2019 Nebraska Legislative Changes
Income Tax Credit for Purchase of a Residence in an Extremely Blighted Area (LB 86 — Operative January 1, 2020)
For taxable years beginning or deemed to begin on or after January 1, 2020, and before January 1, 2026, LB 86 provides a $5,000 nonrefundable income tax credit for the purchase of a residence in an extremely blighted area. The credit would be available to the individual purchasing the residence upon meeting the following requirements: 1) The residence is located in an extremely blighted area; 2) It is the individual’s primary residence; and 3) The individual did not purchase the residence from a family member of the individual or the individual’s spouse.
The individual buyer may claim the tax credit on his or her individual income tax return in the year that he or she purchased the residence. The buyer may carryforward any unused credit to subsequent years. Credits would be subject to recapture by DOR if the individual claiming the credit sells or transfers the residence or quits using the residence as his or her primary residence within five years after the end of the taxable year the credit was claimed.
Changes to the Volunteer Emergency Responders Incentive Act (LB 222 — Operative January 1, 2020)
LB 222 amends the responsibilities of the volunteer department's certification administrator:
- No later than July 15, the certification administrator is required to notify each volunteer member of the total points they accumulated during the first six months of the current calendar year of service.
- No later than February 1, the certification administrator will provide each volunteer member a written certification of the total number of points accumulated by the volunteer member during the immediately prior calendar year of service and if the volunteer qualified as an active emergency responder, active rescue squad member, or active volunteer fire fighter.
- No later than February 15 following the year of qualification, the certification administrator must file a completed annual certification list with DOR and its volunteer department's governing body.
- Copies may be sent to DOR electronically or by mail.
Personal Exemption Credit and Standard Deduction (LB 512 — Operative May 30, 2019)
Amends Neb. Rev. Stat. § 77-2716.01 to clarify how the personal exemption credit reestablished by LB 1090 (2018) applies to married filing jointly returns or any other filing status. The Nebraska standard deduction increased by LB 1090 (2018) includes qualifying widows or widowers.
Pass-through Entity Filing Requirements (LB 512 — Operative May 30, 2019)
LB 512 changes the filing requirement for 100% Nebraska-owned S corporations, partnerships, and limited liability companies. For tax years beginning or deemed to begin on or after January 1, 2019, all S corporations, partnerships, and limited liability companies with income from Nebraska sources, must file a Nebraska return, which may be filed using DOR's electronic filing system. A limited liability company treated as a disregarded entity under the IRC is not required to file a separate Nebraska return and will report its tax information on its owner's Nebraska return.
Deficiency Determinations (LB 512 — Operative May 30, 2019)
Clarifies that DOR can assess a pass-through entity and that any action taken by a pass-through entity on a Notice of Deficiency issued by DOR is binding on the partners, shareholders, or members of the entity.
Sales and Use Taxes
Sales and Use Tax Collection Fees (LB 237 — Operative January 1, 2020)
LB 237 changes the sales tax collection fees for motor vehicles, semitrailers, and trailers by providing that the county treasurer may deduct, in addition to the collection fee permitted to be deducted by a retailer, an additional one-half of one percent of all amounts in excess of $6,000 remitted each month. Beginning January 1, 2020, 50% of the additional fee will be deposited in the county general fund and 50% will be deposited in the county road fund. Beginning January 1, 2023, 75% will be deposited in the county general fund and 25% will be deposited in the county road fund.
Remote Sellers and Marketplace Facilitators (LB 284 — Operative April 1, 2019)
LB 284 expands the definition of “engaged in business in this state” to include certain businesses without a physical presence in Nebraska. Any seller without physical presence in Nebraska who made more than $100,000 in retail Nebraska sales, including sales through a Multivendor Marketplace Platform (MMP), in the prior calendar year or current calendar year, or who had 200 or more Nebraska retail sales transactions in the prior calendar year or current calendar year, is required to register and collect Nebraska and local sales taxes on sales delivered or sourced to a Nebraska address. A seller includes an MMP, also known as a marketplace facilitator, who exceeds the above thresholds for sales made on its platform.
Angel Investment Tax Credit (LB 334 — Operative August 1, 2019)
LB 344 terminates the Angel Investment Tax Credit Act after calendar year 2019. No tax credits may be allocated after that calendar year.
State Lottery Advertisements (LB 252 — Operative September 1, 2019)
LB 252 requires placement of game top prize odds in Nebraska Lottery print and broadcast advertising.
Gambling and Mechanical Amusement Devices (LB 538 — Operative January 1, 2020)
LB 538 establishes an approval process for mechanical amusement devices that dispense cash prizes or similar awards with cash value, to demonstrate that such devices are not gambling devices. That process includes a $500 application fee, submission of a specimen of the device and verification by an independent testing laboratory, and requires prior approval by the Tax Commissioner of any functional changes to the device or software. Additionally, such devices are subject to an annual Mechanical Amusement Device tax of $250.
Rental Property and Online Hosting Platforms (LB 57 – Operative September 6, 2019)
LB 57 prohibits ordinances and other regulations prohibiting short-term rentals of residential property; and it provides for agreements with online hosting platforms regarding taxation.
Music Licensing Agency Act Changes (LB 203 –Operative August 1, 2019)
LB 203 adds the owner of a multi-family residential dwelling to the definition of a proprietor. Proprietor means the owner of a retail establishment, restaurant, inn, bar, tavern, sports or entertainment facility, multi-family residential dwelling, or other similar place of business or professional office located in this state in which the public may assemble.
Tobacco and Nicotine Products (LB 397 –Operative September 1, 2019)
LB 397 changes the definition of a cigarette in the cigarette tax statutes to include any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased, by consumers as a cigarette. The bill also provides relatively minor amendments, including a definition of an electronic nicotine delivery system for purposes of local tobacco licenses, changes the provisions of the qualified escrow fund and bonding requirements administered by the Attorney General's Office.
Contingency Fee Contracts (LB 512 — Operative May 30, 2019)
Provides that contingency fee contracts with collection agencies to collect delinquent taxes do not need to meet the requirements of Neb. Rev. Stat. §§ 73-203 or 73-204. These contracts are required by § 77-377.02 to be on a contingency fee basis.
Motor Fuels Division (LB 512 — Operative May 30, 2019)
LB 512 eliminates the separate Motor Fuel Tax Enforcement and Collection Division of DOR, effectively allowing the incoropration of the division into DOR's Compliance Division, providing for more effective and efficient use of DOR audit resources in the area of excise tax compliance. .