Sales and Use Taxes in Nebraska

April 13, 2006

	Visited: 110
	Not rated
	Rate:

In Nebraska a tax is imposed on gross receipts from the following activities:

retail sales of property
furnishing, installing, or connecting utilities or community antenna television service
retailers of intellectual or entertainment properties
admission tickets
warranties or maintenance agreements when the items covered are subject to sales tax

The tax also applies to the renting or furnishing, for periods of less than 30 days, of rooms or accommodations in hotels, motels, etc.

Sales and use tax rate. The Nebraska sales and use tax rate is 5.5 percent. In addition, make sure you contact your local governments in Nebraska because they are allowed to assess an extra local sales and use tax of 0.5, 1, or 1.5 percent.

Tax-exempt items. Nebraska has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Nebraska sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Nebraska the sales tax is imposed on the consumer although the retailer is required to collect the tax. The sales tax required to be collected is a debt owed by the retailer to the state.

Use tax. The use tax complements the sales tax and is imposed on the storage, use, or other consumption in Nebraska of tangible personal property. The use tax is imposed when the property is purchased, leased, or rented from any retailer and on any transaction subject to sales tax when the sales tax has not been paid. Use tax is not imposed on the gross receipts required to be included in the measure of the sales tax on which sales tax has been paid.

Responsibility for collecting use tax. The use tax is imposed on the person storing, using, or otherwise consuming in Nebraska tangible personal property purchased from a retailer.

Obtaining tax permits in Nebraska. In Nebraska any person conducting business as a seller must apply for a permit for each place of business. An application for a permit is made on the form prescribed by the Nebraska Commissioner, and there is a $10 fee. A permit is not assignable and is valid only for the person in whose name it is issued and only for transacting business at the designated place.

Leases. The lease or rental of tangible personal property at retail in Nebraska is subject to sales and use tax. Tax on a conditional sale is due on the full contract price at the time the contract is entered into. An agreement is considered a conditional sale if one or more of the following conditions are present:

the lease is required to be classified as a capital lease rather than an operating lease under generally accepted accounting principles
portions of the payments are made specifically applicable to an equity to be acquired by the lessee
the lease binds the lessee for a fixed term and the lessee is to obtain title at the end of the term upon completion of the payments or has the option to purchase the property for the lesser of $100 or 1 percent of the total contract price
the total amount that the lessee is required to pay for a relatively short period of use constitutes an inordinately large proportion of the total sum required to be paid to secure the transfer of title
the agreed periodic payments materially exceed the current fair rental value
some portion of the payments is specifically designated as interest or is otherwise readily recognizable as the equivalent of interest

The following discussions address additional sales and use tax issues that many small business owners face: