will be considered when:
•

Interest was assessed due to an error or unreasonable delay by the Department;

•

Interest was assessed due to erroneous written advice by the Department when the advice
was a direct response to a request from the taxpayer and the taxpayer reasonably relied
upon the advice;

•

Interest was attributable to an amount that was previously refunded for the period interest
on such amount was not allowed by law;

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 99-08-3

October 6, 2008

Page 2 of 2

•

Interest was assessed because of an amount erroneously refunded to the taxpayer (interest
would only be abated up to 90 days); or

•

Interest on a related federal amount was abated by the Internal Revenue Service.

In addition to the items listed above, the following criteria may also be considered by the Tax
Commissioner when deciding whether to grant a request for an abatement of interest:
•

Situations where a taxpayer voluntarily complies with the tax laws by filing delinquent tax
return(s) for prior period(s);

•

Family illness or death where a taxpayer was unable to file returns timely. This could
include the discovery after death of unfiled returns for a deceased taxpayer; or

•

Destruction of taxpayer records due to natural disaster.

Neb. Rev. Stat. §§ 77-2711 and 77-2792 contain the provisions allowing for the abatement of interest
by the Tax Commissioner for all tax programs other than motor fuels. Form 21A, Application for
Abatement of Interest, will be modified to incorporate the above criteria. Meanwhile, taxpayers
seeking to request an abatement of interest based on any of the above criteria should direct their
request, in writing, to the Department.
APPROVED:

Douglas A. Ewald
Tax Commissioner

October 6, 2008