Bill Summary – FastDemocracy

LB16                                                                                     LB16
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                                 LEGISLATURE OF NEBRASKA
                            ONE HUNDRED EIGHTH LEGISLATURE
                                 FIRST SPECIAL SESSION
                         LEGISLATIVE BILL 16
       Introduced by Erdman, 47.
       Read first time July 25, 2024
       Committee: Revenue
  A BILL FOR AN ACT relating to revenue and taxation; to amend sections
       13-319, 13-501, 13-2813, 60-3,185, 60-3,190, 77-27,148, and 77-3507,
       Reissue Revised Statutes of   Nebraska,    sections   77-201,    77-2004,
      77-2005, 77-2006, 77-3508, 77-6406, and 77-6827, Revised Statutes
       Cumulative Supplement, 2022, sections 18-2147, 77-3506, 79-1001, and
      85-2231, Revised Statutes Supplement, 2023, and section 77-2701,
       Revised Statutes Supplement, 2023, as amended by Laws 2024, LB937,
       section 67, Laws 2024, LB1023, section 8, and Laws 2024, LB1317,
      section 80; to adopt the Nebraska EPIC Option Consumption Tax Act;
       to terminate the Nebraska Budget Act, tax-increment financing, the
       motor vehicle tax, the motor vehicle fee, the property tax, the
      inheritance tax, sales and use taxes, the income tax, the homestead
       exemption, the Tax Equity and Educational Opportunities Support Act,
       and the Community College Aid Act as   prescribed;   to change an
       application deadline under the ImagiNE Nebraska Act; and to repeal
       the original sections.
   Be it enacted by the people of the State of Nebraska,
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          Section 1.      Sections 1 to 57 of this act shall be known and may be
   cited as the Nebraska EPIC Option Consumption Tax Act, where the acronym
   EPIC stands for the elimination of property, income, and corporate taxes.
         Sec. 2.     For purposes of the Nebraska EPIC Option Consumption Tax
  Act:
          (1) Affiliated firms means two or more firms that are affiliated
   with each other. A firm is affiliated with another if one firm owns fifty
   percent or more of:
          (a) The voting shares in a corporation; or
         (b)   The capital interests of   a business firm that is    not    a
  corporation;
          (2) Consumption tax means the tax imposed pursuant to the Nebraska
   EPIC Option Consumption Tax Act;
          (3)   Designated commercial private courier service means     a firm
   designated as such by the Tax Commissioner, upon application by the firm,
   if the firm:
          (a) Provides its services to the general public; and
          (b)   Records electronically to    its database kept in     the regular
   course of its business the date on which an item was given to such firm
   for delivery;
          (4) Education and training means tuition for primary, secondary, or
   postsecondary level education and job-related training courses. Such term
   does not include room, board, sports activities, recreational activities,
   hobbies, games, arts or crafts, or cultural activities;
          (5)   Groceries means food items purchased for personal human
   consumption;
          (6) Gross payments means payments for taxable property or services,
   including taxes imposed in the Nebraska EPIC Option Consumption Tax Act;
          (7)(a) Intangible property includes copyrights, trademarks, patents,
  goodwill,     financial instruments,     securities,     commercial paper,     debts,
   notes and bonds, and other property deemed intangible by common law.
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          (b) Intangible property does not include tangible personal property
   or rents or leaseholds of any term thereon, real property or rents or
   leaseholds of any term thereon, or computer software;
          (8)     Person means any individual,     association,           estate,     trust,
   partnership, corporation, or other entity of any kind;
         (9)(a)    Produce,       provide,   render,     or sell taxable property or
  services shall have the following meaning: A taxable property or service
   is something used to produce, provide, render, or sell a taxable property
   or service if such property or service is purchased by a person engaged
   in a trade or business for the purpose of employing or using such taxable
   property or service in the production, provision, rendering, or sale of
   other taxable property or services in the ordinary course of that trade
   or business.
         (b) Taxable property or services used in a trade or business for the
  purposes of research, experimentation, testing, and development shall be
  treated as used to produce, provide, render, or sell taxable property or
  services.
          (c) Taxable property or services purchased by an insurer on behalf
  of an insured shall be treated as used to produce, provide, render, or
   sell taxable property or   services if   the premium for the insurance
  contract giving rise to the insurer's obligation was subject to tax
  pursuant to section 27 of this act.
          (d) Education and training shall be treated as services used to
   produce, provide, render, or sell taxable property or services;
         (10) Registered seller means a person registered pursuant to section
  11 of this act;
         (11) Responsible officers and partners means:
          (a) In the case of a corporation, any officer who is the president,
  the chief executive officer,   a vice president,      the secretary,     the
   treasurer,      or the chief financial officer or     who serves       a similar
   function for the corporation;
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         (b) In the case of a partnership, any partner other than limited
   partners; or
         (c) In the case of a limited liability company, any officer serving
   the function of   a corporate president or   chief executive officer,
   treasurer or   chief financial officer,    or secretary and any member
   actively engaged in the management of the company;
         (12) Tax Commissioner means the Tax Commissioner of the State of
   Nebraska;
         (13) Tax inclusive fair market value means the fair market value of
   taxable property or services plus the tax imposed by the Nebraska EPIC
   Option Consumption Tax Act;
         (14) Taxable employer includes:
         (a) Any household employing domestic servants; and
         (b) Any government except for government enterprises as defined in
   section 25 of this act;
         (15)(a) Taxable property or service means:
         (i) Any property, including leaseholds of any term or rents with
   respect to such property, but excluding:
         (A) Intangible property; and
         (B) Used property; and
         (ii) Any service, including any financial intermediation services as
   defined in section 27 of this act.
         (b) For purposes of subdivision (15)(a) of this section, the term
   service:
         (i) Shall include any service performed by an employee for which the
   employee is paid wages or a salary by a taxable employer; and
         (ii) Shall not include any service performed by an employee for
   which the employee is paid wages or a salary:
         (A) By an employer in the regular course of the employer's trade or
   business;
         (B) By an employer that is a not-for-profit organization as defined
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  in section 26 of this act;
         (C) By an employer that is a government enterprise as defined in
   section 25 of this act; or
        (D) By taxable employers to employees directly providing education
  and training;
        (16) Used property means:
        (a) Property on which the tax imposed by the Nebraska EPIC Option
  Consumption Tax Act has already been collected and for which no credit
  has been allowed;
        (b) Property that was held other than for a business purpose in a
  trade or business as defined in subdivision (2)(b) of section 8 of this
  act, on December 31, 2025;
         (c) Property that a business has been using but intends to dispose
   of; or
        (d) Property owned by a private citizen prior to January 1, 2026;
  and
        (17)    Wage or   salary means all compensation paid for employment
   service,     including cash compensation,       employee benefits,    disability
   insurance, wage replacement insurance payments, unemployment compensation
  insurance, workers' compensation insurance, and the fair market value of
   any other consideration paid by     an employer to   an employee in
   consideration for employment services rendered.
        Sec. 3.    (1) The state income tax imposed pursuant to the Nebraska
  Revenue Act of 1967 is hereby repealed effective at the end of the day on
  December 31, 2025. The Department of Revenue may collect taxes due from
  2025 during calendar year 2026, but income earned in 2026 shall not be
  subject to the income tax.
         (2) The state sales and use taxes imposed pursuant to the Nebraska
   Revenue Act of 1967 and all local sales and use taxes imposed pursuant to
   the Local Option Revenue Act, the Qualified Judgment Payment Act, and
  sections 13-319 and 13-2813 are hereby repealed effective at the end of
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   the day on December 31, 2025. The Department of Revenue may collect sales
   and use taxes due from 2025 during calendar year 2026, but no sales and
   use taxes shall be imposed on purchases of goods and services beginning
   January 1, 2026.
         Sec. 4.    (1) The property tax imposed pursuant to Chapter 77 is
   hereby repealed effective at the end of the day on December 31, 2025.
   Property taxes due from 2025 may be collected during calendar year 2026,
   but no property taxes shall be imposed on real or personal property
   beginning January 1, 2026.
         (2) The motor vehicle tax imposed in section 60-3,185 and the motor
   vehicle fee imposed in section 60-3,190 are hereby repealed effective at
   the end of the day on December 31, 2025. Such taxes and fees due from
   2025 may be collected during calendar year 2026, but no such taxes or
   fees shall be imposed beginning January 1, 2026.
         Sec. 5.   The inheritance tax imposed pursuant to sections 77-2001 to
   77-2040 is hereby repealed effective at the end of the day on December
   31,   2025.   Inheritance taxes due from   2025   may be   collected during
   calendar year 2026, but no inheritance taxes shall be imposed on a
   deceased person's estate beginning January 1, 2026.
         Sec. 6.    This section establishes the Nebraska Taxpayer's Bill of
   Rights, which shall apply beginning January 1, 2026, and shall include
   the following:
         (1) The citizens of Nebraska are entitled to a fair and just tax
   system, one which favors neither the poor nor the rich, neither rural
   dwellers nor urban dwellers, neither business owners nor laborers, and
   that is no respecter of race, religion, creed, or sex;
         (2) The State of Nebraska shall never impose or collect a tax on the
   income of its citizens, whether such income tax be of a personal nature
   or of a corporate nature;
         (3) The State of Nebraska shall never impose a tax on the property
   already owned by its citizens, regardless of whether such property is
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  real or personal, tangible or intangible;
         (4) The State of Nebraska shall never impose a tax on the estate of
   a deceased person or the inheritance of the heirs of a deceased person;
         (5)     Because the consumption tax manifests     a security against
  government excess, it shall be preferred above all other tax systems in
  the State of Nebraska;
        (6) The Department of Revenue shall be subject to the citizens of
  the State of   Nebraska by    readily correcting errors of    taxation and
  granting temporary relief to registered sellers suffering hardship due to
  the burden of remitting taxes;
        (7) No service or new good shall ever be subjected to more than one
  kind of tax and no additional excise taxes shall be imposed by the State
  of Nebraska or any political subdivision thereof beyond those described
  in section 8 of this act;
        (8) The State of Nebraska and any political subdivision thereof
  shall be strictly prohibited from imposing a tax on groceries purchased
  for off-premises consumption;
        (9) The State of Nebraska and any political subdivision thereof
  shall be strictly prohibited from imposing a tax on services or materials
  used to manufacture products, including agricultural products, for sale
   to the general public or to enhance services for sale to the general
   public; and
        (10) The State of Nebraska shall live within its revenue means in
  the same way that a citizen lives within his or her revenue means.
         Sec. 7.          (1) Beginning January 1, 2026, there is hereby imposed a
  tax on    the use or   consumption in   the State of   Nebraska of   taxable
  property or services.
        (2) The rate of the consumption tax shall be seven and one-half
  percent until changed by the Legislature.
         (3)     Counties,       cities,    and villages may impose an   additional
  consumption tax not to exceed one percent for the purpose of repaying
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  bonds.
         (4) The person purchasing taxable property or services in the State
   of Nebraska shall be liable for the tax.
        (5) Except as otherwise provided in this section, the tax shall be
  collected by the registered seller. The tax shall constitute a part of
  the purchase price and until collected shall be a debt from the purchaser
   to the registered seller.       The tax required to   be collected by    the
  registered seller from the purchaser constitutes a debt owed by the
  registered seller to the State of Nebraska.
        (6) The registered seller shall, at the time of making the sale,
   collect any tax which may be due from the purchaser and shall give to the
   purchaser,       upon request,     a receipt therefor in   the manner and form
   prescribed by the Nebraska EPIC Option Consumption Tax Act.
         (7) In order to prevent evasion of the consumption tax, it shall be
  presumed that all gross payments from sales by registered sellers are
   subject to the tax until the contrary is established. The burden of
   proving that a sale is not a taxable sale is upon the registered seller
   who makes the sale unless he or she takes and records from the purchaser
   a tax-exempt certificate identification number.
         (8) The Tax Commissioner, in order to enforce and facilitate the
   proper administration of the consumption tax, may designate such person
  or persons as he or she may deem necessary to be tax collectors and
  delegate to such persons such authority as is necessary to collect any
   such tax which is due and payable to the State of Nebraska. The Tax
   Commissioner may require of all persons so designated a surety bond in
   favor of the State of Nebraska to insure against any misappropriation of
  state funds so    collected.       The Tax Commissioner may require any tax
   official, city, county, or state, to collect the tax on behalf of the
   state. All persons designated to or required to collect the tax shall
   account for such collections in    the manner prescribed by     the Tax
   Commissioner. Nothing in this subsection shall be so construed as to
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