Employment & Investment Growth Act Self-Review Guidelines
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.
This guidance document may change with updated information or added examples. DOR recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.
Prior to our qualification audit please review the items below to ensure that they have been handled properly. These items are the most common audit adjustments made during the Department of Revenue qualification audits over the last several years. If you perform a self-audit and make corrections for the following items, then the qualification audit will be completed more quickly and the qualified company will be able to receive benefits sooner.
Investment
| Topic | Proper Treatment |
|---|---|
| Assets placed in service prior to application date | Exclude from investment. (Note: This is not based on date capitalized, but date physically placed in service) |
| Sales tax paid on tangible personal property | Exclude from investment |
| Sales tax paid on real property | Exclude the refundable sales and use tax from investment. The refund is calculated as follows: {Contract price X .50/(1 + tax rate)} X tax rate |
| Lease of qualified property | Include in investment (see below for valuation method). |
| Capital lease | Include based on cost of asset instead of using lease payments |
| Operating lease | Include in year the lease starts. Valued at the average net annual rent multiplied by the number of years of the lease for which the taxpayer was originally bound, not to exceed 10 years or the end of the third year after the entitlement period, whichever is earlier. |
| Retirements |
3M + 30 type project: Exclude retirements of property placed in service since date of application in determining whether the project reached or maintained the required levels. 20M type project: Exclude all retired property when determining the net gain. |
Full-time Equivalent Employee Calculation
| Topic | Proper Treatment |
|---|---|
| Overtime | Include based on actual number of hours worked, not based on the time and one-half used for payment. |
| Transfers of employees | If the project is not defined as statewide, then if an individual who was employed by the taxpayer in the base year moves into the project at a later date they will need to be added to the base year. |
| Hours worked |
Include all hours for full-time, part-time, overtime, holiday, vacation, sick leave, etc. Include the exempt employees based on the regular work week for the company. Exclude hours recorded due to termination or severance. Exclude hours worked at a location outside the definition of the project. |
Compensation Credit Calculation
| Topic | Proper Treatment |
|---|---|
| Wages | Use Nebraska taxable wages. Do not use gross wages. |
| Nonresidents | Deduct taxable wages paid to nonresident employees hired after the base year (Worksheet B-2, line 5, Form 775N). |
