Adjustments of Another State's Individual Income Tax

018.01 Any taxpayer who has claimed credit for tax paid to another state, and who receives changes made by another state in the taxpayer's state income tax return must report the changes to the Nebraska Department of Revenue within ninety days of the final determination of the change. Reportable changes include changes made to the states return by any competent authority of the state. In reporting any change to the other states tax return, the taxpayer must furnish the Nebraska Department of Revenue complete information regarding the amount of income reported and taxes paid to the other state. The report must also concede the accuracy of the final determination or give a statement outlining the specific errors of the final determination.

018.02 Any adjustments made by filing the other states amended returns or by the other states revenue service must be reported to the Nebraska Department of Revenue by filing an Amended Nebraska Individual Income Tax Return, for the taxable year involved. The amended return for Nebraska must be filed within ninety days of the filing of the amended return for the other state, and must include copies of any reports issued by state authorities. A taxpayer who files an amended return with the other state as a protective claim is not required to file an amended return with Nebraska. The acceptance of the claim, or the payment of the refund, constitutes a state change that must be reported. A protective claim is a claim filed to protect the taxpayer from the expiration of the statute of limitations while a separate action challenging a position of the other state is pending.

018.03 The amended return for Nebraska must be filed separately and should not be attached to or filed with a return for another taxable year. Payment of any additional tax must accompany the amended return.

018.04 For the purpose of determining when adjustments in state income tax constitute a final determination, the following acts will be considered to be a final determination even though the taxpayer and the other state may still be contesting the amount due:

018.04A A decision by a state tax court or a judgment, decree, or other order by a court of competent jurisdiction which has become final. 018.04B A closing agreement authorized by state law which relates either to the total tax liability of the taxpayer for a particular taxable year or years or to one or more separate items affecting tax liability. A closing agreement becomes final for purposes of this regulation on the date of its approval by the other state. 018.04C The final disposition by the other state of a taxpayer's claim for a refund. 018.04D Any informal agreement between the taxpayer and the other state made for the express purpose of serving as a determination in respect to the adjusted gross income, taxable income, or tax liability of the taxpayer. Such an agreement must include a waiver by the taxpayer of restrictions on assessment and the collection of any deficiencies resulting from the agreement. 018.04E The acceptance of an examining officer's findings in regard to the income of a partnership or a fiduciary. 018.04F The payment of any additional tax by the taxpayer. Any deposit made with the other state that can be returned at the request of the taxpayer is not considered the payment of the tax by the taxpayer. The additional tax will be considered paid when the other state applies the deposit. 018.04G Any other final judgment effecting changes in the reported taxable income in the other state.

018.05 If a taxpayer fails to report any change or correction which increases his or her federal adjusted gross income from the other state, taxable income, or tax liability, or fails to report any change or correction which is treated as a deficiency for the other states income tax purposes, or fails to file an amended Nebraska return, the Nebraska Department of Revenue may mail to the taxpayer a notice of deficiency at any time. If a taxpayer properly reports any change in his or her other states adjusted gross income, taxable income, or tax liability, the Nebraska Department of Revenue may make an assessment relating to the change at any time within two years after the report or amended return was filed.

018.06 Any change in the other states adjusted gross income, taxable income, or tax liability which has not been reported to the other state cannot be used as the basis for a reduction in the Nebraska liability.

018.07 The amended return reporting a change that results in an overpayment of tax for Nebraska is a claim for credit or refund.

018.07A The amount of the credit or refund shall not exceed the amount of the Nebraska tax attributable to such states change, correction, or the items amended on the other states return. 018.07B If the amended return is not filed within ninety days of the final determination of the change, interest shall not accrue after the ninetieth day. 018.07C If the amended return is not filed within two years and ninety days from the final determination of the change, or within then years of the original due date of the return, whichever is earlier, no credit or refund shall be granted.

(Section 77-2775(2), R.S.Supp., 1998, and sections 77-2786(4), and (5), and 77-2793(5), R.R.S. 1996. November 11, 1998.)