Can a taxpayer file a Nebraska Advantage Act application for a subsequent project with the same activities without losing benefits, and how does timing affect the result?

Plain-English summary

A business that already has a Nebraska incentive deal (under the old LB 775 Employment and Investment Growth Act or the LB 312 Nebraska Advantage Act) may want a second, "subsequent" project covering the same activities. This ruling explains how to do that — and warns that when you file the subsequent application makes an enormous difference.

Important currency note: the ruling itself states that applicants who file applications for subsequent Nebraska Advantage Act projects on or after December 13, 2017 must instead refer to Revenue Ruling 29-17-2. Treat the guidance below as applying to applications filed before that date, and confirm current rules for later filings.

File AFTER the previous entitlement period ends — benefits preserved

If you file the subsequent Advantage Act application after the prior project's entitlement period has ended, you keep and use all the benefits earned under the previous project. Mechanics:

• The two projects are distinguished by the subsequent application date. All investment after that date belongs to the subsequent project for reaching required levels and earning benefits.
• Only property acquired before the subsequent application date may keep receiving property tax benefits based on the previous project.
• The subsequent project is treated as a continuation of the previous one: remaining carryover credits may be used at the subsequent project until fully used or until the previous project's carryover period expires, whichever comes first.
• You may use remaining credits to get sales/use tax refunds on qualified and non-qualified property of the subsequent project. But if you use carryover credits for a refund on qualified investment before the subsequent project reaches its required levels, then once you're eligible for direct refunds there will be no direct refund on that same property, and the used credits are not reinstated. Credits from the previous and subsequent projects are accounted for and used separately.
• Recapture protection: if the subsequent project later falls into recapture, benefits already received through carryover credits are not recaptured — only benefits earned in the subsequent project are.

File BEFORE the previous entitlement period ends — recapture trap

If you file the subsequent application before the current project's entitlement period ends (same activities), you still get two separate projects distinguished by application date, but:

• All employees working at the project after the application date — regardless of hire date — count only at the subsequent project.
• Any investment in building and equipment within the subsequent project's description is no longer treated as located/used at the previous project as of the subsequent application date — no matter when that investment was actually made.
• Consequence: the previous project fails to maintain its required employment and investment levels for the application year and the rest of its entitlement period, so it falls into recapture.
• Previous-project credits may not be used for sales/use tax refunds on purchases after the subsequent application date; leftover carryover credits can only offset income tax liability, and property gets no property tax benefits based on the previous project.

What this means for you

Businesses planning a second Advantage Act project with the same activities

Wait until your current project's entitlement period fully ends before filing the subsequent application. Filing even a little early doesn't just delay benefits — it collapses your previous project's compliance and triggers recapture, while stripping the ability to use old credits for sales/use tax refunds.

Businesses with unused carryover credits

Filing after the entitlement period lets you keep spending carryover credits at the new project (until they run out or the carryover window closes), and those carryover-funded benefits are shielded from recapture on the new project. Just remember credits from the two projects are tracked separately, and burning credits for early refunds can forfeit later direct refunds on the same property.

Anyone filing on or after December 13, 2017

Don't rely on this ruling's mechanics — the ruling directs you to Revenue Ruling 29-17-2 for subsequent-project applications filed on or after that date.

Common questions

Q: Can I file for a second project with the same activities without losing my earned benefits?
A: Yes, but only if you file after the previous project's entitlement period has ended.

Q: What happens if I file the subsequent application too early?
A: The previous project loses its required employment/investment levels and falls into recapture; old credits can then only offset income tax, not obtain sales/use tax refunds.

Q: Are my carryover-credit benefits at risk if the new project is recaptured?
A: No. If you filed after the entitlement period ended, benefits received through carryover credits are not recaptured — only benefits earned in the subsequent project are.

Q: I'm filing in 2018. Does this ruling still govern?
A: No. The ruling directs applicants filing subsequent-project applications on or after December 13, 2017 to Revenue Ruling 29-17-2.

Citations and references

• This ruling interprets the treatment of subsequent projects under the Nebraska Advantage Act (LB 312) relative to prior LB 775 or LB 312 projects. It does not quote a specific statutory section; it turns on the timing of the subsequent application versus the previous project's entitlement period.
• Revenue Ruling 29-17-2 — governs subsequent-project applications filed on or after December 13, 2017 (per this ruling's own note).

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr290511_subsequent_agreement.pdf

Original ruling text

Revenue Ruling 29-05-11
Economic Development Tax Incentives
December 20, 2005
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.

Applicants who file applications for subsequent Nebraska Advantage Act projects on or
after December 13, 2017 must refer to Revenue Ruling 29-17-2.
Economic Development Tax Incentives - - Filing for a Subsequent Agreement. AN APPLICATION
FOR A SUBSEQUENT AGREEMENT UNDER THE NEBRASKA ADVANTAGE ACT,
LB 312, CAN BE FILED WITHOUT A LOSS OF BENEFITS FOLLOWING THE END OF THE
ENTITLEMENT PERIOD FOR A PREVIOUS PROJECT WHICH INCLUDED THE SAME
ACTIVITIES.
Advice has been requested as to whether a taxpayer with an agreement for a project under either
the Employment and Investment Growth Act, LB 775, or the Nebraska Advantage Act, LB 312,
can file a Nebraska Advantage Act application for a subsequent project which includes the same
activities as the previous project.
Subsequent Application Filed AFTER End of Entitlement Period.
At the end of a current project’s entitlement period, a taxpayer may file an application for a
subsequent Nebraska Advantage Act project including the same activities as the previous project.
In order to retain and use all of the benefits earned under the previous project, the application
for the Nebraska Advantage Act agreement must be filed after the previous project’s entitlement
period has ended.
The filing of the application distinguishes between the two projects based on the date of the
subsequent application. All investment after the date of the subsequent application will be
considered a part of the subsequent project for reaching required levels and receiving benefits.
Only property acquired before the date of the subsequent application may continue to receive
any applicable property tax benefits based on the previous project. The subsequent project will be
considered to be a continuation of the previous project and any credits remaining from the previous
project may be used at the subsequent project until they are fully used or until the carryover period
of the previous project expires, whichever occurs first.

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818

Revenue Ruling 29-05-11

December 20, 2005

Page 2 of 2

A taxpayer may obtain refunds of sales or use tax paid on qualified and non-qualified property of
the subsequent project, by using any remaining credits. If carryover credits are used to request a
refund of sales or use tax on qualified investment in the subsequent project before the required
levels are reached, when the taxpayer becomes eligible for direct refunds for the subsequent project,
there will be no direct refund on the same property, and credits from the previous project will
not be reinstated. However, credits from the previous and subsequent projects will be accounted
for and used separately. In the event that the subsequent project falls into recapture, the benefits
received through the use of carryover credits are not recaptured and only the benefits earned in the
subsequent project would be recaptured.
Subsequent Application Filed BEFORE End of Entitlement Period.
However the treatment is not the same if a taxpayer files an application for a subsequent project prior
to the end of the current project’s entitlement period for the same activities as the previous project.
There will be two separate projects that will be distinguished based on the date of application.
All employees working at the project after the date of application, regardless of their date of hire,
will be considered employees only at the subsequent project. Any investment in the building and
equipment that is within the description of the subsequent project will not be considered as located
and used at the previous project as of the date of the subsequent application, regardless of whether
the investment was made before or after the date of the subsequent application.
As a result, the taxpayer will become subject to recapture since the employment and investment
levels of the previous project were not maintained for the year of the application and all remaining
years of the entitlement period for the previous project. Credits from the previous project may not
be used to obtain sales or use tax refunds for any purchases after the date of application for the
subsequent project. Carryover credits remaining from the previous project would only be available
for use against the taxpayer’s income tax liability. Any property at the project will not be eligible
for any property tax benefits based on the previous project.
APPROVED:

Mary J. Egr Edson
State Tax Commissioner
December 20, 2005