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Nebraska Advantage Research and Development Act
Frequently Asked Questions

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.


What is the Nebraska Advantage Research and Development Act?

The Nebraska Advantage Research and Development Act created a research tax credit, which is available for tax years beginning on or after January 1, 2006. A business firm that incurs research and experimental expenditures in Nebraska is eligible for the tax credit.

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What tax credits are available?

A business firm that incurs research and experimental  expenditures (as defined in § 174 of the Internal Revenue Code) may claim a tax credit equal to 15 percent of the federal tax credit allowed.* The tax credit may be used to obtain a refund of sales and use taxes paid, or as a refundable income tax credit. The tax credit is allowed for the first tax year it is claimed, and may be claimed for the following 20 tax years if the business firm continues to earn the federal credit.

In addition, business firms that make expenditures in research and experimental activities on the campus of a college or university in Nebraska, or at a facility in Nebraska owned by a college or university, are allowed a tax credit equal to 35 percent of the federal credit* instead of the usual 15 percent. The tax credit is allowed for the first tax year it is claimed and may be claimed for the following four tax years if the business continues to earn the federal credit and continues to have expenditures on campus.

*The tax credit may be subject to apportionment if a business firm makes expenditures in research and experimental activities in other states.

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Does the business firm need to verify an employee's work eligibility status?

Yes. On and after October 1, 2009, all business firms claiming the tax credit must electronically verify the work eligibility status of all newly-hired employees in Nebraska during the tax year in which the credit is claimed.

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What if I hired an employee before October 1, 2009?

A business firm is not required to verify the work eligibility of any employee hired before October 1, 2009.

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How does a business firm verify a newly hired employee's work eligibility?

A business firm should utilize E-Verify, the federal electronic verification program that ensures all new employees are legally eligible to work in the United States. 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 business firms to electronically compare employee information taken from the Form I-9, Employment Eligibility Verification, against the databases of the Social Security Administration and the Department of Homeland Security. For additional information, go to the U.S. Citizenship and Immigration Service’s website at http://www.uscis.gov/portal/site/uscis and click on the E-Verify button.

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What happens if a business firm does not verify the work status of a newly hired Nebraska employee?

The Nebraska Advantage Research and Development tax credit will not be granted unless the business firm can document the fact that it has electronically verified the work eligibility status of all newly-hired employees employed in Nebraska.

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What if I have more questions?

If you have questions that were not addressed here, please contact George Kilpatrick at 402-471-6024 or george.kilpatrick@nebraska.gov.


Many of your other questions can be answered in the following publications:


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