Barring a special session, the 2011 Nebraska Legislature has adjourned for the year. Significant 2011 Nebraska tax changes include the Governor’s proposed economic development proposals, revisions required to maintain Nebraska’s standing in the Streamlined Sales Tax Project, and certain key administrative changes. A review of certain key changes are as follows:
Economic Tax Incentives
• Angel Investment Tax Credit (LB 389)
Beginning with tax year 2011, individuals, trusts, or pass-through entities are eligible for a refundable income tax credit equal to 35% or 40% of an investment in an eligible Nebraska business. The amount of the credit depends on the location of the business receiving the investment – 40% of the investment if the qualified business is located in a distressed area or 35% of the investment in all other areas of the state.
• Nebraska Advantage Rural Development (LB 389)
The key change is a reduction in the amount of credits awarded under the program. Applications filed after July 1, 2011 will compete for $1 million in credits annually, compared to $4 million in prior years.
Sales and Use Tax
• Common and Contract Carrier Sales Tax Exemption Certificates (LB 210)
All common or contract carrier sales tax exemption certificates will expire on October 31, 2013. After October 31, 2013, all common or contract carrier sales tax exemption certificates will expire every five years. Previously, all common or contract carrier sales tax exemption certificates expired every three years.
• County Sales Tax (LB 106)
A county may impose (by election) a county sales and use tax for purposes of financing public safety services, which include crime prevention, offender detention, and firefighter, police, medical, ambulance, or other emergency services.
• Sales and Use Tax Due Date (LB 210)
The due date for sales and use tax returns will change from the 25th of the month to the 20th of the month. This change will take effect:
1. For monthly filers, with the October return due on November 20, 2011;
2. For quarterly filers, with the fourth quarter return due on January 20, 2012; and
3. For annual filers, with the 2011 annual return also due on January 20, 2012.
• Sales of Low-speed Vehicles (LB 289)
The sale of a motor vehicle includes the sale of low-speed vehicles. The seller of a low-speed vehicle must provide the purchaser with a Nebraska Sales/Use Tax and Tire Fee Statement for Motor Vehicle and Trailer Sales, Form 6.
• Sales Tax Exemption for Nonprofit, Private Colleges and Universities (LB 637)
Purchases by regionally or nationally accredited, privately-controlled nonprofit colleges or universities are exempt from sales tax if the college or university’s primary campus is physically located in Nebraska. Previously, the sales tax exemption was available to any private, nonprofit college or university accredited by the State, regardless of its primary location.
• Tax Rates for Direct Mail (LB 211)
The sales tax rate for direct mail is based on the type of direct mail being sent – either advertising and promotional material, or other direct mail – and the delivery location or information provided by the purchaser of the direct mail. Sellers of advertising and promotional direct mail material will continue to collect sales tax based upon the delivery location. Sellers of “other direct mail” material, such as customer newsletters and bank statements, will collect sales tax based on the purchaser’s address.
• Tax Rates for a Motor Vehicle Lease or Rental (LB 211)
The sales tax rate for a lease or rental of a motor vehicle (automobile, truck, trailer, or truck-tractor) is based upon the primary location of the motor vehicle. The sales tax rate was previously based upon the motor vehicle’s location on the date on which the lease or rental agreement was executed.
• Corporate Officer Tax Liability (LB 210)
The Nebraska Department of Revenue may issue a notice or demand for payment against a corporate officer for a corporate tax liability up to one year after the closure or dismissal of a bankruptcy case where the corporation appeared as the debtor.