Publisher's note: The bill is presented using denoted lines. As such, it may be hard to read, but it would be searchable for various elements of interest.
FOR AN ACT relating to revenue and taxation; to amend section 77-4106 and 77-5726, Reissue Revised Statutes of Nebraska; to change provisions relating to refunds of local sales and use taxes under certain tax incentive laws; to create a fund; and to repeal the original sections.
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LEGISLATURE OF NEBRASKA
ONE HUNDRED FIRST LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 967
Introduced by Schilz, 47.
Read first time January 19, 2010
Committee: Revenue
A BILL
1 FOR AN ACT relating to revenue and taxation; to amend sections
2 77-4106 and 77-5726, Reissue Revised Statutes of
3 Nebraska; to change provisions relating to refunds of
4 local sales and use taxes under certain tax incentive
5 laws; to create a fund; and to repeal the original
6 sections.
7 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 77-4106, Reissue Revised Statutes of
2 Nebraska, is amended to read:
3 77-4106 (1)(a) The credits prescribed in section 77-4105
4 shall be established by filing the forms required by the Tax
5 Commissioner with the income tax return for the year. The credits
6 may be used after any other nonrefundable credits to reduce the
7 taxpayer’s income tax liability imposed by sections 77-2714 to
8 77-27,135. The credits may be used to obtain a refund of sales and
9 use taxes under the Nebraska Revenue Act of 1967, the Local Option
10 Revenue Act, and sections 13-319, 13-324, and 13-2813 which are not
11 otherwise refundable that are paid on purchases, including rentals,
12 for use at the project.
13 (b) The credits may be used as allowed in subdivision
14 (a) of this subsection and shall be applied in the order in which
15 they were first allowed. Any decision on how part of the credit is
16 applied shall not limit how the remaining credit could be applied
17 under this section.
18 (c) The credit may be carried over until fully utilized,
19 except that such credit may not be carried over more than eight
20 years after the end of the entitlement period.
21 (2)(a) No refund claims shall be filed until after the
22 required levels of employment and investment have been met.
23 (b) Refund claims shall be filed no more than once each
24 quarter for refunds under the Employment and Investment Growth
25 Act, except that any claim for a refund in excess of twenty-five
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1 thousand dollars may be filed at any time.
2 (c) Any refund claim for sales and use tax on materials
3 incorporated into real estate as a part of the project shall be
4 filed by and the refund paid to the owner of the improvement
5 to real estate. A refund claim for such materials purchased
6 by a purchasing agent shall include a copy of the purchasing
7 agent appointment, the contract price, and a certification by
8 the contractor or repairperson of the percentage of the materials
9 incorporated into the project on which sales and use taxes were
10 paid to Nebraska after appointment as purchasing agent.
11 (d) All refund claims shall be filed, processed, and
12 allowed as any other claim under section 77-2708, except that the
13 amounts allowed to be refunded under the Employment and Investment
14 Growth Act shall be deemed to be overpayments and shall be refunded
15 notwithstanding any limitation in subdivision (2)(a) of section
16 77-2708. The refund may be allowed if the claim is filed within
17 three calendar years from the end of the year the required levels
18 of employment and investment are met or within the period set forth
19 in section 77-2708.
20 (e) Interest shall not be allowed on any sales and use
21 taxes refunded under the Employment and Investment Growth Act.
22 (3) The appointment of purchasing agents shall be
23 recognized for the purpose of changing the status of a contractor
24 or repairperson as the ultimate consumer of tangible personal
25 property purchased after the date of the appointment which is
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1 physically incorporated into the project and becomes the property
2 of the owner of the improvement to real estate. The purchasing
3 agent shall be jointly liable for the payment of the sales and use
4 tax on the purchases with the owner of the improvement to real
5 estate.
6 (4) If the three-year average for the three previous
7 calendar years of the total amount of refund claims of local option
8 sales and use taxes for a city of the first class, city of the
9 second class, or village pursuant to the Employment and Investment
10 Growth Act and the Nebraska Advantage Act exceeds ten percent of
11 the city’s or village’s sales and use tax revenue in a calendar
12 year, the refunds in excess of such ten-percent amount for that
13 calendar year shall be made from the Local Option Sales Tax Refund
14 Fund if the fund has sufficient money to make such refunds.
15 Sec. 2. Section 77-5726, Reissue Revised Statutes of
16 Nebraska, is amended to read:
17 77-5726 (1)(a) The credits prescribed in section 77-5725
18 shall be established by filing the forms required by the Tax
19 Commissioner with the income tax return for the year. The credits
20 may be used and shall be applied in the order in which they
21 were first allowed. The credits may be used after any other
22 nonrefundable credits to reduce the taxpayer’s income tax liability
23 imposed by sections 77-2714 to 77-27,135. Any decision on how part
24 of the credit is applied shall not limit how the remaining credit
25 could be applied under this section.
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1 (b) The taxpayer may use the credit provided in
2 subsection (3) of section 77-5725 to reduce the taxpayer’s income
3 tax withholding employer or payor tax liability under section
4 77-2756 or 77-2757 to the extent such liability is attributable
5 to the number of new employees at the project, excluding any
6 compensation in excess of one million dollars paid to any one
7 employee during the year. The taxpayer may use the credit provided
8 in subsection (4) of section 77-5725 to reduce the taxpayer’s
9 income tax withholding employer or payor tax liability under
10 section 77-2756 or 77-2757 to the extent such liability is
11 attributable to all employees employed at the project, other than
12 base-year employees and excluding any compensation in excess of one
13 million dollars paid to any one employee during the year. To the
14 extent of the credit used, such withholding shall not constitute
15 public funds or state tax revenue and shall not constitute a trust
16 fund or be owned by the state. The use by the taxpayer of the
17 credit shall not change the amount that otherwise would be reported
18 by the taxpayer to the employee under section 77-2754 as income tax
19 withheld and shall not reduce the amount that otherwise would be
20 allowed by the state as a refundable credit on an employee’s income
21 tax return as income tax withheld under section 77-2755.
22 For a tier 1, tier 2, tier 3, or tier 4 project, the
23 amount of credits used against income tax withholding shall not
24 exceed the withholding attributable to new employees employed at
25 the project, excluding any compensation in excess of one million
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1 dollars paid to any one employee during the year.
2 For a tier 6 project, the amount of credits used
3 against income tax withholding shall not exceed the withholding
4 attributable to all employees employed at the project, other than
5 base-year employees and excluding any compensation in excess of one
6 million dollars paid to any one employee during the year.
7 If the amount of credit used by the taxpayer against
8 income tax withholding exceeds this amount, the excess withholding
9 shall be returned to the Department of Revenue in the manner
10 provided in section 77-2756, such excess amount returned shall be
11 considered unused, and the amount of unused credits may be used
12 as otherwise permitted in this section or shall carry over to the
13 extent authorized in subdivision (1)(d) of this section.
14 (c) Credits may be used to obtain a refund of sales and
15 use taxes under the Local Option Revenue Act, the Nebraska Revenue
16 Act of 1967, and sections 13-319, 13-324, and 13-2813 which are not
17 otherwise refundable that are paid on purchases, including rentals,
18 for use at the project for a tier 1, tier 2, tier 3, or tier 4
19 project or for use within this state for a tier 6 project.
20 (d) The credits earned for a tier 6 project may be used
21 to obtain a payment from the state equal to the real property
22 taxes due after the year the required levels of employment and
23 investment were met and before the end of the carryover period,
24 for real property that is included in such project and acquired
25 by the taxpayer, whether by lease or purchase, after the date the
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1 application was filed. The payment from the state shall be made
2 only after payment of the real property taxes have been made to the
3 county as required by law. Payments shall not be allowed for any
4 taxes paid on real property for which the taxes are divided under
5 section 18-2147 or 58-507.
6 (e) Credits may be carried over until fully utilized,
7 except that such credits may not be carried over more than nine
8 years after the year of application for a tier 1 or tier 3 project,
9 fourteen years after the year of application for a tier 2 or tier
10 4 project, or more than one year past the end of the entitlement
11 period for a tier 6 project.
12 (2)(a) No refund claims shall be filed until after the
13 required levels of employment and investment have been met.
14 (b) Refund claims shall be filed no more than once each
15 quarter for refunds under the Nebraska Advantage Act, except that
16 any claim for a refund in excess of twenty-five thousand dollars
17 may be filed at any time.
18 (c) Any refund claim for sales and use taxes on materials
19 incorporated into real estate as a part of the project shall be
20 filed by and the refund paid to the owner of the improvement
21 to real estate. A refund claim for such materials purchased
22 by a purchasing agent shall include a copy of the purchasing
23 agent appointment, the contract price, and a certification by
24 the contractor or repairperson of the percentage of the materials
25 incorporated into the project on which sales and use taxes were
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1 paid to Nebraska after appointment as purchasing agent.
2 (d) All refund claims shall be filed, processed, and
3 allowed as any other claim under section 77-2708, except that
4 the amounts allowed to be refunded under the Nebraska Advantage
5 Act shall be deemed to be overpayments and shall be refunded
6 notwithstanding any limitation in subdivision (2)(a) of section
7 77-2708. The refund may be allowed if the claim is filed within
8 three calendar years from the end of the year the required levels
9 of employment and investment are met or within the period set forth
10 in section 77-2708.
11 (e) If a claim for a refund of sales and use taxes
12 under the Local Option Revenue Act or sections 13-319, 13-324, and
13 13-2813 of more than twenty-five thousand dollars is filed by June
14 15 of a given year, the refund shall be made on or after November
15 15 of the same year. If such a claim is filed on or after June
16 16 of a given year, the refund shall not be made until on or
17 after November 15 of the following year. The Tax Commissioner shall
18 notify the affected city, village, county, or municipal county of
19 the amount of refund claims of sales and use taxes under the Local
20 Option Revenue Act or sections 13-319, 13-324, and 13-2813 that are
21 in excess of twenty-five thousand dollars on or before July 1 of
22 the year before the claims will be paid under this section.
23 (f) Interest shall not be allowed on any taxes refunded
24 under the Nebraska Advantage Act.
25 (3) The appointment of purchasing agents shall be
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1 recognized for the purpose of changing the status of a contractor
2 or repairperson as the ultimate consumer of tangible personal
3 property purchased after the date of the appointment which is
4 physically incorporated into the project and becomes the property
5 of the owner of the improvement to real estate. The purchasing
6 agent shall be jointly liable for the payment of the sales and use
7 tax on the purchases with the owner of the improvement to real
8 estate.
9 (4) A determination that a taxpayer is not engaged in a
10 qualified business or has failed to meet or maintain the required
11 levels of employment or investment for incentives, exemptions, or
12 recapture may be protested within sixty days after the mailing of
13 the written notice of the proposed determination. If the notice
14 of proposed determination is not protested within the sixty-day
15 period, the proposed determination is a final determination. If the
16 notice is protested, the Tax Commissioner shall issue a written
17 order resolving such protests. The written order of the Tax
18 Commissioner resolving a protest may be appealed to the district
19 court of Lancaster County within thirty days after the issuance of
20 the order.
21 (5) If the three-year average for the three previous
22 calendar years of the total amount of refund claims of local option
23 sales and use taxes for a city of the first class, city of the
24 second class, or village pursuant to the Nebraska Advantage Act and
25 the Employment and Investment Growth Act exceeds ten percent of the
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city’s or village’s sales and use tax revenue 1 in a calendar year,
2 the refunds in excess of such ten-percent amount for that calendar
3 year shall be made from the Local Option Sales Tax Refund Fund if
4 the fund has sufficient money to make such refunds.
5 Sec. 3. (1) The Local Option Sales Tax Refund Fund is
6 created. Each city of the first class, city of the second class,
7 and village making refunds of local option sales and use taxes
8 pursuant to the Employment and Investment Growth Act and the
9 Nebraska Advantage Act shall be eligible to have such refunds made
10 from the fund as provided in this section and sections 77-4106 and
11 77-5726 and shall make payments to the fund as provided in this
12 section.
13 (2) If the three-year average for the three previous
14 calendar years of the total amount of refund claims of local option
15 sales and use taxes for such a city of the first class, city of
16 the second class, or village exceeds ten percent of the city’s or
17 village’s sales and use tax revenue in a calendar year, the refunds
18 in excess of such ten-percent amount for that calendar year shall
19 be made from the fund if the fund has sufficient money to make such
20 refunds.
21 (3) If the three-year average of refund claims of local
22 option sales and use taxes for such a city of the first class,
23 city of the second class, or village is less than ten percent of
24 the affected city’s or village’s sales and use tax revenue in a
25 calendar year, the affected city or village shall pay to the fund
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an amount representing the difference between 1 the actual amount of
2 such calendar year’s refund claims of sales and use taxes and such
3 ten-percent amount.
4 (4) Any money in the fund available for investment
5 shall be invested by the state investment officer pursuant to
6 the Nebraska Capital Expansion Act and the Nebraska State Funds
7 Investment Act.
8 Sec. 4. Original sections 77-4106 and 77-5726, Reissue
9 Revised Statutes of Nebraska, are repealed.
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