LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
LEGISLATIVE BILL 720
Introduced by Kolterman, 24; Albrecht, 17; Arch, 14; Geist, 25; Halloran,
33; Hilgers, 21; Hilkemann, 4; Hunt, 8; Kolowski, 31; La Grone, 49; Lathrop, 12; Lindstrom, 18; Lowe, 37; McDonnell,
5; Morfeld, 46; Pansing Brooks, 28; Quick, 35; Scheer, 19;
Slama, 1; Stinner, 48; Williams, 36; Wishart, 27.
Read first time January 23, 2019
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 66-1344, 77-202, 77-1229, 77-2711, 77-27,119, 77-27,144, 77-5725,
3 77-5905, and 81-125, Reissue Revised Statutes of Nebraska, and
4 sections 18-2119, 18-2710.03, 49-801.01, 50-1209, 84-602.03, and
5 84-612, Revised Statutes Cumulative Supplement, 2018; to adopt the
6 ImagiNE Nebraska Act; to change provisions relating to sales and use
7 tax refunds; to stop accepting applications under the Nebraska
8 Advantage Act; to provide for transfers from the Cash Reserve Fund;
9 to harmonize provisions; to provide severability; to repeal the
10 original sections; and to declare an emergency.
11 Be it enacted by the people of the State of Nebraska,
1 Section 1. Sections 1 to 44 of this act shall be known and may be
2 cited as the ImagiNE Nebraska Act.
3 Sec. 2. The Legislature hereby finds and declares that it is the
4 policy of this state to modernize its economic development platform in
5 order to (1) encourage new businesses to relocate to Nebraska, (2)
6 encourage existing businesses to remain and grow in Nebraska, (3)
7 encourage the creation and retention of new, high-paying jobs in
8 Nebraska, (4) attract and retain investment capital in Nebraska, (5)
9 develop the Nebraska workforce, (6) simplify the administration of the
10 tax incentive program created in the ImagiNE Nebraska Act for both
11 businesses and the state, and (7) improve the transparency and
12 accountability of such program.
13 Sec. 3. For purposes of the ImagiNE Nebraska Act, the definitions
14 found in sections 4 to 26 of this act shall be used.
15 Sec. 4. Any term shall have the same meaning as used in Chapter 77,
16 article 27, except as otherwise defined in the ImagiNE Nebraska Act.
17 Sec. 5. Base year means the year immediately preceding the year of
19 Sec. 6. Base-year employee means any individual who was employed in
20 Nebraska and subject to the Nebraska income tax on compensation received
21 from the taxpayer or its predecessors during the base year and who is
22 employed at the qualified location or locations.
23 Sec. 7. Carryover period means the period of three years
24 immediately following the end of the performance period.
25 Sec. 8. Compensation means the wages and other payments subject to
26 the federal medicare tax.
27 Sec. 9. Director means the Director of Economic Development.
28 Sec. 10. Equivalent employees means the number of employees
29 computed by dividing the total hours paid in a year by the product of
30 forty times the number of weeks in a year. A salaried employee who
31 receives a predetermined amount of compensation each pay period on a
1 weekly or less frequent basis is deemed to have been paid for forty hours
2 per week during the pay period.
3 Sec. 11. Investment means the value of qualified property
4 incorporated into or used at the qualified location or locations. For
5 qualified property owned by the taxpayer, the value shall be the original
6 cost of the property. For qualified property rented by the taxpayer, the
7 average net annual rent shall be multiplied by the number of years of the
8 lease for which the taxpayer was originally bound, not to exceed ten
9 years. The rental of land included in and incidental to the leasing of a
10 building shall not be excluded from the computation. For purposes of this
11 section, original cost means the amount required to be capitalized for
12 depreciation, amortization, or other recovery under the Internal Revenue
13 Code of 1986, as amended. Any amount, including the labor of the
14 taxpayer, that is capitalized as a part of the cost of the qualified
15 property or that is written off under section 179 of the Internal Revenue
16 Code of 1986, as amended, shall be considered part of the original cost.
17 Sec. 12. Motor vehicle means any motor vehicle, trailer, or
18 semitrailer as defined in the Motor Vehicle Registration Act and subject
19 to registration for operation on the highways.
20 Sec. 13. NAICS means the North American Industry Classification
21 System established by the United States Department of Commerce and
22 applied to classify the locations owned or leased by the taxpayer,
23 including the specific NAICS codes and code definitions in effect on the
24 effective date of this act.
25 Sec. 14. Nebraska ninety-county average hourly wage for any year
26 means the most recent ninety-county average hourly wage paid by all
27 employers in all counties in Nebraska other than Douglas, Lancaster, and
28 Sarpy, as reported by the Office of Labor Market Information of the
29 Department of Labor by October 1 of the year prior to application.
30 Sec. 15. Nebraska statewide average hourly wage for any year means
31 the most recent statewide average hourly wage paid by all employers in
1 all counties in Nebraska as reported by the Office of Labor Market
2 Information of the Department of Labor by October 1 of the year prior to
4 Sec. 16. (1) Number of new employees, for purposes of subdivisions
5 (3)(a) and (4)(a) of section 32 of this act, means the number of
6 equivalent employees that are employed at the project during a year that
7 are in excess of the number of equivalent employees during the base year,
8 not to exceed the number of equivalent employees employed at the project
9 during a year who are not base-year employees and who are paid wages at a
10 rate equal to at least the Nebraska ninety-county average hourly wage for
11 the year of application.
12 (2) Number of new employees, for all other purposes, means the
13 number of equivalent employees that are employed at the project during a
14 year that are in excess of the number of equivalent employees during the
15 base year, not to exceed the number of equivalent employees employed at
16 the project during a year who are not base-year employees and who are
17 paid wages at a rate equal to at least the Nebraska statewide average
18 hourly wage for the year of application.
19 (3) For employees who work both at a qualified location and also
20 perform services for the taxpayer at other nonqualified locations, they
21 will be included in determining the number of new employees if more than
22 fifty percent of the time for which they are compensated is spent at the
23 qualified location. Employees who work at the qualified location fifty
24 percent or less of the time for which they are compensated are not
25 considered employed at the qualified location.
26 (4) Employees working on project activities for wages or salaries
27 who are based for income tax purposes at a project location shall be
28 considered to be employed at the project.
29 Sec. 17. Performance period means the year during which the
30 required increases in employment and investment were met or exceeded and
31 each year thereafter until the end of the sixth year after the year the
1 required increases were met or exceeded.
2 Sec. 18. (1) Qualified location means a location at which the
3 majority of the business activities conducted are within the following
4 NAICS codes or otherwise meet the following descriptions:
5 (a) Manufacturing – 31, 32, or 33;
6 (b) Testing laboratories - 541380;
7 (c) The administrative management of the taxpayer's activities,
8 including headquarter facilities relating to such activities or the
9 administrative management of any of the activities of any business entity
10 or entities in which the taxpayer or a group of its shareholders hold any
11 direct or indirect ownership interest of at least ten percent, including
12 headquarter facilities relating to such activities;
13 (d) Logistics facilities – Portions of NAICS 488210, 488310, and
14 488490 dealing with independently operated trucking terminals,
15 independently operated railroad and railway terminals, and waterfront
16 terminal and port facility operations;
17 (e) The conducting of research, development, or testing, or any
18 combination thereof, for scientific, agricultural, animal husbandry, food
19 product, industrial, or technology purposes;
20 (f) The performance of data processing, insurance, transportation,
21 or financial services. For purposes of this subdivision, financial
22 services includes only financial services provided by any financial
23 institution subject to tax under Chapter 77, article 38, or any person or
24 entity licensed by the Department of Banking and Finance or the federal
25 Securities and Exchange Commission;
26 (g) Telecommunication services. For purposes of this subdivision,
27 telecommunication services includes community antenna television service,
28 Internet access, satellite ground station, call center, or telemarketing;
29 (h) Operating a data center. For purposes of this subdivision, data
30 center means computers, supporting equipment, and other organized
31 assembly of hardware or software that are designed to centralize the
1 storage, management, or dissemination of data and information,
2 environmentally controlled structures or facilities or interrelated
3 structures or facilities that provide the infrastructure for housing the
4 equipment, such as raised flooring, electricity supply, communication and
5 data lines, Internet access, cooling, security, and fire suppression, and
6 any building housing the foregoing. A data center also includes a
7 facility described in this subdivision for the co-location of computers;
8 (i) The production of electricity by using one or more sources of
9 renewable energy to produce electricity for sale. For purposes of this
10 subdivision, sources of renewable energy includes, but is not limited to,
11 wind, solar, geothermal, hydroelectric, biomass, and transmutation of
12 elements; or
13 (j) The performance of information technology services.
14 (2) Qualified location also includes any other business location if
15 at least seventy-five percent of the revenue derived at the location is
16 from sales to customers who are not related persons, which are delivered
17 or provided from the qualified location to a location that is not within
18 Nebraska according to the apportionment rules in section 77-2734.14 or
19 any special apportionment rules allowed pursuant to section 77-2734.15.
20 Intermediate sales to related persons within the state are included as
21 sales to customers delivered or provided to a location outside Nebraska
22 if the related person delivers or provides the goods or services to a
23 location outside Nebraska.
24 (3) The director may adopt and promulgate rules and regulations
25 establishing an alternative method in circumstances where this section
26 does not accurately reflect the out-of-state sales taking place at
27 locations within Nebraska for a particular industry.
28 (4) Qualified location does not include any location at which the
29 majority of the business activities conducted are:
30 (a) Agriculture, Forestry, Fishing and Hunting;
31 (b) Mining, Quarrying, and Oil and Gas Extraction;
1 (c) Utilities, other than as specified in subdivision (1)(i) of this
3 (d) Construction;
4 (e) Retail Trade, other than as specified in subsection (2) of this
6 (f) Real Estate and Rental and Leasing;
7 (g) Professional, Scientific, and Technical Services, other than as
8 specified in subsection (2) of this section;
9 (h) Health Care and Social Assistance;
10 (i) Arts, Entertainment and Recreation;
11 (j) Accommodation and Food Services;
12 (k) Other Services, except Public Administration, other than as
13 specified in subsection (2) of this section; or
14 (l) Public Administration.
15 Sec. 19. Qualified employee leasing company means a company which
16 places all employees of a client-lessee on its payroll and leases such
17 employees to the client-lessee on an ongoing basis for a fee and, by
18 written agreement between the employee leasing company and a client-
19 lessee, grants to the client-lessee input into the hiring and firing of
20 the employees leased to the client-lessee.
21 Sec. 20. Qualified property means any tangible property of a type
22 subject to depreciation, amortization, or other recovery under the
23 Internal Revenue Code of 1986, as amended, or the components of such
24 property, that will be located and used at the project. Qualified
25 property does not include (1) aircraft, barges, motor vehicles, railroad
26 rolling stock, or watercraft or (2) property that is rented by the
27 taxpayer qualifying under the ImagiNE Nebraska Act to another person.
28 Qualified property of the taxpayer located at the residence of an
29 employee working in Nebraska from his or her residence on tasks
30 interdependent with the work performed at the project shall be deemed
31 located and used at the project.
1 Sec. 21. Ramp-up period means the period of time from the date of
2 the complete application through the end of the fourth year after the
3 year in which the complete application was filed with the director.
4 Sec. 22. Related persons means any corporations, partnerships,
5 limited liability companies, or joint ventures which are or would
6 otherwise be members of the same unitary group, if incorporated, or any
7 persons who are considered to be related persons under either section
8 267(b) and (c) or section 707(b) of the Internal Revenue Code of 1986, as
10 Sec. 23. Taxpayer means any person subject to sales and use taxes
11 under the Nebraska Revenue Act of 1967 and subject to withholding under
12 section 77-2753 and any entity that is or would otherwise be a member of
13 the same unitary group, if incorporated, that is subject to such sales
14 and use taxes and such withholding. Taxpayer does not include a political
15 subdivision or an organization that is exempt from income taxes under
16 section 501(a) of the Internal Revenue Code of 1986, as amended. For
17 purposes of this section, political subdivision includes any public