Bill Summary – FastDemocracy

LB74                                                                     LB74
                                                                   2023
                               LEGISLATURE OF NEBRASKA
                            ONE HUNDRED EIGHTH LEGISLATURE
                                    FIRST SESSION
                       LEGISLATIVE BILL 74
       Introduced by Linehan, 39.
       Read first time January 05, 2023
       Committee: Revenue
  A BILL FOR AN ACT relating to sales and use taxes; to amend sections
       77-2701, 77-2701.04, 77-2701.41, 77-2711, 77-2713, and 77-27,223,
      Revised Statutes Cumulative Supplement, 2022; to change provisions
      relating to purchasing agents; to harmonize provisions; to provide
      an operative date; and to repeal the original sections.
  Be it enacted by the people of the State of Nebraska,
                                          -1-
LB74                                                                                                  LB74
                                                                                                2023
       Section 1. Section 77-2701, Revised Statutes Cumulative Supplement,
   2022, is amended to read:
      77-2701       Sections      77-2701       to    77-27,135.01,      77-27,222,      77-27,235,
  77-27,236, and 77-27,238 to 77-27,240 and section 4 of this act shall be
  known and may be cited as the Nebraska Revenue Act of 1967.
      Sec. 2. Section 77-2701.04, Revised Statutes Cumulative Supplement,
  2022, is amended to read:
      77-2701.04         For purposes of    sections     77-2701.04    to    77-2713    and
   77-27,239    and section    4    of this act,      unless the context otherwise
  requires, the definitions found in sections 77-2701.05 to 77-2701.55
  shall be used.
      Sec. 3. Section 77-2701.41, Revised Statutes Cumulative Supplement,
  2022, is amended to read:
      77-2701.41 Taxpayer means any person subject to a tax imposed by
  sections 77-2701 to 77-2713 and section 4 of this act.
       Sec.     4.        (1)   The appointment of    purchasing agents shall be
  recognized for the purpose of permitting a construction contractor to
  purchase materials tax free based on the buyer-based exemption of the
  contractor's client for items that are physically annexed to    the
   structure and which subsequently belong to the client who is eligible for
   the buyer-based exemption. The appointment of purchasing agents shall be
  in writing and occur prior to having any buyer-based tax-exempt items
  annexed to real estate in the construction, improvement, or repair. The
  contractor who has been appointed as a purchasing agent may purchase the
   materials tax free or may apply for a refund of or use as a credit
  against a future use tax liability the tax paid on inventory items
  annexed to real estate in the construction, improvement, or repair of a
  project that belongs to the client who is eligible for the buyer-based
  exemption.
      (2) A client described in subsection (1) of this section which
   enters into     a contract of    construction,       improvement,    or repair with
                                                     -2-
LB74                                                                                             LB74
                                                                                           2023
   respect to buyer-based tax-exempt items annexed to real estate without
   first issuing     a purchasing agent authorization to    a construction
   contractor prior to such items being annexed to real estate in the
   project may apply to the Tax Commissioner for a refund of any sales and
   use tax paid by the contractor on such items physically annexed to real
   estate in the construction, improvement, or repair.
       Sec. 5. Section 77-2711, Revised Statutes Cumulative Supplement,
   2022, is amended to read:
       77-2711       (1)(a)    The Tax Commissioner shall enforce sections
   77-2701.04 to 77-2713 and section 4 of this act and may prescribe, adopt,
   and enforce rules and regulations relating to the administration and
   enforcement of such sections.
       (b) The Tax Commissioner may prescribe the extent to which any
   ruling or regulation shall be applied without retroactive effect.
       (2)    The Tax Commissioner may employ accountants,         auditors,
   investigators,     assistants,      and clerks necessary for the efficient
   administration of the Nebraska Revenue Act of 1967 and may delegate
   authority to his or her representatives to conduct hearings, prescribe
   regulations, or perform any other duties imposed by such act.
       (3)(a)    Every seller,   every retailer,     and every person storing,
   using, or otherwise consuming in this state property purchased from a
   retailer shall keep such records, receipts, invoices, and other pertinent
   papers in such form as the Tax Commissioner may reasonably require.
       (b) Every such seller, retailer, or person shall keep such records
   for not less than three years from the making of such records unless the
   Tax Commissioner in writing sooner authorized their destruction.
       (4) The Tax Commissioner or any person authorized in writing by him
   or her may examine the books, papers, records, and equipment of any
   person selling property and any person liable for the use tax and may
   investigate the character of the business of the person in order to
   verify the accuracy of any return made or, if no return is made by the
                                                 -3-
LB74                                                                                               LB74
                                                                                             2023
  person, to ascertain and determine the amount required to be paid. In the
  examination of any person selling property or of any person liable for
  the use tax, an inquiry shall be made as to the accuracy of the reporting
  of city and county sales and use taxes for which the person is liable
  under the Local Option Revenue Act or sections 13-319, 13-324, 13-2813,
  and 77-6403 and the accuracy of the allocation made between the various
   counties, cities, villages, and municipal counties of the tax due. The
  Tax Commissioner may make or   cause to    be made copies of    resale or
   exemption certificates and may pay a reasonable amount to the person
   having custody of the records for providing such copies.
        (5) The taxpayer shall have the right to keep or store his or her
  records at a point outside this state and shall make his or her records
  available to the Tax Commissioner at all times.
        (6) In administration of the use tax, the Tax Commissioner may
  require the filing of reports by any person or class of persons having in
  his, her, or their possession or custody information relating to sales of
  property, the storage, use, or other consumption of which is subject to
  the tax. The report shall be filed when the Tax Commissioner requires and
  shall set forth the names and addresses of purchasers of the property,
   the sales price of    the property,    the date of     sale,   and such other
   information as the Tax Commissioner may require.
         (7) It shall be a Class I misdemeanor for the Tax Commissioner or
  any official or employee of the Tax Commissioner, the State Treasurer, or
   the Department of Administrative Services to make known in any manner
   whatever the business affairs, operations, or information obtained by an
  investigation of records and activities of any retailer or any other
  person visited or examined in the discharge of official duty or the
  amount or   source of    income,     profits,     losses,       expenditures,     or any
  particular thereof, set forth or disclosed in any return, or to permit
   any return or copy thereof, or any book containing any abstract or
   particulars thereof to be seen or examined by any person not connected
                                                 -4-
LB74                                                                                             LB74
                                                                                           2023
  with the Tax Commissioner. Nothing in this section shall be construed to
   prohibit (a) the delivery to a taxpayer, his or her duly authorized
  representative, or his or her successors, receivers, trustees, executors,
   administrators, assignees, or guarantors, if directly interested, of a
  certified copy of any return or report in connection with his or her tax,
  (b)   the publication of    statistics so   classified as     to prevent the
  identification of particular reports or returns and the items thereof,
  (c) the inspection by the Attorney General, other legal representative of
  the state, or county attorney of the reports or returns of any taxpayer
  when either (i) information on the reports or returns is considered by
  the Attorney General to    be relevant to    any action or        proceeding
   instituted by the taxpayer or against whom an action or proceeding is
   being considered or has been commenced by any state agency or the county
  or (ii) the taxpayer has instituted an action to review the tax based
   thereon or an action or proceeding against the taxpayer for collection of
   tax or failure to comply with the Nebraska Revenue Act of 1967 is being
  considered or has been commenced, (d) the furnishing of any information
  to the United States Government or to states allowing similar privileges
  to the Tax Commissioner, (e) the disclosure of information and records to
  a collection agency contracting with the Tax Commissioner pursuant to
  sections 77-377.01 to 77-377.04, (f) the disclosure to another party to a
  transaction of information and records concerning the transaction between
  the taxpayer and the other party, (g) the disclosure of information
  pursuant to section 77-27,195, 77-5731, 77-6837, 77-6839, or 77-6928, or
  (h) the disclosure of information to the Department of Labor necessary
   for the administration of the Employment Security Law, the Contractor
   Registration Act, or the Employee Classification Act.
        (8)   Notwithstanding the provisions of    subsection         (7)    of this
  section, the Tax Commissioner may permit the Postal Inspector of the
   United States Postal Service or his or her delegates to inspect the
  reports or returns of any person filed pursuant to the Nebraska Revenue
                                               -5-
LB74                                                                                                  LB74
                                                                                                2023
  Act of 1967 when information on the reports or returns is relevant to any
  action or proceeding instituted or being considered by the United States
   Postal Service against such person for the fraudulent use of the mails to
   carry and deliver false and fraudulent tax returns to      the Tax
   Commissioner with the intent to defraud the State of Nebraska or to evade
   the payment of Nebraska state taxes.
         (9)     Notwithstanding the provisions of    subsection     (7)     of this
  section, the Tax Commissioner may permit other tax officials of this
  state to inspect the tax returns, reports, and applications filed under
   sections 77-2701.04 to 77-2713 and section 4 of this act, but such
  inspection shall be permitted only for purposes of enforcing a tax law
  and only to the extent and under the conditions prescribed by the rules
  and regulations of the Tax Commissioner.
        (10)       Notwithstanding the provisions of    subsection    (7)     of this
  section, the Tax Commissioner may, upon request, provide the county board
   of any county which has exercised the authority granted by    section
  81-3716 with a list of the names and addresses of the hotels located
   within the county for which lodging sales tax returns have been filed or
   for which lodging sales taxes have been remitted for the county's County
   Visitors Promotion Fund under the Nebraska Visitors Development Act.
        The information provided by the Tax Commissioner shall indicate only
   the names and addresses of the hotels located within the requesting
   county for which lodging sales tax returns have been filed for   a
   specified period and the fact that lodging sales taxes remitted by or on
  behalf of the hotel have constituted a portion of the total sum remitted
  by the state to the county for a specified period under the provisions of
  the Nebraska Visitors Development Act. No additional information shall be
  revealed.
         (11)(a) Notwithstanding the provisions of subsection (7) of this
   section, the Tax Commissioner shall, upon written request by the Auditor
   of Public Accounts or the office of Legislative Audit, make tax returns
                                                     -6-
LB74                                                                                                    LB74
                                                                                                  2023
   and tax return information open to inspection by or disclosure to the
   Auditor of Public Accounts or employees of the office of Legislative
   Audit for the purpose of and to the extent necessary in making an audit
   of the Department of Revenue pursuant to section 50-1205 or 84-304.
   Confidential tax returns and tax return information shall be audited only
   upon the premises of the Department of Revenue. All audit workpapers
   pertaining to the audit of the Department of Revenue shall be stored in a
   secure place in the Department of Revenue.
        (b) No employee of the Auditor of Public Accounts or the office of
   Legislative Audit shall disclose to    any person,    other than another
   Auditor of   Public Accounts or   office employee whose official duties
   require such disclosure, any return or return information described in
   the Nebraska Revenue Act of 1967 in a form which can be associated with
   or otherwise identify, directly or indirectly, a particular taxpayer.
        (c) Any person who violates the provisions of this subsection shall
   be guilty of a Class I misdemeanor. For purposes of this subsection,
   employee includes       a former Auditor of    Public Accounts or    office of
   Legislative Audit employee.
        (12) For purposes of this subsection and subsections (11) and (14)
   of this section:
        (a) Disclosure means the making known to any person in any manner a
   tax return or return information;
        (b) Return information means:
        (i) A taxpayer's identification number and (A) the nature, source,
   or amount of   his or   her income,         payments,       receipts,      deductions,
   exemptions, credits, assets, liabilities, net worth, tax liability, tax
   withheld, deficiencies, overassessments, or tax payments, whether the
   taxpayer's return was, is being, or will be examined or subject to other
   investigation or processing or (B) any other data received by, recorded
   by, prepared by, furnished to, or collected by the Tax Commissioner with
   respect to a return or the determination of the existence or possible
                                                      -7-
LB74                                                                                                          LB74
                                                                                                        2023
  existence of liability or the amount of liability of any person for any
  tax, penalty, interest, fine, forfeiture, or other imposition or offense;
  and
         (ii) Any part of any written determination or any background file
   document relating to such written determination; and
         (c) Tax return or return means any tax or information return or
   claim for refund required by, provided for, or permitted under sections
   77-2701 to 77-2713 and section 4 of this act which is filed with the Tax
   Commissioner by, on behalf of, or with respect to any person and any
   amendment or      supplement thereto,      including supporting schedules,
  attachments, or lists which are supplemental to or part of the filed
  return.
        (13)    Notwithstanding the provisions of   subsection        (7)    of this
  section,      the Tax Commissioner shall,     upon request,        provide any
   municipality which has adopted the local option sales tax under the Local
   Option Revenue Act with   a list of   the names and addresses of    the
  retailers which have collected the local option sales tax for the
  municipality. The request may be made annually and shall be submitted to
  the Tax Commissioner on or before June 30 of each year. The information
   provided by     the Tax Commissioner shall indicate only the names and
  addresses of the retailers. The Tax Commissioner may provide additional
   information to a municipality so long as the information does not include
   any data detailing the specific revenue, expenses, or operations of any
   particular business.
         (14)(a) Notwithstanding the provisions of subsection (7) of this
   section, the Tax Commiss