Employment Expansion and Investment Incentive Act Statutes

77-27,187. Act, how cited.

Sections 77-27,187 to 77-27,195 shall be known and may be cited as the Employment Expansion and Investment Incentive Act.

Source:
Laws 1986, LB 1124, § 1; Laws 1987, LB 270, § 1; Laws 1997, LB 886, § 1; Laws 1998, LB 1104, § 14; Laws 2002, LB 93, § 19.
Effective date July 20, 2002.

77-27,187.01. Terms, defined.

For purposes of the Employment Expansion and Investment Incentive Act, unless the context otherwise requires:

  1. Any term has the same meaning as used in the Nebraska Revenue Act of 1967;
  2. Equivalent Nebraska employees means the number of Nebraska employees computed by dividing the total hours paid in a year to Nebraska employees by the product of forty times the number of weeks in a year;
  3. Nebraska employee means an individual who is either a resident or partial-year resident of Nebraska;
  4. Qualified employee leasing company means a company which places all employees of a client-lessee on its payroll and leases such employees to the client-lessee on an ongoing basis for a fee and, by written agreement between the employee leasing company and a client-lessee, grants to the client-lessee input into the hiring and firing of the employees leased to the client-lessee;
  5. Related taxpayers includes any corporations that are part of a unitary business under the Nebraska Revenue Act of 1967 but are not part of the same corporate taxpayer, any business entities that are not corporations but which would be a part of the unitary business if they were corporations, and any business entities if at least fifty percent of such entities are owned by the same persons or related taxpayers and family members as defined in the ownership attribution rules of the Internal Revenue Code of 1986, as amended;
  6. Taxpayer means a corporate taxpayer or other person subject to either an income tax imposed by the Nebraska Revenue Act of 1967 or a franchise tax under Chapter 77, article 38, or exempt from such taxes under section 521 of the Internal Revenue Code of 1986, as amended, or a partnership, limited liability company, S corporation, or joint venture when all of the partners, shareholders, or members are subject to or exempt from such taxes; and
  7. Year means the taxable year of the taxpayer.

Source:
Laws 1997, LB 886, § 2; Laws 1998, LB 1104, § 15; Laws 1999, LB 539, § 1.
Effective date August 28, 1999.

77-27,188. Tax credit; allowed; when; amount.

  1.  
    • (a) A credit against the taxes imposed by the Nebraska Revenue Act of 1967 shall be allowed to any taxpayer engaged in a qualifying business as described in section 77-27,189 who increases the employment of such business in this state by two new equivalent Nebraska employees and who makes an increased investment in this state of at least seventy-five thousand dollars during a taxable year.
    • (b) Any taxpayer who has been allowed a credit under subdivision (1)(a) of this section during the preceding five taxable years, not counting carryovers, shall be allowed a credit for an increase in employment in this state by two new equivalent Nebraska employees
       

  2. Except as provided in subsection (3) of this section, the amount of the credit shall be one thousand five hundred dollars for each new equivalent Nebraska employee and one thousand dollars for each seventy-five thousand dollars of increased investment.

  3. For any taxpayer described in subdivision (1)(a) of this section which is also located within the boundaries of an enterprise zone as defined and designated by the Department of Economic Development pursuant to the Enterprise Zone Act, the amount of the credit shall be:

    • (a) Four thousand five hundred dollars for each new equivalent Nebraska employee and three thousand dollars for each seventy-five thousand dollars of increased investment if at least fifty percent of the new equivalent Nebraska employees of the taxpayer reside within the boundaries of the enterprise zone; or
    • (b) Four thousand five hundred dollars for each new equivalent Nebraska employee residing within the boundaries of the enterprise zone, one thousand five hundred dollars for each new equivalent Nebraska employee not residing within the boundaries of the enterprise zone, and one thousand dollars for each seventy-five thousand dollars of increased investment if less than fifty percent of the new equivalent Nebraska employees of the taxpayer reside within the boundaries of the enterprise zone.

      The credit allowed to a taxpayer pursuant to this subsection shall not exceed seventy-five thousand dollars in any one tax year.

      For purposes of this subdivision, employees residing within the boundaries of an enterprise zone shall be construed to mean employees residing within a county in which an enterprise zone is located when the enterprise zone is not located in a city of the primary or metropolitan class.

      For purposes of this subdivision, an employee residing within the enterprise zone shall mean an individual who is domiciled within the enterprise zone for the entire pay period.

  4. The credit shall be applied as provided in section 77-27,188.01.

  5. Any taxpayer who has qualified for a credit in the amount set out in subsection (3) of this section may elect to receive either the amount as calculated pursuant to subsection (2) or (3) of this section.

  6. An employee of a qualified employee leasing company shall be considered to be an employee of the client-lessee for purposes of this section if the employee performs services for the client-lessee. A qualified employee leasing company shall provide the Department of Revenue access to the records of employees leased to the client-lessee.

Source:
Laws 1986, LB 1124, § 2; Laws 1987, LB 270, § 2; Laws 1989, LB 335, § 1; Laws 1993, LB 725, § 16; Laws 1995, LB 134, § 6; Laws 1997, LB 886, § 3; Laws 1999, LB 539, § 2; Laws 2001, LB 169, § 2.
Effective date September 1, 2001.

77-27,188.01.   Tax credit; claim; use; payment by contractor; how treated; carry over.

  1. The credit allowed under section 77-27,188 may be used to obtain a refund of sales and use taxes paid or against the income tax liability of the taxpayer.
  2. A claim for the credit may be filed quarterly for refund of the sales and use taxes paid, either directly or indirectly, after the filing of the income tax return for the taxable year in which the credit was first allowed.
  3. The credit may be used to obtain a refund of sales and use taxes paid before the end of the taxable year for which the credit was allowed, except that the amount refunded under this subsection shall not exceed the amount of the sales and use taxes paid, either directly or indirectly, by the taxpayer on the qualifying investment.
  4. For purposes of subsections (2) and (3) of this section, the taxpayer shall be deemed to have paid indirectly any sales or use taxes paid by a contractor on property annexed to an improvement to real estate built for the taxpayer. The contractor shall certify to the taxpayer the amount of the Nebraska sales and use taxes paid on the materials, or the taxpayer, with the permission of the Tax Commissioner and a certification from the contractor that Nebraska sales and use taxes were paid on all materials, may presume that fifty percent of the cost of the improvement was for materials annexed to real estate on which the tax was paid.

  5.  

    • (a) The credit shall be a nonrefundable credit when used against the income tax liability of the taxpayer. The credit shall be applied before any refundable credits are applied. Except as provided in subdivision (b) of this subsection, the amount of the credit that may be used in any taxable year shall not exceed fifty percent of the income tax liability of the taxpayer reduced by all other nonrefundable credits except the credits prescribed in section 77-4105.
    • For any taxpayer receiving credit in an amount calculated pursuant to subsection (3) of section 77-27,188, the amount of the credit that may be used in any taxable year shall not exceed the amount of the income tax liability of the taxpayer reduced by all other nonrefundable credits except the credits prescribed in section 77-4105.
       
  6. The credit that is not used against liabilities incurred in the taxable year in which such credit was first allowable may be carried over and used against the liabilities incurred in the five immediately succeeding taxable years. The credits carried over shall be used in the order in which they were first allowed and before any additional credit allowable in a current taxable year may be used.
  7. No claim for refund of sales and use taxes under this section may be filed prior to January 1, 1989.
  8. Credits distributed to a partner, limited liability company member, shareholder, or beneficiary under section 77-27,194 may only be used against the income tax liability of the partner, member, shareholder, or beneficiary receiving the credits.

Source:
Laws 1987, LB 270, § 3; Laws 1989, LB 335, § 2; Laws 1993, LB 121, § 512; Laws 1993, LB 345, § 73; Laws 1993, LB 725, § 17; Laws 1994, LB 884, § 91.

77-27,188.02. Failure to maintain investment and employment level; effect. 

If the taxpayer does not maintain the minimum increases in the level of investment and employment required in section 77-27,188 to create a credit for at least two years after the year for which the credit was first allowed:

  1. The taxpayer shall lose one-third of the amount of unused credits for each year that the taxpayer has not maintained the required level of investment and employment; and
  2. During the subsequent two years, the taxpayer shall repay to the state one-third of the amount of the credit used for each year that the taxpayer has not maintained the required level of investment and employment.

Source:
Laws 1987, LB 270, § 4; Laws 1989, LB 335, § 3; Laws 1997, LB 886, § 4; Laws 2001, LB 169, § 3.
Effective date September 1, 2001.

77-27,189. Qualifying business, defined.

  1. A qualifying business shall mean any business engaged in the activities listed in subdivisions (1)(b)(i) through (vii) of this section or in the storage, warehousing, distribution, transportation, or sale of tangible personal property, except that qualifying business shall not include any business activity in which eighty percent or more of the total sales are sales to the ultimate consumer of tangible personal property which is not (a) assembled, fabricated, manufactured, or processed by the taxpayer or (b) used by the purchaser in any of the following activities:
    • (i) The assembly, fabrication, manufacture, or processing of tangible personal property;
    • (ii) The feeding or raising of livestock;
    • (iii) The conducting of research, development, or testing for scientific, agricultural, animal husbandry, or industrial purposes;
    • (iv) The performance of data processing, telecommunication, insurance, or financial services;
    • (v) Farming or ranching;
    • (vi) The administrative management or the headquarters of any of the activities listed in subdivisions (i) through (vii) of this subdivision or any activity excluded solely because of its retail sales; or
    • (vii) Any combination of the activities listed in this section.
       
  2. A qualifying business shall also mean any individual or association of individuals (a) licensed pursuant to the Uniform Licensing Law to practice medicine and surgery or osteopathic medicine and surgery, (b) who practice from an office located in an enterprise zone designated pursuant to the Enterprise Zone Act, which zone is not located within the boundaries of a city of the metropolitan or primary class, and (c) whose area of practice is in the primary care areas of family practice, general practice, general internal medicine, general pediatrics, general surgery, or obstetrics and gynecology.

Source:
Laws 1986, LB 1124, § 3; Laws 1987, LB 270, § 5; Laws 1993, LB 725, § 18.

77-27,190. Employment expansion; how determined.

  1. A taxpayer shall be deemed to have a new equivalent Nebraska employee when the number of equivalent Nebraska employees during a taxable year exceeds the number of equivalent Nebraska employees during each of the three preceding taxable years.
  2. Qualifying business employees who work within and without this state shall be considered only to the extent they are paid for work performed within this state.
  3. The hours worked by any person considered an independent contractor or the employee of another taxpayer shall not be used in the computation under this section.

Source:
Laws 1986, LB 1124, § 4; Laws 1987, LB 270, § 6; Laws 1997, LB 886, § 5.
Effective date September 13, 1997.

77-27,191.   Investment increase; how determined.

  1. A taxpayer shall be deemed to have made an increased investment in this state to the extent the value of the property used or available for use on the last day of the taxable year exceeds (a) the value of all property used or available for use on the first day of the taxable year or (b) the average investment in this state during each of the three preceding taxable years, whichever is greater.
  2. The average investment in this state shall be the average of the value of all property used or available for use on the first day of the taxable year and the last day of the taxable year.
  3. To determine the value of property owned by the taxpayer, the tax basis before allowance for depreciation shall be used. To determine the value of property rented by the taxpayer, the annual rent of the property shall be multiplied by eight.
  4. Only investment in improvements to real property and tangible personal property that are depreciable under the Internal Revenue Code shall be considered.
  5. Vehicles, planes, or railroad rolling stock shall be excluded in determining the investment or average investment under this section.
  6. For taxable years 1987 and 1988 only, taxpayers claiming credits under section 77-27,188 shall qualify for credits to the extent allowed either under the provisions of this section as it existed after the passage of Laws 1987, LB 270, or as amended by Legislative Bill 335, Ninety-first Legislature, First Session, 1989.

Source:
Laws 1986, LB 1124, § 5; Laws 1987, LB 270, § 7; Laws 1989, LB 335, § 4.

77-27,192.   Existing business acquisition, disposal, or reorganization; computation.

  1.  
    • (a) If the taxpayer acquires an existing business, the increases determined in sections 77-27,190 and 77-27,191 shall be computed as though the taxpayer had owned the business during the current taxable year and the three preceding taxable years.
    • (b) If the taxpayer disposes of an existing business, and the new owner maintains the minimum increases in the levels of investment and employment required in section 77-27,188 to create a credit, the taxpayer shall not be required to make any repayment under section 77-27,188.02 solely because of the disposition of the business.
       
  2. If the structure of a business is reorganized, the taxpayer shall compute the increases on a consistent basis for all periods.

Source:
Laws 1986, LB 1124, § 6; Laws 1997, LB 886, § 6; Laws 2001, LB 169, § 4.
Effective date September 1, 2001.

77-27,193. Multiple locations; computation of credit.

  1. A taxpayer with more than one business location in this state shall be entitled to a credit equal to the lesser of (a) the sum of the credits computed for the individual business locations or (b) the credit computed based on the total activities of the business in this state.
  2. The credit allowed to a taxpayer shall be calculated excluding any investment acquired in any manner from a related taxpayer or any employees previously employed in this state within the current taxable year or preceding three taxable years by a related taxpayer.
  3. For purposes of computing the statewide limitation in subdivision (1)(b) of this section, the type of business being conducted shall be ignored.
  4. For purposes of subsection (1) of this section, two or more parcels of real property which are within the same municipality or county shall constitute one business location if the business activities conducted by the taxpayer on such parcels are interdependent. This subsection shall be applicable to all returns for which, on September 13, 1997, section 77-2786 has not barred a deficiency determination or section 77-2793 has not barred a claim for credit or refund.

Source:
Laws 1986, LB 1124, § 7; Laws 1987, LB 270, § 8; Laws 1997, LB 886, § 7.
Effective date September 13, 1997.

77-27,194. Credit; when transferable. 

The credit allowed under the Employment Expansion and Investment Incentive Act shall not be transferable, except in the following situations:

  1. Any credit allowable to a partnership, a limited liability company, a subchapter S corporation, or an estate or trust may be distributed to the partners, limited liability company members, shareholders, or beneficiaries. Any credit distributed shall be distributed in the same manner as income is distributed. A credit distributed shall be considered a credit used and the partnership, limited liability company, subchapter S corporation, estate, or trust shall be liable for any repayment under section 77-27,188.02; and
  2. If a taxpayer operating a qualifying business and allowed a credit under section 77-27,188 dies and there is credit remaining after the filing of the final return for the taxpayer, the personal representative shall determine the distribution of the credit or any remaining carryover with the initial fiduciary return filed for the estate. The determination of the distribution of credit may be changed only after obtaining the permission of the Tax Commissioner.

Source:
Laws 1986, LB 1124, § 8; Laws 1993, LB 121, § 513; Laws 1994, LB 884, § 92; Laws 1997, LB 886, § 8.
Effective date September 13, 1997.

77-27,194.01. Refund claims; interest not allowable. 

For all refund claims filed on or after October 1, 1998, interest shall not be allowable on any refunds paid because of benefits earned under the Employment Expansion and Investment Incentive Act.

Source:
Laws 1998, LB 1104, § 16.
Operative date April 15, 1998.

77-27,195.   Report; contents.

  1. The Tax Commissioner shall prepare a report identifying the amount of investment in this state and the number of equivalent jobs created by each taxpayer claiming a credit pursuant to the Employment Expansion and Investment Incentive Act. The report shall include the amount of credits claimed in the aggregate. The report shall be issued on or before March 15 of each year beginning with March 15, 1988, for all credits allowed during the previous calendar year.
  2. In the report for any year in which a taxpayer located in an enterprise zone designated pursuant to the Enterprise Zone Act claimed a credit pursuant to subsection (3) of section 77-27,188, the Tax Commissioner shall identify (a) the amount of investment made in each enterprise zone by all taxpayers claiming credits, (b) the number of jobs created in each enterprise zone by all taxpayers claiming credits, (c) the number of jobs created in each enterprise zone by all taxpayers claiming credits held by residents of the enterprise zone, and (d) the average wage on an hourly basis or the average annual salary of new jobs created in each enterprise zone by all taxpayers claiming credits.

Source:
Laws 1986, LB 1124, § 9; Laws 1993, LB 725, § 19; Laws 1997, LB 886, § 9.
Effective date September 13, 1997.

Cross Reference
Enterprise Zone Act, see section 13-2101.01.

77-27,196. Repealed. Laws 2002, LB 93, s. 27.

77-27,196.01. Changes to sections; when operative; credits; applicability of act.

  1. The changes made in sections 77-27,188, 77-27,188.02, 77-27,190, 77-27,192, 77-27,193, and 77-27,194 by Laws 1997, LB 886, shall become operative for all credits earned in tax years beginning, or deemed to begin, on and after January 1, 1998. For all credits earned in tax years beginning, or deemed to begin, prior to January 1, 1998, the provisions of the Employment Expansion and Investment Incentive Act as they existed immediately prior to such date shall apply.
  2. The changes made in sections 77-27,187.01 and 77-27,188 by Laws 1999, LB 539, shall become operative for all credits earned in tax years beginning, or deemed to begin, on and after January 1, 1999. For all credits earned in tax years beginning, or deemed to begin, prior to January 1, 1999, the provisions of the Employment Expansion and Investment Incentive Act as they existed immediately prior to such date shall apply.
  3. The changes made in sections 77-27,188, 77-27,188.02, and 77-27,192 by Laws 2001, LB 169, shall become operative for all credits earned in tax years beginning, or deemed to begin, on and after January 1, 2001. For all credits earned in tax years beginning, or deemed to begin, prior to January 1, 2001, the provisions of the Employment Expansion and Investment Incentive Act as they existed immediately prior to such date shall apply.

Source:
Laws 1997, LB 886, § 10; Laws 1999, LB 539, § 3; Laws 2001, LB 169, § 5.
Effective date September 1, 2001.

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