The Nebraska Department of Revenue has recently issued proposed changes to its Nebraska regulations. Many of the proposed changes update the regulations to reflect recent statutory changes. However, some of the proposed changes reflect new substantive rules.
One key example is the Department’s new Regulation 1-107, governing Nebraska’s Manufacturing Machinery and Equipment Exemption. In that regulation, the Department limits availability of the exemption to companies which derive more than fifty percent of their total annual revenue from the sales of tangible personal property which they manufacture. The Department’s 50% test is not contained within Nebraska statutes. The Department’s proposed regulation states that the following activities are not considered “manufacturing”: a) mining, quarrying, and any other activity performed in severing raw materials from the ground; and b) sorting, cleaning, or repackaging property without any related manufacturing. These limitations are not contained within Nebraska statutes.
In addition, the Department’s proposed regulation states that “manufacturing machinery and equipment” does not include “materials and parts purchased by a manufacturer to construct its own machinery or equipment used in its manufacturing process, except those used to create molds and dies.” This limitation is also not contained within Nebraska statutes.
Full copies of the proposed regulations are available on the Department’s website. If you believe the regulations will adversely affect you or your clients, a hearing on these regulations will be held at the Department’s offices on August 28. An interested person may also submit a statement regarding the regulations to the Department by 5:00 pm on August 27, 2008 to be made part of the record.