77-5725 Tiers; requirements; incentives; enumerated.
77-5725. Tiers; requirements;incentives; enumerated.(1) Applicants may qualifyfor benefits under the Nebraska Advantage Act in one of six tiers:(a) Tier 1, investment in qualified property of at leastone million dollars and the hiring of at least ten new employees. There shallbe no new project applications for benefits under this tier filed after December31, 2015, without further authorization of the Legislature. All complete projectapplications filed on or before December 31, 2015, shall be considered bythe Tax Commissioner and approved if the project and taxpayer qualify forbenefits. Agreements may be executed with regard to completed project applicationsfiled on or before December 31, 2015. All project agreements pending, approved,or entered into before such date shall continue in full force and effect;(b) Tier 2, investment in qualified property of at leastthree million dollars and the hiring of at least thirty new employees;(c) Tier 3, the hiring of at least thirty new employees.There shall be no new project applications for benefits under this tier filedafter December 31, 2015, without further authorization of the Legislature.All complete project applications filed on or before December 31, 2015, shallbe considered by the Tax Commissioner and approved if the project and taxpayerqualify for benefits. Agreements may be executed with regard to completedproject applications filed on or before December 31, 2015. All project agreementspending, approved, or entered into before such date shall continue in fullforce and effect;(d) Tier 4, investment in qualified property of at leastten million dollars and the hiring of at least one hundred new employees;(e) Tier 5, investment in qualified property of at leastthirty million dollars. Failure to maintain an average number of equivalentemployees as defined in section 77-5727 greater than or equal to the numberof equivalent employees in the base year shall result in a partial recaptureof benefits; and(f) Tier 6, investment in qualified property of at leastten million dollars and the hiring of at least seventy-five new employeesor the investment in qualified property of at least one hundred million dollarsand the hiring of at least fifty new employees. Agreements may be executedwith regard to completed project applications filed before January 1, 2016.All project agreements pending, approved, or entered into before such dateshall continue in full force and effect.(2) When the taxpayer has met the required levels of employmentand investment contained in the agreement for a tier 1, tier 2, tier 4, tier5, or tier 6 project, the taxpayer shall be entitled to the following incentives:(a) A refund of all sales and use taxes for a tier 2, tier4, tier 5, or tier 6 project or a refund of one-half of all sales and usetaxes for a tier 1 project paid under the Local Option Revenue Act, the NebraskaRevenue Act of 1967, and sections 13-319, 13-324, and 13-2813 from the dateof the application through the meeting of the required levels of employmentand investment for all purchases, including rentals, of:(i) Qualified property used as a part of the project;(ii) Property, excluding motor vehicles, based in this stateand used in both this state and another state in connection with the projectexcept when any such property is to be used for fundraising for or for thetransportation of an elected official;(iii) Tangible personal property by a contractor or repairperson after appointment as a purchasingagent of the owner of the improvement to real estate when such property is incorporated into realestate as a part of a project.The refund shall be based on fifty percent of the contract price, excludingany land, as the cost of materials subject to the sales and use tax;(iv) Tangible personal property by a contractor or repairpersonafter appointment as a purchasing agent of the taxpayer when such property is annexedto, but not incorporated into, real estate as a part of a project. Therefund shall be based on the costof materials subject to the sales and use tax that were annexed to real estate; and(v) Tangiblepersonal property by a contractor or repairperson after appointment as a purchasingagent of the taxpayer when such property is both (A) incorporated into realestate as a part of a project and (B) annexed to, but not incorporated into,real estate as a part of a project. The refund shall be based on fifty percentof the contract price, excluding any land, as the cost of materials subjectto the sales and use tax; and(b) A refundof all sales and use taxes for a tier 2, tier 4, tier 5, or tier 6 projector a refund of one-half of all sales and use taxes for a tier 1 project paidunder the Local Option Revenue Act, the Nebraska Revenue Act of 1967, andsections 13-319, 13-324, and 13-2813 on the types of purchases, includingrentals, listed in subdivision (a) of this subsection for such taxes paidduring each year of the entitlement period in which the taxpayer is at orabove the required levels of employment and investment.(3) Any taxpayer who qualifies for a tier 1, tier 2, tier3, or tier 4 project shall be entitled to a credit equal to three percenttimes the average wage of new employees times the number of new employeesif the average wage of the new employees equals at least sixty percent ofthe Nebraska average annual wage for the year of application. The credit shallequal four percent times the average wage of new employees times the numberof new employees if the average wage of the new employees equals at leastseventy-five percent of the Nebraska average annual wage for the year of application.The credit shall equal five percent times the average wage of new employeestimes the number of new employees if the average wage of the new employeesequals at least one hundred percent of the Nebraska average annual wage forthe year of application. The credit shall equal six percent times the averagewage of new employees times the number of new employees if the average wageof the new employees equals at least one hundred twenty-five percent of theNebraska average annual wage for the year of application. For computationof such credit:(a) Average annual wage means the total compensation paidto employees during the year at the project who are not base-year employeesand who are paid wages equal to at least sixty percent of the Nebraska averageweekly wage for the year of application, excluding any compensation in excessof one million dollars paid to any one employee during the year, divided bythe number of equivalent employees making up such total compensation;(b) Average wage of new employees means the average annualwage paid to employees during the year at the project who are not base-yearemployees and who are paid wages equal to at least sixty percent of the Nebraskaaverage weekly wage for the year of application, excluding any compensationin excess of one million dollars paid to any one employee during the year;and(c) Nebraska average annual wage means the Nebraska averageweekly wage times fifty-two.(4) Any taxpayer who qualifies for a tier 6 project shallbe entitled to a credit equal to ten percent times the total compensationpaid to all employees, other than base-year employees, excluding any compensationin excess of one million dollars paid to any one employee during the year,employed at the project.(5) Any taxpayer who has met the required levels of employmentand investment for a tier 2 or tier 4 project shall receive a credit equalto ten percent of the investment made in qualified property at the project.Any taxpayer who has met the required levels of investment and employmentfor a tier 1 project shall receive a credit equal to three percent of theinvestment made in qualified property at the project. Any taxpayer who hasmet the required levels of investment and employment for a tier 6 projectshall receive a credit equal to fifteen percent of the investment made inqualified property at the project.(6) The credits prescribed in subsections (3), (4), and (5)of this section shall be allowable for compensation paid and investments madeduring each year of the entitlement period that the taxpayer is at or abovethe required levels of employment and investment.(7) The credit prescribed in subsection (5) of this sectionshall also be allowable during the first year of the entitlement period forinvestment in qualified property at the project after the date of the applicationand before the required levels of employment and investment were met.(8)(a) A taxpayer who has met the required levels of employmentand investment for a tier 4 or tier 6 project shall receive the incentiveprovided in this subsection. A taxpayer who has a project for an Internetweb portal or a data center andwho has met the required levels of employmentand investment for a tier2 project or the required level of investment for a tier 5 projectshall receive the incentive provided in this subsection for property in subdivision(8)(b)(ii) of this section. Such investment and hiring of new employees shallbe considered a required level of investment and employment for this subsectionand for the recapture of benefits under this subsection only.(b) The following property used in connection with such projector projects and acquired by the taxpayer, whether by lease or purchase, afterthe date the application was filed shall constitute separate classes of personalproperty:(i) Turbine-powered aircraft, including turboprop, turbojet,and turbofan aircraft, except when any such aircraft is used for fundraisingfor or for the transportation of an elected official;(ii) Computer systems, made up of equipment that is interconnectedin order to enable the acquisition, storage, manipulation, management, movement,control, display, transmission, or reception of data involving computer softwareand hardware, used for business information processing which require environmentalcontrols of temperature and power and which are capable of simultaneouslysupporting more than one transaction and more than one user. A computer systemincludes peripheral components which require environmental controls of temperatureand power connected to such computer systems. Peripheral components shallbe limited to additional memory units, tape drives, disk drives, power supplies,cooling units, data switches, and communication controllers;(iii) Depreciable personal property used for a distributionfacility, including, but not limited to, storage racks, conveyor mechanisms,forklifts, and other property used to store or move products;(iv) Personal property which is business equipment locatedin a single project if the business equipment is involved directly in themanufacture or processing of agricultural products; and(v) For a tier 6 project, any other personal property locatedat the project.(c) Such property shall be eligible for exemption from thetax on personal property from the first January 1 following the date of acquisitionfor property in subdivision (8)(b)(i) of this section, or from the first January1 following the end of the year during which the required levels were exceededfor property in subdivisions (8)(b)(ii), (iii), (iv), and (v) of this section,through the ninth December 31 after the first year any property included insubdivisions (8)(b)(ii), (iii), (iv), and (v) of this section qualifies forthe exemption. In order to receive the property tax exemptions allowed bysubdivision (8)(b) of this section, the taxpayer shall annually file a claimfor exemption with the Tax Commissioner on or before May 1. The form and supportingschedules shall be prescribed by the Tax Commissioner and shall list all propertyfor which exemption is being sought under this section. A separate claim forexemption must be filed for each project and each county in which propertyis claimed to be exempt. A copy of this form must also be filed with the countyassessor in each county in which the applicant is requesting exemption. TheTax Commissioner shall determine the eligibility of each item listed for exemptionand, on or before August 1, certify such to the taxpayer and to the affectedcounty assessor. In determining the eligibility of items of personal propertyfor exemption, the Tax Commissioner is limited to the question of whetherthe property claimed as exempt by the taxpayer falls within the classes ofproperty described in subdivision (8)(b) of this section. The determinationof whether a taxpayer is eligible to obtain exemption for personal propertybased on meeting the required levels of investment and employment is the responsibilityof the Tax Commissioner.(9)(a) The investment thresholds in this section for a particularyear of application shall be adjusted by the method provided in this subsection.(b) For tier 1, tier 2, tier 4, and tier 5, beginning October1, 2006, and each October 1 thereafter, the average Producer Price Index forall commodities, published by the United States Department of Labor, Bureauof Labor Statistics, for the most recent twelve available periods shall bedivided by the Producer Price Index for the first quarter of 2006 and theresult multiplied by the applicable investment threshold. The investment thresholdsshall be adjusted for cumulative inflation since 2006.(c) For tier 6, beginning October 1, 2008, and each October1 thereafter, the average Producer Price Index for all commodities, publishedby the United States Department of Labor, Bureau of Labor Statistics, forthe most recent twelve available periods shall be divided by the ProducerPrice Index for the first quarter of 2008 and the result multiplied by theapplicable investment threshold. The investment thresholds shall be adjustedfor cumulative inflation since 2008.(d) If the resulting amount is not a multiple of one milliondollars, the amount shall be rounded to the next lowest one million dollars.(e) The investment thresholds established by this subsectionapply for purposes of project qualifications for all applications filed onor after January 1 of the following year for all years of the project. Adjustmentsdo not apply to projects after the year of application. SourceLaws 2005, LB 312, § 47; Laws 2006, LB 1003, § 14; Laws 2007, LB223, § 30; Laws 2007, LB334, § 98; Laws 2008, LB895, § 16; Laws 2008, LB965, § 22; Laws 2009, LB164, § 6; Laws 2010, LB879, § 18; Laws 2010, LB918, § 4.Note: The Revisor of Statutes has pursuant to section 49-769 correlated LB879, section 18, with LB918, section 4, to reflect all amendments.Note: Changes made by LB918 became effective July 15, 2010. Changes made by LB879 became operative July 15, 2010. Cross ReferencesLocal Option Revenue Act, see section 77-27,148.Nebraska Revenue Act of 1967, see section 77-2701.