Nebraska bill would shift Department of Revenue costs to fee payers, expand enforcement fund use

Senator Brad Von Gillern introduced LB 1110 on behalf of the Department of Revenue, saying the bill aims to “nearly entirely eliminat[e] the department's general fund dependence” by charging users for additional services rather than relying on general-taxpayer subsidies. The measure would authorize a suite of fees — generally a minimum or percentage charge for enforcement and appeals work — and expand how DOR can use money in its Enforcement Fund.

Nebraska Tax Commissioner James Kam told the Revenue Committee the bill’s core changes include allowing the department to charge a collection fee of $25 or 10% (whichever is greater) on delinquent tax liabilities, a $40 filing fee for petitions of redetermination, and $25 fees for requests such as waivers of interest or certificates that no tax is due. Kam said LB 1110 also would allow the tax commissioner to register claims in Lancaster County for out-of-state collections and permit data-sharing agreements with the Department of Health and Human Services to administer tax-credit programs.

"The main goals of LB 11 10 are to free up the use of the DOR enforcement fund and to reduce the department's general fund impact," Kam said, adding the changes are part of the governor’s broader budget plan. He estimated the proposals, combined with other budget measures, would make DOR roughly 90–95% cash funded based on historical activity.

The bill would also redirect mechanical-amusement (cash-device) tax revenues into the DOR Enforcement Fund and remove statutory restrictions that currently confine how those funds may be spent. Kam said the department expects recurring central-server costs associated with collections to be about $1,000,000 per year; he told the committee there was roughly $700,000 pending in appropriations and a separate proposal to raise a stamp tax could help close the remaining gap.

Committee members pressed for details about who would pay the new charges and when a liability is considered delinquent. Kam said the fees would generally fall on delinquent taxpayers and estimated a delinquent status could be 60 to 90 days in practice, but he did not provide a statutory definition on the record.

The Nebraska Society of Certified Public Accountants submitted a written opposition that raised "due process" concerns, saying additional fees at multiple stages — including for redetermination — could erect financial barriers for taxpayers seeking appeals. Senator Gagnon and others asked whether that step would unfairly limit access to administrative review. Kam responded that the department regularly works with taxpayers, offering payment plans and penalty abatements where warranted, and said the department would collaborate with CPAs on implementation.

Sponsor Von Gillern pointed out the bill includes waiver language for people who could be economically harmed by fees and said an amendment removed a tobacco-fund transfer that had shown a roughly $9.5 million negative general-fund entry on an earlier fiscal note. The hearing record included one online opponent and one neutral comment; no formal committee action or vote occurred during the session.

Next steps: the committee closed the LB 1110 hearing and recorded online testimony; any formal committee motion or amendment would be taken at a future meeting.