LB84 LB84
2021 2021
LEGISLATIVE BILL 84
Approved by the Governor May 25, 2021
Introduced by Bostelman, 23; Slama, 1; Hansen, B., 16; McCollister, 20;
Sanders, 45.
A BILL FOR AN ACT relating to taxation; to amend sections 50-1209 and 77-6818,
Revised Statutes Cumulative Supplement, 2020; to change provisions relating to tax incentive performance audits; to redefine a term under the ImagiNE Nebraska Act; and to repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Section 50-1209, Revised Statutes Cumulative Supplement, 2020,
is amended to read:
50-1209 (1) Tax incentive performance audits shall be conducted by the office pursuant to this section on the following tax incentive programs:
(a) The Beginning Farmer Tax Credit Act;
(b) The ImagiNE Nebraska Act;
(c) The Nebraska Advantage Act;
(d) The Nebraska Advantage Microenterprise Tax Credit Act;
(e) The Nebraska Advantage Research and Development Act;
(f) The Nebraska Advantage Rural Development Act;
(g) The Nebraska Job Creation and Mainstreet Revitalization Act;
(h) The New Markets Job Growth Investment Act; and
(i) Any other tax incentive program created by the Legislature for the purpose of recruitment or retention of businesses in Nebraska. In determining whether a future tax incentive program is enacted for the purpose of
recruitment or retention of businesses, the office shall consider legislative intent, including legislative statements of purpose and goals, and may also consider whether the tax incentive program is promoted as a business incentive by the Department of Economic Development or other relevant state agency.
(2) The office shall develop a schedule for conducting tax incentive performance audits and shall update the schedule annually. The schedule shall ensure that each tax incentive program is reviewed at least once every five years.
(3) Each tax incentive performance audit conducted by the office pursuant to this section shall include the following:
(a) An analysis of whether the tax incentive program is meeting the following goals:
(i) Strengthening the state's economy overall by:
(A) Attracting new business to the state;
(B) Expanding existing businesses;
(C) Increasing employment, particularly employment of full-time workers.
The analysis shall consider whether the job growth in those businesses receiving tax incentives is at least ten percent above industry averages;
(D) Creating high-quality jobs; and
(E) Increasing business investment;
(ii) Revitalizing rural areas and other distressed areas of the state;
(iii) Diversifying the state's economy and positioning Nebraska for the future by stimulating entrepreneurial firms, high-tech firms, and renewable energy firms; and
(iv) Any other program-specific goals found in the statutes for the tax incentive program being evaluated;
(b) An analysis of the economic and fiscal impacts of the tax incentive program. The analysis may take into account the following considerations in
addition to other relevant factors:
(i) The costs per full-time worker. When practical and applicable, such costs shall be considered in at least the following two ways:
(A) By an estimation including the minimum investment required to qualify for benefits; and
(B) By an estimation including all investment;
(ii) The extent to which the tax incentive changes business behavior;
(iii) The results of the tax incentive for the economy of Nebraska as a whole. This consideration includes both direct and indirect impacts generally and any effects on other Nebraska businesses; and
(iv) A comparison to the results of other economic development strategies with similar goals, other policies, or other incentives;
(c) An assessment of whether adequate protections are in place to ensure the fiscal impact of the tax incentive does not increase substantially beyond the state's expectations in future years;
(d) An assessment of the fiscal impact of the tax incentive on the budgets of local governments, if applicable; and
(e) Recommendations for any changes to statutes or rules and regulations that would allow the tax incentive program to be more easily evaluated in the future, including changes to data collection, reporting, sharing of
information, and clarification of goals.
(4) For purposes of this section:
(a) Distressed area means an area of substantial unemployment as
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determined by the Department of Labor pursuant to the Nebraska Workforce Innovation and Opportunity Act;
(b) Full-time worker means an individual (i) who usually works thirty-five hours per week or more, (ii) whose employment is reported to the Department of
Labor on two consecutive quarterly wage reports, and (iii) who earns wages equal to or exceeding the state minimum wage;
(c) High-quality job means a job that:
(i) Averages at least thirty-five hours of employment per week;
(ii) Is reported to the Department of Labor on two consecutive quarterly wage reports; and
(iii) Earns wages that are at least ten percent higher than the statewide industry sector average and that equal or exceed:
(A) One hundred ten percent of the Nebraska average weekly wage if the job is in a county with a population of less than one hundred thousand inhabitants;
or
(B) One hundred twenty percent of the Nebraska average weekly wage if the job is in a county with a population of one hundred thousand inhabitants or
more;
(d) High-tech firm means a person or unitary group that has a location with any of the following four-digit code designations under the North American Industry Classification System as assigned by the Department of Labor: 2111,
3254, 3341, 3342, 3344, 3345, 3364, 5112, 5173, 5179, 5182, 5191, 5413, 5415,
or 5417;
(e) Nebraska average weekly wage means the most recent average weekly wage paid by all employers in all counties in Nebraska as reported by the Department of Labor by October 1 of each year;
(f) New business means a person or unitary group participating in a tax incentive program that did not pay income taxes or wages in the state more than two years prior to submitting an application under the tax incentive program.
For any tax incentive program without an application process, new business means a person or unitary group participating in the program that did not pay income taxes or wages in the state more than two years prior to the first day of the first tax year for which a tax benefit was earned;
(g) Renewable energy firm means a person or unitary group that has a location with any of the following six-digit code designations under the North American Industry Classification System as assigned by the Department of Labor:
111110, 111120, 111130, 111140, 111150, 111160, 111191, 111199, 111211, 111219,
111310, 111320, 111331, 111332, 111333, 111334, 111335, 111336, 111339, 111411,
111419, 111930, 111991, 113310, 221111, 221113, 221114, 221115, 221116, 221117,
221118, 221330, 237130, 237210, 237990, 325193, 325199, 331512, 331513, 331523,
331524, 331529, 332111, 332112, 333414, 333415, 333511, 333611, 333612, 333613,
334519, 485510, 541330, 541360, 541370, 541620, 541690, 541713, 541714, 541715,
561730, or 562213;
(h) Rural area means any village or city of the second class in this state or any county in this state with fewer than twenty-five thousand residents; and
(i) Unitary group has the same meaning as in section 77-2734.04.
Sec. 2. Section 77-6818, Revised Statutes Cumulative Supplement, 2020, is amended to read:
77-6818 (1) Qualified location means a location at which the majority of
the business activities conducted are within one or more of the following NAICS
codes or the following descriptions:
(a) Manufacturing - 31, 32, or 33, including pre-production services;
(b) Testing Laboratories - 541380;
(c) Rail Transportation - 482;
(d) Truck Transportation - 484;
(e) Insurance Carriers - 5241;
(f) Wired Telecommunications Carriers - 517311;
(g) Wireless Telecommunications Carriers (except Satellite) - 517312;
(h) Telemarketing Bureaus and Other Contact Centers - 561422;
(i) Data Processing, Hosting, and Related Services - 518210;
(j) Computer Facilities Management Services - 541513;
(k) Warehousing and Storage - 4931;
(l) The administrative management of the taxpayer's activities, including headquarter facilities relating to such activities, or the administrative management of any of the activities of any business entity or entities in which the taxpayer or a group of its owners hold any direct or indirect ownership interest of at least ten percent, including headquarter facilities relating to
such activities;
(m) Logistics Facilities - Portions of NAICS 488210, 488310, and 488490
dealing with independently operated trucking terminals, independently operated railroad and railway terminals, and waterfront terminal and port facility operations;
(n) Services provided on aircraft brought into this state by an individual who is a resident of another state or any other person who has a business location in another state when the aircraft is not to be registered or based in
this state and will not remain in this state more than ten days after the service is completed;
(o) The conducting of research, development, or testing, or any combination thereof, for scientific, agricultural, animal husbandry, food product, industrial, or technology purposes;
(p) The production of electricity by using one or more sources of
renewable energy to produce electricity for sale. For purposes of this subdivision, sources of renewable energy includes, but is not limited to, wind,
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solar, energy storage, geothermal, hydroelectric, biomass, nuclear, and transmutation of elements;
(q) Computer Systems Design and Related Services - 5415; or
(r) The performance of financial services. For purposes of this subdivision, financial services includes only financial services provided by
any financial institution subject to tax under Chapter 77, article 38, or any person or entity licensed by the Department of Banking and Finance or the federal Securities and Exchange Commission.
(2)(a) Qualified location also includes any other business location if at least seventy-five percent of the revenue derived at the location is from sales to customers who are not related persons which are delivered or provided from the qualified location to a location that is not within Nebraska according to
the sourcing rules in subsections (2) and (3) of section 77-2734.14.
Intermediate sales to related persons are included as sales to customers delivered or provided to a location outside Nebraska if the related person delivers or provides the goods or services to a location outside Nebraska. Even if a location meets the seventy-five percent requirement of this subdivision,
such location shall not constitute a qualified location under this subdivision if the majority of the business activities conducted at such location are within any of the following NAICS codes or any combination thereof:
(i) Agriculture, Forestry, Fishing and Hunting - 11;
(ii) Transportation and Warehousing - 48-49;
(iii) Information - 51;
(iv) Utilities - 22;
(v) Mining, Quarrying, and Oil and Gas Extraction - 21;
(vi) Public Administration - 92; or
(vii) Construction - 23.
(b) The director may adopt and promulgate rules and regulations establishing an alternative method in circumstances in which subdivision (2)(a)
of this section does not accurately reflect the out-of-state sales taking place at locations within Nebraska for a particular industry.
(3) The determination of the majority of the business activities shall be
made based on the number of employees working in the respective business activities. The director may adopt and promulgate rules and regulations establishing an alternative method in circumstances in which other factors provide a better reflection of business activities.
(4) The delineation of the types of business activities which enable a location to constitute a qualified location is based on the state's intention to attract certain types of business activities and to responsibly accomplish the purposes of the ImagiNE Nebraska Act by directing the state's incentive capabilities towards business activities which, due to their national nature,
could locate outside of Nebraska and which therefore would, through the use of
incentives, be motivated to locate in Nebraska. By listing specific types of
business activities in subsection (1) of this section, the state has determined such business activities by their nature meet these objectives. By specifying the national nature of a taxpayer's revenue in subsection (2) of this section,
the state has determined that certain other types of business activities can meet these objectives.
Sec. 3. Original sections 50-1209 and 77-6818, Revised Statutes Cumulative Supplement, 2020, are repealed.
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Statutes affected:
Introduced: 50-1209, 77-6818
Final Reading: 50-1209, 77-6818
Slip Law: 50-1209, 77-6818