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REG-1-001 NATURE OF THE SALES TAX
001.01 The sales tax is imposed upon the gross receipts from all sales, leases, rentals, installation, application, repair, or maintenance of tangible personal property, the gross receipts of every person providing or installing utility services, the gross receipts of a retailer of intellectual or entertainment properties, the gross receipts from the sale of admissions, the gross receipts from renting or furnishing accommodations or lodging for periods of less than thirty days, and the gross receipts from the sale or providing of certain enumerated services. (Reg-1-007, Gross Receipts)
001.01A For the purposes of the sales and use tax regulations, the term property shall mean all tangible and intangible property, rights, licenses, and franchises subject to tax under section 77-2703(1) of the Nebraska Revised Statutes.
001.02 This tax is not upon the article sold, but upon the transaction called the sale. The term "sale" includes installment, conditional and credit sales, and includes any transfer of title or possession, segregation in contemplation of transfer of title or possession, exchange, barter, lease or rental, conditional sale, or otherwise in any manner or by any means for a consideration.
001.03 The amount of sales tax collected is a trust fund held by the collector that belongs to the state. Any sales tax that is improperly or erroneously collected also belongs to the state and must be remitted.
(Sections 77-2702.07, 77-2702.14, 77-2702.15, 77-2703(1), and 77-3905(6), R.R.S. 2003. October 1, 2003.)
002.01 The sales and use taxes complement each other and together provide a uniform tax upon either the sale, lease, rental, use, storage, distribution, or other consumption of all tangible personal property and on any intangible property or services the gross receipts of which are included in the measure of the sales tax under section 77-2703(1). Use tax is not a duplication of the sales tax. The storage, use, distribution, or other consumption of any item is taxable if the purchase of the item would be taxable if the transaction was completed in this state.
002.02 The consumer's use tax is imposed upon the storage, use, distribution, or other consumption of any tangible personal property and on any intangible property or services the gross receipts of which are included in the measure of the sales tax under section 77-2703(1). The consumer's use tax applies when the sales tax has not been paid. It is presumed that any property or services sold, leased, or rented by any person for delivery in this state is sold, leased, or rented for storage, use, distribution, or other consumption in this state until the contrary is established. The burden of proving that any property or services delivered in this state is delivered for a purpose other than storage, use, distribution, or other consumption in this state is on the person who purchases, leases, or rents the property or services.
002.03 Consumer's use tax is paid directly to the Nebraska Department of Revenue by the purchaser. A permit is not necessary or required.
002.04 Consumer's use tax does not apply to the following:
002.04A Transactions upon which the Nebraska sales tax has been paid;
002.04A(1) See requirements for remitting sales tax by holders of direct payment permits in Reg-1-097, issuers of certificates of exemption for multiple points of use, Reg-1-104, or certificates of exemption for direct mail, Reg-1-105.
002.04B Storage, use, or other consumption of property or services exempt from sales tax;
002.04C Transactions where the tax has been properly paid on the sale, purchase, use, or other consumption of property or services in another state at a rate equal to or greater than the rate in Nebraska. (Reg-1-071, Credit for Tax Paid to Another State);
002.04D Transactions where the item purchased has been used for its intended purpose in another state. This exemption does not apply to motor vehicles, motorboats, or airplanes; and
002.04E Transactions where the item was purchased in another state, is stored in Nebraska, and is subsequently taken to and used in another state without any use other than storage in this state.
002.05 Consumer's use tax will apply to the following:
002.05A Purchases for delivery in Nebraska from out-of-state retailers when the applicable sales and use tax has not been paid;
002.05B Retail purchases made in this state when the applicable sales tax has not been paid;
002.05C Purchases at retail from federal government agencies and instrumentalities not required to act as collectors of Nebraska sales or use tax;
002.05D Purchases where an exempt sale certificate was originally given, but the property or service is subsequently put to a taxable use;
002.05E Use of property or services originally purchased tax free for resale purposes but which is later consumed for personal needs or consumed by or within the business;
002.05F Purchases from out-of-state retailers of items exempt in the other state that are used in this state and would be taxable if purchased in this state; or
002.05G Purchases that are manufactured, processed, or fabricated in another state and that are not used for their intended purposes in the other state after its manufacture, processing, or fabrication.
002.06 If a purchaser who gives a Resale Certificate makes any use of the property other than retention, demonstration, or display while holding such property for sale, lease, or rental in the regular course of business, the use shall be taxable to that purchaser as of the time when the property is first so used. Except for a purchaser of aircraft as provided in Reg-1-067, Aircraft and Related Services, the sales price of that property to him or her shall be deemed the measure of the use tax and the tax rate to be applied will be the rate in effect at the time of use.
002.07 The amount of consumer's use tax is computed by multiplying the purchase price of the property or service by the applicable rate in effect at the time of use. The rate applicable for consumer's use tax is the same as the rate for sales tax. Purchase price means the total amount of consideration for the property or services received and includes cash, credit, property, and services rendered.
002.08 Those persons holding a sales tax permit shall on the return required thereby, report and pay all consumer's use tax for which they are liable.
002.09 Persons not required to hold a sales tax permit but who are liable for consumer's use tax shall obtain a consumer's use tax return and report and pay the tax directly to the Nebraska Department of Revenue. Unless otherwise required by the Nebraska Department of Revenue, such consumers shall file returns annually if the tax will not exceed nine hundred dollars ($900.00). If the tax is expected to be between nine hundred dollars ($900.00) and three thousand dollars ($3,000.00), the returns shall be filed quarterly. All others shall file monthly.
002.09A Persons who are Model 1, 2, or 3 sellers may follow the filing frequency guidelines outlined in the Streamlined Sales Tax Agreement.
002.09B Persons who are registered under the Streamlined Sales Tax Agreement, do not have a legal requirement to register in the state, and are not Model 1, 2, or 3 sellers may follow the filing frequency guidelines outlined in the Agreement.
002.10 Returns, properly signed and accompanied by remittance, will be considered timely filed if mailed, postage prepaid, on or before the twenty-fifth day of the month following the close of the reporting period. When the twenty-fifth day falls on a Saturday, Sunday, or an approved holiday, the return will be considered timely filed if mailed, postage prepaid, on the next succeeding day which is not a Saturday, Sunday, or an approved holiday. A United States Postal Service postmark will be conclusive evidence of the date of mailing for the purpose of timely filing a return.
002.10A The Tax Commissioner will comply with the format for filing methods and payment methods pursuant to the Streamlined Sales Tax Agreement for Model 1, 2, or 3 sellers.
002.11 Remittance must accompany the return and be in the form of a check, draft, money order, or other payment method as approved by the Tax Commissioner made payable to the Nebraska Department of Revenue. Cash, post-dated checks, or postage stamps must not be sent as payment. Cash may be used when payment is made in person at an office of the Department of Revenue.
(Sections 77-1702, 77-1784, 77-2701.42, 77-2704.30, 77-2704.31, 77-2706(3), and 77-2708(1), R.R.S. 2003, and sections 77-2703(2), and 77-2701.37, R.S.Supp., 2004; and Penney Co., Inc. v. Balka, 254 Neb.521 (1998). April 12, 2005.)
003.01 The responsibility to collect tax does not rest solely on Nebraska-based sellers. Every out-of-state seller, except as set out in this regulation, making retail sales of property or services for delivery in the State of Nebraska or leasing or renting property with delivery to lessees within this state must obtain a permit, collect, and remit Nebraska sales tax.
003.02 The seller is not obligated to collect sales tax when he or she is not engaged in business in this state as defined in Reg-1-004, Permits. Where no obligation to register for collection of the Nebraska tax exists, the seller may make application for a sales tax permit, and in fact is encouraged to make application for such a permit in order that the appropriate use tax might be collected from Nebraska customers. The Nebraska purchaser is required to pay the use tax liability directly to the Department of Revenue when a use tax is due and the retailer does not have a permit in this state to collect, report, and remit collections of use tax.
003.03 The Tax Commissioner may require non-nexus sellers to file the same return as is required from retailers collecting the sales tax or, at the Tax Commissioner's discretion, to file a separate return.
003.03A The Nebraska Department of Revenue encourages retailers in Nebraska who are making sales in other states to become licensed and collect the appropriate tax for the other state.
(Sections 77-2704.30, 77-2704.31, 77-2705, and 77-2708(1), R.R.S. 2003, and section 77-2703(2), R.S.Supp., 2004. April 12, 2005.)
004.01 Every person engaging in business as a retailer in Nebraska must obtain a sales tax permit by submitting a Nebraska Tax Application, Form 20, or register through an alternative method as authorized under the Streamlined Sales Tax Agreement.
004.02 Engaging in business in this state means and includes any of the following:
004.02A Maintaining, occupying, or using permanently or temporarily, directly or indirectly, or through an agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place or other place of business in this state;
004.02B Having any representatives, agents, salesmen, canvassers, or solicitors operating in this state under the authority of the retailer or a subsidiary of the retailer for the purposes of selling, delivering, or taking of orders for any property;
004.02C Deriving receipts from the rental or lease of property in this state;
004.02D Soliciting retail sales of property from residents of this state on a continuous, regular, or systematic basis by means of advertising which is broadcast from or relayed from a transmitter within this state or distributed from a location within this state;
004.02E Soliciting orders from residents of this state for property by mail, if the solicitations are continuous, regular, seasonal, or systematic and if the retailer benefits from any banking, financing, debt collection, or marketing activities occurring in this state or benefits from the location in this state of authorized installation, servicing, or repair facilities;
004.02F Being owned or controlled by the same interests which own or control any retailer engaged in business in the same or similar line of business in this state;
004.02G Maintaining or having a franchisee or licensee operating under the retailer‘s trade name in this state if the franchisee or licensee is required to collect the tax under the Nebraska Revenue Act of 1967; or
004.02H Doing any of the above as a retailer of services or on behalf of a retailer of services enumerated as taxable in Reg-1-007, Gross Receipts.
004.03 A separate application for each Nebraska retail location is required unless applying through the Streamlined Sales Tax Agreement.
004.04 Out-of-state retailers who are not engaged in business as specified in 004.02, are not required to obtain a permit. However, as a service to their Nebraska customers, those retailers are encouraged to obtain a license which allows them to collect and remit the tax in the same manner as a retailer who is engaged in business in this state. This will preclude the purchasers from having to accrue and remit their consumer's use tax liability directly to the Department of Revenue.
004.05 Upon examination and approval of the application, the Department of Revenue shall issue to the retailer the appropriate sales tax permit for each Nebraska business location. The permit is permanent, not transferrable, and valid only for the retailer in whose name it is issued and for the conduct of business at the place designated. The permit must be conspicuously displayed at the place of business.
004.05A Retailers moving their locations may file a Nebraska change request to change the location address shown on their permits. New permits with the new address will be issued.
004.06 Retailers who temporarily will not be making any sales, may cancel their permits. When sales are resumed, the permits may be reinstated without any charge.
004.07 Upon violation of any of the sales tax statutes or regulations, the Department of Revenue may revoke or suspend the permit or permits of the violator. The procedures for revocation hearings are contained in Practice and Procedure Reg-33-008.
004.08 Anyone whose permit has been previously suspended or revoked shall pay the Department of Revenue a fee of twenty-five dollars ($25.00) for the renewal or reissuance of a permit in the event of a first revocation, and fifty dollars ($50.00) for each successive revocation. A new permit will not be issued to the same person until the Department of Revenue is satisfied that such person will comply with the sales and use tax statutes and regulations.
004.09 Anyone who engages in business as a retailer in this state without a permit or permits or after a permit has been suspended, and each officer of any corporation which so engages in business, shall be guilty of a misdemeanor. Upon conviction thereof, such person and each such officer shall be fined an amount not to exceed five hundred dollars ($500.00) per each day of operation.
(Sections 77-2701.13, 77-2705, and 77-2713(3), R.R.S. 2003, and section 77-2703(2), R.S.Supp., 2004. April 12, 2005.)
005.01 Retailer means any seller and includes:
005.01A Any person engaged in the business of selling, leasing, or renting property or services the receipts of which are subject to sales tax;
005.01B Any person engaged in the business of making sales at auction of tangible personal property for storage, use, or other consumption, or who is collecting the proceeds of an auction;
005.01C Any person who leases or rents tangible personal property to another for storage, use, or other consumption, except film rentals when an admission tax is charged and railroad rolling stock interchanged pursuant to the provisions of the Interstate Commerce Act;
005.01D Any person who is renting or furnishing lodging for periods of less than thirty (30) days, except a facility which is either licensed under the Health Care Facility Licensure Act of the Nebraska Revised Statutes, or operated by an educational institution established or recognized under Chapter 79 or 85 of the Nebraska Revised Statutes, in which rooms are regularly used to house students for a consideration for periods in excess of thirty (30) days;
005.01E Any person who is furnishing telephone, mobile telecommunications, telegraph, gas, electricity, sewer, or water service;
005.01F Any person who is furnishing community or county antenna television service or satellite programming service;
005.01G Any person who is charging admissions, except admissions charged by elementary or secondary schools, public or private, or school districts, student organizations, or parent-teacher associations pursuant to an agreement with proper school authorities, or admissions to fund-raising events by ballot question committees, candidate committees, independent committees, and political party committees that are registered with the Political Accountability and Disclosure Commission or are for candidates for federal office;
005.01H Any person who is renting or otherwise furnishing tangible personal property under an agreement requiring the periodic cleaning or laundering of such tangible personal property;
005.01I Any person who is selling or otherwise providing warranties, guarantees, service contracts, or maintenance agreements covering taxable property or services;
005.01J Any person who is selling or otherwise providing computer software;
005.01K Any person making drop shipments from a Nebraska location to delivery locations in Nebraska for an out-of-state retailer who is not licensed in Nebraska for sales tax;
005.01L Any contractor;
005.01M Any person who is selling live plants, other than as a part of the transfer of an improvement to real estate or the real estate; and
005.01N Any person who is the promoter, operator, or organizer of a fair, flea market, craft show, or similar event.
005.01N(1) Retailer does not include any person making sales at a fair, flea market, craft show, or similar event when the licensed promoter, operator, or organizer has arranged to remit the sales tax on behalf of that person for the show.
005.02 A person does not have to be engaged solely in a retail business in order to be liable for collecting, reporting, and remitting the sales and use tax. Manufacturers, producers, jobbers, or wholesalers are liable for collection of the tax to the extent that they make sales at retail or have gross receipts which are taxable. Sales are sales for resale only if a resale certificate is procured from the buyer. All other sales are presumed to be taxable.
005.03 Model 1 seller means a seller that has selected a certified service provider as its agent to perform all the seller’s sales and use tax functions, other than the seller’s obligation to remit tax on its own retail purchases.
005.04 Model 2 seller means a seller that has selected a certified automated system to perform part of its sales and use tax functions but retains responsibility for remitting the tax.
005.05 Model 3 seller means a seller that has sales in at least five member states of the Streamlined Sales Tax Agreement, has total annual sales revenue of at least five hundred million dollars, has a proprietary system that calculates the amount of tax due each jurisdiction, and has entered into a performance agreement with the member states that establishes a tax performance standard for the seller.
(Sections 77-2701.21, 77-2701.22, 77-2701.23, 77-2701.31, 77-2701.32, and 77-2705, R.R.S. 2003. April 12, 2005.)
REG-1-006 RETAIL SALE OR SALE AT RETAIL
006.01 Retail sale or sale at retail means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent.
006.01A Gross receipts from sales at retail in this state are taxable except as otherwise provided.
006.01B Retail sale includes the sale or exchange of property or services for property, for money, or for services. Retail sale includes every transaction constituting a sale, whether conditional, installment, credit, or otherwise. In general, retail sale or sale at retail includes all sales of tangible personal property, or of other items the gross receipts of which are taxable. (Reg-1-007, Gross Receipts).
006.02 The test of a sale at retail is whether or not the sale is to a purchaser for use or consumption and not for resale. Services are generally consumed by the purchaser and are only rarely purchased for resale. (See Reg-1-013, Sale for Resale, or Reg-1-023, Ingredient or Component Part).
006.03 The question of who makes the sale is immaterial. The controlling consideration is whether it is a sale to a final consumer or user and not for resale.
006.04 The location of the sale is generally where the purchaser or lessee takes delivery of the property or service.
006.04A The sale occurs in this state even if the buyer intends to take the property or service to another state.
006.04B Freight terms such as FOB shipping point or FOB destination, or declarations of the parties made after the completion of the transaction are not sufficient to show where the sale occurs.
006.05 If the location where the purchaser takes delivery of the property or service cannot be determined, the sale is taxed at the address for the purchaser according to the retailer’s records.
006.06 If the retailer's records do not contain an address for the purchaser, an address obtained during the transaction, including from a payment document, may be used.
006.07 If the location of the sale cannot be determined under any of the above, the sale is taxed at the location from which the property was shipped, from which the digital goods or computer software delivered electronically was first available for transmission by the seller, or from which the service was provided.
006.08 The sale of utilities occurs where the meter is located or the connection is furnished.
006.09 A sale of a maintenance agreement with the covered property occurs where the property is delivered, or where the motor vehicle, trailer, semitrailer, or motorboat is registered.
006.09A A sale of a maintenance agreement separate from the covered property occurs at the location where the property being covered is normally used.
006.10 A sale occurs in another state when the seller is required by the terms of the sale to deliver the property or service to a point outside this state.
006.10A The Department of Revenue will assume that delivery is required when the item is so large or dangerous that it requires special handling, the seller normally provides the special handling, and the seller actually delivers the item in another state.
006.10B Acceptable proof of transportation outside this state is a waybill or bill of lading, an insurance or other receipt issued by the United States Postal Service, or a trip sheet signed by both the seller's delivery agent and the person who received the goods.
006.10C If the property or service is returned to Nebraska after delivery by the seller, it is taxable in Nebraska. The buyer must pay the use tax directly to the Department of Revenue.
006.11 The provisions of this regulation do not apply to motor vehicles, trailers, and semitrailers which are sold, rented, or leased for periods of one year or more; to motorboats which are sold, rented, or leased for periods of one year or more, or to sales of aircraft that do not qualify as transportation equipment as defined in Reg-1-019, Rental or Lease of Vehicles. See also Reg-1-020, Motor Vehicles, Reg-1-067, Aircraft and Related Services, and Reg-1-096, Motorboats, for the rules on these rentals and sales.
(Section 77-2701.31, R.R.S. 2003, and sections 77-2701.34, 77-2703(1)(g), and 77-2703.01, R.S.Supp., 2004. April 12, 2005.)
REG-1-007 GROSS RECEIPTS DEFINED
007.01 Gross receipts mean the total amount of the sale or lease or rental price of retail sales by retailers, valued in money, whether received in money or otherwise. Gross receipts includes the value of any property, services, commodities, or precious metals, including gold or silver coins, received. Gross receipts include:
007.01A The gross revenue received from the installation of, or from furnishing local exchange telephone service, mobile telecommunications service, and intrastate message toll telephone service, (Reg-1-065, Telephone and Telegraph Communication Services);
007.01B The gross revenue received from the installation of or furnishing intrastate telegraph service, (Reg-1-065, Telephone and Telegraph Communication Services);
007.01C The gross revenue received from furnishing gas, electricity, sewer and water service, (Reg-1-066, Sewer and Water);
007.01D The gross revenue received from the installation of or furnishing satellite programming or community or county antenna television service, (Reg-1-081, Community or County Antenna Television Service);
007.01E The gross revenue from admissions, (Reg-1-044, Admissions);
007.01F The gross revenue received from the sale, lease, rental, installation, application, repair, or maintenance of tangible personal property, including the sale through vending machines to users or consumers, and also including small sales on which no tax is collected;
007.01G The gross revenue from lodging for any period less than thirty (30) days, (Reg-1-046, Hotels, Lodgings, and Accommodations);
007.01H The gross revenue from the sale, lease, license, franchise or rental of intellectual or entertainment properties, including computer software, videotapes and movie film, (Reg-1-045, Motion Picture Film and Videotape and Reg-1-088, Computer Software);
007.01I The gross revenue from charges for delivery or freight or for shipping and handling received by the retailer, (Reg-1-026, Finance, Carrying, Service, and Interest Charges, Reg-1-079, Delivery Charges);
007.01J The gross revenue from the sale of maintenance agreements, service contracts, guarantees, or warranties, when the items covered or the services to be provided are taxable;
007.01K The gross revenue from computer software training, (Reg-1-088, Computer Software);
007.01L The gross revenue from building cleaning and maintenance services, (Reg-1-098, Building Cleaning and Maintenance);
007.01M The gross revenue from pest control services, (Reg-1-100, Pest Control Services);
007.01N The gross revenue from security or detective services, (Reg-1-101, Security and Detective Services);
007.01O The gross revenue from recreational vehicle (RV) park services, (Reg-1-103, Recreational Vehicle Park Services);
007.01P The gross revenue from motor vehicle washing, waxing, towing, and painting, (Reg-1-099, Motor Vehicle Services);
007.01Q The gross revenue from contractor labor, (Reg-1-017, Contractors);
007.01R The gross revenue from animal specialty services, (Reg-1-102, Animal Specialty Services); and
007.01S The total amount of the sale without deduction for:
007.01S(1) The cost of materials used, labor or service costs, interest paid, losses, or any other expense;
007.01S(2) The cost of transportation of property;
007.01S(3) The amount charged for warranties, guaranties, service contracts, or maintenance agreements;
007.01S(4) Cash rebates or refunds paid by the manufacturer to either the retailer or the purchaser, (For rebates on motor vehicles, see Reg-1-020, Motor Vehicles);
007.01S(5) The amount paid for any occupation taxes, import duties, or manufacturer's excise taxes;
007.01S(6) The cost of any license, franchise, or lease for the use of computer software or entertainment properties such as videotapes or movie films; and
007.01S(7) Any mandatory charge required to be paid in the purchase of an item subject to tax.
007.02 The definition of gross receipts does not include the following:
007.02A Discounts allowed and taken on sales, (Reg-1-024, Cash Discounts);
007.02B The portion of the sales price of property refunded to the customer either in cash or credit, (Reg-1-025, Returned Articles);
007.02C Charges for financing, carrying charges, service charges, and interest charges for credit sales, (Reg-1-026, Finance, Carrying, Service, and Interest Charges);
007.02D The value of property accepted as partial consideration on the retail sale of other similar property, (Reg-1-029,Trade-ins or Exchanges);
007.02E The amount collected for the federal luxury excise taxes on consumers; and
007.02F The amount charged for the federal retail tax on heavy trucks, trailers, and tractors.
(Sections 77-2702.07 and 77-2702.17, R.R.S. 2003. October 1, 2003.)
008.01 Every retailer is required to keep records in order to determine the amount of tax due. These records must include the normal books of account ordinarily maintained by the average prudent businessman engaged in a similar activity, together with all documents supporting entries in the books of accounts. Schedules and working papers used in the preparation of the tax returns and all resale certificates and exemption certificates must be retained.
008.01A Model 1, 2, and 3 sellers may maintain records in accordance with the Streamlined Sales Tax Agreement.
008.02 The records created at the time of sale may take the form of sales slips, sales invoices, guest checks, tally sheets, itemized lists, or other memoranda. A cash register tape may be acceptable if it preserves sufficient information. Items may be described by a symbol if the symbol is representative of a class of merchandise or services which are always taxable or exempt. If a vendor sells only exempt merchandise in a "Department P", a description of such merchandise as "Department P" is sufficient; provided , the vendor uses such symbol consistently to describe the same merchandise. However, if a vendor sells several types of merchandise, both taxable and exempt, in a single department, his or her records must individually identify the types of merchandise which are exempt.
008.03 A retailer who maintains records where the amount of tax collected is commingled with the receipts from the sale may determine taxable receipts in the following manner:
008.03A The receipts from any sales which are specifically exempt or otherwise excluded from tax are subtracted from total receipts. The remainder represents the receipts from the taxable sales plus the tax collected.
008.03B The remainder is divided by one plus the rate of tax in effect.
008.03C The purpose of this portion of the regulation is to permit the widest possible latitude in the internal record systems of retailers and to avoid requiring certain retailers to compute and remit the tax on a base which already includes the tax.
008.04 Every person storing, using, or otherwise consuming in this state property or services must keep receipts, invoices, and other pertinent records as is necessary to establish the amount of tax for which he or she is liable. Any person having in his or her possession or custody information relating to sales of property or services, the storage, use, or other consumption of which is subject to tax, may be required at any time to submit the names and addresses of the purchasers, the sales price of the property, and the date of the sale.
008.05 The Tax Commissioner or any person authorized in writing by him or her may examine the books, papers, records, and equipment of any person to ascertain or verify the accuracy of any return filed, or, if no return is filed by the person, to ascertain and determine the amount required to be paid.
008.06 Records must be retained for a period not less than three years after the return is filed, or while any refund claim or redetermination of a deficiency is pending, unless the Department of Revenue, in writing, authorizes their destruction at an earlier date. However, the Department may issue a deficiency determination within five years after any amount of tax is determined due and payable when a properly completed return has not been filed.
008.07 When records are missing, all gross receipts are presumed to be taxable, or the Department may estimate a person's liability for tax based on what records are available. The person required to keep the records has the burden to show that the gross receipts are not taxable or that the estimate is incorrect.
(Sections 77-2705(7), 77-2709(5)(c), and 77-2711(3), (4), and (6), R.R.S. 2003. April 12, 2005.)
009.01 Gross sales must be reported in accordance with the method of accounting regularly employed in keeping the books of the particular taxpayer. Retailers may use either the cash basis, accrual basis, or any other generally recognized accounting basis which correctly reflects the operation of the business. When a basis of accounting has been adopted for reporting sales tax, the retailer may not change that basis of accounting without prior permission from the Department of Revenue.
009.01A Notwithstanding the method of accounting normally used, contractors will collect, report, and remit the tax on construction services for each payment that is received. If the payment is not recorded as a sale when received, the contractor must report and remit the tax based on the reporting period during which either the bill was prepared or the payment was received.
009.02 Retailers maintaining their regular books and records on the cash basis shall make returns on the basis of cash received during the period, provided this basis clearly reflects the operation of the business.
009.03 Retailers maintaining their regular books and records on the accrual basis, or any other basis of accounting recognized under generally accepted accounting principles, shall make returns on that basis and shall report all sales recorded during the period on the corresponding Nebraska and Local Sales and Use Tax Return, Form 10.
009.04 As is explained in Reg-1-016, Changes in Rate of Tax, the basis on which returns are required to be made shall also serve as the basis for determining the rate at which the tax is to be collected by the retailer from the purchaser.
009.05 Retailers maintaining their books and records on the accrual basis, may elect to defer remittance of sales tax not yet collected on credit, conditional, and installment sales. If such election is made, it shall be pursuant to the following conditions:
009.05A The election must be submitted in writing to the Nebraska Department of Revenue prior to the retailer's change in reporting,
009.05B Such election shall become effective the first day of the month following the month the notice of election is received by the Department; provided, such notice is postmarked no later than the 15th day of the month. Elections postmarked after the 15th day of the month shall become effective the first day of the next succeeding month (i.e., election notice postmarked September 10, effective date of election, October 1; election notice postmarked September 17, effective date of election, November 1.)
009.05C The election will be acknowledged by the Department; such acknowledgment is to be maintained with the retailer's records.
009.05D This option is available only to retailers who finance their own sales or discount them to a qualified subsidiary corporation.
009.05D(1) Retailers who accept bank or similar credit cards or who discount their credit sales to a third party, may not defer the sales tax remittance on these sales. However, retailers who both carry their own credit and discount some credit sales to a third party, may defer the sales tax remittance on that portion of credit sales carried by the retailer.
009.05D(2) Retailers who discount their credit sales to a subsidiary corporation may elect to defer the sales tax until the subsidiary receives payment on the account. If the subsidiary corporation does not obtain a Nebraska sales tax permit, the retailer must obtain a surety bond in favor of the State of Nebraska in an amount not less than two (2) times the amount of sales tax payable on outstanding Nebraska accounts receivable held by the subsidiary as of the end of the prior calendar year. The Nebraska Department of Revenue will provide the necessary information and bond conditions upon written request. Each retailer maintaining a surety bond, shall review the amount of each bond at the close of each calendar year, adjusting same to reflect the minimum bond requirement.
009.05D(3) Failure of the subsidiary to maintain a sales tax permit, or of the retailer to maintain a bond in the required amount shall result in all sales tax not previously remitted on recorded sales becoming due and payable. The tax must be paid by the next required sales tax return filing date.
009.05E Once in effect, this election shall remain in force for a period of not less than one (1) year from the date the election becomes effective.
009.05F Retailers who wish to discontinue remitting under this option and remit sales tax in accordance with paragraph 009.03, are required to notify the Department. Payment of all deferred sales taxes will be remitted on their next required sales tax filing date corresponding to the tax period within which the notice is received by the Department. Should a retailer discontinue business while under this option, all deferred sales taxes must be remitted on its final sales tax return.
009.05G For retailers deferring sales tax remittances, the amount of tax due on a sale is determined by the sales tax rate in effect at the time the sale is recorded.
009.05H Retailers deferring sales tax remittances under this option do not qualify for the bad debt deduction as sales tax is remitted after the receipt of payment.(Reg-1-028, Bad Debts)
(Section 77-2708(1)(b)(iv), R.R.S. 2003, and sections 77-2701.10, and 77-2703(1), R.S.Supp., 2004. July 16, 2005.)
REG-1-010 THE SALES AND USE TAX RETURN
010.01 A return is required for each period or portion of a period in which a sales tax permit is active. The return must be filed for every tax period even if there have been no sales.
010.02 The period is the reporting frequency as assigned by the Department of Revenue. Normally it will be monthly, but in the case of retailers who have small tax liabilities, they may be assigned either a quarterly or an annual filing frequency.
010.02A Sellers who are Model 1, 2, or 3 sellers may follow the filing frequency guidelines outlined in the Streamlined Sales Tax Agreement.
010.02B Sellers who are registered under the Streamlined Sales Tax Agreement, who do not have a legal requirement to register in the state, and who are not Model 1, 2, or 3 sellers may follow the filing frequency guidelines outlined in the Agreement.
010.03 Sales tax permitholders must report and account for gross receipts from sales and services.
010.03A The form includes both a return for sales tax and a return for use tax. Unless there are amounts shown on the appropriate lines, mailing the form to the Department of Revenue will not constitute the filing of either or both returns.
010.03B If the return is filed within twenty-five days following the end of the preceding tax period, the retailer is entitled to deduct and withhold a collection fee from the amount of sales tax which otherwise would be due. No similar fee is allowed to be deducted for reporting consumer's use tax or tax remitted pursuant to a Direct Payment Permit.
010.03C The Tax Commissioner will comply with the format for filing methods and payment methods pursuant to the Streamlined Sales Tax Agreement for Model 1, 2, or 3 sellers.
010.04 Unless otherwise provided in the Streamlined Sales Tax Agreement, the Tax Commissioner may require that returns be signed by the person required to file the return or by his or her duly authorized agent.
010.05 Returns properly signed and accompanied by remittance will be considered timely filed if actually received or if mailed, postage prepaid, on or before the twenty-fifth day of the month following the close of the reporting period. When the last day falls on a Saturday, Sunday, or an approved holiday, the return shall be considered timely filed if actually received or if mailed postage prepaid on the next succeeding day which is not a Saturday, Sunday, or an approved holiday.
010.05A A United States Postal Service postmark will be conclusive evidence of the date of mailing for the purpose of timely filing a return. When there is a private postage meter mark and there is no United States Postal Service postmark, the return is filed on the date received.
010.05B Failure to file the return or to remit the tax due by the due date will subject the taxpayer to a penalty equal to ten per cent of the unpaid tax or twenty-five dollars ($25.00), whichever is the greater amount. In addition, interest will be imposed at the rate specified in section 45-104.02 from the due date to the date payment is received.
010.06 Remittance must accompany the return and be in the form of a check, draft, money order, or other payment method as approved by the Tax Commissioner made payable to the Nebraska Department of Revenue. Cash, post-dated checks, or postage stamps must not be sent as payment. Cash may be used when payment is made in person at an office of the Department of Revenue.
(Sections 77-1702, 77-1784, 77-2705.01, 77-2705.02, 77-2705.03, 77-2708(1), and 77-27,125, R.R.S. 2003, and section 77-2712.05, R.S.Supp., 2004. April 12, 2005.)
REG-1-011 BRACKET SYSTEM FOR ADDING AND COLLECTING SALES TAX
011.01 A bracket system correlating sales price to the appropriate sales or use tax charge may be used by the seller. Copies of the bracket schedule established by the Department of Revenue are available upon request.
011.02 The sales or use tax liability may be computed by multiplying the sales price by the applicable tax rate in effect. All persons using machine or computer billing are authorized by the Department of Revenue to use a straight percentage basis of calculating the tax on such billings. If the calculation of the tax results in a fraction of a cent, the tax liability should be carried to the third decimal place and rounded to the nearest whole cent. If the third decimal place is four or less, round down and if the third decimal place is greater than four, round up.
011.03 Although retail sales may be made on which no tax is collected because of the size of the sale, e.g., a 10-cent sale, the receipts from such sales are included in taxable sales on which the retailer must compute and remit the tax.
011.04 When more than one item is purchased, the tax may be computed on the total amount of the combined taxable purchases or on the individual items. However, when the tax is allowed to be included in the amount of the purchase, the tax is computed on each item separately, rather than on the total of all purchases.
(Section 77-3,117, R.R.S. 2003, and section 77-2703(1)(d), R.S.Supp., 2004. April 12, 2005.)
012.01 Certain sales are exempt. Exempt sales can be divided into four groups. The four groups are sales that are exempt because of:
012.01A The seller (entity-based exemption);
012.01B The item sold (product-based exemption);
012.01C The buyer (entity-based exemption); or
012.01D The buyer's intended use of the item (use-based exemption).
012.02 The following are the sales that are exempt. This listing does not contain an explanation of the exemption. Refer to the regulation referenced at the end of the exemption for definitions, explanations, and limitations.
012.02A Entity-based transactions which are exempt because of the seller include:
012.02A(1) Meals served to students by schools, student organizations or parent-teacher associations during the regular school day or at school functions not open to the general public, (Reg-1-092, Educational Institutions);
012.02A(2) Concession sales of food by elementary and secondary schools at events including those open to the public, (Reg-1-092, Educational Institutions);
012.02A(3) Admissions charged by schools, student organizations, or parent-teacher associations during the regular school day or at school functions including those open to the public, (Reg-1-092, Educational Institutions);
012.02A(4) Sales by parent-booster clubs, parent-teacher associations, parent-teacher-student associations, or school-operated stores approved by elementary or secondary schools if the proceeds are used to support school activities or the school itself, (Reg-1-092, Educational Institutions);
012.02A(5) Meals sold by churches at church functions, (Reg-1-091, Religious Organizations);
012.02A(6) Meals served to patients and inmates of hospitals and other institutions licensed by the state for the care of human beings, (Reg-1-083, Food Service);
012.02A(7) Rooms in a licensed health care facility, (Reg-1-046, Hotels, Lodgings, and Accommodations);
012.02A(8) Occasional sales, (Reg-1-022, Occasional Sales); and
012.02A(9) Admissions charged or meals sold at political fund-raising events by ballot question committees, candidate committees, independent committees, and political party committees, (Reg-1-090, Nonprofit Organizations).
012.02B Product-based transactions which are exempt because of the item sold include:
012.02B(1) Aircraft fuels;
012.02B(2) Motor vehicle fuels as defined in Chapter 66, article 4, of the Nebraska Revised Statutes;
012.02B(3) Newspapers issued at least fifty-two times a year, (Reg-1-054, Newspapers);
012.02B(4) Prescription medicines, (Reg-1-050, Medicines and Medical Equipment);
012.02B(5) Insulin, (Reg-1-050, Medicines and Medical Equipment);
012.02B(6) Animals ordinarily used as food for human consumption, (Reg-1-062, Animal Life);
012.02B(7) Lodging rented for thirty (30) days or longer, (Reg-1-046, Hotels, Lodgings, and Accommodations);
012.02B(8) Rental of rooms in dormitories operated by an educational institution, (Reg-1-046, Hotels, Lodgings, and Accommodations);
012.02B(9) Laundry and dry cleaning services through the use of coin-operated machines, (Reg-1-048, Laundries and Dry Cleaners);
012.02B(10) A motor vehicle purchased with funds contributed by the Veterans Administration of the United States, (Reg-1-020, Motor Vehicles);
012.02B(11) A motor vehicle purchased with funds contributed by Nebraska Health and Human Services Finance and Support, (Reg-1-020, Motor Vehicles);
012.02B(12) Railroad rolling stock and replacement parts, (Reg-1-068, Railroads);
012.02B(13) Food, but not meals, for human consumption, (Reg-1-087, Food for Human Consumption); and
012.02B(14) Nebraska Lottery tickets.
012.02C Entity-based transactions which are exempt because of the buyer include:
012.02C(1) The United States government and its agencies, (Reg-1-072, United States Government and Federal Corporations);
012.02C(2) Organizations created exclusively for religious purposes, (Reg-1-091, Religious Organizations);
012.02C(3) Nonprofit organizations providing services exclusively to the blind, (Reg-1-090, Nonprofit Organizations);
012.02C(4) Public or private Nebraska educational institutions, (Reg-1-092, Educational Institutions);
012.02C(5) Nonprofit Nebraska licensed hospitals, (Reg-1-090, Nonprofit Organizations);
012.02C(6) Nonprofit Nebraska licensed skilled nursing facilities, (Reg-1-090, Nonprofit Organizations);
012.02C(7) Nonprofit Nebraska licensed intermediate care facilities and nonprofit Nebraska licensed intermediate care facilities for the mentally retarded, (Reg-1-090, Nonprofit Organizations);
012.02C(8) Nonprofit Nebraska licensed home health agencies, hospices or hospice services, or respite care services , (Reg-1-090, Nonprofit Organizations);
012.02C(9) Nonprofit Nebraska licensed nursing facilities, (Reg-1-090, Nonprofit Organizations);
012.02C(10) Nonprofit Nebraska licensed health clinics, when owned or controlled by two or more nonprofit hospitals or which receive federal funds through the U.S. Public Health Service, (Reg-1-090, Nonprofit Organizations);
012.02C(11) Nebraska child caring agencies licensed for the full-time custody and care of children, (Reg-1-090, Nonprofit Organizations);
012.02C(12) Nebraska licensed child placing agencies, (Reg-1-090, Nonprofit Organizations);
012.02C(13) The State of Nebraska, (Reg-1-093, Governmental Units);
012.02C(14) The State Fair Board, (Reg-1-090, Nonprofit Organizations);
012.02C(15) Any Nebraska county, township, city, or village, (Reg-1-093, Governmental Units);
012.02C(16) Any Nebraska elected county fair board, (Reg-1-093, Governmental Units);
012.02C(17) Any Nebraska county or municipal library, (Reg-1-093, Governmental Units);
012.02C(18) Any Nebraska rural or suburban fire protection district, (Reg-1-093, Governmental Units);
012.02C(19) Any Nebraska irrigation district, (Reg-1-093, Governmental Units);
012.02C(20) Any Nebraska reclamation district, (Reg-1-093, Governmental Units);
012.02C(21) The irrigation division of any Nebraska public power and irrigation district, (Reg-1-093, Governmental Units);
012.02C(22) A Native American Indian living on the Indian reservation or a Native American Indian Tribal Council when the sale is within the boundaries of an Indian Reservation;
012.02C(23) Certain foreign diplomats, (Reg-1-072, United States Government and Federal Corporations);
012.02C(24) The American National Red Cross;
012.02C(25) Any Nebraska natural resource district;
012.02C(26) Any Nebraska airport authority;
012.02C(27) Any Nebraska drainage district;
012.02C(28) Another state or unit of government in the other state, when the other state grants a reciprocal exemption to Nebraska and Nebraska political subdivisions and the item purchased was industrial equipment;
012.02C(29) The Nebraska Investment Finance Authority; and
012.02C(30) The Small Business Development Authority.
012.02D Use-based transactions are exempt because of the purchaser's intended use of the property. The consumer's use tax is due on these items if they are used in a manner other than originally intended. Included in this group are sales of:
012.02D(1) Property purchased to be resold prior to the use of such property, (Reg-1-013, Sale for Resale-Resale Certificate);
012.02D(2) Property which will be incorporated as an ingredient or component part of an item to be sold, (Reg-1-023, Component Parts-Manufacturing, Processing, and Fabrication);
012.02D(3) Fabrication labor on property that will be resold or that is an ingredient or component part of an item to be sold, (Reg-1-023, Component Parts-Manufacturing, Processing, and Fabrication);
012.02D(4) Property delivered outside Nebraska, (Reg-1-006, Retail Sale or Sale at Retail);
012.02D(5) Fabrication labor on materials delivered outside Nebraska by the retailer, (Reg-1-006, Retail Sale or Sale at Retail);
012.02D(6) Feed or water for the care of or consumption by animals ordinarily used as food for human consumption or for human apparel, (Reg-1-063, Feed, Water, Agricultural Chemicals, and Veterinary Medicines for Animal Life);
012.02D(7) Seeds and annual plants for agricultural purposes, (Reg-1-060, Seeds and Plants);
012.02D(8) Diesel fuel as defined in Chapter 66, article 4 and compressed fuel as defined in the Compressed Fuel Tax Act, of the Nebraska Revised Statutes for use in vehicles, (Reg-1-089, Energy Source Utility Exemption);
012.02D(9) Agricultural chemicals to be applied to land or crops, and oxygen for use in aquaculture, (Reg-1-061, Agricultural Chemicals);
012.02D(10) Nonreturnable containers when sold empty for resale with the contents, (Reg-1-043, Containers);
012.02D(11) Returnable containers when sold with the contents, or when returned for refilling, (Reg-1-043, Containers);
012.02D(12) All containers when the contents are exempt, (Reg-1-043, Containers);
012.02D(13) Fuel, including electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, gasoline, butane, nuclear fuel, oxygen, and coke when more than 50% is for use in irrigation or farming, (Reg-1-089, Energy Source Utility Exemption);
012.02D(14) Fuel, including electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, gasoline, butane, nuclear fuel, oxygen, and coke when more than 50% is for use in processing, manufacturing, or refining of products, in the generation of electricity, or by a hospital, (Reg-1-089, Energy Source Utility Exemption);
012.02D(15) Water purchased for irrigation of agricultural lands, (Reg-1-066, Sewer and Water);
012.02D(16) Water for manufacturing purposes, (Reg-1-066, Sewer and Water);
012.02D(17) Motor vehicles, watercraft, or aircraft used as common or contract carriers and replacement parts for such vehicles, (Reg-1-069, Common and Contract Carrier Vehicles);
012.02D(18) Semen or insemination services for ranching, farming, commercial, or industrial uses;
012.02D(19) Items for use in a municipally-owned public transportation system for passengers;
012.02D(20) Items for use with a racetrack by a licensee of the State Racing Commission;
012.02D(21) An airplane, or repairs to an airplane, that will not be located in Nebraska by a nonresident, (Reg-1-067, Aircraft and Related Services);
012.02D(22) Oxygen prescribed for human use, (Reg-1-050, Medicines and Medical Equipment);
012.02D(23) Prosthetic devices when prescribed for human use, (Reg-1-050, Medicines and Medical Equipment);
012.02D(24) Durable medical equipment and medical supplies when prescribed for human use, (Reg-1-050, Medicines and Medical Equipment);
012.02D(25) Mobility enhancing equipment when prescribed for human use, (Reg-1-050, Medicines and Medical Equipment);
012.02D(26) Newspaper advertising supplements delivered directly to and distributed with any newspaper, (Reg-1-054, Newspapers);
012.02D(27) Personal property containing copyrighted material for rebroadcast by a radio or television station to the general public if the purchaser is operating under a certificate from the Federal Communications Commission, (Reg-1-045, Motion Picture Film, Videotape, and Programming);
012.02D(28) Molds, dies, and patterns specifically designed and fabricated to the special order of a customer and used to manufacture a single product that is injection molded from plastic or stamped from metal, (Reg-1-095, Molds, Dies and Patterns);
012.02D(29) Animal specialty services provided to livestock, (Reg-1-102, Animal Specialty Services);
012.02D(30) Contractor labor for new construction and certain other construction projects, (Reg-1-017, Contractors);
012.02D(31) Repair labor on licensable motor vehicles and other items not subject to tax; and
012.02D(32) Agricultural machinery and equipment for use in commercial agriculture, (Reg-1-094, Agricultural Machinery and Equipment Refund).
012.03 Consumer's use tax does not apply to the following:
012.03A Transactions upon which the Nebraska sales tax has been paid;
012.03B Storage, use, or consumption of items exempt from sales tax;
012.03C Transactions where the taxpayer has properly paid a tax in another state at a rate equal to or greater than the rate in Nebraska, (Reg-1-071, Credit for Tax Paid to Another State);
012.03D Items that were purchased and used in another state before being brought into Nebraska; and
012.03E Removal from inventory of items purchased from a seller not doing business in this state by a contractor for a project in another state, (Reg-1-017, Contractors).
012.04 The seller must keep exempt sale certificates, resale certificates, energy source exemption certificates, or other adequate proof to support exemption on sales described in Reg-1-012.02C and Reg-1-012.02D. The seller must retain the exempt sale certificate or resale certificate to support deductions from gross receipts on the tax return.
(Sections 77-2704.39, 77-2704.40, 77-2704.41, 77-2704.46, 77-2705(7), and 77-2706, R.R.S. 2003, and sections 77-2703(1)(f) and 77-2704.12, R.S.Supp., 2005. March 7, 2006.)
REG-1-013 SALE FOR RESALE - RESALE CERTIFICATE
013.01 A sale for resale is a sale of property or services to any purchaser for the purpose of resale in the normal course of the purchaser's business. The item may be resold either in the form or condition in which it was purchased, or as an ingredient or component part of other property, (Reg-1-023, Component Parts--Manufacturing, Processing, and Fabrication). A sale for resale includes a sale of property to a purchaser for the sole purpose of renting or leasing such property to others; provided, such rental or lease payments are set at a fair market value.
013.01A Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts.
013.01B A sale for resale does not include the sale of property to a purchaser whose subsequent rental or lease of that property is incidental to the rental or lease of real estate.
013.02 The burden of proving that a sale of property is not a sale at retail is upon the retailer (seller) unless the retailer (seller) accepts a properly completed resale certificate providing evidence that the property is purchased for the purpose of reselling, leasing, or renting in the regular course of the purchaser's business or is to be used as an ingredient or component part of other property to be resold, leased, or rented. The resale certificate constitutes a part of the retailer's (seller's) records and is to be retained in the same manner as other sales tax records.
013.03 A properly completed resale certificate received from the purchaser is proof for the retailer (seller) that the sale was for resale. To be properly completed, the resale certificate, as allowed by Reg-1-013.11, must include all of the following:
013.03A Identification of both purchaser and retailer (seller) including type of business engaged in by purchaser;
013.03B Sales tax permit number of purchaser. If the purchaser is licensed as a retailer in Nebraska or another state which requires a permit, enter the sales tax permit number. If the purchaser has no permit number, state the reason;
013.03C A general description of the property or services sold, leased, or rented by the purchaser in the regular course of his or her business;
013.03D Identification of items purchased. A single purchase certificate that covers a single sales transaction must describe the specific property or services purchased. A blanket certificate must contain a general description of the property or services commonly purchased;
013.03E Authorized signature or other form of authorization as allowed by the Streamlined Sales Tax Agreement; and
013.03F Date of issuance.
013.04 If a purchaser who gives a resale certificate makes any use of the property other than retention, demonstration, or display while holding it for sale, lease, or rental in the regular course of business, such use removes it from the "sale for resale" exemption category and accordingly, the use is taxable to the purchaser from the time the property is first used. Except for a purchaser of aircraft as provided in Reg-1-067, Aircraft and Related Services, the sales price of the property is the measure of the tax. (Reg-1-035, Consumption of Untaxed Property.)
013.05 The retailer (seller) holding a properly completed resale certificate is relieved from liability for tax, penalty, and interest. However, this does not apply to sellers who fraudulently fail to collect tax or who solicit purchasers to participate in unlawful claims of exemption.
013.06 A retailer (seller) repeatedly making the same type of sales to the same purchaser is not required to take a separate resale certificate for each sale, but may take a blanket resale certificate covering future sales.
013.07 Sales in which the seller is required to make delivery outside of Nebraska need not be supported by resale certificates if properly supported by bills of lading, certificates of out-of-state delivery, or other documentation. However, where delivery to the out-of-state purchaser occurs in this state, the sales tax payment is required unless the sale is otherwise exempt or for actual resale purposes, in which case the retailer (seller) must take a properly completed resale or exempt sale certificate.
013.08 If in any case a resale certificate or satisfactory evidence in support of a claim that a sale is exempt cannot be produced on demand of the Nebraska Department of Revenue, the retailer (seller) making the sale is responsible for the tax on the transaction.
013.09 Any purchaser, or the agent thereof, who gives a resale certificate to the retailer (seller) for any purchase taxable under sections 77-2701 through 77-27,135 of the Nebraska Revised Statutes, which is purchased for a use other than resale, lease, or rental in the regular course of the purchaser's business, shall be subject to a penalty of one hundred dollars ($100.00) or ten times the tax, whichever amount is larger, for each instance of presentation and misuse. With regard to a blanket resale certificate, said penalty shall apply to each purchase made during the period the blanket certificate is in effect.
013.10 Any purchaser, or the agent thereof, who fraudulently signs a resale certificate with intent to avoid payment of the tax may, in addition to the penalty set out in paragraph 013.09, be found guilty of a Class IV misdemeanor.
013.11 The Nebraska Department of Revenue will recognize only the Nebraska Resale or Exempt Sale Certificate, Form 13, a previously approved paper or electronic substitute for this Form 13, the Multistate Tax Commission Uniform Sales and Use Tax Certificate, or a certificate of exemption authorized by the Streamlined Sales Tax Agreement.
013.12 Sellers shall maintain records of resale transactions. The Nebraska Department of Revenue may make and retain copies of any resale certificates.
(Sections 77-2706(1), (2), (3), and (4), and 77-2706.01, R.R.S. 2003, and sections 77-2701.34 and 77-2703(1)(f), R.S.Supp., 2004. April 12, 2005.)
REG-1-014 EXEMPT SALE CERTIFICATE
014.01 Certain sales, leases, or rentals, and the storage, use, or other consumption of property or services are not taxable. Exempt transactions can be divided into four groups. The four groups are transactions that are exempt due to:
014.01A The seller (entity-based exemption);
014.01B The item sold (product-based exemption);
014.01C The buyer (entity-based exemption); and
014.01D The buyer's intended use of the item (use-based exemption).
Transactions of the type described in 014.01A and 014.01B are not required to be supported by exempt sale certificates, provided the records clearly show the nature of the seller and the product being sold. A purchaser making a purchase that is exempt because it is an occasional sale is required to obtain a certificate or other documentation from the seller that the sale was exempt.
Transactions of the type described in 014.01C and 014.01D are required to be supported by exempt sale certificates or other suitable documentation. (Reg-1-012, Exemptions.)
014.02 The burden of proving that any sale of property or services is not taxable is upon the retailer (seller) and sufficient records must be kept which reveal the nature of each exempt sale. A retailer (seller) is required to obtain an exempt sale certificate from the purchaser in support of the claim that the sale is exempt. The exempt sale certificate constitutes a part of the retailer's (seller's) records and is to be retained in the same manner as other sales tax records.
014.03 Exemption numbers in the form of numbered certificates of exemption are issued by the Nebraska Department of Revenue and are required for nonprofit organizations, public schools, and common or contract carriers. (Reg-1-069, Common and Contract Carrier Vehicles, Reg-1-090, Nonprofit Organizations, and Reg-1-092, Educational Institutions.)
014.04 The following types of organizations are not issued numbered certificates of exemption by the Nebraska Department of Revenue: The United States government, its agencies, and corporations wholly owned by the United States government; the state, its agencies, and political subdivisions, other than public schools. Purchases by many Nebraska political subdivisions, all other states, and all political subdivisions of other states are taxable.
014.05 A properly completed exempt sale certificate received from the purchaser is proof for the retailer (seller) that the sale was exempt from the sales and use tax. To be properly completed, the exemption certificate, as allowed by Reg-1-014.11, must include all of the following:
014.05A Identification of both purchaser and seller;
014.05B Statement of basis for exemption as described on the Nebraska Resale or Exempt Sale Certificate, Form 13, including completion of all information for the basis chosen;
014.05C A statement as to whether the certificate is for a single purchase or is a blanket certificate for future sales;
014.05D Authorized signature or other form of authorization as allowed by the Streamlined Sales Tax Agreement; and
014.05E Date of issuance.
014.06 The retailer (seller) holding a properly completed exempt sale certificate is relieved from liability for tax, penalty, and interest. However, this does not apply to sellers who fraudulently fail to collect tax or solicit purchasers to participate in unlawful claims of exemption.
014.07 A retailer (seller) repeatedly making the same type of exempt sale to the same purchaser is not required to take a separate exempt sale certificate for each sale but may take a blanket certificate covering future sales.
014.08 If in any case an exempt sale certificate or satisfactory evidence cannot be produced on demand of the Nebraska Department of Revenue in support of a claim that a sale is exempt, the retailer (seller) making the sale is responsible for the tax on the transaction.
014.09 Any purchaser, or the agent of the purchaser, who gives an exempt sale certificate to the retailer (seller) for any purchase which is not exempted from the sales and use tax under sections 77-2701 through 77-27,135 of the Nebraska Revised Statutes, shall be subject to a penalty of one hundred dollars ($100.00) or ten times the tax, whichever amount is larger, for each instance of presentation and misuse. With regard to a blanket exempt sale certificate, said penalty shall apply to each purchase made during the period the blanket certificate is in effect.
014.10 Any purchaser, or the agent of the purchaser, who fraudulently signs an exempt sale certificate with intent to avoid payment of the tax may, in addition to the penalty set out in paragraph 014.09, be found guilty of a Class IV misdemeanor.
014.11 The Nebraska Department of Revenue will recognize only the Nebraska Resale or Exempt Sale Certificate, Form 13, a previously approved paper or electronic substitute, a Nebraska Energy Source Exemption Certificate, Form 13E, a Nebraska Certificate of Exemption for Mobility Enhancing Equipment, Form 13ME, or a certificate of exemption authorized by the Streamlined Sales Tax Agreement for all sales except sales to the federal government. Sales to the federal government, an agency, or wholly owned corporation thereof, may be supported in either of two ways. First, they may be supported by a regular federal certificate of exemption form. An alternative procedure involves maintaining purchase documentation clearly identifying the purchaser as the federal government, an agency, or wholly owned corporation thereof. The best documents available are those which show payment was made by a United States Treasury Department warrant. (Reg-1-072, United States Government and Federal Corporations.)
014.12 Sellers shall maintain records of exempt transactions. The Nebraska Department of Revenue may make and retain copies of any exempt sale certificate.
(Sections 77-2705(7) and (8), 77-2706, 77-2711(3)(a) and (4), and 77- 2713(5), R.R.S. 2003, and section 77-2703(1)(f), R.S.Supp., 2004. April 12, 2005.)
REG-1-015 COMMON AND CONTRACT CARRIERS (MULTISTATE OPERATIONS) - TAX DEFERRAL
015.01 Any person, firm, or corporation operating as a common or contract carrier engaged in multistate operations, may apply to the Nebraska Department of Revenue for special permission to defer the incidence of the sales and use tax on certain purchases within or without this state, where the item purchased is first stored here for subsequent use in multistate operations, and at the time of purchase, the final location of the use of the item is unknown. The special permission referred to in this regulation is not related to the common and contract carrier exemption referred to in Reg-1-069, Common and Contract Carrier Vehicles.
015.02 Upon receipt of a request for permission to defer taxes, an investigation will be made to determine whether the applicant maintains satisfactory records to show where the purchased property is actually used. Such request must be written and be accompanied by a $10.00 fee. If a favorable report results from the investigation, the Nebraska Department of Revenue will issue a special permission letter to the respective common or contract carrier. This special permission letter is issued in the form of a certificate of exemption. The common or contract carrier receiving the letter should furnish a copy of the letter to those vendors from whom purchases are made where use is unknown at the time of purchase in order that sales or use tax will be excluded from such purchases. Such letter shall not be used when purchases are made which knowingly have been or will be used or consumed within this state.
015.03 A retailer (seller) repeatedly making the same type of exempt sale to common or contract carriers need not take a separate copy of the special permission letter for each sale but may, at his or her risk, take a blanket certificate covering all future sales. If the Nebraska Department of Revenue determines that any such sale was not exempt, the retailer (seller) shall be liable for the tax, penalty, and interest. If a single special permission letter is taken, identification of the common or contract carrier must appear upon the memoranda created at the time of sale.
015.04 When items that were purchased tax exempt are later used in this state by the common or contract carrier, use tax is due at the applicable rate in effect at the time of use. This liability must be reported on the appropriate return to be filed for the period corresponding to the month of use.
(Section 77-2706(6), R.R.S. 1943.January 24, 1993.)
REG-1-016 CHANGES IN RATE OF TAX
016.01 The rate at which the sales and use tax is imposed is subject to change or the base may be altered by legislation which extends the tax to transactions previously not taxed. The purpose of this regulation is to set out the manner in which such occurrences will affect the tax on sales and purchases made where pre-existing contracts or obligations are involved so that retailers and consumers alike can take note of possible increases for which they may become liable.
016.02 For sales, leases, or rentals, the sales tax is imposed and shall be collected and remitted by the retailer at the rate in effect at the time the gross receipts are recorded as sales under the accounting method used by the retailer to maintain his or her books and records. A lease or rental agreement which extends through a tax rate change, will recognize the changed tax rate on payments recorded on or after the rate change. (Reg-1-009, Accounting Methods.)
016.02A For the rental or lease of a motor vehicle, the sales tax is imposed at the rate in effect at the time of the delivery of the motor vehicle regardless of changes in the rate during the term of the lease.
016.03 If the use tax is not required to be remitted at the time of purchase, the applicable use tax rate is that rate in effect at the time of use according to the accounting basis used to maintain the taxpayer's books and records.
016.04 The retailer on a cash basis of accounting will collect and report the tax at the rate in effect at the time he or she receives a payment without regard to whether the payment is in satisfaction of an obligation predating a change in the rate. The retailer using an accrual basis of accounting will collect and report the tax at the rate in effect at the time he or she records the sale.
016.05 Persons providing services covering a period starting before, and ending after, the effective date of a rate change will bill tax as follows: (a) for a rate increase, the change will apply to the first billing period starting on or after the effective date of the change; and (b) for a rate decrease, the change will apply to bills rendered on or after the effective date of the change.
016.06 When construction contractors operating under either Option 2 or Option 3 purchase construction materials to be consumed by them, they are obligated to pay the tax on the same basis as other consumers without regard to whether the purchase of such materials is for use in completion of a construction contract executed prior to a change in the rate. However, when a written contract exists for a fixed-price construction, reconstruction, alteration, or improvement project and the sales tax rate is increased during the term of that fixed-price contract, the contractor may apply for a refund of the increased sales tax; provided, such refund amount exceeds ten dollars ($10.00). The contractor must submit a copy of the contract and any other evidence necessary to establish his or her entitlement to the refund.
016.06A In the event that the sales tax rate is decreased during the term of the fixed-price contract, the contractor shall pay to the Department of Revenue the difference between the decreased tax rate and the tax rate in effect prior to the decrease; provided, the amount of such payment exceeds ten dollars ($10.00). This procedure results in the contractor's final sales tax liability on fixed-price written contracts, to equal the rate in effect at the time the contract was entered into.
016.07 When construction contractors are required to collect the sales tax on contractor labor, they are obligated to collect the tax on the same basis as other contractors without regard to whether the contractor labor was performed in the completion of a construction contract executed prior to the imposition of tax on contractor labor. However, when a written contract exists for a fixed-price construction, reconstruction, alteration, improvement, or repair project and the sales tax was first imposed on contractor labor during the term of that fixed-price contract, the taxpayer may apply for a refund of the sales tax paid on the contractor labor; provided, such refund amount exceeds ten dollars ($10.00). The taxpayer must submit a copy of the contract and any other evidence necessary to establish his or her entitlement to the refund.
016.07A In the event that the sales tax no longer applies to contractor labor during the term of the fixed-price contract, the taxpayer shall pay to the Department of Revenue the difference between the decreased tax collected and the tax that would have been due on the contractor labor prior to the change; provided, the amount of such payment exceeds ten dollars ($10.00). Failure to make the required payment constitutes a criminal act.
(Section 77-2701.03, R.R.S. 2003, and sections 77-2703(1) and (2), 77-2704.32, and 77-2704.33, R.S.Supp., 2004. April 12, 2005.)
017.01 Gross receipts from construction projects or the repair of real estate or fixtures are generally subject to sales or use tax except as otherwise stated in this regulation. In most cases, the building materials will be taxable even when contractor labor is not taxed. The following definitions will be used for this regulation.
017.01A A contractor is any person who repairs property annexed to, or who annexes property to, real estate, including leased property, by attaching building materials to the improvement or annexed property being built or repaired, or who arranges for such annexation. This includes the original construction of a building or other structure, the installation of fixtures, and the repair of a building, structure, or fixture.
017.01B Property is annexed to real property or other property annexed to real estate if (1) the property becomes real estate, or (2) the installation or removal of the property requires specialized skills or tools and is performed or supervised by a recognized trade professional.
017.01C A structure is any construction composed of building materials arranged and fitted together in some way, such as a bridge, highway, street light, dam, television tower, fence, sewer, water line, or billboard.
017.01D A building is any free-standing structure enclosed within a roof and exterior walls. It does not have to be enclosed on all sides. It is designed for the housing, shelter, enclosure, and support of individuals, animals, manufacturing or property of any kind. It must be annexed to the land.
A building includes manufactured housing that is either set up for occupancy as a dwelling according to local building codes, or that is permanently annexed to real estate. (Reg-1-018, Rent or Lease of Tangible Personal Property)
017.01E A building material is any property that will be annexed to the land or an improvement on the land. Building materials do not include tools, supplies, or any items that will not be annexed.
017.01F A fixture is a piece of equipment that must be annexed to the building or structure in order to properly function, yet remains identifiable as a separate item. Examples of fixtures are central air conditioners, hot water heaters, garbage disposals, built-in dishwashers, and furnaces.
017.01G A recognized trade professional includes, but is not limited to, any person required to be licensed to practice his or her trade, such as a plumber, or electrician.
017.01H Construction services means annexing building materials to real estate, repair of a structure as defined above, or repair of building materials that are, or will be, annexed to real estate. Construction services includes installation, construction, servicing, or removal of property used in conjunction with the furnishing, installing, or connecting of telephone, telegraph, mobile communications, or community antenna television service. Construction services does not include the cost of raw land or finished lot, impact fees, title insurance, property insurance, lender fees, closing costs, inspection fees, real estate brokerage commissions and fees, or any other taxes or fees levied on the transfer of property.
