03/12/2009

2009 Changes To Nebraska Statutory Tax Law

In the 2009 legislative session, the Nebraska Legislature made a number of notable changes to Nebraska’s tax rules. Key changes include the following:

Sales And Use Tax

• Urban Growth Districts.  A municipality may create one or more urban growth districts for the purpose of using local option sales and use tax revenue to finance municipal infrastructure.
• Installation Services.  A third party service provider must collect and remit tax on payments made to an installer for installing and applying tangible personal property if the sale of the property is subject to tax and the customer receiving the property is not charged for the installation.
• Liability Relief For Sellers.  A seller shall not be liable for penalty and interest for failing to collect and remit sales and use tax at a new rate without 30 days notice of a rate change.
• Liability Relief For Purchasers.  Purchasers are relieved from liability for penalty for having failed to pay correct sales tax if erroneous information was provided by the state.
• Animal Grooming Services.  Animal grooming services are exempt from sales tax only if performed by licensed veterinarians or licensed veterinary technicians for medical treatment purposes.

Nebraska Tax Incentives

• E-Verify.  An applicant under Nebraska’s incentive programs must provide the Department with satisfactory evidence that the applicant electronically verified the work eligibility status of all newly hired employees employed in Nebraska to be eligible for incentive benefits. The Department shall exclude any hours worked and compensation paid to an employee that is not eligible to work in Nebraska for determining benefits under Nebraska incentive programs.
• Nebraska Advantage Act.  The Legislature made the following changes to the Nebraska Advantage Act:a. Extension Of Tier 1 And Tier 3 Sunsets.  Tier 1 and Tier 3 will now sunset on December 31, 2015.b. Employees At Military Installations.  Employees who work at a military installation in Nebraska for a Nebraska Advantage Act applicant, or tasks interdependent with the work performed at the project, shall be considered to be employed at the project.c. Qualified Businesses.  A qualified business activity now includes the sale of tangible personal property if the taxpayer derives at least 75% or more of its sales to consumers located outside the state.d. Amending The Application.  An applicant may amend an agreement to another tier if the amendment is consistent with the purposes of the Act.

  e. Recapture Benefits.  The recapture of benefits shall be a percentage equal to the number of years the taxpayer did not maintain the minimum levels of investment and employment divided by the project’s entitlement period.

  f. Investment Threshold Of Index.  Tiers 1, 2, 4, 5 and 6 investment thresholds shall be indexed annually based upon changes in the Producer Price Index over a 12 month period with a base year of 2006.

  g. Tier 6 Credit Usage.  For a Tier 6 project, credit may be used against income tax withholding attributable to all employees employed at the project, other than base year employees, and excluding any compensation in excess of $1,000,000 paid to any one employee during the year.

• Nebraska Advantage Research And Development Act.  The following changes were made to the Nebraska Advantage Research and Development Act:a. Sunset Extended.  The Nebraska Advantage Research and Development Act will now sunset on December 31, 2015. The Act was set to expire on December 31, 2010.b. Interest.  Interest shall not be allowed on the taxes refunded under the Research and Development Act.c. University Research.  A business making expenditures in research and experimental activities on a college or university campus may claim a research tax credit of 35% of the federal research development tax credit. The credit may be carried forward for 4 tax years.Miscellaneous Changes

   

• Corporate Officer Tax Liability.  The Legislature limited any notice or demand for payment against a responsible corporate officer or employee for a corporation’s tax liability to 3 years following the final determination of the corporation’s tax liability.
• E-File.  The Tax Commissioner may require tax professionals who prepare and file more than 25 tax returns annually to file those returns electronically.