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Application Guide:
Nebraska Advantage Rural Development Act

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:

The Nebraska Advantage Rural Development Act requires participants to utilize E-Verify, the federal electronic verification program, to timely verify that new employees are legally able to work in the United States. An application will not be accepted unless the applicant is 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 at uscis.gov/e-verify and click on the E-Verify button at the left of the page.


Application Limitations

The Nebraska Advantage Rural Development Act requires that an application be filed for each project. The application date for the project will determine the required level of wages and the base year used for employment and investment calculations. The application date will also determine the project’s priority for authorization of expected benefits. To file an application for the Nebraska Advantage Act, complete the appropriate Application and provide the required attachments.

The application date is the last day on which information necessary to complete the application is filed. The base year from which investment and employment growth is calculated will change when an incomplete application filed near the end of a tax year is not completed until after the start of the following year.

Example. An application is filed March 13, 2016 that is not complete. The additional information is not provided until April 4, 2016. The applicant's tax year end is March 31, 2016. The increases will be measured against the tax year end March 31, 2016 levels of employment and investment rather than the tax year end March 31, 2015 levels because the date of the application was April 4, 2016.

Establishing an Application Date

A Level 1 or Level 2 applicant should complete the L1L2 Application, while a livestock modernization project should complete the LM Application.

To constitute a complete application: all questions and lines on the application must be completed; all applicable worksheets must be completed; and a true copy of the federal return, as defined in Item 7 below, must be attached. Failure to complete all applicable pages or to provide the required attachments will delay the application date. The application date will be determined by the date the last of these items is submitted, as provided in Revenue Ruling 29‑03‑1.

The certified mailing receipt stamped by the United States Postal Service (USPS) or a USPS postmark will serve as verification of the date mailed and establish the application date. The date the application is received will serve as the application date when an application is mailed other than by certified mail and does not have a USPS postmark. Any applications filed after November 1 will be treated as applications filed on the first business day of the following calendar year. The application must clearly indicate that it is intended to be an application of the following year and the appropriate base year must be used.

Items of Note

  1. A project may be defined to include: a single entity; more than one entity within the definition of a taxpayer; 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.
     
  2. Location of Project

Livestock modernization project —

A livestock modernization project may be located in any county in Nebraska.

Level 1 or 2 projects, including a livestock production project —

A project must be located at a site meeting the requirements listed below.  Teleworkers performing activities interdependent with the project may reside in any location which meets the requirements for the selected level.

Eligible Level 1 project locations —

  1. A location outside of the following counties is eligible:

    Adams, Buffalo, Cass, Dakota, Dawson, Dodge, Douglas, Gage, Hall, Lancaster, Lincoln, Madison, Otoe, Platte, Sarpy, Saunders, Seward, Scotts Bluff, and Washington.
     
  2. A location within the boundaries of one of the listed villages is eligible, even though the village is in an otherwise ineligible county. Go to “Eligible Villages” for a list of villages in otherwise ineligible counties.
     
  3. Eligible Census Tracts in the Omaha metropolitan area per the American Community Survey (ACS) as of December 16, 2011:

2, 3, 4, 5, 6, 7, 8, 11, 12, 16, 18, 19, 20, 21, 23, 24, 25, 28, 29, 30, 31, 32, 33, 34.01, 34.02, 35, 36, 37, 38, 39, 40, 42, 43, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 58, 59.01, 59.02, 60, 61.01, 61.02, 62.02, 63.01, 63.02, 68.06, 69.06, 70.01, 70.02, 70.03, 73.04 in Douglas County,

and 101.07, 101.08, 105.01 in Sarpy County.

To find the census tract for a location, go to the U.S Census Bureau website and enter the address.

Eligible Level 2 project locations —

  1. Any location outside of the following counties is eligible:
     
    Adams, Buffalo, Cass, Dodge, Douglas, Hall, Lancaster, Lincoln, Madison, Platte, Sarpy, and Scotts Bluff.
     
  2. A location within the boundaries of one of the following cities of second class is eligible, even though the city of second class is in an otherwise ineligible county:
     
    Battle Creek, Bennington, Blue Springs, Doniphan, Gibbon, Gretna, Hickman, Hooper, Humphrey, Louisville, Madison, Minatare, Mitchell, Newman Grove, North Bend, Ravenna, Scribner, Springfield, Terrytown, Tilden, Valley, Waterloo, Waverly, Weeping Water, and Wood River.
  1. Any new applicant under the Nebraska Advantage Rural Development 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 the U.S. 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 applicant must provide proof of timely employment confirmation. Examples of documents for the applicant 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 the U.S. will be excluded from the calculation of any tax incentive.
  1. The Application requires applicants to estimate the amount of expected investment and employment benefits. The expected benefits requested are the maximum amount of benefits that may be received. The project must attain the minimum levels of investment and employment to be eligible for any benefits. If the project does not attain at least 75% of the expected investment, then all investment credits must be repaid. If the project does not attain at least 75% of the employment growth, then all employment credits must be repaid. Please refer to the Calculation Tips when determining the expected benefits.

  2. The qualifying wage rate for new employees is $12.86 wages for all applications with an application date in 2016.

  3. Qualifying Business activity

    The explanation of the qualifying business should include enough information to provide a reasonable person a general understanding of the business operations and should identify the specific type of business activity under which the project qualifies.
     
    1. Comparison of Livestock Production and Livestock Modernization.

      Livestock Production and Livestock Modernization are similar business activities, but have different project requirements.

    2. Livestock Production involves the commercial operation of real and personal property for the production of livestock: including breeding, showing, or racing of horses or for the use of horses in a recreational or tourism enterprise; or the production of dairy and eggs.The project must meet the Level 1 or Level 2 requirements for investment and employment growth at a location in one county meeting the population requirement. Investment may include any improvements to real property and tangible personal property that are depreciable under the Internal Revenue Code, except for vehicles, planes, or railroad rolling stock.

    3. Livestock modernization is defined as the construction, improvement, or acquisition of depreciable buildings, facilities, or equipment for livestock housing, confinement, feeding, production, and waste management. The project must have a net investment increase of at least $50,000. There is no employment increase required. Equipment does not include breeding stock, vehicles, planes, or railroad rolling stock. Livestock modernization or expansion does not include any improvements made to correct a violation of the Environmental Protection Act, the Integrated Solid Waste Management Act, the Livestock Waste Management Act, a rule or regulation adopted and promulgated pursuant to such acts, or any order of the Nebraska Department of Environmental Quality (NDEQ) undertaken within five years after a complaint issued from the NDEQ Director.

     
  4. The application must be signed by an authorized person (owner, partner, or corporate officer).

  5. The federal income tax return provided should be a signed copy and should, at a minimum, 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).

    If the applicant is a sole proprietorship, provide a copy of the individual income tax return including a Profit or Loss from Business, Schedule C, or the Profit or Loss from Farming, Schedule F.

  6. The date of a completed application will be used to determine the priority for the authorization of the project’s expected benefits. There is a total of $1,000,000 available for Level 1 or Level 2 applicants for each calendar year.

    For livestock modernization projects, the amount of funds available depends on the year of application.
Funds Available
Calendar Year
$ 500,000
2016
$ 750,000
2017 and 2018
$ 1,000,000
2019

If the project’s expected benefits are not authorized because the limit has been previously authorized for other applicants, then the project is not eligible to participate and $400 of the application fee will be refunded. Refer to the Authorization Table for information on the remaining funds available.

If more than one complete application is filed or completed on the day in which the cumulative expected benefits for the year reach the limit in available funds, the remaining funds available will be prorated among the applicants on that day who wish to proceed.

If 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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