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LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 531
Introduced by Briese, 41.
Read first time January 19, 2021
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 77-2715.07, 77-2717, and 77-2734.03, Revised Statutes Cumulative
3 Supplement, 2020; to adopt the Nebraska Child Care Contribution Tax
4 Credit Act; to harmonize provisions; and to repeal the original
5 sections.
6 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 8 of this act shall be known and may be
2 cited as the Nebraska Child Care Contribution Tax Credit Act.
3 Sec. 2. The Legislature finds that COVID-19 has greatly impacted
4 the child care industry, and access to quality child care opportunities
5 is crucial to Nebraska's ongoing economic stability and growth.
6 Sec. 3. For purposes of the Nebraska Child Care Contribution Tax
7 Credit Act:
8 (1) Child means an individual who is twelve years of age or less;
9 (2) Child care and education provider means a person who owns or
10 operates an eligible child care and early childhood education program;
11 (3) Department means the Department of Revenue;
12 (4) Eligible child care and early childhood education program means
13 a program that:
14 (a) Is enrolled to participate in the quality rating and improvement
15 system developed under the Step Up to Quality Child Care Act;
16 (b) Is licensed as a family child care home I, family child care
17 home II, child care center, preschool, or school-age-only center; and
18 (c) Operates as a for-profit child care business or is a nonprofit
19 organization under the Internal Revenue Code of 1986;
20 (5) Intermediary means any organization that distributes funds for
21 the purpose of supporting an eligible child care and early childhood
22 education program;
23 (6) Qualifying contribution means a contribution in the form of
24 cash, check, cash equivalent, agricultural commodity, livestock, or
25 publicly traded security that is used for one or more of the purposes
26 described in subsection (4) of section 4 of this act. A contribution of
27 services or property is not a qualifying contribution; and
28 (7) Taxpayer means any person subject to the income tax imposed by
29 the Nebraska Revenue Act of 1986. The term includes resident and
30 nonresident individuals, estates, trusts, and corporations.
31 Sec. 4. (1) For taxable years beginning or deemed to begin on or
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1 after January 1, 2022, and before January 1, 2027, under the Internal
2 Revenue Code of 1986, as amended, any taxpayer who makes a qualifying
3 contribution may apply to the department to receive a nonrefundable tax
4 credit against the income tax imposed by the Nebraska Revenue Act of
5 1967.
6 (2)(a) The credit shall be equal to either fifty percent or seventy-
7 five percent of the taxpayer's qualifying contribution made during the
8 taxable year, except that the credit for a taxpayer shall not exceed one
9 hundred thousand dollars for any single taxable year.
10 (b) The credit shall be equal to seventy-five percent of the
11 qualifying contribution if:
12 (i) The eligible child care and early childhood education program
13 that receives the contribution has a physical presence in an opportunity
14 zone in this state designated pursuant to the federal Tax Cuts and Jobs
15 Act, Public Law 115-97; or
16 (ii) The eligible child care and early childhood education program
17 that receives the contribution has at least one child enrolled in the
18 child care subsidy program established pursuant to section 68-1202 and
19 the child care and education provider is actively caring and billing for
20 the child as verified by the Department of Health and Human Services.
21 (c) The credit shall be equal to fifty percent of the qualifying
22 contribution if subdivision (2)(b) of this section does not apply.
23 (3) If a taxpayer's credit exceeds the total tax due, the taxpayer
24 may carry forward the excess credit for up to five taxable years after
25 the taxable year in which the credit was first allowed, but the taxpayer
26 must use the carryover credit in the earliest taxable year possible.
27 (4) A qualifying contribution shall be used for the purposes of
28 promoting or enhancing quality child care and early childhood education
29 programs. Such purposes include, but are not limited to, contributions:
30 (a) For the establishment or operation of an eligible child care and
31 early childhood education program;
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1 (b) For the establishment of a registered grant or loan program for
2 parents requiring financial assistance for an eligible child care and
3 early childhood education program;
4 (c) To an early childhood collaborative or another intermediary for
5 the training, technical assistance, or mentorship of child care and
6 education providers;
7 (d) For the establishment or ongoing costs of an information
8 dissemination program that assists parents with information and referral
9 services for child care;
10 (e) To a for-profit child care business, including family home
11 providers. The for-profit child care business must use the proceeds of a
12 qualifying contribution for the (i) acquisition or improvement of the
13 child care facilities, (ii) equipment, (iii) services, or (iv) employee
14 retention; and
15 (f) To an intermediary for the establishment or operation of an
16 eligible child care and early childhood education program or a program
17 for parents requiring financial assistance for an eligible child care and
18 early childhood education program.
19 (5) In no event shall credits be allowed for contributions that are
20 not directly related to promoting or enhancing quality child care and
21 early childhood education programs. A contribution shall not qualify for
22 a credit under this section if:
23 (a) The contribution is made to a child care provider in which the
24 taxpayer or a person related to the taxpayer has a financial interest
25 which would result in direct benefit to the taxpayer or related person,
26 unless the contribution is part of a bona fide arm's length transaction
27 where the contribution is to enhance or promote quality early childhood
28 education;
29 (b) The contribution is made to a for-profit child care business and
30 is not directly invested in the acquisition or improvement of child care
31 facilities, equipment, services, or employee retention; or
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1 (c) The contribution is not directly related to promoting or
2 enhancing quality child care and early childhood education programs in
3 Nebraska.
4 Sec. 5. (1) A taxpayer shall apply for the credit provided under
5 the Nebraska Child Care Contribution Tax Credit Act by submitting an
6 application to the department with the following information:
7 (a) Documentation to show that the contribution is a qualifying
8 contribution and meets the requirements provided in the act; and
9 (b) Any other documentation required by the department.
10 (2) If the department determines that the taxpayer qualifies for tax
11 credits under the act, the department shall approve the application and
12 certify the amount of credits approved to the taxpayer. The department
13 shall consider applications in the order in which they are received and
14 may approve tax credits under this section in any year until the
15 aggregate limit allowed under section 6 of this act has been reached.
16 (3) The credits allowed under the act shall be available for taxable
17 years beginning or deemed to begin on or after January 1, 2022, and
18 before January 1, 2027.
19 Sec. 6. The department may approve tax credits under the Nebraska
20 Child Care Contribution Tax Credit Act each year until the total amount
21 of credits approved for the year reaches fifteen million dollars.
22 Sec. 7. (1) If the department finds that a person has obtained a
23 credit by fraud or misrepresentation, the credits shall be disallowed and
24 the taxpayer's state income tax for the taxable year in which the credit
25 was claimed shall be increased by the amount necessary to recapture the
26 credit.
27 (2) Credits granted to a taxpayer, but later disallowed, may be
28 recovered by the department within three years after the end of the
29 taxable year in which the credit was claimed.
30 Sec. 8. The department may adopt and promulgate rules and
31 regulations to carry out the Nebraska Child Care Contribution Tax Credit
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1 Act.
2 Sec. 9. Section 77-2715.07, Revised Statutes Cumulative Supplement,
3 2020, is amended to read:
4 77-2715.07 (1) There shall be allowed to qualified resident
5 individuals as a nonrefundable credit against the income tax imposed by
6 the Nebraska Revenue Act of 1967:
7 (a) A credit equal to the federal credit allowed under section 22 of
8 the Internal Revenue Code; and
9 (b) A credit for taxes paid to another state as provided in section
10 77-2730.
11 (2) There shall be allowed to qualified resident individuals against
12 the income tax imposed by the Nebraska Revenue Act of 1967:
13 (a) For returns filed reporting federal adjusted gross incomes of
14 greater than twenty-nine thousand dollars, a nonrefundable credit equal
15 to twenty-five percent of the federal credit allowed under section 21 of
16 the Internal Revenue Code of 1986, as amended, except that for taxable
17 years beginning or deemed to begin on or after January 1, 2015, such
18 nonrefundable credit shall be allowed only if the individual would have
19 received the federal credit allowed under section 21 of the code after
20 adding back in any carryforward of a net operating loss that was deducted
21 pursuant to such section in determining eligibility for the federal
22 credit;
23 (b) For returns filed reporting federal adjusted gross income of
24 twenty-nine thousand dollars or less, a refundable credit equal to a
25 percentage of the federal credit allowable under section 21 of the
26 Internal Revenue Code of 1986, as amended, whether or not the federal
27 credit was limited by the federal tax liability. The percentage of the
28 federal credit shall be one hundred percent for incomes not greater than
29 twenty-two thousand dollars, and the percentage shall be reduced by ten
30 percent for each one thousand dollars, or fraction thereof, by which the
31 reported federal adjusted gross income exceeds twenty-two thousand
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1 dollars, except that for taxable years beginning or deemed to begin on or
2 after January 1, 2015, such refundable credit shall be allowed only if
3 the individual would have received the federal credit allowed under
4 section 21 of the code after adding back in any carryforward of a net
5 operating loss that was deducted pursuant to such section in determining
6 eligibility for the federal credit;
7 (c) A refundable credit as provided in section 77-5209.01 for
8 individuals who qualify for an income tax credit as a qualified beginning
9 farmer or livestock producer under the Beginning Farmer Tax Credit Act
10 for all taxable years beginning or deemed to begin on or after January 1,
11 2006, under the Internal Revenue Code of 1986, as amended;
12 (d) A refundable credit for individuals who qualify for an income
13 tax credit under the Angel Investment Tax Credit Act, the Nebraska
14 Advantage Microenterprise Tax Credit Act, the Nebraska Advantage Research
15 and Development Act, or the Volunteer Emergency Responders Incentive Act;
16 and
17 (e) A refundable credit equal to ten percent of the federal credit
18 allowed under section 32 of the Internal Revenue Code of 1986, as
19 amended, except that for taxable years beginning or deemed to begin on or
20 after January 1, 2015, such refundable credit shall be allowed only if
21 the individual would have received the federal credit allowed under
22 section 32 of the code after adding back in any carryforward of a net
23 operating loss that was deducted pursuant to such section in determining
24 eligibility for the federal credit.
25 (3) There shall be allowed to all individuals as a nonrefundable
26 credit against the income tax imposed by the Nebraska Revenue Act of
27 1967:
28 (a) A credit for personal exemptions allowed under section
29 77-2716.01;
30 (b) A credit for contributions to certified community betterment
31 programs as provided in the Community Development Assistance Act. Each
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1 partner, each shareholder of an electing subchapter S corporation, each
2 beneficiary of an estate or trust, or each member of a limited liability
3 company shall report his or her share of the credit in the same manner
4 and proportion as he or she reports the partnership, subchapter S
5 corporation, estate, trust, or limited liability company income;
6 (c) A credit for investment in a biodiesel facility as provided in
7 section 77-27,236;
8 (d) A credit as provided in the New Markets Job Growth Investment
9 Act;
10 (e) A credit as provided in the Nebraska Job Creation and Mainstreet
11 Revitalization Act;
12 (f) A credit to employers as provided in section 77-27,238; and
13 (g) A credit as provided in the Affordable Housing Tax Credit Act;
14 and .
15 (h) A credit as provided in the Nebraska Child Care Contribution Tax
16 Credit Act.
17 (4) There shall be allowed as a credit against the income tax
18 imposed by the Nebraska Revenue Act of 1967:
19 (a) A credit to all resident estates and trusts for taxes paid to
20 another state as provided in section 77-2730;
21 (b) A credit to all estates and trusts for contributions to
22 certified community betterment programs as provided in the Community
23 Development Assistance Act; and
24 (c) A refundable credit for individuals who qualify for an income
25 tax credit as an owner of agricultural assets under the Beginning Farmer
26 Tax Credit Act for all taxable years beginning or deemed to begin on or
27 after January 1, 2009, under the Internal Revenue Code of 1986, as
28 amended. The credit allowed for each partner, shareholder, member, or
29 beneficiary of a partnership, corporation, limited liability company, or
30 estate or trust qualifying for an income tax credit as an owner of
31 agricultural assets under the Beginning Farmer Tax Credit Act shall be
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1 equal to the partner's, shareholder's, member's, or beneficiary's portion
2 of the amount of tax credit distributed pursuant to subsection (6) of