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Nebraska Advantage Act
Application Guide

Back to Nebraska Advantage 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.

CAUTION:

For applications filed on or after October 1, 2009, the Nebraska Advantage Act requires participants to utilize E-Verify, the federal electronic verification program, to ensure that new employees are legally able to work in the United States. An application will not be accepted from a taxpayer unless they are registered for E-Verify. Nebraska tax incentives will not be granted unless the applicant proves that it has electronically verified the work eligibility status of all newly hired employees employed in Nebraska.

E-Verify is a free and simple to use Web-based system that electronically verifies the employment eligibility of newly hired employees. E-Verify allows participating employers to electronically compare employee information taken from the Form I-9, Employment Eligibility Verification, against the Social Security Administration’s and the Department of Homeland Security’s databases. For additional information, go to the U.S Citizenship and Immigration Services’ website and click on the E-Verify button at the left of the page.

Introduction

The Nebraska Advantage Act requires that an application be filed for each project. The application date for the project will impact the investment, employment and the associated benefits allowed for the project. A complete application must be filed to establish an application date. To file an application for the Nebraska Advantage Act, submit the prescribed application Nebraska Advantage Application.

All taxpayers must file a Nebraska Advantage Application in order to participate in the incentive program. The first two pages of the application must be provided by all applicants. Page 3 of the application must be provided by any taxpayer applying for a project with multiple or related entities. Page 4 must be provided by any taxpayer applying for a project with multiple locations. The omission from Page 3 or 4 of a taxpayer entity or location which existed at the time of application will result in the entity or location being excluded for the life of the project. Only new entities or locations may be added after the application is filed.

Establishment of an Application Date

  1. To constitute a complete application, all questions and lines on the application and all applicable pages must be completed and a true copy of the federal return as defined in Item 10 below must be attached. Failure to complete all applicable pages or to provide the required attachments will delay the establishment of the application date.

    The application date will determine what investment can be counted. Only property placed in service on or after the date of a completed application will count toward attainment of the investment thresholds, investment tax credit and refund calculations. The application date also establishes the required wage rate and the base year which are used for the calculation of employment growth.

  2. Method of delivery:

    A. 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. The verified date mailed for the last item needed to complete the application is the application date

    B. If an application is sent other than by certified mail or does not have a USPS postmark, then the date the last item required to complete the application is received by the Department of Revenue is the application date.

Items of Note

  1. As of October 1, 2009, any new applicant under the Nebraska Advantage Act is required to use E-Verify, a federal electronic verification program, to ensure that Nebraska employees hired after the date of application are legally able to work in Nebraska. An applicant must provide proof that it has registered for E-Verify at the time of application.

    Prior to approval of tax incentive benefits and during subsequent reviews of benefits claimed, the taxpayer must provide proof of employment confirmation. Examples of documents for the taxpayer to retain include, but are not limited to, the following:
      • Case Verification Number;
      • Copies of the Case Details page which includes the Case Verification Number; and
      • The User Audit Report which provides general data on cases.

Benefits will not be granted unless the applicant can prove that it has electronically verified the work eligibility status of all newly hired employees employed in Nebraska. In addition, all hours worked by, and compensation paid to, any employee who is not eligible to work in Nebraska will be excluded from the calculation of any tax incentive.

Example of Company Information:

Sample

  1. Certain entities are not eligible to file an application. An application will not be accepted from any entity or organization which meets any one of the following:

    A. A political subdivision.

    B. An organization that is exempt from income taxes under IRC § 501(a).

    C. Any entity in which political subdivisions or organizations described in IRC § 501(c) or (d) hold an ownership interest of 20% or more.

  2. A project may be defined to include a single entity, more than one entity within the definition of a taxpayer per Neb. Rev. Stat. § 77-5719, 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.

    A. List the specific location addresses to be included in the project on Page 4. Multiple addresses in the same city or municipality should be listed separately.

    B. If the project is to include more than one location, complete Item D, Page 4 and include sufficient documentation to show that the employment and investment at different locations are interdependent parts of the plan.
      • There must be a material flow of information or products between locations for them to be interdependent.
      • The corporate headquarters is deemed interdependent with any other location controlled by that headquarters. If a project includes a headquarters and two other locations. The two other locations must be shown to be interdependent.
      • Merely showing the locations are part of a unitary business is not sufficient.
  1. At the end of the entitlement period for an Employment and Investment Growth Act, LB775, project or a Nebraska Advantage Act project a taxpayer may enter into a subsequent agreement under the Nebraska Advantage Act, for a project which may include the same activities as the previous project (Revenue Ruling 29-05-11). 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 29-05-11).

  2. The applicant selects the type of project [Tier 1, 2, 2 Web Portal or Data Center (2WP/DC), 2 Large Data Center (2LDC), 3, 4, 5, 5 Web Portal or Data Center (5WP/DC), 5 Large Data Center (5LDC), or 6] in the application process. There is one type of application to be used for a Tier 1, 2, 2WP/DC, 3, 4, 5 , 5WP/DC, or 6; and a separate application for a Tier 2LDC or a Tier 5LDC project. You may only amend down to a project with lesser benefits. A project may not be amended to Tier 1 due to the differences in qualifying activities, benefits, and project time frames.

  3. The explanation of the qualifying business activity should include enough information to provide an outside person a general understanding of the business operations. Check the boxes relating to the qualifying business activities performed by the taxpayer at the listed project locations.

  4. An applicant for a Tier 2LDC project may apply for a Tier 5LDC project at the same time the Tier 2LDC application is filed. If not selected at the time of the Tier 2LDC application, the Tier 5LDC application may be filed separately as long as it is dated prior to the end of the entitlement period for the Tier 2LDC. A Tier 5LDC project cannot be applied for on its own without a preceding Tier 2LDC project.

    A Tier 2WP/DC or Tier 5WP/DC must be selected at the time of the application for the project to be eligible for any property tax benefits for computer systems and peripheral components. A taxpayer who has met the required levels of employment and investment for the selected tier, taking into account only the employment and investment at the web portal or data center, will be eligible for the property tax exemption on computer systems and peripherals.

  5. The expected refunds listed in Item 5, on Page 2 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, prepare its books and records, 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, 2006.

The applicant selected Tier 2.

The project is expected to qualify in tax year end 12/31/2009.

There will be $500,000 in office furniture and computers placed in service in 2007.

The company will construct a $2 million building in 2008.

There will be $1 million dollars in machinery placed in service in 2009.

At tax year end 12/31/2009, the project will have 45 new full-time equivalent employees.

The project purchases are subject to 5.5% state sales tax and 1.5% city sales tax.

The purchases of qualifying investment in 2010 to 2012 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

2006

$0

$0

$0

2007

$500,000 X 7% = $35,000

$0

$0

2008

($2,000,000 X 50%/1.07%) X 7% = $65,421

$0

$0

2009

$1,000,000 X 7% = $70,000

$0

$0

2010

$200,000 X 7% = $14,000
$100,000 X 7% = $7,000

$184,421*

$0

2011

$200,000 X 7% = $14,000
$100,000 X 7% = $7,000

$14,000

$7,000

2012

$200,000 X 7% = $14,000
$100,000 X 7% = $7,000

$14,000

$7,000

* $35,000 + 65,421 + 70,000 + 14,000 = $184,421

  1. The application needs to be signed by an authorized person (Owner, Partner, Corporate Officer, or a person authorized by a completed Power of Attorney, Form 33).

  2. The federal income tax return provided should be a signed copy and should at least include copies of the first five pages, consolidating schedules supporting the first five pages, Affiliations Schedule (Form 851) and a copy of each Shareholder's Share of Income, Credits, Deductions, etc. (Schedule K-1). A pro-forma federal return is not acceptable.

Should you have any questions regarding the preparation of this application, please contact Megan Ferris at 402-471-5687. 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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