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Nebraska State Auditor Mike Foley sent a letter to the Nebraska Department of Revenue Monday morning urging it to take more aggressive measures to collect unpaid state taxes. In an audit of Nebraska’s 2025 Annual Comprehensive Financial Report, Foley’s office found a delinquent state tax balance of over $310 million.
“A whole lot of people who have income and have a tax obligation are finding ways of evading their taxes,” Foley said. “And that puts an undue burden on all the rest of us who pay our taxes on time and struggle under a high tax burden.”
The balance of unpaid state taxes has increased steadily over the past decade, inflating 124% since 2016. Compared to fiscal year 2024, the state tax delinquency balance rose $41 million — a 15% spike — according to the Auditor of Public Account’s letter to the revenue department.
“This is not just individual taxpayers,” Foley said. “In many instances, this is corporate taxpayers or partnerships. Sometimes it's sales tax that's not being paid — collected from the customers but not being paid to the government.”
Foley is unsure what’s directly causing the rise in delinquent tax obligations, but he said it needs to be addressed as soon as possible.
“Maybe that's an indicator of a softening in the economy,” Foley said. “Or maybe people are just realizing, ‘Hey, you don't necessarily have to pay your taxes. You can get away with it.’ I hope that's not the case, but for whatever reason, the number has gone way up over the past year, and that's just not sustainable.”
To target outstanding taxes, the Department of Revenue has several collection methods at its disposal. The agency can pull money directly from the bank accounts of delinquent taxpayers, take legal action, seize or put liens on property or create payment agreements.
“They have a number of tools in the toolbox, but those tools apparently are not sufficient to get the job done,” Foley said.
Without more direct collection actions, Foley said the state may never collect what it’s owed. Foley’s office estimates only 20% of the $310 million in outstanding taxes will be collected by the state based on the department’s collection history.
“That's their track record based on historical practice, and that's just not good enough,” Foley said. “And they know that. They realize they've got a problem. They're not fighting us at all.”
The Department of Revenue’s solution includes automating its collection process.
“There's an automated process of identifying all the bank accounts that are out there and who owns them, and then you can match up the file of all the delinquent taxpayers and match that against this list of bank accounts,” Foley said. “They find, presumably, more bank accounts that might have monies in them that could be swept up and help to satisfy the tax obligations.”
In 2024, a bill passed by the Nebraska Legislature went into effect requiring financial institutions in the state to participate in this “data match” process at the revenue department’s request. Foley said the department is hiring a contractor to run that process.
“It's all hypothetical now, as to whether that will work,” Foley said. “I don't know if they've actually inked the deal yet on this new contractor that they're going to hire, but very soon they will have a contractor in place.”
In a statement, Nebraska Tax Commissioner Jim Kamm said collecting tax revenue, "continues to receive the Department of Revenue's highest prioritization."
Kamm specifically mentioned recent law changes that allow "for the increased use of automated tools, such as Financial Institution Data Matching (FIDM), (which) will increase efficiencies within DOR’s collection processes while reducing administrative burdens to financial institutions across the state. The use of FIDM is consistent with Governor Pillen’s goal to cut spending while identifying efficiencies which improve services -- in this case, the collection of delinquent tax balances,” he said.
Not only is the department seeking to hire a contractor to run the FIDM program, Kamm said, but it also has put out a request for proposal to use a collection agency, something he said will help the state collect money from individuals and businesses who are based outside of Nebraska.
In early October, 11 agents who targeted delinquent taxpayer money were laid off by the Department of Revenue. The layoffs followed Gov. Jim Pillen announcing plans to cut the state’s budget next year to address a substantial budget shortfall.
Foley said collecting these unpaid taxes will be especially important as the state faces cuts.
“The Legislature has got some miserable work ahead of them when they come back in January,” Foley said. “They're going to be looking through that state budget with a fine-tooth comb and try to find some savings, and they may also tinker a bit with tax policy. I don't know what they'll do, but they'll put everything on the table and say, ‘we got a problem here.’"