No, the county tax is only imposed on taxable sales within the boundaries of the county, but outside the city boundaries of any city that imposes a city sales tax. Sales made in a city that is located in a county that has a county sales tax will be subject to the state rate and the city rate only. Sales made within a county that imposes a county sales tax, but outside any city limits of a city that imposes a city sales tax, will be subject to the state rate and the county rate only.
For example, a taxable purchase made in Dakota City (which does not impose a local option sales tax) is subject to the state sales tax rate of 5.5%, plus the county sales tax rate of 0.5%, for a total sales tax rate of 6.0%.
A taxable purchase made in South Sioux City (one of the two cities within Dakota County imposing a local option sales tax) is subject to the state sales tax rate of 5.5%, plus the city sales tax rate for South Sioux City of 1.5%, for a total sales tax rate of 7.0%. No county sales tax is due on sales made in South Sioux City.
The 501(c) federal status (exemption from federal income tax) does not automatically mean the nonprofit organization is exempt from Nebraska sales tax. Very few nonprofit organizations actually qualify for the sales and use tax exemption. Sales Tax Regulations 1-012 and 1-090 identify who is exempt in this state. Also refer to the department's information guide, Nebraska Taxation of Nonprofit Organizations.
The point of delivery determines the location of the sale. The sales tax rate is calculated at the rate in effect at that location. Deliveries into a Nebraska city that imposes a local option sales tax are taxed at the state rate (5.5%), plus the applicable local rate. Deliveries into another state are not subject to Nebraska sales tax.
Services are generally taxed at the location where the service is provided to the customer. Utility services are taxed where the meter is located. Refer to Sales Tax Regulation 1-006, and Local Option Sales and Use Tax Regulation 9-007.
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Charges for production and assembly labor are taxable. Charges for repair and installation labor are taxable when the property being repaired, replaced, or installed is taxable. See Sales and Use Tax Regulation 1-082.
For labor charges to repair agricultural equipment, please see our information guides "Agricultural Machinery & Equipment" and "Well Drilling and Irrigation Industry."
Labor charges to install new or upgraded component parts or accessories are taxable. See our notice titled "If you install or apply tangible personal property."
For the taxability of labor charges performed on motor vehicles, see “What labor charges for work done on motor vehicles are taxable?”
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These charges are taxable whenever the item is taxable and the charges for such items are paid to the retailer of the item (Regulations 1-026 and 1-079).
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Charges for consultants who only provide generalized advice and who do not provide software or updates or modifications to software are exempt. Charges for services by a consultant that result in a transfer of software, whether canned or custom, are subject to tax including charges for programming, program development, systems analysis, software customization and modification, upgrading of software programs, and charges for installation. See Sales and Use Tax Regulation 1-088.
Training charges are taxable whenever paid to the seller of the software. Automatic or mandatory telephone support services that come with the transfer of software are taxable. The optional purchase of telephone support services which are separately stated are not taxable.
See Sales and Use Tax Regulation 1-074.
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Yes. Sales made by retailers via the Internet are taxed in the same manner as sales made by other retailers, including those via mail-order catalogs. If the seller is licensed to collect Nebraska sales tax, then the customer pays the tax to the seller. If the seller is not licensed to collect Nebraska tax or fails to collect the tax, then the customer becomes personally liable for the tax and must pay it directly to the Department of Revenue as consumer's use tax. Forms are available on our website for remitting consumer's use tax.
Exception: Sales of household goods and personal effects made on an online auction site, by an individual, are not taxable if:
- The sale is made only once per calendar year for a period of three days or less; and
- The type of property placed on the online auction site does not include anything which is similar to that sold by the individual (or any member of the individual's household) in a trade or business.
If you are a seller via the Internet, click here for more information.
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Prepared foods such as restaurant meals, hamburgers, fountain drinks, and ice cream sundaes are taxable. Food sales in vending machines, by concessionaires, and by caterers for immediate consumption are taxable. Sales tax regulations 1-083 (food services), 1-041 (concession sales), and 1-087 (food for human consumption), explain when a retailer should collect sales tax.
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Depreciable agricultural machinery and equipment purchased for use in commercial agriculture is exempt from sales and use tax provided the purchaser completes and gives to the seller a Nebraska Resale or Exempt Sale Certificate, Form 13, Section B.
Machinery or equipment that is used directly in planting, tilling, harvesting, haying, fertilizing, or irrigating crops, and equipment used in raising or feeding livestock may qualify for the exemption. Refer to the department's information guide, Agricultural Machinery and Equipment
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The purchaser must complete and file a Nebraska Sales and Use Tax Refund Claim for Agricultural Machinery and Equipment Purchases or Leases, Form 7AG-1, within three years from the date of the purchase or the lease payment.
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Intercompany sales of services (companies that have at least 50% common ownership) are exempt from sales and use tax as occasional sales. (See Sales and Use Tax Regulation 1-022)
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Several enumerated services and labor charges are taxed. See information guide "Nebraska and Local Sales Tax."
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Enzymes and certain other items used in the production of ethanol do not become ingredient and component parts of the finished ethanol product. The enzymes are consumed in the ethanol production process and do not pass through the physical distillation which generates the ethanol. In addition, the enzyme products similarly are not present in the distiller grains, a sub-product of the process.
Therefore, the purchase and use of the following items are taxable. Such items do not become ingredient and component parts of the finished ethanol product or distiller grains.
Yeast, Anhydrous Ammonia, Sulfuric Acid, Caustic Soda, Sodium Busulfate, Urea, Lactoside 247, Anibiotics, or MAP (monoammonium phosphate)
If you have any questions regarding the taxability of these items or other items used in the ethanol production process, please contact the Department.
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When a manufacturer agrees to replace or repair an item after the time period for coverage under a warranty has expired as a “goodwill” or “after-warranty” repair, the transaction is separate from the original warranty. Any charges to the manufacturer for parts and labor provided with such repairs, except for labor related to the repair of a motor vehicle, are subject to tax.
The exemption provided in Regulation 1-074.02 applies only to parts furnished under a specific warranty, the gross receipts of which were subject to tax. When the repair is performed outside the warranty period any charge made to the manufacturer for the repair parts and labor is subject to tax.
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The motor vehicle dealer is responsible for remitting consumer's use tax based on the cost of the vehicle. Nebraska Sales and Use Tax Regulation 1-021 provides the method for calculating the tax due.
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Due to the current high cost of fuel, many retailers are passing this cost on to their customers by including a separate line item on the invoice instead of including it in the price of the goods or services. Retailers are calling it a “fuel surcharge” or some similar description.
Taxable Fuel Surcharges: Retailers of taxable goods and services, who add fuel surcharges to the customer’s invoice, must charge sales tax on this additional charge. Fuel surcharges are considered to be part of the delivery charge or the cost of doing business. Fuel surcharges are taxable regardless of whether they are billed based on the distance traveled, as a percentage of the sale, or at a flat rate.
Non-taxable Fuel Surcharges: If the goods or services are exempt from tax, then the fuel surcharge is not taxable.
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Yes. When the federal government is the direct purchaser of any taxable property, the sale is exempt. U.S. government purchasers (federal government employees) with credit cards containing the appropriate prefix and sixth digit (see chart below to determine the exempt status) may use the credit card transaction instead of completing a Nebraska Resale or Exempt Sale Certificate, Form 13 or U.S. Tax Exemption Certificate, Form SF 1094.
Federal government employees’ credit card purchases which are not centrally billed, in total, to the U.S. Government are taxable, even if the employees are reimbursed for their expenses while conducting business for the federal government.
The credit cards, listed under the Exempt columns below, have their entire balances centrally billed to the federal government (not an employee) and are therefore exempt from Nebraska sales and use tax.
The Department of the Interior uses credit cards which have an integrated billing system. This system only directly bills the United States Government for some of the purchases made with the cards, such as lodging. However, other purchases, such as meals, are billed to the employee. The Department of the Interior integrated billing system uses MasterCard prefix 5568, sixth digit 6. Purchases, made with this card, are taxable as indicated in the box labeled Taxable - Federal GSA SmartPay®2 TRAVEL credit cards.
New Federal GSA SmartPay®2 credit cards were issued to federal employees in the fall of 2008, which includes the new Integrated System credit card.
Exempt - Federal GSA SmartPay®2 PURCHASE credit cards
Prefix (1st four digits) |
Sixth Digit |
Type of Credit Card |
Exemption Status for Nebraska Sales Tax |
4486 |
N/A |
VISA |
All purchases are exempt |
4614 |
N/A |
VISA |
All purchases are exempt |
4716 |
N/A |
VISA |
All purchases are exempt |
5565 |
N/A |
MasterCard |
All purchases are exempt |
5568 |
N/A |
MasterCard |
All purchases are exempt |
Exempt - Federal GSA SmartPay®2 FLEET credit cards
Prefix (1st four digits) |
Sixth Digit |
Type of Credit Card |
Exemption Status for Nebraska Sales Tax |
4486 |
N/A |
VISA |
All purchases are exempt |
4614 |
N/A |
VISA |
All purchases are exempt |
4716 |
N/A |
VISA |
All purchases are exempt |
5565 |
N/A |
MasterCard
Wright Express |
All purchases are exempt |
5568 |
N/A |
MasterCard |
All purchases are exempt |
8699 |
N/A |
Voyager |
All purchases are exempt |
Exempt - Federal GSA SmartPay®2 TRAVEL credit cards
Prefix (1st four digits) |
Sixth Digit |
Type of Credit Card |
Exemption Status for Nebraska Sales Tax |
4486 |
0, 6, 7, 8, 9 |
VISA |
All purchases are exempt |
4614 |
0, 6, 7, 8, 9 |
VISA |
All purchases are exempt |
5565 |
0, 6, 7, 8, 9 |
MasterCard |
All purchases are exempt |
5568 |
0, 7, 8, 9 |
MasterCard |
All purchases are exempt |
Taxable - Federal GSA SmartPay®2 TRAVEL credit cards
Prefix (1st four digits) |
Sixth Digit |
Type of Credit Card |
Exemption Status for Nebraska Sales Tax |
4486 |
1, 2, 3, 4 |
VISA |
All purchases are taxable |
4614 |
1, 2, 3, 4 |
VISA |
All purchases are taxable |
5565 |
1, 2, 3, 4 |
MasterCard |
All purchases are taxable |
5568 |
1, 2, 3, 4, 6 |
MasterCard |
All purchases are taxable – includes Department of the Interior |
Please note: Currently the Federal GSA SmartPay®2 program does not have a No. 5 in use in the sixth digit of their Purchase, Fleet, or Travel credit cards.
For additional information regarding the Federal GSA SmartPay®2 program see the United States General Services site on the
GSA website.
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Animal grooming (other than for livestock) is taxable unless a licensed veterinarian or veterinary technician grooms the animal in conjunction with medical treatment. If the grooming is not performed in conjunction with medical treatment, the charges for grooming are taxable.
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Charges for the development and maintenance of Web pages which are hosted by the developer or a third-party hosting entity are not taxable. Such charges are not taxable even though the purchaser may be provided with passwords by the developer or third-party host in order to access the Web page to update or delete files, create file directories, change permissions, and the like.
Separately stated charges for hosting and maintenance of the Web pages are not taxable.
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Charges by an Application Service Provider (ASP) for services that allow customers remote access to software applications via the Internet or other electronic connection are not taxable when the ASP retains title to the software. The location of the software, whether located on a server in Nebraska or on a server outside the state, does not affect this determination. The ASP is, however, responsible for paying sales or use tax on its purchases of software which reside on a server located in Nebraska.
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Sales tax returns are initially mailed out after the state identification number is assigned. Thereafter, returns are usually mailed around the 10th of the month following the tax period.
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The penalty is $25.00, or 10% of the tax, whichever is greater.
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Yes, a "zero" return must be filed by the due date, even if there is no tax information to report or tax to be remitted. The taxpayer should indicate on the return that there were no taxable sales or purchases for the tax period.
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Any retailer filing monthly returns and engaged in business at more than one location selling property or providing services subject to sales and use tax may make application to file a combined monthly Nebraska and Local Sales and Use Tax Return, Form 10. Each sales location must hold a sales tax permit, and all licensed locations must be subject to common ownership (the same person or persons own eighty percent of each licensed location). To request permission to file a combined sales and use tax return, file Nebraska Application for Permission to File a Monthly Combined Sales and Use Tax or a Combined Annual Litter Fee Return, Form 11.
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Consumer's use tax is a complement to the Nebraska sales tax. It is imposed on the storage, use, distribution, or consumption of tangible personal property and certain services purchased by the end user when Nebraska sales tax has not been paid. An example is a delivery into Nebraska from an out-of-state seller. See Sales and Use Tax Regulation 1-002 for additional information.
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Business consumer's use tax is reported by licensed retailers on the Nebraska and Local Sales and Use Tax Return, Form 10. If the business is not a retailer, consumer's use tax is reported on the Nebraska and Local Consumer's Use Tax Return, Form 2. Individual consumer's use tax is reported on the Nebraska and Local Individual Consumer's Use Tax Return, Form 3.
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Purchasing an Existing Business
Yes. You could unwittingly be buying a debt to the Nebraska Department of Revenue when you purchase an existing business.
Most purchase contracts include a statement that the seller's business is free and clear of all encumbrances. However, without a certificate from the department stating that all taxes have been paid, the contract alone is not sufficient to protect the buyer from assuming the seller's tax liability. Contacting the department will help protect the purchaser's interests and assist with the purchaser's licensing responsibilities.
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Yes. Purchasers of a business must withhold sufficient money from the purchase price to ensure that all taxes owed to the department by the previous owner(s) have been paid. Failure to withhold a portion of the purchase price results in the purchaser becoming personally liable as the successor for any sales or use taxes due, or as the transferee for any income taxes due (including employee withholding). See sections 77-2707 and 77-27,110 of the Nebraska Revised Statutes.
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To protect yourself, the purchaser (or seller) may request from the State Tax Commissioner a notification either stating that no tax is due (certificate of clearance) or identifying the amount of taxes owed. If the purchaser makes the request, the purchaser must verify that he or she is purchasing the business by submitting a copy of the contract or other evidence. If the seller requests the certificate or notice and would like the department to send it to the purchaser, he or she must provide the purchaser's address and Nebraska identification number.
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Contractors
Are “Contractor Labor” charges taxable?
No. Contractor labor charges are no longer taxable as of October 1, 2007. However, if an Option 1 contractor does not separately state it’s contractor labor charges on the customer’s invoice, the entire charge for the building materials and labor is taxable.
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Are there other types of labor or services that remain taxable?
For the labor charges which are taxable, click on Sales Tax Regulation 1-082.
For a list of services which are taxable, click on the information guide,“Nebraska and Local Sales Tax.”
For those taxable services enacted since 2002, see “Sales Tax on Services”.
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I am a prime contractor and have hired a subcontractor to perform part of a remodeling contract. May I purchase the subcontractor's labor tax-free by issuing him or her a Nebraska Resale or Exempt Sale Certificate, Form 13?
Beginning October 1, 2007, contractor labor charges are not taxable. Therefore, contractors will no longer be required to obtain a Nebraska Resale or Exempt Sale Certificate, Form 13, when billing other contractors for contractor labor charges.
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Is a cost-plus contract with a guaranteed maximum considered a fixed-price contract?
No. Cost-plus contracts and cost-plus contracts with a guaranteed maximum price are not fixed-priced contracts for sales and use tax purposes.
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I am an accrual-basis contractor. I have recorded sales of contractor labor before October 1, 2007, but will receive payment for such labor after October 1, 2007. How do I report the sales tax on my contractor labor charges?
If you have consistently reported the tax when you prepared the bill, any bill issued prior to October 1, 2007, is taxable even if you received payment after October 1, 2007.
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As an accrual-basis contractor, must I wait until payment is received before sales tax is remitted on my contractor labor charges?
No. Accrual-basis contractors must remit sales tax on their contractor labor charges when the customers are billed. Note, however, that beginning October 1, 2007, contractor labor charges are not taxable.
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Are labor charges to repair or replace structures such as fences, sidewalks, and driveways taxable?
No. Effective October 1, 2007, contractor labor charges are not taxable.
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I have been hired to landscape a customer's property. On what labor must I collect tax?
Labor to install live plants is taxable. You must collect sales tax on the total amount charged for the plants, mulch put down in conjunction with the plants, and the labor charge to install the plants regardless of your contractor option.
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I have been hired to put in a retaining wall, edging, and dirt to change the slope of the yard. On what labor must I collect tax?
If the work to put in the retaining wall, edging, and dirt is performed by an Option 1 contractor, the Option 1 contractor must collect sales tax on the total amount charged for the retaining wall, edging, dirt, and labor charge unless the labor charge is separately stated.(An Option 1 contractor does not charge tax on separately stated labor charges.)
If the work to put in the retaining wall, edging, and dirt is performed by an Option 2 or Option 3 contractor, the charge for the building materials and labor is not taxable. Option 2 and Option 3 contractors will not collect any tax on the amount charged for the building materials and their labor. Option 2 and Option 3 contractors must pay or remit tax on their purchase of the building materials.
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I am a subcontractor and have been hired to install plumbing for a remodeling project. The project owner is an entity which is exempt from sales tax. Do I need to collect tax on any of my charges to the general contractor?
Since the project is completed for an exempt entity, you will not collect sales tax on any amounts billed to the general contractor, provided the general contractor issues to you a properly completed Purchasing Agent Appointment, Form 17. Form 17 must be completed prior to the start of your portion of the project.
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If a building is torn down and replaced, is the labor taxable?
No. The labor charge to tear down the building is not taxable. If a new building is built by an Option 2 or Option 3 contractor the amount charged to the project owner is not taxable. If the new building is built by an Option 1 contractor, tax will only be collected on the total amount charged for the annexed building materials, provided the labor charge is separately stated. If not separately stated, then the entire amount charged by the Option 1 contractor is taxable.
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I am a plumbing contractor and provide drain cleaning services for my customers. Do I need a sales tax permit and must I charge sales tax on the drain cleaning service?
When performing building cleaning services such as drain cleaning, you are a retailer and must collect sales tax on the total amount charged for such services. As a retailer, you must hold a sales tax permit. A sales tax permit may be obtained by filing a Nebraska Tax Application, Form 20.
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I am a contractor who has been hired to complete a construction project for an entity which is exempt from sales and use tax. In the performance of this project, can I purchase building cleaning services, security services, and pest control services tax-free?
No. A contractor's purchases of these services are taxable. Nor can a contractor purchase these types of services tax-free (for resale), because it is not in the business of providing these types of service. In addition, contractors cannot use a Purchasing Agent Appointment, Form 17, issued by a governmental unit or exempt entity to purchase these services tax-free.
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Is the charge to winterize underground sprinklers taxable?
No. Charges for services such as the blowout and draining of the underground pipes and sprinkler heads are not taxable.
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How do I know which option a contractor has selected?
This information is now available on the REVENUE CONTRACTOR DATABASE. If an option has not been selected, the contractor is deemed, by law, to be an Option 1 contractor.
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How do I change my contractor option?
Contractors may change their option by filing a Nebraska Sales and Use Tax Election, Form 16.
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I am an Option 1 subcontractor and have been hired by the general contractor to complete part of a construction project. Do I need to collect tax on any of my charges to the general contractor?
Yes. You are required to collect sales tax on the total amount charged for the building materials. The charge for your contractor labor is not taxable, provided it is separately stated.
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Are building cleaning services, pest control services, and security services purchased by a contractor and performed at a construction site subject to tax?
Yes. Contractors cannot purchase such services tax-free (for resale) because these services are not considered contractor labor for sales tax purposes. Nor can such services be purchased tax-free under a Purchasing Agent Appointment, Form 17, issued by a governmental unit or exempt entity.
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Is construction site clean-up subject to tax?
Yes. Charges for the clean-up of a building under construction are subject to tax as building cleaning services. Contractors cannot purchase such services tax-free (for resale) from a third party. This service is not considered contractor labor for sales tax purposes. Nor can such services be purchased tax-free under a Purchasing Agent Appointment, Form 17, issued by a governmental unit or exempt entity.
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Are charges to clean a furnace, air conditioner, heat pump, duct work, or drains taxable?
Yes. Building cleaning services includes any work done to clean a fixture that has been annexed to real estate. This includes cleaning a furnace, air conditioner, heat pump, duct work, sewer or drain located in or attached to a building. Such work is not considered contractor labor.
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What happens when a contractor responds to a service call to repair a furnace blower and takes a few minutes to change out the furnace filter?
An Option 1 contractor must collect sales tax on the total amount charged for the furnace filter and parts. Option 2 and Option 3 contractors will pay or remit tax on the furnace filter and repair parts and will not collect any tax on the amount charged to the customer.
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I install a built-in dishwasher for my customer. Is the installation charge subject to sales tax as taxable installation labor?
No. Since a built-in dishwasher is annexed to real estate, normal installation labor rules do not apply. The person "installing" the dishwasher is a contractor.
If the dishwasher is installed by an Option 1 contractor, the total amount charged for the dishwasher and contractor labor charge to install it is taxable unless the labor charge is separately stated. Separately stated labor charges are not taxable.
If the dishwasher is installed by an Option 2 or Option 3 contractor, the total amount charged for the dishwasher and the labor charge are not taxable. The Option 2 or Option 3 contractor must pay or remit tax on its purchase of the unit.
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Do security services include the installation of the security system wires and monitoring equipment?
No. Contractors and third party installers who install parts that remain tangible personal property after installation are required to collect sales tax on the total amount charged for the parts and installation labor. All security system wires and equipment (parts) that are annexed are taxed based on the contractor’s option. A definition of “annexed” is available at Nebraska Sales and Use Tax Regulation 1-017.02B.
An Option 1 contractor is required to collect sales tax on the total amount charged for the annexed parts and labor unless the labor charge is separately stated.
An Option 2 or Option 3 contractor will not collect any sales tax on the amount charged for the annexed parts and labor.
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Is a business which provides security services required to collect sales tax on the charge to repair the security system?
Yes. A security monitoring service that repairs a security system is required to collect sales tax on the total amount charged to repair the security system regardless of whether the item repaired is annexed or remains tangible personal property. A definition of “annexed” is available at Nebraska Sales and Use Tax Regulation 1-017.02B.
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Withholding Tax
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First, you need to apply for a Nebraska withholding number on the Nebraska Tax Application, Form 20, prior to withholding state taxes from your employees. You will be mailed a Nebraska Withholding Certificate with your state identification number on it.
If you have a payroll service do your payroll, you are still responsible for filing this application before they can start any payroll activity. You should provide them with a copy of the Nebraska Withholding Certificate showing your state identification number and business name. This will allow them to prepare the returns they file for you with the correct Nebraska identification number. They are not authorized to file any returns for a Nebraska employer until they have received a Nebraska withholding identification number.
The Nebraska Circular EN has much more detailed information on Nebraska withholding.
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The withholding rates, brackets, and withholding allowances have been revised effective January 1, 2008. The 2008 Circular EN is currently available. Please use the new withholding rates and tables for all payroll and payments beginning January 1, 2008.
The Department is not issuing a 2009 Nebraska Circular EN.
The “special withholding rate” has changed to 1.5%. Employers using the percentage method tables need to replace the previous rate of 3% with the new 1.5% rate. This change is a result of the passage of LB1004 and became effective April 17, 2008. All other aspects of the January 1, 2008 changes, including rates and brackets, remain the same.
Employers using the wage bracket tables may continue to use the shaded/nonshaded areas of the tables as a general guide for determining if the special withholding procedures should be used. |
Also, please take specific note of the special withholding procedures that are explained in this Notice to Employers (and on the second page of the Circular EN).
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Nebraska does not have a state equivalent to this form. Withholding allowances are the same number as the employee claims on his or her Federal Form W-4. The value of the Nebraska allowance is listed in the Nebraska Department of Revenue - Circular EN.
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When an employee wants additional state income tax to be withheld, he or she should complete a written statement to the employer requesting the amount to be withheld.
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Nebraska does not require employers to submit Form 1099-MISC or other 1099 forms to the department unless Nebraska state income tax withheld is to be reported. When Nebraska tax is withheld, the 1099 forms are submitted to the department with the Nebraska Reconciliation of Income Tax Withheld, Form W-3N.
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Yes. The wages paid to employees for work done in Nebraska is subject to Nebraska withholding. The only exceptions to this rule are wages paid to railroad crews, airline flight crews, and interstate truck drivers.
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Corporate Income Tax
Any corporation or other entity taxed as a corporation under the Internal Revenue Code, whether foreign, domestic, or domesticated, shall be subject to the Nebraska income tax; provided such corporate entity is not exempt under the provisions of Public Law 86-272 (15 U.S.C.A. 381-384, 1959), is not a financial institution, and has part of its federal taxable income derived from sources within Nebraska (Neb.Rev.Stat. Sections 77-2734.02, 77-2734.04, and 77-3801).
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Corporations operating as a unitary group must file a single combined return to report the income of the entire group. If you operate a multistate corporation or group of corporations, see the question "How does a multistate business apportion its income?" (Neb.Rev.Stat. Sections 77-2734.02, 77-2734.04, and 77-2734.06)
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Nebraska taxes LLCs in the same way as the Internal Revenue Service. LLCs filing Federal Corporation Income Tax Returns must also file a Nebraska Corporation Income Tax Return, Form 1120N. If, however, the LLC is taxed federally as a partnership, then it will file a Nebraska Partnership Return of Income, Form 1065N.
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When a group of corporations conducts a unitary business both within and without Nebraska, it will determine the income of the group attributable to its activities in Nebraska by use of an apportionment formula utilizing the combined income approach. Nebraska uses a single factor, sales-only formula to apportion income (Neb.Rev.Stat. Section 77-2734.05).
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Nebraska net operating losses and capital losses may be carried back and forward as follows:
Loss Year |
Carryback |
Carryforward |
| 1984 through 1986 |
3 years |
15 years |
| 1987 through current |
0 years |
5 years |
For additional information, see Regulation 24-060.
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Any corporation whose reported amounts of federal taxable income or deductions are changed by the IRS must report the change or correction within 90 days of the determination by filing an Amended Nebraska Corporation Income Tax Return, Form 1120XN.
Any corporation which files an amended return with the IRS must file a Form 1120XN within 90 days of the filing of the amended federal return (Neb.Rev.Stat. Section 77-2775).
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A Nebraska extension of time to file a Form 1120N may only be obtained in the following manner:
- File a Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, on or before the due date of the return;
- Attach a copy of a timely filed Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, to the Nebraska return when filed;
- Attach a copy of the approved federal extension to the Nebraska return when filed; or
- If a federal extension has been granted, additional time to file the Nebraska return may be obtained by filing a Form 7004N on or before the date that the federal extension expires. Attach a copy of the Federal Form 7004 or approved federal extensions to the Form 7004N when filed.
When an extension of time to file a Nebraska return is granted, INTEREST is still due on any unpaid tax. An extension of time cannot exceed a total of seven months after the due date of the return. You can make a tentative payment to stop interest from accruing. If such payment is made, Nebraska Application for Automatic Extension of Time to File Corporation Income Tax Return, Form 7004N, must also be filed. When filing your Nebraska Corporation Income Tax Return, Form 1120N, claim the tentative payment on line 21 of Form 1120N (Neb.Rev.Stat. Section 77-2770).
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United States interest and dividend income exempt from state taxation includes:
- Series E, F, G, and H savings bonds
- U.S. Treasury bills
- U.S. Government notes and bonds
- U.S. Government certificates
- Interest on debentures issued to mortgagees of mortgages foreclosed under provisions of the National Housing Act, if insured after February 3, 1938
- Retirement bonds as provided by I.R.C. section 409
- Federal Farm Credit Bank Consolidated System-wide bonds
- Federal Land Banks and Associations
- Federal Intermediate Credit Bank
- Commodity Credit Corporation
- Federal Farm Mortgage Corporation
- Federal Home Loan Banks
- Reconstruction Finance Corporation
- General Services Administration Participation Certificates
- Central Bank for Cooperatives (interest only)
- Federal Reserve Banks
- Federal Savings and Loan Insurance Corporation
- Production Credit Association (interest only)
- Tennessee Valley Authority bonds
- Postal Service bonds
- Federal Deposit Insurance Corporation (interest only)
- Student Loan Marketing Association (interest only)
- Resolution Trust Corporation
Dividends and other income received from a regulated investment company are exempt to the extent they represent U.S. Government interest and dividend income listed above.
A deduction for U.S. Government interest and dividend income is taken on line 2 of Nebraska Schedule A, Form 1120N. For additional information, see the Nebraska Corporation Income Tax Booklet, and Regulation 24-048.
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A penalty of 5% per month (up to 25%) may be assessed on any outstanding tax liability.
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The due date for the Nebraska corporation income tax return is the 15th day of the third month following the close of the taxable year (Neb.Rev.Stat. Section 77-2768).
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| 2008 Nebraska Corporation Income Tax Rates |
| If taxable income is: |
| over |
but not over |
The Nebraska tax is: |
| $0 |
$100,000 |
|
5.58% of income |
| $100,000 |
-- |
$5,580 + |
7.81% of the excess over $100,000 |
For a listing of the tax rates in prior years, click here.
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Fiduciary Income Tax
| 2008 Nebraska Tax Rate Schedule for Fiduciary Income Tax |
| If taxable income is: |
| over |
but not over |
The Nebraska tax is: |
| $0 |
$500 |
|
2.56% of income |
| 500 |
4,700 |
$12.80 + |
3.57% of the excess over $500 |
| 4,700 |
15,150 |
$162.74 + |
5.12% of the excess over $4,700 |
| 15,150 |
----- |
$697.78 + |
6.84% of the excess over $15,150 |
The credit is the smallest of the computed tax credit, the tax due and paid to the other state, or the Nebraska income tax.
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Nebraska Department of Economic Development
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