Employment & Investment Growth Act Definitions
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.
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Base year: The federal taxable year immediately preceding the year during which the application was filed. For purposes of LB775, year shall mean applicant's federal taxable year.
Carryover period: The eight federal taxable years after the entitlement period within which unused credits may be used.
Compensation: The wages and other payments subject to withholding for federal income tax purposes.
Compensation Credit: A credit equal to five percent of the amount by which the total compensation paid, during each year of the entitlement period, to employees who are either Nebraska (resident or partial-year resident) employees or base-year employees while employed at the project exceeds the average compensation paid at the project multiplied by the number of equivalent base-year employees.
Credit Refunds: Refund of Nebraska sales and use taxes paid on otherwise non-refundable purchases used at the project. Credits earned in a prior federal taxable year may be used to obtain a refund of taxes paid during a year of the entitlement or carryover period.
Direct Refunds: Refunds of Nebraska sales and use taxes paid on purchases of qualified property for use at the project, or on aircraft for use in connection with the project, which are placed in service at the project during the attainment and entitlement period. The project must maintain the minimum levels of investment and employment required for benefits to be eligible for direct refunds in all years of the entitlement period.
Employment Growth: Number of new employees shall mean the excess of the number of equivalent employees employed at the project during a year over the number of equivalent employees during the base year. Refer to statute section 77-4104.01 for limitations for the purchase of an on-going business or the moving of a business.
Entitlement Period: The period within which the applicant generally can both earn and use incentives. The period includes the year applicant meets the minimum chosen levels of investment and employment and the next six federal taxable years. The entitlement period for property tax benefits may be different from the entitlement period for other benefits.
Equivalent Employees: The number of employees computed by dividing the total hours paid in a year by the product of forty times the number of weeks in a year. A salaried employee will be considered to have worked the number of hours that the employer has established as the regular work week for a full-time hourly employee.
Investment: The value of qualified property incorporated into or used at the project after the date of application. For qualified property owned by the taxpayer, the value shall be the original cost of the property. For qualified property rented by the taxpayer, the average net annual rent shall be multiplied by the number of years of the lease for which the taxpayer was originally bound, not to exceed ten years or the end of the third year after the entitlement period, whichever is earlier. Refer to statute section 77-4104.01 for limitations for the purchase on an on-going business, the moving of a business, related party transactions, or a renegotiation of a lease.
Investment Credit: A credit equal to ten percent of the investment made in qualified property at the project during the attainment or entitlement periods.
Property tax exemption: Turbine powered aircraft may be exempted from the first January 1 following the date of acquisition of the property through the sixteenth December 31 after the filing of the application. Mainframe business computers and specific peripheral components connected to such computers that are located in an environmentally controlled area and business equipment involved directly in the processing of agricultural products may be exempted from the first January 1 following the end of the year during which the required levels were exceeded through the sixteenth December 31 after the filing of the application.
Qualified Property: Tangible property of a type subject to depreciation, amortization, or other recovery under the Internal Revenue Code of 1986, or the components of such property, that will be located and used at the project. Qualified property shall not include (a) aircraft, barges, motor vehicles, railroad rolling stock, or watercraft; or (b) property that is rented by the taxpayer qualifying under the Employment and Investment Growth Act to another person.
- Attainment period: The period of time within which the applicant must meet the minimum levels of employment and investment required for benefits. This period of time may be no longer than the year of application and the next six federal taxable years.
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