2012 Nebraska Legislative Changes

Individual Income Tax Rate Reduction and Bracket Adjustments ( LB 970 - Operative Date: January 1, 2013)

Individual income tax rates are adjusted between tax years 2013 and 2014: 

For tax years beginning on or after January 1, 2013, individual income tax rates are adjusted as follows: 

For tax years beginning on or after January 1, 2014, individual income tax brackets are widened as follows: 

Internal Revenue Code Update ( LB 725 - Operative Date: March 8, 2012)

All references to the Federal Internal Revenue Code in Nebraska statutes refer to the Federal Internal Revenue Code as it existed on March 8, 2012. 

Apportion Sales of Intangibles and Services ( LB 872 – Operative Date: January 1, 2014)

A corporate taxpayer will apportion income from the sales of intangibles and services to the location of the customer (market-based apportionment) rather than the location where the income-producing activity is performed (cost of performance apportionment). The sale of intangibles or services by communications companies will continue to be sourced to the location where the income-producing activity is performed.

New Markets Job Growth Investment Act ( LB 1128 – Operative Date: January 1, 2012)

Individuals, pass-through entities, corporations, financial institutions, and insurance companies are eligible for a nonrefundable, nontransferable credit for qualified investments in qualified community development entities. The credit may be used against income tax, insurance premium tax, or franchise tax and is based on a percentage of the investment and the year in which the investment is made. 

Local Option Sales Tax Increase ( LB 357 – Operative Date: July 19, 2012)

A municipality may impose a local option sales tax of 1.75% or 2.0% if the rate increase is approved by at least 70% of the municipality’s governing board and by a vote of the voters residing in the municipality. A percentage of the revenues raised in excess of 1.5% must be used for public infrastructure projects, interlocal agreements, or to reduce other taxes, depending on the size of each municipality.

Local Option Sales Tax Refunds by Cities and Villages ( LB 209 – Operative Date: January 1, 2014)

The State will not deduct a refund of local option sales tax under the Nebraska Advantage Act (LB 312) or Employment and Investment Growth Act (LB 775) from the local option sales tax receipts of a village or first or second class city for at least one year after that refund is paid by the State. 

Municipal Inspection of Sales Tax Returns ( LB 209 – Operative Date: July 19, 2012)

A municipality that has adopted a local option sales tax may inspect, upon written request, sales tax returns of businesses remitting sales tax from locations located within the municipality’s boundaries.

Sales and Use Tax Exemption for Statewide Sports Events ( LB 727 – Operative Date: October 1, 2012)

Admissions and fees charged to participate in any activity offered by a nonprofit organization that conducts statewide sport events with multiple sports for both adults and youth are exempt from sales and use tax.

Sales and Use Tax Exemption for Youth Development Groups ( LB 727 – Operative Date: October 1, 2012)

Admissions and fees charged to participate in any activity offered by a nonprofit organization that is affiliated with a national organization, primarily dedicated to youth development and healthy living, and which offers sports instruction and sports leagues or sports events in multiple sports are exempt from sales and use tax.

Sales and Use Tax Exemption for Youth Sports ( LB 727 – Operative Date: July 1, 2012)

Admissions and fees charged to participate in youth sports events, leagues, or competitive educational activities are exempt from sales and use tax. Youth sports events, leagues, or competitive educational activities are limited to participants who are less than 19 years old. 

Memberships that include a right to vote, hold office, or change the policies of the organization remain exempt from sales and use tax. 

Sales and Use Tax Exemption for Biochips ( LB 830 – Operative Date: July 1, 2012)

Biochips used for purposes of conducting genotyping or the analysis of gene expression, protein expression, genomic sequencing, or protein profiling of plants, animals, or nonhuman laboratory research model organisms are exempt from sales and use tax.

Sales and Use Tax Exemption for Government Property ( LB 902 – Operative Date: April 1, 2012)

Any property beneficially owned by a governmental unit and used for a public purpose is exempt from sales and use tax if the property purchased is subject to a lease-purchase agreement, financing lease, or other instrument which transfers title of the property to the governmental unit upon payment of the debt used to finance the project.

The purchase may be subject to sales or use tax if the purchase exceeds the greater of 0.06% of the total actual value of real and personal property of the governmental unit or $50,000, and the project is not approved by a vote of the people that reside within the governmental unit in which the property is located. 

Sales and Use Tax Exemption for Tractors ( LB 907 – Operative Date: July 19, 2012)

The purchase of a tractor does not qualify for sales tax exemption as agricultural machinery and equipment unless the tractor model has been tested by an eligible test station and permitted for sale by the Nebraska Department of Agriculture. 

Sales and Use Tax Exemption for Shipments Out-of-state by Data Centers ( LB 1080 – Operative Date: January 1, 2013)

Any tangible personal property acquired by a person operating a data center located in Nebraska, which is then incorporated into other tangible personal property for subsequent use outside the state by the same person operating a data center in this state, is exempt from sales and use tax.

Sales and Use Tax Exemption for Nonprofit Health Clinics ( LB 40 – Operative Date: July 1, 2012)

Purchases by a nonprofit health clinic are exempt from sales and use tax if the health clinic is owned by one or more hospitals for purposes of reducing health care costs. Previously, a health clinic had to be owned by two or more hospitals for its purchases to be exempt. 

Sales and Use Tax Exemption for Nonprofit Mental Health Centers ( LB 1097– Operative Date: October 1, 2012)

Purchases by a nonprofit mental health center are exempt from sales and use tax if the mental health center is licensed under the Health Care Facility Licensure Act. 

Tier 2 Large Data Center Projects ( LB 1118 – Operative Date: March 7, 2012)

A taxpayer who invests at least $200 million and creates 30 new jobs at a data center project is eligible for a 10-year personal property tax exemption for the project, in addition to the benefits currently available for other Tier 2 projects. For additional information, visit the Economic Tax Incentives website. 

Subsequent Agreement for Tier 2 Large Data Center Projects ( LB 1118 – Operative Date: March 7, 2012)

A taxpayer may sign a single agreement for a Tier 2 large data center project and sequential Tier 5 project. Previously, a taxpayer could not sign an agreement for a sequential project.

Nebraska Advantage Research and Development Tax Credit ( LB 983 – Operative Date: January 1, 2012)

A taxpayer may claim an income tax credit or sales tax refund for qualified research and development expenditures for 21 years. Previously, the credit could only be claimed for 5 years. 

Local Option Sales Tax Refunds by Cities and Villages ( LB 209 – Operative Date: January 1, 2014)

The State will not deduct a refund of local option sales tax under the Nebraska Advantage Act (LB 312) or Employment and Investment Growth Act (LB 775) from the local option sales tax receipts of a village or first or second class city for at least one year after that refund is paid by the State. 

Motor Fuels Return Due Date ( LB 727 – Operative Date: July 1, 2012)

The due date for all motor fuels returns and reports will change from the 25th of the month to the 20th of the month. This change will take effect as follows:

• For monthly filers, with the July return due on August 20, 2012;
• For quarterly filers, with the third quarter return due on October 22, 2012; and
• For annual filers, with the 2012 annual return due on January 22, 2013.

This change applies to:

• Nebraska Monthly Fuels Tax Return, Form 73;
• Nebraska Motor Fuels Use Tax Return, Form 74;
• Nebraska Ethanol & Biodiesel Producer's Return, Form 83; 
• Nebraska Compressed Fuel Retailer Return, Form 86; and
• Nebraska Motor Fuels Terminal Operator Report, Form 87.

Eliminate Commissions Resulting from Audit Assessments ( LB 727 – Operative Date: April 12, 2012)

A licensee is no longer entitled to a commission for collecting and remitting fuel tax if the commission results from a deficiency assessment issued by the Department.

Petroleum Release Remedial Action Claim ( LB 873 – Operative Date: June 30, 2012)

The deadline for filing a claim with the Nebraska Department of Environmental Quality under the Petroleum Release Remedial Action Act was extended until June 30, 2016. The previous deadline was June 30, 2012. 

Death Deeds Exempt from Documentary Stamp Tax ( LB 536 – Operative Date: January 1, 2013)

A transfer of real property by death deed is not subject to the documentary stamp tax.

Comparable Sales of Agricultural Land ( LB 750 – Operative Date: July 19, 2012)

When considering comparable sales for agricultural land valuation, whether a premium was paid is to be considered. A premium may be paid when proximity or tax consequences cause the buyer to pay more than the actual value for agricultural land.

Definition of Farm Home Site ( LB 750 – Operative Date: July 19, 2012)

Farm home site means land contiguous to a farm site which includes an inhabitable residence and improvements used for residential purposes and which is located outside of urban areas or outside a platted and zoned subdivision.

Property Tax Exemption for Lease-Purchase Agreements of Government Property ( LB 902 – Operative Date: April 1, 2012)

Any property beneficially owned by a governmental unit and used for a public purpose is exempt from property tax if the property purchased is subject to a lease-purchase agreement, financing lease, or other instrument which transfers title of the property to the governmental unit upon payment of the debt used to finance the project. 

The purchase may be subject to property tax if the acquisition cost of the property exceeds the greater of 0.06% of the total actual value of real and personal property of the governmental unit or $50,000, and the acquisition is not approved by a vote of the people that reside within the governmental unit in which the property is located. 

Property Tax Exemption for Shipments Out-of-state by Data Centers ( LB 1080 – Operative Date: January 1, 2013)

Any tangible personal property acquired by a person operating a data center located in Nebraska, which is then incorporated into other tangible personal property for subsequent use outside the state by the same person operating a data center in this state, is exempt from the personal property tax. 

Notices Mailed by the Department ( LB 727 - Operative Date: April 12, 2012)

The Department may mail notice of any administrative action by first-class, registered, or certified mail. The Department is no longer required to mail these notices by certified or registered mail. 

Surcharge on Prepaid Wireless Phones ( LB 1091 – Operative Date: January 1, 2013)

A retailer of prepaid wireless telecommunication services is required to collect and remit a prepaid wireless surcharge from each consumer purchasing prepaid wireless telecommunication services. The surcharge will be set annually by the Nebraska Department of Revenue and will be administered in the same manner as the sales tax, including due dates, audit procedures, registration requirements, and payment procedures. 

Electronic Submission of Department Reports ( LB 782 - Operative Date: July 19, 2012)

All Department reports must be submitted to the Governor, Legislature, Auditor of Public Accounts, Attorney General, and/or other state agencies electronically.

Municipal Equalization Aid ( LB 1114 – Operative Date: July 1, 2012)

A reduction in state municipal equalization aid for municipalities whose tax levy is less than the average property tax levy shall be limited to a maximum reduction of 80%. 

Turnback Financing Assistance ( LB 426 – Operative Date: July 19 , 2012)

A municipality may not receive assistance under both the Sports Arena Facility Financing Assistance Act and the Civic and Community Center Financing Act for the same project. 

A city of the primary class may not receive assistance under both the Sports Arena Facility Financing Assistance Act and the Civic and Community Center Financing Act.

New Municipal Occupation Taxes ( LB 745 – Operative Date: July 19, 2012)

A municipality may not impose a new occupation tax without a majority of the municipality’s voters approving the imposition of the occupation tax. A municipality may terminate an existing occupation tax or impose an occupation tax for a specific project without voter approval if the revenue generated from the occupation tax is not deposited in the municipality’s general fund. 

Increasing Municipal Occupation Taxes ( LB 745 – Operative Date: July 19, 2012)

A municipality may not increase the rate of an existing occupation tax without a majority of the municipality’s voters approving the increase of the occupation tax, except that a municipality may increase an existing occupation tax without a vote if the projected revenue from the increase does not exceed the following dollar thresholds:

• $6 million (metropolitan);
• $3 million (primary class);
• $700,000 (first class); and
• $300,000 (second class and villages).

A municipality may also terminate an existing occupation tax or change the rate of an existing occupation tax for a specific project without voter approval if the revenue generated from the occupation tax is not deposited in the municipality’s general fund. 

Regulation of Amateur Boxing ( LB 869 – Operative Date: July 19, 2012)

The Nebraska Athletic Commission will no longer regulate amateur boxing events or exhibitions.