City of Lincoln accused of taxing residents outside of their jurisdiction

LINCOLN, Neb. (KLKN) — On Oct. 6, State Sen. Beau Ballard of Lincoln announced that his office has received evidence that the City of Lincoln has been collecting city sales tax from residents living in its extraterritorial jurisdiction (ETJ).

According to Ballard, the amount of tax collected has not been disclosed.

“Families in the ETJ don’t get to vote in city elections, but we now have evidence from constituents that the City has been collecting city sales and occupation taxes from residents of the ETJ,” Ballard said. “We don’t yet know how long this has been going on or how much has been collected, but we believe the amount likely is substantial. And if the City had no legal authority to take it, even one dollar is too much.”

Ballard said he is proposing legislation to right the wrong. The bill, that is said to be introduced in the 2027 legislative session, will include a required 20-year lookback of collections, interest on refunds, quarterly reconciliation going forward and Attorney General enforcement.

Nebraska Attorney General Mike Hilgers posted to social media supporting Ballard’s claim.

“I have heard/seen this,” Hilgers wrote. “Very bad for the City to be collecting sales taxes from ETJ citizens. Taxation without representation!”

Garret Swanson, the City of Lincoln’s chief communications officer, said the City has nothing to do with collecting sales tax.

“Sales taxes are collected and administered by the Nebraska Department of Revenue, not the City of Lincoln,” Swanson said. “The City does not receive or retain the business tax returns that would be necessary to conduct the audit described by Senator Ballard today. If a business believes sales tax was collected in error, the Nebraska Department of Revenue has an established process to review the matter and issue a refund when appropriate.”