NE 01-06-3 Sales and Use Tax 2006-06-09

Are a Nebraska housing agency's purchases exempt from sales and use tax, and how does it claim the exemption?

Short answer: Yes, mostly. Effective July 1, 2006, Laws 2006 LB 1189 exempts purchases made by a housing agency (as defined in Neb. Rev. Stat. § 71-1575) from Nebraska sales and use tax. The exemption applies to all purchases except those for any commercial operation that does not exclusively benefit the residents of an affordable housing project. To buy tax-free, the housing agency issues a Nebraska Resale or Exempt Sale Certificate (Form 13) to its vendors; because governmental units like housing agencies are not assigned exemption numbers (Reg 1-093.01), the agency indicates exemption category #1 in Section B of the Form 13. A housing agency may appoint a contractor as its purchasing agent (Form 17) to buy building materials that will be annexed to agency-owned property, but the exempt status cannot be extended to anyone buying property or services to donate to the agency. Sales or use tax paid in error on or after July 1, 2006, can be refunded (if $2.00 or more) by filing a Claim for Overpayment of Sales and Use Tax (Form 7). Housing agencies must still collect sales tax on their own taxable sales. LB 1189 supersedes Regulation 1-093.06C; other governmental units listed in Regulation 1-093.06 remain taxable.

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This page answers the general question as of 2006. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Effective July 1, 2006, Laws 2006, LB 1189 added a sales and use tax exemption for purchases made by a housing agency (as defined in Neb. Rev. Stat. § 71-1575). This ruling explains the scope of that exemption and the paperwork to use it.

What's exempt. All purchases by a housing agency on or after July 1, 2006 -- except purchases for any commercial operation that does not exclusively benefit the residents of an affordable housing project.

How to claim it. The housing agency issues a Nebraska Resale or Exempt Sale Certificate, Form 13, to its vendors. Because governmental units like housing agencies are not assigned exemption numbers (Regulation 1-093.01), the agency indicates exemption category #1 in Section B of the Form 13.

Contractors as purchasing agents. A housing agency may appoint a contractor as its agent to purchase building materials that will be annexed to property the agency owns, using a Purchasing Agent Appointment and Delegation of Authority for Sales and Use Tax, Form 17. However, the agency's exempt status cannot be extended to any person or business buying property or services to be donated or given to the housing agency.

Refunds of tax paid in error. Sales or use tax paid in error on purchases on or after July 1, 2006, can be refunded to the agency if the refund is $2.00 or more, by filing a Claim for Overpayment of Sales and Use Tax, Form 7.

The agency's own sales are still taxable. Housing agencies must still collect sales tax on their sales of property or services that are subject to tax.

Regulatory cleanup. LB 1189 supersedes Sales and Use Tax Regulation 1-093.06C. Purchases by the other governmental units listed in Regulation 1-093.06 remain taxable, and Regulations 1-012.02C and 1-093.04 are incomplete to the extent they do not list housing agencies as exempt governmental units.

What this means for you

Housing agencies

Your purchases are exempt (with the commercial-operation carve-out) starting July 1, 2006. Give vendors a Form 13 marked exemption category #1 in Section B, use a Form 17 to make a contractor your purchasing agent for annexed building materials, and file a Form 7 to recover tax paid in error ($2.00 minimum). Keep collecting tax on your own taxable sales.

Contractors and donors

A contractor properly appointed as the agency's purchasing agent can buy annexed building materials tax-free on the agency's behalf. But if you buy property or services to donate to a housing agency, you cannot use the agency's exemption -- that purchase is taxable to you.

Common questions

Q: Are all housing agency purchases exempt?
A: Nearly all. The exception is purchases for a commercial operation that does not exclusively benefit the residents of an affordable housing project.

Q: What exemption number does the agency put on Form 13?
A: None -- governmental units are not assigned exemption numbers. The agency indicates exemption category #1 in Section B of the Form 13.

Q: Can a supplier donating goods to the agency buy them tax-free?
A: No. The agency's exempt status cannot be extended to a person or business buying property or services to donate or give to the agency.

Citations and references

Neb. Rev. Stat. § 71-1575 -- defines "housing agency" for purposes of the exemption.
Laws 2006, LB 1189 -- created the sales/use tax exemption for housing agency purchases effective July 1, 2006, and supersedes Regulation 1-093.06C.
Nebraska Sales and Use Tax Regulation 1-093.01 -- governmental units are not assigned exemption numbers.
Forms 13, 17, and 7 -- exempt sale certificate, purchasing-agent appointment, and claim for overpayment, respectively.

Source

Original ruling text

REVENUE RULING 1-06-3
June 9, 2006
Sales and Use Tax - Housing Agency. EFFECTIVE JULY 1, 2006, PURCHASES BY A HOUSING
AGENCY AS DEFINED IN SECTION 71-1575 ARE EXEMPT FROM SALES AND USE
TAXES. THIS EXEMPTION APPLIES TO ALL PURCHASES EXCEPT FOR PURCHASES
FOR ANY COMMERCIAL OPERATION THAT DOES NOT EXCLUSIVELY BENEFIT THE
RESIDENTS OF AN AFFORDABLE HOUSING PROJECT.
Laws 2006, LB 1189, provides an exemption from sales and use tax for purchases made on or after
July 1, 2006, by a housing agency as deﬁned in Neb. Rev. Stat. Section 71-1575. This exemption
does not apply to purchases for any commercial operation that does not exclusively beneﬁt the
residents of an affordable housing project. A housing agency must issue a Nebraska Resale or
Exempt Sale Certiﬁcate, Form 13, to its vendors in order to purchase items tax free. As provided
in Nebraska Sales and Use Tax Regulation 1-093.01, governmental units such as housing agencies
are not assigned exemption numbers. Therefore, the housing agency must indicate exemption
category #1 in Section B of the Form 13.
A housing agency may appoint as its agent a contractor to purchase building materials that will
be annexed to property owned by the housing agency. The appointment of the contractor as its
agent is completed by issuing to the contractor a Purchasing Agent Appointment and Delegation
of Authority for Sales and Use Tax, Form 17. The exempt status of the housing agency cannot be
extended to any person or business purchasing property or services to be donated or given to the
housing agency.
Sales or use tax paid in error on purchases made on and after July 1, 2006, can be refunded to the
housing agency provided the amount of the refund is $2.00 or more. To receive the refund, the
housing agency must ﬁle a Claim for Overpayment of Sales and Use Tax, Form 7.
Housing agencies are still required to collect sales tax on their sales of property or services that are
subject to tax.
The provisions of Sales and Use Tax Regulation 1-093.06C are superseded with the passage of
LB 1189. Purchases by the other governmental units listed in Regulation 1-093.06 remain taxable.
Regulations 1-012.02C and 1-093.04 are incomplete to the extent that they do not include housing
agencies as exempt governmental units.
APPROVED:

Mary J. Egr Edson
State Tax Commissioner
June 9, 2006

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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