Revenue Ruling 29-91-1
Economic Development Tax Incentives

Supersedes Revenue Ruling 29-89-2

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.

Economic Development Tax Incentives -- Peripheral Components. PERIPHERAL COMPONENTS MUST DIRECTLY COMMUNICATE WITH THE MAINFRAME BUSINESS COMPUTER TO QUALIFY FOR EXEMPTION FROM PERSONAL PROPERTY TAX. THIS RULING IS EFFECTIVE FOR APPLICATIONS FILED BEFORE JANUARY 1, 1988.

Advice has been requested as to what peripheral components may qualify for the exemption from personal property tax provided in the Employment and Investment Growth Act.

The Act allows a property tax exemption for three classes of property located in the state of Nebraska and used in connection with a project within the state that meets the requirements set out in section 77-4105(2), R.S.Supp., 1987.

Section 77-4105(2)(b), R.S.Supp., 1987, provides an exemption from personal property tax for:

Mainframe business computers . . . plus all peripheral components connected to such Computers;
In determining what peripheral components qualify for the exemption from personal property tax, the following definitions will be used by the State Tax Commissioner:
PERIPHERAL COMPONENTS
Peripheral - Operation of input/output and other devices not under direct computer control; most commonly used to designate the transfer of information between magnetic tapes and other media.

Component - A basic part; an element.

Peripheral Equipment - The input/output units and auxiliary storage units of a computer system, attached by cables to the central processing unit (CPU). Used to get data in and data out, and to act as a reservoir for large amounts of data that cannot be held in the CPU at one time. Graphics tablets, visual display terminals, and floppy disk drives are examples of peripheral equipment.

Peripheral components, therefore, shall mean all devices which are used to input business information into the CPU of the mainframe, to output business information after being processed by the CPU, or to store either processed or unprocessed business information for use at a later time. Such devices need not be maintained within the temperature and humidity controlled environment required for the mainframe, nor shall they require additional controls of voltage beyond those normally maintained by the utilities supplier.

Upon receipt of a Nebraska Personal Property Return, Form 775P, the Nebraska Department of Revenue shall determine whether each item claimed qualifies for exemption. This determination will be made in accordance with section 77-4105(2)(b), R.S.Supp., 1987, subject to the definitions contained in this ruling. Applicants will be required to provide sufficient explanation and documentation in support of each item's claim for exemption.

APPROVED:

M. Berri Balka
State Tax Commissioner

March 11, 1991