Could Nebraska real estate salespersons, associate brokers, or designated brokers qualify for microenterprise tax credits?

Plain-English summary

Associate brokers and real estate salespersons were not eligible for Nebraska microenterprise credits because they were treated as employees of the designated broker and did not manage or operate the business.

A designated broker could be eligible if the broker met every other requirement of the Act, including continuous personal involvement in the business's daily management and operation.

Why the roles differed

The Real Estate License Act gave the designated broker full authority to conduct the real estate business and responsibility for supervising associate brokers and salespersons.

Associate brokers and salespersons could not participate in transactions without the designated broker's consent and supervision. They had to be employed by and licensed under that broker, so the Department did not treat them as actively managing the microbusiness.

Common questions

Q: Could an associate broker qualify because the person held a broker license?

A: No. The GIL focused on the associate broker's supervised employee role rather than the license title alone.

Q: Could a real estate salesperson qualify?

A: No. The salesperson was treated as an employee under the designated broker.

Q: Was every designated broker automatically eligible?

A: No. A designated broker only could qualify if all other Act requirements were satisfied.

Q: What level of involvement did the Act require?

A: Personal involvement on a continuous basis in the daily management and operation of the microbusiness.

Citations and references

• Neb. Rev. Stat. §§ 77-5901 through 77-5908 — Nebraska Advantage Microenterprise Tax Credit Act
• Neb. Rev. Stat. § 77-5903 — active engagement in a microbusiness
• Neb. Rev. Stat. § 81-885.01(4) — designated-broker authority and supervision
• 299 Neb. Admin. Code, ch. 2, § 008 — associate brokers and salespersons under a designated broker
• Nebraska GIL 29-17-1 — applications submitted after January 30, 2017

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/general-information-letters-gils
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/gil/GIL29-17-1_Realtors.pdf

Original ruling text

GIL 29-17-1 Tax Incentives: Realtor Eligibility for Microenterprise Tax Credits
This guidance document is advisory in nature but is binding on the Nebraska Department of
Revenue (Department) until amended. A guidance document does not include internal
procedural documents that only affect the internal operations of the Department and does not
impose additional requirements or penalties on regulated parties or include confidential
information or rules and regulations made in accordance with the Administrative Procedure Act.
If you believe that this guidance document imposes additional requirements or penalties on
regulated parties, you may request a review of the document.
This guidance document may change with updated information or added examples. The
Department recommends you do not print this document. Instead, sign up for the subscription
service at revenue.nebraska.gov to get updates on your topics of interest.
January 30, 2017

Dear XXXX:
We have received your questions regarding whether realtors are eligible to receive tax credits under
the Nebraska Advantage Microenterprise Tax Credit Act. Because of the nature of the questions
asked, we are issuing this reply as a General Information Letter (GIL).
GILs address general questions; provide analysis of issues; and direct taxpayers to the Nebraska
statutes, Nebraska Department of Revenue (Department) regulations, revenue rulings, or other
sources of information to help answer a question. A GIL is a statement of current Department
policy, and taxpayers may rely on the Department to follow the principles or procedures described
in a GIL until it is rescinded or superseded. You may also find current regulations, revenue rulings,
information guides, taxpayer rulings, and other GILs that may be helpful to you at
revenue.nebraska.gov.
The Nebraska Advantage Microenterprise Tax Credit Act (Act), Neb. Rev. Stat. §§ 77-5901
through 77-5908, provides that applications for tax credits shall be accepted from “taxpayers who
are actively engaged in the operation of a microbusiness.” Taxpayers are considered to be actively
engaged in the operation of a microbusiness if they have “personal involvement on a continuous
basis in the daily management and operation of the business.” See Neb. Rev. Stat. § 77-5903.
The Nebraska Real Estate License Act provides that realtors may be licensed as either a broker or
a salesperson. A broker may be either a “designated broker” or an “associate broker.” The
“designated broker” has “full authority to conduct the real estate activities of a real estate business”
and is “responsible for supervising the real estate activities of any associate brokers or
salespersons.” See Neb. Rev. Stat. § 81-885.01(4). Associate brokers and salespersons cannot
participate in real estate transactions without the consent and supervision of a designated broker.
See 299 NAC 2-008. To do their work, associate brokers and salespersons are required to be
employed by and licensed under a designated broker.

Associate brokers and salespersons are not eligible to receive credits under the Act because they
are considered to be employees of the designated broker under § 81-885.01, and, as a result, are
not actually managing or operating the business. The designated broker, however, is engaged in
the operation and management of the business and may be eligible to receive credits if he or she
meets all other requirements of the Act.
The position established by this GIL applies to all applications for credits under the Act submitted
after the date of this GIL.
For the Tax Commissioner

Sincerely,
Liz Gau
Attorney
Policy Section