LB350 LB350
2023 2023
LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 350
Introduced by Wayne, 13.
Read first time January 12, 2023
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 77-908, 77-2715.07, 77-2717, 77-2734.03, and 77-3806, Revised
3 Statutes Cumulative Supplement, 2022; to adopt the Pioneer Economic
4 Tax Credit Act; to harmonize provisions; to provide an operative
5 date; and to repeal the original sections.
6 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 10 of this act shall be known and may be
2 cited as the Pioneer Economic Tax Credit Act.
3 Sec. 2. For purposes of the Pioneer Economic Tax Credit Act:
4 (1) Community development financial institution means an
5 organization that is certified as a community development financial
6 institution and is eligible to receive financial assistance from the
7 Community Development Financial Institutions Fund of the United States
8 Department of the Treasury;
9 (2) Department means the Department of Economic Development;
10 (3) Eligible activity means a program or activity described in
11 section 4 of this act;
12 (4) iHub means an organization that has been designated as an iHub
13 under the Nebraska Innovation Hub Act;
14 (5) Intermodal facility means a hub or other facility for trade
15 combining any combination of rail, barge, trucking, air cargo, or other
16 transportation services;
17 (6) Qualifying organization means an organization that is certified
18 pursuant to section 3 of this act to provide tax-credit-supported funding
19 for eligible activities; and
20 (7) Tax credit means a credit against the income tax due under the
21 Nebraska Revenue Act of 1967 or against any tax due under sections 77-907
22 to 77-918 or 77-3801 to 77-3807.
23 Sec. 3. (1) An organization is eligible to become certified as a
24 qualifying organization for tax-credit purposes under the Pioneer
25 Economic Tax Credit Act if the organization is either:
26 (a) An iHub; or
27 (b) A community development financial institution.
28 (2) An organization seeking certification under this section shall
29 file an application with the department in a form and manner prescribed
30 by the department.
31 (3) If the department finds that an applicant is eligible for
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1 certification under this section, the department shall certify it as a
2 qualifying organization. An applicant shall obtain such certification
3 prior to accepting any donations from taxpayers under the act.
4 Sec. 4. (1) A qualifying organization may use donations received
5 under the Pioneer Economic Tax Credit Act to fund eligible activities.
6 For purposes of the act, the following shall be considered eligible
7 activities:
8 (a) A project to make a site ready for industrial development. Such
9 a site must be:
10 (i) Owned by the qualifying organization or by a city or village in
11 this state; and
12 (ii) A location that has received an expression of interest by a
13 private developer or that has been rejected by a private developer for an
14 identifiable reason;
15 (b) A project for the construction of intermodal facilities at a
16 site owned by the qualifying organization or by a city or village in this
17 state;
18 (c) A project for the construction of a sports facility or stadium
19 at a site owned by the qualifying organization or by a city or village in
20 this state;
21 (d) A project to provide funding for the creation or operation of an
22 accelerator program for technology companies. For purposes of this
23 subdivision, accelerator program means a program that:
24 (i) Provides education and mentorship lasting no more than twenty-
25 four months for early-stage technology companies that have been recruited
26 to a location in this state; and
27 (ii) Has a defined curriculum and mentorship component designed to
28 accelerate a technology company's development and growth; and
29 (e) A project to provide funding and support services to
30 underrepresented companies. For purposes of this subdivision,
31 underrepresented company means a for-profit business that:
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1 (i) Is headquartered in a community that is eligible for investment
2 through the federal new markets tax credit program under 26 U.S.C.
3 45D(e);
4 (ii) Has fewer than ten employees; and
5 (iii) Has average gross revenue of less than five hundred thousand
6 dollars over the previous three years.
7 (2) The activities described in subdivisions (1)(a), (b), and (c) of
8 this section shall be considered eligible activities under this section
9 only if the qualifying organization providing the funding is an iHub.
10 Sec. 5. (1) An individual taxpayer who makes one or more cash
11 contributions to one or more qualifying organizations during a tax year
12 for the purpose of funding eligible activities shall be eligible for a
13 tax credit under the Pioneer Economic Tax Credit Act. The amount of the
14 credit shall be equal to fifty percent of the total amount of such
15 contributions made during the tax year.
16 (2) Taxpayers who are married but file separate returns for a tax
17 year in which they could have filed a joint return may each claim only
18 one-half of the tax credit that would otherwise have been allowed for a
19 joint return.
20 (3) The tax credit allowed under this section shall be a
21 nonrefundable credit. Any amount of the credit that is unused may be
22 carried forward and applied against the taxpayer's tax liability for the
23 next five years immediately following the tax year in which the credit is
24 first allowed. The tax credit cannot be carried back.
25 (4) The tax credit allowed under this section is subject to section
26 9 of this act.
27 Sec. 6. (1) Any partnership, limited liability company, or
28 corporation having an election in effect under subchapter S of the
29 Internal Revenue Code of 1986, as amended, that makes one or more cash
30 contributions to one or more qualifying organizations during a tax year
31 for the purpose of funding eligible activities shall be eligible for a
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1 tax credit under the Pioneer Economic Tax Credit Act. The amount of the
2 credit shall be equal to fifty percent of the total amount of such
3 contributions made during the tax year. The credit shall be attributed to
4 each partner, member, or shareholder in the same proportion used to
5 report the partnership's, limited liability company's, or subchapter S
6 corporation's income or loss for income tax purposes.
7 (2) The tax credit allowed under this section shall be a
8 nonrefundable credit. Any amount of the tax credit that is unused may be
9 carried forward and applied against the taxpayer's tax liability for the
10 next five years immediately following the tax year in which the credit is
11 first allowed. The tax credit cannot be carried back.
12 (3) The tax credit allowed under this section is subject to section
13 9 of this act.
14 Sec. 7. (1) An estate or trust which makes one or more cash
15 contributions to one or more qualifying organizations during a tax year
16 for the purpose of funding eligible activities shall be eligible for a
17 tax credit under the Pioneer Economic Tax Credit Act. The amount of the
18 credit shall be equal to fifty percent of the total amount of such
19 contributions made during the tax year. Any credit not used by the estate
20 or trust may be attributed to each beneficiary of the estate or trust in
21 the same proportion used to report the beneficiary's income from the
22 estate or trust for income tax purposes.
23 (2) The tax credit allowed under this section shall be a
24 nonrefundable credit. Any amount of the tax credit that is unused may be
25 carried forward and applied against the taxpayer's tax liability for the
26 next five years immediately following the tax year in which the credit is
27 first allowed. The tax credit cannot be carried back.
28 (3) The tax credit allowed under this section is subject to section
29 9 of this act.
30 Sec. 8. (1) A corporate taxpayer as defined in section 77-2734.04
31 which makes one or more cash contributions to one or more qualifying
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1 organizations during a tax year for the purpose of funding eligible
2 activities shall be eligible for a tax credit under the Pioneer Economic
3 Tax Credit Act. The amount of the credit shall be equal to fifty percent
4 of the total amount of such contributions made during the tax year.
5 (2) The tax credit allowed under this section shall be a
6 nonrefundable credit. Any amount of the tax credit that is unused may be
7 carried forward and applied against the taxpayer's tax liability for the
8 next five years immediately following the tax year in which the credit is
9 first allowed. The tax credit cannot be carried back.
10 (3) The tax credit allowed under this section is subject to section
11 9 of this act.
12 Sec. 9. (1) Prior to making a contribution to a qualifying
13 organization, any taxpayer desiring to claim a tax credit under the
14 Pioneer Economic Tax Credit Act shall notify the qualifying organization
15 of the taxpayer's intent to make a contribution and the amount to be
16 claimed as a tax credit. Upon receiving each such notification, the
17 qualifying organization shall notify the department of the intended tax
18 credit amount. If the department determines that the intended tax credit
19 amount in the notification would exceed the limit specified in subsection
20 (3) of this section, the department shall notify the qualifying
21 organization of its determination within thirty days after receipt of the
22 notification. The qualifying organization shall then promptly notify the
23 taxpayer of the department's determination that the intended tax credit
24 amount in the notification is not available. If an amount less than the
25 amount indicated in the notification is available for a tax credit, the
26 department shall notify the qualifying organization of the available
27 amount and the qualifying organization shall notify the taxpayer of the
28 available amount within three business days.
29 (2) In order to be allowed a tax credit as provided by the act, the
30 taxpayer shall make its contribution between thirty-one and sixty days
31 after notifying the qualifying organization of the taxpayer's intent to
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1 make a contribution. If the qualifying organization does not receive the
2 contribution within the required time period, it shall notify the
3 department of such fact and the department shall no longer include such
4 amount when calculating whether the limit prescribed in subsection (3) of
5 this section has been exceeded. If the qualifying organization receives
6 the contribution within the required time period, it shall provide the
7 taxpayer with a receipt for the contribution. The receipt shall show the
8 name and address of the qualifying organization, the date the qualifying
9 organization was certified by the department in accordance with section 3
10 of this act, the name, address, and, if available, tax identification
11 number of the taxpayer making the contribution, the amount of the
12 contribution, and the date the contribution was received.
13 (3) The department shall consider notifications regarding intended
14 tax credit amounts in the order in which they are received to ascertain
15 whether the intended tax credit amounts are within the annual limit
16 provided in this subsection. The annual limit on the total amount of tax
17 credits for calendar year 2024 and each calendar year thereafter shall be
18 fifty million dollars. Once credits have reached the annual limit for any
19 calendar year, no additional credits shall be allowed for such calendar
20 year. Credits shall be prorated among the notifications received on the
21 day the annual limit is exceeded.
22 Sec. 10. The department may adopt and promulgate rules and
23 regulations to carry out the Pioneer Economic Tax Credit Act.
24 Sec. 11. Section 77-908, Revised Statutes Cumulative Supplement,
25 2022, is amended to read:
26 77-908 Every insurance company organized under the stock, mutual,
27 assessment, or reciprocal plan, except fraternal benefit societies, which
28 is transacting business in this state shall, on or before March 1 of each
29 year, pay a tax to the director of one percent of the gross amount of
30 direct writing premiums received by it during the preceding calendar year
31 for business done in this state, except that (1) for group sickness and
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1 accident insurance the rate of such tax shall be five-tenths of one
2 percent and (2) for property and casualty insurance, excluding individual
3 sickness and accident insurance, the rate of such tax shall be one
4 percent. A captive insurer authorized under the Captive Insurers Act that
5 is transacting business in this state shall, on or before March 1 of each
6 year, pay to the director a tax of one-fourth of one percent of the gross
7 amount of direct writing premiums received by such insurer during the
8 preceding calendar year for business transacted in the state. The taxable
9 premiums shall include premiums paid on the lives of persons residing in
10 this state and premiums paid for risks located in this state whether the
11 insurance was written in this state or not, including that portion of a
12 group premium paid which represents the premium for insurance on Nebraska
13 residents or risks located in Nebraska included within the group when the
14 number of lives in the group exceeds five hundred. The tax shall also
15 apply to premiums received by domestic companies for insurance written on
16 individuals residing outside this state or risks located outside this
17 state if no comparable tax is paid by the direct writing domestic company
18 to any other appropriate taxing authority. Companies whose scheme of
19 operation contemplates the return of a portion of premiums to
20 policyholders, without such policyholders being claimants under the terms
21 of their policies, may deduct such return premiums or dividends from
22 their gross premiums for the purpose of tax calculations. Any such
23 insurance company shall receive a credit on the tax imposed as provided
24 in the Community Development Assistance Act, the Nebraska Job Creation
25 and Mainstreet Revitalization Act, the New Markets Job Growth Investment
26 Act, the Nebraska Higher Blend Tax Credit Act, and the Affordable Housing
27 Tax Credit Act, and the Pioneer Economic Tax Credit Act.
28 Sec. 12. Section 77-2715.07, Revised Statutes Cumulative Supplement,
29 2022, is amended to read:
30 77-2715.07 (1) There shall be allowed to qualified resident
31 individuals as a nonrefundable credit against the income tax imposed by
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