Pub. 3 2021 Issue 1

J A N U A R Y / F E B R U A R Y 2 0 2 1 16 nebraska cpas BY NICK NIEMANN AND MATT OTTEMANN, MCGRATH NORTH As with all tax matters, state and local taxes offer the opportunity to choose to plan ahead, or to choose to not plan ahead. Planning ahead usually results in the better outcome. In either situation, all taxpayers are subject to being audited. All audits are either resolved at the audit level or resolved on appeal. When a state tax matter is not resolved upon audit, a Notice of Deficiency will normally be issued. It must be responded to with a full understanding of the facts and legal issues. The failure to properly respond canmean that the client is stuck owing the alleged tax — regardless of the merits of their case. So, we've highlighted some key issues — and pitfalls — for tax practitioners to be aware of when their clients receive a Nebraska Notice of Deficiency. A Legally Valid Protest Must Be Filed The first step in responding to a Notice of Deficiency occurs when the Petition for Redetermination (often just called the “Protest”) is filed. Nebraska law establishes that, once issued, a Notice of Deficiency must be protested in a set timeframe. This is generally 60 days but can vary based on the type of notice that has been issued. Failure to file the Protest in the statutory timeframe often means the client loses the opportunity to contest the notice. The Department of Revenue has, by regulation, established certain legal requirements to constitute a valid Protest to a Notice of Deficiency. The failure to meet these requirements could mean that the Protest would be void, so the full tax would be due. YOUR CLIENT HAS RECEIVED A NEBRASKA NOTICE OF DEFICIENCY: NOW WHAT?