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Employment & Investment Growth Act Application Guide

Back to LB 775 Information

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (Department) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of the Department 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. The Department 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.

The Employment and Investment Growth Act requires that an application be filed for each project. The application date for the project will determine the employment and investment to be included in the project. There is no form to complete. To file an application for the Employment and Investment Growth Act, a narrative or attachments should be provided to address each of the items listed in the Outline of Requirements for Application.

Establishment of an Application Date

  1. Items 1, 2, 3, 4, 5 and 13 of the Outline are required to establish an application date. If one of the items 1, 2, 3, 4, 5 or 13 is omitted, then the application date will be determined by the date the last of these items is submitted. The other items can be handled through correspondence at a later date, however this slows down the application process.
     

  2. The certified mailing receipt stamped by the United States Postal Service or a U.S. Postal Service postmark will serve as the verification of the date mailed, and thus the application date. If an application is mailed other than by certified mail or does not have a USPS postmark, then the date received will serve as the application date.

Items of Note

  1. A project may be defined to include a single entity, more than one entity within the definition of a taxpayer per statute section 77-4103(14), a single location or multiple locations. A company may have more than one project at a time as long as the projects are distinct from each other.
     

    1. List the specific location address(es) to be included.
       

    2. If the project is to include more than one location, then include sufficient documentation to show that the employment and investment at different locations are interdependent parts of the plan. Merely showing the locations are part of a unitary business is not sufficient.
       

    3. For a limited liability company, partnership, or s corporation, all members, partners, or shareholders must be subject to sales and use tax and an income tax or franchise tax. Provide a list of names, federal identification numbers, and ownership percentages.
       

  2. At the end of a project's entitlement period, a taxpayer may enter into a subsequent agreement under the Employment and Investment Growth Act, for a project which may include the same activities as the previous project (Revenue Ruling29-93-3). Property acquired after the date of application for a subsequent agreement for the same project cannot qualify for the property tax exemption under the first agreement (Revenue Ruling 29-96-2).
     

  3. The explanation of the qualifying business should include enough information to provide an outside person a general understanding of the business operations. The paragraph of Nebraska revised statute section 77-4103(11) under which the applicant qualifies should be noted.
     

  4. The applicant selects the type of project ($10 million in investment and 100 new full-time equivalent employees, $3 million in investment and 30 new full-time equivalent employees or a $20 million investment) in the application process. Revenue Ruling 29-87-3 allows for an amendment of the agreement in only particular cases. You may only amend down to a project with lesser benefits.
     

  5. The timetable showing the expected refunds should be based on the year the refunds are expected to be paid by the Department of Revenue. The project must complete its year of qualification and have an audit conducted, before they can file for the refunds. The direct refunds due to investment and credits taken as sales tax refunds should be based on the best estimate of when the project will qualify and should estimate at least three years of refund payments. Refer to the example below:

Facts:

  • The application was filed on September 27, 1999.
  • The project is expected to qualify in tax year end 12/31/2002.
  • There will be $500,000 in office furniture and computers placed in service in 2000.
  • The company will construct a $2 million building in 2001.
  • There will be $1 million in machinery placed in service in 2002.
  • At tax year end 12/31/2002, the project will have 45 new full-time equivalent employees.
  • The project purchases are subject to 5.0% state tax and 1.0% city tax.
  • The purchases of qualifying investment in 2003 to 2005 that are expected to be $200,000 per year.
  • The non-qualifying purchases subject to sales or use taxes used at the project are estimated to be $100,000 per year
Tax Year End Tax Paid or Calculated Direct Refunds Credit Refund
1999 $0 $0 $0
2000 $500,000 X 6% = $30,000 $0 $0
2001 ($2,000,000 X 50%/1.06%) X 6% = $56,604 $0 $0
2002 $1,000,000 X 6% = $60,000 $0 $0
2003 $200,000 X 6% = $12,000
$100,000 X 6% = $6,000
$158,604(a) $6,000
2004 $200,000 X 6% = $12,000
$100,000 X 6% = $6,000
$12,000 $6,000
2005 $200,000 X 6% = $12,000
$100,000 X 6% = $6,000
$12,000 $6,000

(a) $30,000 + 56,604 + 60,000 + 12,000 = $158,604

  1. The application needs to be signed by an authorized person (Owner, Partner, Corporate Officer).
     
  2. The federal income tax return provided should be a signed copy and should at least include copies of the first four pages, consolidating schedules supporting the first four pages, Affiliations Schedule (Form 851) and a copy of each Shareholder's Share of Income, Credits, Deductions, etc. (Schedule K-1).

Should you have any questions regarding the preparation of this application, please contact Deb Bray at 402-471-5833. The application should be sent to the following address:

Tax Incentives
Nebraska Department of Revenue
301 Centennial Mall South
PO Box 98944
Lincoln, NE 68509-8944


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