Nebraska Department of Revenue Audit Response — IDR Replies and Position Statements

NEBRASKA DOR AUDIT RESPONSE PACKAGE — IDR REPLIES, POSITION STATEMENTS, AND RECORDS RETENTION GUIDE

TABLE OF CONTENTS

1. Audit Cover Page
2. Acknowledgment Letter to Auditor
3. Records Retention and Production Index
4. IDR Response Template
5. Position Statement — Disputed Item
6. Penalty Abatement Request
7. Closing Conference Summary
8. Confidentiality and Privilege Notice
9. Power of Attorney / Representation
10. Nebraska Practice Notes
11. Sources and References

1. AUDIT COVER PAGE

2. ACKNOWLEDGMENT LETTER TO AUDITOR

[LETTERHEAD]

[DATE]

[AUDITOR NAME]
Nebraska Department of Revenue
[FIELD OFFICE OR LINCOLN ADDRESS]

Re: Audit of [TAXPAYER NAME], Nebraska ID # [NUMBER], Tax Period(s) [PERIOD(S)]

Dear [AUDITOR NAME]:

This letter acknowledges receipt of your [ENGAGEMENT LETTER / OPENING-CONFERENCE NOTICE / IDR #1] dated [__/__/____] initiating the above-referenced examination.

Taxpayer welcomes the examination and is committed to providing complete and accurate information promptly and in accordance with the Nebraska Taxpayer Bill of Rights and Title 316 Neb. Admin. Code, Chapter 33. To facilitate the audit:

1. Designated representative. Please direct all communications, IDRs, and conference scheduling to the undersigned. A signed Form 33 Power of Attorney is [on file / enclosed].

2. Records and books. Taxpayer will produce records pursuant to Neb. Rev. Stat. § 77-27,109 and § 77-2711 within reasonable response windows. Records are maintained at [ADDRESS] and in electronic form on [SYSTEM]. Where production requires extraction or aggregation from multiple systems, Taxpayer will identify the work involved and request a reasonable extension as needed.

3. Format. Unless you advise otherwise, electronic productions will be made via [SECURE FILE TRANSFER PORTAL / ENCRYPTED EMAIL]. Confidential filings will be marked "Confidential — Tax Information" pursuant to Neb. Rev. Stat. § 77-27,119.

4. Site visit. Taxpayer is available to host an opening conference and any necessary site visit on the following dates: [DATES].

5. Statute-of-limitations waivers. Any request for a statute-of-limitations extension under Neb. Rev. Stat. § 77-2786 should be in writing and will be reviewed before signature.

6. Communications log. Taxpayer will keep a written log of all auditor communications and supplied documents. Please confirm production receipts in writing.

I look forward to working with you. Please contact me with questions.

Respectfully,

[________________________________]

[REPRESENTATIVE NAME], [TITLE]

[FIRM] | [PHONE] | [EMAIL]

3. RECORDS RETENTION AND PRODUCTION INDEX

4. IDR RESPONSE TEMPLATE

[LETTERHEAD]

[DATE]

[AUDITOR NAME], Nebraska Department of Revenue

Re: Response to Information Document Request No. [NUMBER], dated [__/__/____]

Taxpayer: [TAXPAYER NAME] | Nebraska ID: [NUMBER] | Period: [PERIOD]

Dear [AUDITOR NAME]:

Pursuant to your IDR No. [NUMBER] (the "IDR"), Taxpayer responds as follows.

Item-by-Item Response

Objections and Limitations (where asserted)

• Item [#]: Objection on grounds of: ☐ overbreadth ☐ relevance ☐ undue burden ☐ not in custody/control ☐ privilege (attorney-client / work product). Specific basis: [EXPLANATION].
• Confidentiality: All productions are confidential tax information under Neb. Rev. Stat. § 77-27,119 and § 77-2711(3). They are produced to DOR for examination purposes only.

Extension Request (if applicable)

Taxpayer requests an extension to [__/__/____] for the following items: [#], because [REASON — e.g., third-party data not yet received, system migration, custodian travel].

Reservation

Taxpayer reserves the right to supplement these responses, correct inadvertent errors, claim additional privilege, and assert any defense or position in any subsequent protest, hearing, or judicial review.

Respectfully,

[________________________________]

[REPRESENTATIVE NAME]

5. POSITION STATEMENT — DISPUTED ITEM

5.1. Issue Heading

[ISSUE NAME, e.g., "Apportionment of Sales of Services Under Neb. Rev. Stat. § 77-2734.14"]

5.2. Auditor's Proposed Adjustment

The audit proposes to [DESCRIBE — e.g., source services revenue to Nebraska based on customer billing address], resulting in a proposed Nebraska tax adjustment of $[AMOUNT] for tax period [PERIOD].

5.3. Taxpayer's Position

5.3.1. Statutory framework. [Cite controlling statute and explain its operation, e.g., Neb. Rev. Stat. § 77-2734.14 sources sales of services to Nebraska based on the location where the benefit of the service is received...].

5.3.2. Application to facts. [Apply law to the audited facts. Identify supporting documents.].

5.3.3. Authority. [Cite regulations (Title 316 NAC), DOR rulings, and Nebraska Supreme Court / Court of Appeals cases supporting the position.].

5.3.4. Federal analog (where helpful). [If applicable, cite federal IRC sections or Treasury regulations; note Nebraska conformity under § 77-2715.].

5.4. Requested Audit Disposition

5.4.1. Withdraw the proposed adjustment in full; or, in the alternative, reduce the adjustment to $[AMOUNT] consistent with [ALTERNATIVE METHODOLOGY].

5.5. Documents Submitted with This Statement

• Exhibit A — [DOCUMENT]
• Exhibit B — [DOCUMENT]
• Exhibit C — [DOCUMENT]

6. PENALTY ABATEMENT REQUEST

To: [AUDITOR NAME] / Nebraska DOR Penalty Review

Re: Request for abatement of penalties asserted or proposed in connection with the [TAX TYPE] examination of [TAXPAYER], period [PERIOD].

6.1. Taxpayer requests abatement of all penalties on the following grounds:

• Reasonable cause and good faith — Taxpayer made a good-faith effort to comply with Nebraska tax law; the position taken was supported by [STATUTE / REGULATION / RULING / CASE] and constituted substantial authority.
• Reliance on written DOR advice — Pursuant to Right VI of the Nebraska Taxpayer Bill of Rights, Taxpayer relied on the following written guidance: [CITE LETTER, RULING, REGULATION, OR PUBLISHED GUIDANCE].
• First-time occurrence / clean compliance history — Taxpayer has timely filed and paid for the prior [NUMBER] periods.
• No willful neglect — The underpayment, if any, did not arise from willful neglect within the meaning of Neb. Rev. Stat. § [CITATION].
• Computational / clerical error promptly corrected — Taxpayer corrected the error within [NUMBER] days of discovery.

6.2. Taxpayer does not waive any defense to the underlying tax adjustment by requesting penalty abatement.

7. CLOSING CONFERENCE SUMMARY

The above is Taxpayer's good-faith summary of the closing conference. Please advise of any disagreement within ten (10) business days.

[________________________________]

[REPRESENTATIVE NAME] | Date: [__/__/____]

8. CONFIDENTIALITY AND PRIVILEGE NOTICE

8.1. All materials produced are confidential tax information protected under Neb. Rev. Stat. § 77-27,119, § 77-2711(3), and the Nebraska Taxpayer Bill of Rights, Right I. They may be used only for purposes of this examination and any administrative or judicial review thereof, and may not be disclosed except as authorized by law.

8.2. Communications between Taxpayer and counsel, and any work product created in anticipation of administrative or judicial proceedings, remain protected by the attorney-client privilege and the work-product doctrine. The production of any document does not waive privilege as to other documents or communications, and Taxpayer reserves the right to claw back inadvertent productions.

8.3. Federally authorized tax practitioner privilege (IRC § 7525) applies to the extent recognized in any later proceeding.

9. POWER OF ATTORNEY / REPRESENTATION

☐ Nebraska DOR Form 33 (Power of Attorney) on file (date filed: [__/__/____]).
☐ Form 33 enclosed with this filing.

10. NEBRASKA PRACTICE NOTES

• Audit ≠ Notice. A DOR audit is the examination phase; the Notice of Deficiency Determination is the formal proposed assessment. Position statements during the audit can prevent a Notice or narrow it. Once a Notice issues, the income-tax 90-day clock under § 77-2778 / § 77-27,127 (or the sales/use tax 60-day clock under § 77-2709) begins to run from the mailing date.
• Statute of limitations. Under § 77-2786, the general income-tax limitations period is three years from the later of the return's due date or filing date. The period extends to six years if more than 25% of taxable income is omitted, and is unlimited for false / fraudulent returns or non-filing. Sales/use tax has a parallel three-year period (with extensions) under § 77-2709 and related regulations.
• Records retention — primary authorities. Sales/use tax: § 77-2711 and Reg-1-008 (three-year minimum). Income tax: § 77-27,109 (Tax Commissioner authority to compel records) and § 77-2786 (retention is functionally tied to the open-period assessment risk; six years is the practical floor, longer for incentive-program participants).
• § 77-2799 caveat. No section numbered 77-2799 exists in Chapter 77 (the numbering jumps from § 77-2798 directly to § 77-2801 et seq.). If a referral cites "§ 77-2799," confirm whether the intended citation is § 77-2798 (judicial review venue), § 77-2786 (limitations), § 77-27,109 (records production), or § 77-2711 (sales/use retention).
• TERC has no audit-stage role for income or sales tax. TERC (Neb. Rev. Stat. §§ 77-5005 to 77-5013) hears property-tax appeals from county boards of equalization. Do not direct income- or sales-tax audit correspondence to TERC.
• Confidentiality. Audit communications and tax return data are confidential under § 77-27,119 and § 77-2711(3). Use the "Confidential — Tax Information" legend on productions.
• Federal RAR follow-up. A federal Revenue Agent's Report adjustment requires an amended Nebraska return within 60 days under Neb. Rev. Stat. § 77-2775, and DOR routinely audits in lockstep with federal adjustments. Plan multi-year coordination accordingly.
• Nebraska Taxpayer Bill of Rights — Use the Bill of Rights as both a procedural roadmap and a tone-setting reference in penalty-abatement and treatment-of-taxpayer arguments. Right V (due process), Right VI (reliance on written advice), Right VIII (fair collection), and Right IX (professional treatment) are most often invoked.
• Settlement authority. The Tax Commissioner may compromise tax liabilities under Neb. Rev. Stat. § 77-378 (collectibility-based offers) and through closing agreements, with the latter typically reserved for issues with substantial legal uncertainty.

11. SOURCES AND REFERENCES

• Nebraska Legislature — Chapter 77: https://nebraskalegislature.gov/laws/browse-chapters.php?chapter=77
• Neb. Rev. Stat. § 77-27,109: https://nebraskalegislature.gov/laws/statutes.php?statute=77-27,109
• Neb. Rev. Stat. § 77-2711: https://nebraskalegislature.gov/laws/statutes.php?statute=77-2711
• Neb. Rev. Stat. § 77-2786: https://nebraskalegislature.gov/laws/statutes.php?statute=77-2786
• Title 316 NAC, Chapter 33 (Practice and Procedure): https://revenue.nebraska.gov/about/legal-information/regulations/chapter-33-practice-and-procedure
• Title 316 NAC Reg-1-008 (Records): https://revenue.nebraska.gov/sites/default/files/doc/legal/regs/1-008.pdf
• Nebraska Taxpayer Bill of Rights: https://revenue.nebraska.gov/about/nebraska-taxpayer-bill-rights
• DOR — Audit Authority and Recordkeeping (McGrath North): https://www.mcgrathnorth.com/publications/nebraska-tax-audit-authority-recordkeeping-responsibility-and-confidentiality
• DOR Form 33 (Power of Attorney): https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/f_33.pdf
• DOR Court Case Summaries: https://revenue.nebraska.gov/about/legal-information/court-case-summaries

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Nebraska must review and customize this document before use. Statutory citations and deadlines change frequently; verify all authorities before use.