28-5947. Property surrender; definition

A. Except as otherwise provided in subsection B of this section, on demand of the director, a person in possession of or obligated with respect to property or rights to property subject to levy on which a levy has been made shall surrender the property or rights to property or discharge the obligation to the director, except the part of the property or rights to property as is, at the time of the demand, subject to an attachment or execution under any judicial process.

B. A levy on an organization with respect to a life insurance or endowment contract issued by the organization, without necessity for the surrender of the contract document, is a demand by the director for payment of the amount described in this subsection and the exercise of the right of the person against whom the tax is assessed to the advance of the amount. The organization shall pay the amount within ninety days after service of the notice of levy. The notice shall include a certification by the director that a copy of the notice has been mailed to the person against whom the tax is assessed at the person's last known address. The levy is deemed to be satisfied if the organization pays to the director the amount that the person against whom the tax is assessed could have had advanced to the person by the organization on the date prescribed in this subsection for the satisfaction of the levy plus the amount of any advance, including contractual interest, made to the person on or after the date the organization had actual notice or knowledge of the existence of the lien with respect to which the levy is made, other than an advance, including contractual interest, made automatically to maintain the contract in force under an agreement entered into before the organization has the notice or knowledge. The satisfaction of a levy under this subsection is without prejudice to any civil action for the enforcement of a lien imposed by this article with respect to the contract.

C. On demand of the director, a person who fails or refuses to surrender any property or rights to property that are subject to levy is personally liable and the person's estate is liable to this state in an amount that is equal to the value of the property or rights to property that are not surrendered, but not exceeding the amount of taxes for the collection of which the levy has been made, with costs and interest on the amount at an annual rate of twelve per cent from the date of the levy or, in the case of a levy described in section 28-5945, subsection B, from the date the person would otherwise have been obligated to pay the amount to the taxpayer. Any amount, other than costs, recovered under this subsection shall be credited against the tax liability for the collection of which the levy was made.

D. A person in possession of or obligated with respect to property or rights to property subject to levy on which a levy has been made who, on demand by the director, surrenders the property or rights to property or discharges the obligation to the director or who pays a liability under subsection C of this section is discharged from any obligation or liability to the delinquent taxpayer with respect to the property or rights to property arising from the surrender or payment. In the case of a levy that is satisfied pursuant to subsection B of this section, the organization is also discharged from any obligation or liability to a beneficiary arising from such surrender or payment.

E. As used in this section, " person" includes an officer or employee of a corporation, an officer, employee or elected official of this state or its political subdivisions, any agency or instrumentality of this state or its political subdivisions, or a member or employee of a partnership who as such officer, employee, elected official or member is under a duty to surrender the property or rights to property, or to discharge the obligation.