Tax Incentives Home | Back to Microenterprise Information
Sections 77-5901 to 77-5907 shall be known and may be cited as the Nebraska Advantage Microenterprise Tax Credit Act.
Source:
Laws 2005, LB 312, § 66.
77-5902 Act; administration; purpose.
The Nebraska Advantage Microenterprise Tax Credit Act shall be administered by the Department of Revenue. The purpose of the act is to provide tax credits to applicants for creating or expanding microbusinesses that contribute to the revitalization of economically distressed areas through the creation of new or improved income, self-employment, or other new jobs in the area.
Source:
Laws 2005, LB 312, § 67.
For purposes of the Nebraska Advantage Microenterprise Tax Credit Act:
(1) Actively engaged in the operation of a microbusiness means personal involvement on a continuous basis in the daily management and operation of the business;
(2) Distressed area means a municipality , county, unincorporated area within a county, or census tract in Nebraska that has (a) an unemployment rate which exceeds the statewide average unemployment rate, (b) a per capita income below the statewide average per capita income, or (c) had a population decrease between the two most recent federal decennial censuses ;
(3) Equivalent employees means 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;
(4) Microbusiness means any business employing five or fewer equivalent employees;
(5) New employment means the amount by which the total compensation paid during the tax year to employees who are Nebraska residents exceeds the total compensation paid to employees who are Nebraska residents in the tax year prior to application;
(6) New investment means the increase in the applicant's purchases of buildings and depreciable personal property located in Nebraska and expenditures on repairs and maintenance on property located in Nebraska, not including vehicles required to be registered for operation on the roads and highways of this state , during the tax year. If the buildings or depreciable personal property is leased, the amount of new investment shall be the increase in average net annual rents multiplied by the number of years of the lease for which the taxpayer is bound, not to exceed ten years;
(7) Related persons means (a) any corporation, partnership, limited liability corporation, cooperative, including cooperatives exempt under section 521 of the Internal Revenue Code of 1986, as amended, or joint venture which is or would otherwise be a member of the same unitary group, if incorporated, or any person who is considered to be a related person under either section 267(b) and (c) or section 707(b) of the Internal Revenue Code of 1986, as amended, and (b) any individual who is a spouse, parent if the taxpayer is a minor, or minor son or daughter of the taxpayer; and
(8) Taxpayer means any person subject to the income tax imposed by the Nebraska Revenue Act of 1967, any corporation, partnership, limited liability company, cooperative, including a cooperative exempt under section 521 of the Internal Revenue Code of 1986, as amended, or joint venture that is or would otherwise be a member of the same unitary group, if incorporated, which is, or whose partners, members, or owners representing an ownership interest of at least ninety percent of such entity are, subject to such tax, and any other partnership, limited liability company, subchapter S corporation, cooperative, including a cooperative exempt under section 521 of the Internal Revenue Code of 1986, as amended, or joint venture when the partners, shareholders, or members representing an ownership interest of at least ninety percent of such entity are subject to such tax.
Source:
Laws 2005, LB 312, § 68; Laws 2006, LB 1003, § 17.
Cross References:
Nebraska Revenue Act of 1967, see section 77-2701.
77-5904 Tax credit; application; contents; advisory committee.
(1) The Department of Revenue shall accept applications for tax credits from taxpayers who are actively engaged in the operation of a microbusiness in a distressed area or who will establish a microbusiness that they will actively operate in a distressed area within the current or subsequent tax year.
(2) The department may convene an advisory committee of individuals with expertise in small business development, lending, and community development to evaluate applications and advise the department in authorizing tentative tax credits.
(3) The application shall be on a form developed by the department and shall contain:
(a) A description of the microbusiness;
(b) The projected income and expenditures;
(c) The market to be served by the microbusiness and the way the expansion addresses the market;
(d) The amount of projected investment or employment increase that would generate the credit;
(e) The projected improvement in income or creation of new self-employment or other jobs in the distressed area;
(f) The nature of the applicant's engagement in the operation of the microbusiness; and
(g) Other documents, plans, and specifications as required by the department.
Source:
Laws 2005, LB 312, § 69.
77-5905 Applications; approval; limit.
(1) If the Department of Revenue determines that an application meets the requirements of section 77-5904 and that the investment or employment is eligible for the credit and (a) the applicant is actively engaged in the operation of the microbusiness or will be actively engaged in the operation upon its establishment, (b) the majority of the assets of the microbusiness are located in a distressed area or will be upon its establishment, (c) the applicant will make new investment or employment in the microbusiness, and (d) the new investment or employment will create new income or jobs in the distressed area, the department shall approve the application and authorize tentative tax credits to the applicant within the limits set forth in this section and certify the amount of tentative tax credits approved for the applicant. Applications for tax credits shall be considered in the order in which they are received.
(2) The department may approve applications up to the adjusted limit for each calendar year beginning January 1, 2006, through December 31, 2010. After applications totaling the adjusted limit have been approved for a calendar year, no further applications shall be approved for that year. The adjusted limit in a given year is two million dollars plus tentative tax credits that were not granted by the end of the preceding year. Tax credits shall not be allowed for a taxpayer receiving benefits under the Employment and Investment Growth Act, the Nebraska Advantage Act, or the Nebraska Advantage Rural Development Act.
Source:
Laws 2005, LB 312, § 70.
Cross References:
Employment and Investment Growth Act, see section 77-4101.
Nebraska Advantage Act,see section 77-5701.
Nebraska Advantage Rural Development Act, see section 77-27,187.
77-5906 Tax credit; amount; claim; expiration.
Taxpayers shall be entitled to refundable tax credits equal to twenty percent of the taxpayer's new investment or employment in the microbusiness during the tax year not to exceed the amount of tentative tax credits approved by the department under section 77-5905. The taxpayer shall claim the tax credit by filing a form developed by the Tax Commissioner and attaching the tentative tax credit certification granted by the department. Tentative tax credits expire after the end of the tax year following the year the tentative tax credit was certified. The total lifetime tax credits claimed by any one taxpayer and any related person under the Nebraska Advantage Microenterprise Tax Credit Act shall be limited to ten thousand dollars.
Source:
Laws 2005, LB 312, § 71.
The Tax Commissioner shall prepare a report identifying the following aggregate amounts for the previous calendar year: (1) The amount of projected employment and investment anticipated by taxpayers receiving tentative tax credits and the tentative tax credits granted; (2) the actual amount of employment and investment made by taxpayers that were granted tentative tax credits in the previous calendar year; (3) the tax credits used; and (4) the tentative tax credits that expired. The report shall be issued on or before July 15, 2007, and each July 15 thereafter. No information shall be provided in the report that is protected by state or federal confidentiality laws.
Source:
Laws 2005, LB 312, § 72.
