Levy on an Employer or Financial Institution

008.01 The Department may issue a notice of levy if a taxpayer is delinquent in the payment of any Nebraska taxes, the taxpayer has not shown satisfactory cooperation regarding delinquent taxes, and a demand for payment has been sent for the total amount owing within the last 60 days. The notice of levy must inform the taxpayer, and the employer, bank, or financial institution of the right to request in writing, a determination that a notice of levy is not valid against his or her interest in the property within 20 days after service of the notice of levy as provided in Reg-36-006.06. 008.01A Notices of levy may be issued without recording a notice of state tax lien. 008.01B If the notice of levy is on wages, and the balance will be resolved through levy payments prior to the expiration of the statutory lien, it is not necessary to record the notice of state tax lien. If a wage levy will extend beyond the expiration of the statutory lien, the notice of state tax lien must be recorded with the Secretary of State. 008.01C Except as provided in § 008.01C(1), a notice of levy must be served personally or by first class mail to the payor, bank, or other financial institution in control of wages or assets of the taxpayer. 008.01C(1) The Tax Commissioner may enter into agreements with one or more financial institutions in Nebraska to serve notices of levy to those financial institutions in any medium and format agreed upon, including electronic transmittal. 008.01D The payor, bank, or other financial institution must respond to the notice of levy within 20 days after receipt of the notice by either complying with the levy or requesting a determination that the levy is not valid against the interest of the payor, bank, or financial institution as provided in Reg-36-008.06. 008.02 A notice of levy served on a payor is effective upon all wages, salaries, or other income that is in the control of the payor, and that is not exempt, until the amount of tax, interest, penalties, and costs are satisfied or the levy is released. (Reg-36-010, Exemptions from Levies). The Department may approve a reduction in the amount of wages, salaries, or other income that is subject to levy. 008.02A If the taxpayer is an employee of the payor, and ceases to be employed by the payor before the entire amount of tax, interest, penalties, and costs are satisfied, the employer must immediately notify the Tax Commissioner in writing of the termination date of the employee and the total amount withheld from the taxpayer. No employer may discharge the employee solely because the Department has issued the initial notice of levy. 008.02B The Tax Commissioner must refund any amounts withheld from the taxpayer and paid over to the Department that are in excess of the tax, interest, penalties, and costs. 008.02C The notice of levy is continuing and will be released only when: 008.02 C(1) The amount of the levy is paid in full; 008.02 C(2) The levy is voluntarily released by the Department; or 008.02 C(3) The taxpayer comes under the protection of the U.S. Bankruptcy Court. 008.03 A notice of levy served on a bank or other financial institution is effective only for the amount stated in the levy and to the extent of funds under the control of the bank or other financial institution at the time of the service of the notice of levy. 008.03A Funds subject to the notice of levy include, but are not limited to, funds in checking accounts, savings accounts, certificates of deposit, individual retirement accounts, and club savings plans. 008.03B Additional levies may be served at different intervals to seize additional real, personal, or intangible property or rights to real, personal, or intangible property (property). 008.03C A bank or other financial institution cannot subtract a service fee, processing fee, or any other amount from amounts returned to the Department under the notice of levy to reimburse the financial institution for its cost of processing the levy. 008.03D A bank or other financial institution may not subtract a loan payment, loan balance, check that was honored despite insufficient funds, bank charges, or any other amount owed the financial institution by the taxpayer from the amounts returned to the Department under the notice of levy. 008.04 Effect of Honoring a Notice of Levy. Any person in possession of assets who has been served a notice of levy and who surrenders the property pursuant to the notice of levy, is discharged from any liability to the taxpayer with respect to the property surrendered or paid. 008.05 Effect of Refusing to Honor a Notice of Levy. Any employer, bank, or other financial institution who is served a notice of levy, and who fails or refuses to honor the levy without cause, may be held liable for the amount of the levy up to the value of the property of the taxpayer under its control at the time the notice of levy was served or, if it is a continuing levy, assets that come into its possession at any time thereafter until the notice of levy is released. The employer, bank, or other financial institution is subject to the same collection provisions as set forth in Chapter 36 of these regulations. 008.06 A taxpayer, employer, bank, or other financial institution may request in writing, a determination that a notice of levy is not valid against his or her interest in the property within 20 days after service of the notice of levy. 008.06A The Department must respond to the taxpayer's request in writing within ten days of receipt of the request, and mail its response by first class mail. 008.06B Any person who disagrees with the decision may appeal as provided in Neb. Rev. Stat. § 84-917. (Neb. Rev. Stat. §§ 25-1558, 77-3906, and 77-3910.October 26, 2014.)