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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 1179
Introduced by Wayne, 13.
Read first time January 23, 2020
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 77-27,119 and 77-5905, Reissue Revised Statutes of Nebraska,
3 sections 49-801.01 and 84-602.03, Revised Statutes Cumulative
4 Supplement, 2018, and sections 50-1209 and 77-2711, Revised Statutes
5 Supplement, 2019; to adopt the ImagiNE Small Business and Urban
6 Revitalization Act; to harmonize provisions; and to repeal the
7 original sections.
8 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 22 of this act shall be known and may be
2 cited as the ImagiNE Small Business and Urban Revitalization Act.
3 Sec. 2. For purposes of the ImagiNE Small Business and Urban
4 Revitalization Act, the definitions found in sections 3 to 10 of this act
5 shall be used.
6 Sec. 3. Any term has the same meaning as used in the Nebraska
7 Revenue Act of 1967.
8 Sec. 4. Blighted area means an area that has been declared a
9 substandard and blighted area pursuant to section 18-2109.
10 Sec. 5. Equivalent employees means the number of employees computed
11 by dividing the total hours paid in a year to employees by the product of
12 forty times the number of weeks in a year.
13 Sec. 6. (1) Qualified business means any business engaged in:
14 (a) Storage, warehousing, distribution, transportation, or the sale
15 of tangible personal property;
16 (b) Conducting research, development, or testing for scientific,
17 agricultural, animal husbandry, food product, or industrial purposes;
18 (c) Performing data processing services, telecommunication services,
19 insurance services, or financial services;
20 (d) Assembly, fabrication, manufacture, or processing of tangible
21 personal property;
22 (e) Administrative management of any activities, including
23 headquarter facilities relating to such activities; or
24 (f) Any combination of the activities listed in this subsection.
25 (2) For purposes of this section:
26 (a) Financial services includes only financial services provided by
27 a financial institution subject to tax under Chapter 77, article 38, or
28 any person or entity licensed by the Department of Banking and Finance or
29 the Securities and Exchange Commission; and
30 (b) Telecommunication services includes community antenna television
31 service, Internet access services, and telemarketing services and any
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1 satellite ground station, data center, or call center.
2 Sec. 7. Qualified employee leasing company means a company that
3 places all employees of a client-lessee on its payroll and leases such
4 employees to the client-lessee on an ongoing basis for a fee and, by
5 written agreement between the employee leasing company and a client-
6 lessee, grants to the client-lessee input into the hiring and firing of
7 the employees leased to the client-lessee.
8 Sec. 8. Related taxpayers shall include any corporations that are
9 part of a unitary business under the Nebraska Revenue Act of 1967 but are
10 not part of the same corporate taxpayer, any business entities that are
11 not corporations but which would be a part of the unitary business if
12 they were corporations, and any business entities if at least fifty
13 percent of such entities are owned by the same persons or related
14 taxpayers and family members as defined in the ownership attribution
15 rules of the Internal Revenue Code of 1986, as amended.
16 Sec. 9. Taxpayer means a corporate taxpayer or other person subject
17 to either an income tax imposed by the Nebraska Revenue Act of 1967 or a
18 franchise tax under Chapter 77, article 38, or a partnership, limited
19 liability company, subchapter S corporation, cooperative, including a
20 cooperative exempt under section 521 of the Internal Revenue Code of
21 1986, as amended, limited cooperative association, or joint venture that
22 is or would otherwise be a member of the same unitary group if
23 incorporated, which is, or whose partners, members, or owners
24 representing an ownership interest of at least ninety percent of the
25 control of such entity are, subject to or exempt from such taxes, and any
26 other partnership, limited liability company, subchapter S corporation,
27 cooperative, including a cooperative exempt under section 521 of the
28 Internal Revenue Code of 1986, as amended, limited cooperative
29 association, or joint venture when the partners, members, or owners
30 representing an ownership interest of at least ninety percent of the
31 control of such entity are subject to or exempt from such taxes.
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1 Sec. 10. Year means the taxable year of the taxpayer.
2 Sec. 11. (1) To earn the incentives set forth in the ImagiNE Small
3 Business and Urban Revitalization Act, the taxpayer shall file an
4 application for an agreement with the Director of Economic Development.
5 (2) The application shall contain:
6 (a) A written statement describing the full expected employment and
7 investment amount for a qualified business in this state;
8 (b) Sufficient documents, plans, and specifications as required by
9 the director to support the plan and to define a project; and
10 (c) An application fee of five hundred dollars. The fee shall be
11 remitted to the State Treasurer for credit to the Nebraska Incentives
12 Fund.
13 (3) The application and all supporting information shall be
14 confidential except for the name of the taxpayer, the location of the
15 project, and the amounts of increased employment or investment.
16 (4) Subject to the limit in subsection (5) of this section, the
17 director shall approve the application and authorize the total amount of
18 credits expected to be earned as a result of the project if he or she is
19 satisfied that the plan in the application defines a project that meets
20 the requirements established in section 12 of this act and such
21 requirements will be reached within the required time period.
22 (5) For each calendar year, the director shall not approve further
23 applications once the expected credits from the approved projects total
24 five million dollars. Four hundred dollars of the application fee shall
25 be refunded to the applicant if the application is not approved because
26 such limit is reached.
27 (6) Applications for incentives shall be considered in the order in
28 which they are received.
29 (7) Applications shall be filed by November 1 and shall be complete
30 by December 1 of each calendar year. Any application that is filed after
31 November 1 or that is not complete on December 1 shall be considered to
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1 be filed during the following calendar year.
2 (8) After approval, the taxpayer and the director shall enter into a
3 written agreement. As part of such agreement, the taxpayer shall agree to
4 complete the project and the director, on behalf of the State of
5 Nebraska, shall designate the approved plans of the taxpayer as a project
6 and, in consideration of the taxpayer's agreement, agree to allow the
7 taxpayer to use the incentives contained in the ImagiNE Small Business
8 and Urban Revitalization Act up to the total amount that were authorized
9 by the director at the time of approval. The application and all
10 supporting documentation, to the extent approved, shall be considered a
11 part of the agreement. The agreement shall state:
12 (a) The levels of employment and investment required by the act for
13 the project;
14 (b) The time period under the act in which the required levels must
15 be met;
16 (c) The documentation the taxpayer will need to supply when claiming
17 an incentive under the act;
18 (d) The date the application was filed; and
19 (e) The maximum amount of credits authorized.
20 (9) There shall be no new applications for incentives filed under
21 this section after December 31, 2028.
22 Sec. 12. (1) A refundable credit against the taxes imposed by the
23 Nebraska Revenue Act of 1967 shall be allowed to any taxpayer who has an
24 approved application pursuant to the ImagiNE Small Business and Urban
25 Revitalization Act, who is engaged in a qualified business, and who:
26 (a) Increases employment by five new equivalent employees and makes
27 an increased investment of at least two hundred fifty thousand dollars
28 prior to the end of the first taxable year after the year in which the
29 application was submitted in a blighted area located within a city of the
30 metropolitan class or city of the primary class; and
31 (b) Pays a minimum qualifying wage of fourteen dollars per hour to
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1 the new equivalent employees for whom tax credits are sought under the
2 ImagiNE Small Business and Urban Revitalization Act.
3 (2) A refundable credit against the taxes imposed by the Nebraska
4 Revenue Act of 1967 shall be allowed to any taxpayer who has an approved
5 application pursuant to the ImagiNE Small Business and Urban
6 Revitalization Act, who is engaged in a qualified business, and who makes
7 an increased investment of at least fifty thousand dollars prior to the
8 end of the first taxable year after the year in which the application was
9 submitted in a blighted area located within a city of the first class,
10 city of the second class, or village.
11 (3) The amount of the credit allowed under subsection (1) of this
12 section shall be three thousand dollars for each new equivalent employee
13 and two thousand seven hundred fifty dollars for each fifty thousand
14 dollars of increased investment.
15 (4) The amount of the credit allowed under subsection (2) of this
16 section shall be ten percent of the investment, not to exceed a credit of
17 one hundred fifty thousand dollars per application.
18 (5) The credit shall not exceed the amounts set out in the
19 application and approved by the Director of Economic Development.
20 (6) Any increase in investment or employment that is used in
21 determining benefits under the ImagiNE Small Business and Urban
22 Revitalization Act shall be excluded from the increases computed for
23 determining benefits under any other tax incentive program offered by
24 this state. Any increase in investment or employment that is used in
25 determining benefits under another tax incentive program offered by this
26 state shall be excluded from the increases computed for determining
27 benefits under the ImagiNE Small Business and Urban Revitalization Act.
28 (7) For purposes of this section:
29 (a) An employee of a qualified employee leasing company shall be
30 considered to be an employee of the client-lessee if the employee
31 performs services for the client-lessee. A qualified employee leasing
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1 company shall provide the Department of Economic Development with access
2 to the records of employees leased to the client-lessee; and
3 (b) A teleworker working in a blighted area from his or her
4 residence for a taxpayer shall be considered an employee of the taxpayer,
5 and property of the taxpayer provided to such teleworker shall be
6 considered an investment. Teleworker includes an individual working on a
7 per-item basis and an independent contractor working for the taxpayer so
8 long as the taxpayer withholds Nebraska income tax from wages or other
9 payments made to such teleworker. For purposes of calculating the number
10 of new equivalent employees when the teleworkers are paid on a per-item
11 basis or are independent contractors, the total wages or payments made to
12 all such new employees during the year shall be divided by the minimum
13 qualifying wage described in subdivision (1)(b) of this section, with the
14 result divided by two thousand eighty hours.
15 Sec. 13. (1) A taxpayer shall be deemed to have new equivalent
16 employees when the new equivalent employees hired during a taxable year
17 are in addition to the number of total equivalent employees in the
18 taxable year preceding the date of application.
19 (2) Employees of a qualifying business who work within and without
20 this state shall be considered only to the extent they are paid for work
21 performed within this state.
22 (3) The hours worked by any person considered an independent
23 contractor or the employee of another taxpayer shall not be used in the
24 computation of equivalent employees, except as provided in subsection (7)
25 of section 12 of this act.
26 Sec. 14. (1) A taxpayer shall be deemed to have made an increased
27 investment in this state to the extent the value of the property used or
28 available for use exceeds the value of all property used or available for
29 use on the last day of the taxable year previous to the date the
30 application was filed.
31 (2) To determine the value of property owned by the taxpayer, the
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1 tax basis before allowance for depreciation shall be used. To determine
2 the value of property rented by the taxpayer, the average net annual rent
3 shall be multiplied by the number of years of the lease for which the
4 taxpayer was originally bound, not to exceed ten years. The rental of
5 land included in and incidental to the leasing of a building shall not be
6 excluded from the computation.
7 (3) Only investment in improvements to real property and tangible
8 personal property that are depreciable under the Internal Revenue Code of
9 1986, as amended, shall be considered.
10 (4)(a) Vehicles, planes, and railroad rolling stock shall be
11 excluded when determining the increased investment for purposes of the
12 credit allowed under subsection (1) of section 12 of this act.
13 (b) Vehicles, planes, railroad rolling stock, single-family housing,
14 and duplexes shall be excluded when determining the increased investment
15 for purposes of the credit allowed under subsection (2) of section 12 of
16 this act.
17 Sec. 15. (1)(a) If the taxpayer acquires an existing business, the
18 increases determined in sections 13 and 14 of this act shall be computed
19 as though the taxpayer had owned the business for the entire taxable year
20 preceding the date of application.
21 (b) If the taxpayer disposes of an existing business and the new
22 owner maintains the minimum increases in the levels of investment and
23 employment required in section 12 of this act to create a credit, the
24 taxpayer shall not be required to make any repayment under section 18 of
25 this act solely because of the disposition of the business.
26 (2) If the structure of a business is reorganized, the taxpayer
27 shall compute