Bill Summary – FastDemocracy

LB1295                                                                LB1295
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                             LEGISLATURE OF NEBRASKA
                          ONE HUNDRED EIGHTH LEGISLATURE
                                  SECOND SESSION
                   LEGISLATIVE BILL 1295
     Introduced by von Gillern, 4.
     Read first time January 16, 2024
     Committee: Revenue
 A BILL FOR AN ACT relating to revenue and taxation; to amend section
     77-5601, Revised Statutes Cumulative Supplement, 2022; to adopt the
     Financial Institution Data Match Act; to harmonize provisions; and
     to repeal the original section.
 Be it enacted by the people of the State of Nebraska,
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           Section 1.      Sections 1 to 8 of this act shall be known and may be
  cited as the Financial Institution Data Match Act.
           Sec. 2.   For purposes of the Financial Institution Data Match Act:
          (1) Account means a demand deposit account, checking or negotiable
     withdrawal order account,    savings account,    time deposit account,     or
  money-market mutual fund account;
           (2) Department means the Department of Revenue;
           (3) Financial institution means every federal or state commercial or
 savings bank, including savings and loan associations and cooperative
     banks, federal or state chartered credit unions, benefit associations,
     insurance companies, safe deposit companies, any money-market mutual fund
     that meets the requirements of section 851(a) of the Internal Revenue
  Code and 17 C.F.R. 270.2a-7, any broker, brokerage firm, trust company,
  or unit investment trust, or any other similar entity doing business or
  authorized to do business in the State of Nebraska;
          (4) Match means a comparison by name and social security number or
    federal employer identification number of a list of tax debtors provided
    to a financial institution by the department and a list of depositors of
     any financial institution.     Such comparison may be    carried out by
  automated or other means; and
           (5) Tax debtor means a person liable to pay any delinquent (i) tax,
     (ii) fee, or (iii) other type of repayment under any program administered
     by the Tax Commissioner.
           Sec. 3.     (1) The department shall operate a data match system with
  each financial institution doing business in the State of Nebraska.
           (2)   Under the data match system,    a financial institution shall
  receive from the department a listing of tax debtors to be used in
     matches within the financial institution's system. The listing from the
     department shall include the name and social security number or federal
 employer identification number of    each tax debtor.      The financial
     institution shall receive the listing within thirty days after the end of
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     each calendar quarter subsequent to the effective date of this act.
    Within thirty days after receiving the listing, the financial institution
     shall match the listing to its records of accounts held in one or more
    persons' names which are open accounts or accounts that were closed
    within the preceding calendar quarter. The financial institution shall
    provide the department with a match listing of all matches made within
     five working days of the match. The match listing from the financial
 institution shall include the name, address, and social security number
    or federal employer identification number of each tax debtor matched and
     the balance of each account. The financial institution shall also provide
 the names and addresses of all other owners of accounts in the match
    listing as reflected on a signature card or other similar document on
     file with the financial institution. The financial institution shall
 submit all match listings by   an electronic medium approved by   the
    department.
           (3)     Nothing in   this section shall    (a)    require    a financial
  institution to disclose the account number assigned to the account of any
  person or (b) serve to encumber the ownership interest of any person in
  or impact any right of setoff against an account.
          (4)    To maintain the confidentiality of    the listing and match
    listing, the department shall implement appropriate security provisions
     for the listing and match listing which are as   stringent as    those
    established under the federal Tax Information Security Guidelines for
    Federal, State and Local Agencies.
           Sec. 4.       The department may enter into agreements with financial
    institutions doing business in this state to operate the data match
    system described in section 3 of this act. A financial institution may
     charge a reasonable fee, not to exceed actual cost, to be paid by the
     department for the service of reporting matches as required by section 3
     of this act.
           Sec. 5.      (1) The department may contract with one or more vendors to
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 develop the data match system and perform the matches required under
     section   3   of this act.   Vendors entering into   a contract with the
  department pursuant to this section are subject to the requirements and
  penalties of   the confidentiality laws of    this state regarding tax
  information, including, but not limited to, the provisions and penalties
  in sections 77-2711 and 77-27,119.
        (2)(a) Within fifteen days after the end of fiscal year 2024-25 and
     each fiscal year thereafter, the Tax Commissioner shall determine and
  certify to the State Treasurer the following amounts:
         (i) The total amount of any fees for services or reimbursements paid
  by the department or other costs incurred by the department during the
  previous fiscal year due to the contracts entered into pursuant to this
  section; and
         (ii) The total amount of taxes, penalties, and interest collected
  during the previous fiscal year as a result of contracts entered into
  pursuant to this section.
         (b) After receiving such certification, the State Treasurer shall
  transfer the amount certified under subdivision (2)(a)(i) of this section
  or two percent of the amount certified under subdivision (2)(a)(ii) of
  this section, whichever amount is less, from the General Fund to the
  Department of Revenue Enforcement Fund.
         (3)   The Tax Commissioner shall submit electronically an    annual
  report to the Revenue Committee of the Legislature and the Appropriations
  Committee of the Legislature on the amount of taxes, penalties, and
     interest collected during the most recently completed fiscal year as a
  result of contracts entered into pursuant to this section.
         Sec. 6.         A financial institution receiving information from the
     department under section   3   of this act and the employees,      agents,
  officers, and directors of the financial institution shall maintain the
  confidentiality of the information supplied by the department and use
    such information only for the purposes described in section 3 of this act
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 and shall be    subject to   the requirements and penalties of     the
 confidentiality laws of this state regarding tax information, including,
 but not limited to, the provisions and penalties in sections 77-2711 and
 77-27,119.
         Sec. 7.         (1) A financial institution is not liable under any state
 or local law to any individual or to the department for disclosure or
 release of information to the department for the purpose of complying
 with the requirements of section 3 of this act.
         (2) The Financial Institution Data Match Act shall not be construed
 to make a financial institution responsible or liable to any extent for
 assuring that the department maintains the confidentiality of information
     disclosed under section 3 of this act.
         (3) A financial institution is not liable to any extent for failing
 to disclose to a depositor or account holder that the name, address, and
 social security number or federal employer identification number of a tax
 debtor was included in the match listing provided to the department
 pursuant to section 3 of this act.
         (4)    A    financial institution may disclose to   its depositors or
 account holders that the department has the authority to request and
 obtain certain identifying information on certain depositors or account
 holders pursuant to the Financial Institution Data Match Act for state
 tax collection purposes.
         Sec.       8.     The department may adopt and promulgate rules and
 regulations to carry out the Financial Institution Data Match Act.
         Sec. 9. Section 77-5601, Revised Statutes Cumulative Supplement,
 2022, is amended to read:
         77-5601 (1) From August 1, 2004, through October 31, 2004, there
 shall be conducted a tax amnesty program with regard to taxes due and
 owing that have not been reported to the Department of Revenue. Any
 person applying for tax amnesty shall pay all unreported taxes that were
 due on or before April 1, 2004. Any person that applies for tax amnesty
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 and is accepted by the Tax Commissioner shall have any penalties and
     interest waived on unreported and delinquent taxes notwithstanding any
  other provisions of law to the contrary.
         (2) To be eligible for the tax amnesty provided by this section, the
  person shall apply for amnesty within the amnesty period, file a return
  for each taxable period for which the amnesty is requested by December
  31, 2004, if no return has been filed, and pay in full all taxes for
     which amnesty is sought with the return or within thirty days after the
  application if a return was filed prior to the amnesty period. Tax
  amnesty shall not be available for any person that is under civil or
     criminal audit,   investigation,     or prosecution for unreported or
     delinquent taxes by this state or the United States Government on or
  before April 16, 2004.
         (3) The department shall not seek civil or criminal prosecution
  against any person for any taxable period for which amnesty has been
  granted. The Tax Commissioner shall develop forms for applying for the
  tax amnesty program,   develop procedures for qualification for tax
  amnesty, and conduct a public awareness campaign publicizing the program.
         (4) If a person elects to participate in the amnesty program, the
     election shall constitute an express and irrevocable relinquishment of
  all administrative and judicial rights to challenge the imposition of the
     tax or its amount. Nothing in this section shall prohibit the department
     from adjusting a return as a result of any state or federal audit.
         (5)(a) Except for any local option sales tax collected and returned
  to the appropriate municipality and any motor vehicle fuel, diesel fuel,
  and compressed fuel taxes, which shall be deposited in the Highway Trust
  Fund or Highway Allocation Fund as provided by law, no less than eighty
  percent of all revenue received pursuant to the tax amnesty program shall
  be deposited in the General Fund and ten percent, not to exceed five
  hundred thousand dollars, shall be deposited in the Department of Revenue
 Enforcement Fund. Any amount that would otherwise be deposited in the
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 Department of Revenue Enforcement Fund that is in excess of the five-
     hundred-thousand-dollar limitation shall be   deposited in    the General
  Fund.
         (b) For fiscal year 2005-06, all proceeds in the Department of
  Revenue Enforcement Fund shall be appropriated to the department for
  purposes of employing investigators, agents, and auditors and otherwise
  increasing personnel for enforcement of the Nebraska Revenue Act of 1967.
         (c) For fiscal years after fiscal year 2005-06, twenty percent of
  all proceeds received during the previous calendar year due to   the
 efforts of auditors and investigators hired pursuant to subdivision (5)
    (b) of this section, not to exceed seven hundred fifty thousand dollars,
     shall be deposited in the Department of Revenue Enforcement Fund for
  purposes of    employing investigators and auditors or    continuing such
  employment for purposes of increasing enforcement of the act.
         (d) Ten percent of all proceeds received during each calendar year
  due to the contracts entered into pursuant to section 77-367 shall be
  deposited in the Department of Revenue Enforcement Fund for purposes of
  identifying nonfilers of returns, underreporters, nonpayers of taxes, and
  improper or fraudulent payments.
         (6)(a) The department shall prepare a report by April 1, 2005, and
     by February 1 of each year thereafter detailing the results of the tax
  amnesty program and the subsequent enforcement efforts. For the report
  due April 1, 2005, the report shall include (i) the amount of revenue
  obtained as a result of the tax amnesty program broken down by tax
  program, (ii) the amount obtained from instate taxpayers and from out-of-
     state taxpayers, and (iii) the amount obtained from individual taxpayers
     and from business enterprises.
         (b) For reports due in subsequent years, the report shall include
  (i) the number of personnel hired for purposes of subdivision (5)(b) of
  this section and their duties, (ii) a description of lists, software,
    programming, computer equipment, and other technological methods acquired
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 and the purposes of each, and (iii) the amount of new revenue obtained as
 a result of the new personnel and acquisitions during the prior calendar
 year, broken down into the same categories as described in subdivision
 (6)(a) of this section.
         (7) The Department of Revenue Enforcement Fund is created. Transfers
 may be made from the Department of Revenue Enforcement Fund to the
 General Fund at the direction of the Legislature. The Department of
 Revenue Enforcement Fund may receive transfers from the Civic and
 Community Center Financing Fund at the direction of the Legislature for
 the purpose of     administering the Sports Arena Facility Financing
 Assistance Act. The Department of Revenue Enforcement Fund shall include
 any money credited to the fund (a) under section 77-2703, and such money
 shall be used by the Department of Revenue to defray the costs incurred
 to implement Laws 2019, LB237, (b) under the Mechanical Amusement Device
 Tax Act, and such money shall be used by the department to defray the
 costs incurred to implement and enforce Laws 2019, LB538, and any rules
 and regulations adopted and promulgated to carry out Laws 2019, LB538,
 and (c) under section 77-2906, and such money shall be used by the
 Department of Revenue to defray the costs incurred to implement Laws
 2020, LB310, and (d) under section 5 of this act. Any money in the
 Department of Revenue Enforcement Fund available for investment shall be
 invested by the state investment officer pursuant to the Nebraska Capital
 Expansion Act and the Nebraska State Funds Investment Act.
         (8) For purposes of this section, taxes mean any taxes collected by
 the department, including, but not limited to state and local sales and
 use taxes, individual and corporate income taxes, financial institutions
 deposit taxes,         motor vehicle fuel,    diesel fuel,    and compressed fuel
 taxes, cigarette taxes, transfer taxes, and charitable gaming taxes.
         Sec.    10.        Original section    77-5601,      Revised Statutes Cumulative
     Supplement, 2022, is repealed.
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