If an employee works at my Nebraska LB 775 project and also at my other locations, can I count them toward the new-employee and wage-credit calculations?

Plain-English summary

Nebraska's Employment and Investment Growth Act (LB 775) rewarded a company for adding new employees at the project -- measured both as a head count of new employees and as a credit based on the compensation paid to them. This ruling answers what happens when a worker splits time between the incentive project and the company's other locations.

The core holding: new employees who are employed at more than one of the taxpayer's locations can be included to determine the number of new employees or the credit on wages paid only to the extent they are paid for work performed at the project.

The Department builds the rule from two definitions:

• Section 77-4103(9) -- the number of new employees "employed at the project" is determined by converting into 40-hour-per-week equivalents the number of hours paid. Part-time hours count toward that equivalent number.
• Section 77-4105(4)(a) -- the credit is based on compensation paid while employed at the project.

How split-location workers are treated. If employees work at the project and at other locations, "they are in effect part-time employees at the project." Only the hours they worked at the project are included in determining the number of new employees. And the compensation on which the credit is computed is based on the portion of the time they work at the project -- the same project-hours fraction used for the head count drives the wage-credit fraction.

An 80 percent full-time rule. Employees "such as auditors" who regularly work at the project but also perform some services at other locations "will be considered employed full-time at the project if more than 80 percent of the time for which they are compensated is spent at the project." Above that threshold, you don't have to fractionalize -- they count as full-time project employees.

What this means for you

A company with employees who float between the project and other sites

You can still count these workers, but you must allocate. Track each split-location employee's project hours; convert them to 40-hour-week equivalents for the new-employee count, and use the same project-time fraction to size the compensation eligible for the credit.

Employees who are mostly at the project

If a regular project worker spends more than 80 percent of compensated time at the project, treat them as a full-time project employee rather than pro-rating -- a useful simplification for near-full-time roles like on-site auditors.

Common questions

Q: Can I count an employee who works at the project and elsewhere?
A: Yes, but only to the extent they are paid for work performed at the project. Their project hours count toward the new-employee equivalent, and only project-time compensation counts for the credit.

Q: How are the new-employee numbers figured?
A: By converting the hours paid for project work into 40-hour-per-week full-time equivalents, so part-time and split-location hours are included at the project.

Q: Is there a shortcut for nearly-full-time project workers?
A: Yes. An employee who regularly works at the project is treated as full-time there if more than 80 percent of their compensated time is spent at the project.

Q: Can I rely on this ruling today?
A: It is the Department's general policy and is "binding on the Nebraska Department of Revenue until amended," but the LB 775 program has evolved since 1987. Confirm current law and consult a Nebraska tax professional.

Citations and references

• Nebraska Revenue Ruling 29-87-6, "Economic Development Tax Incentives -- New Employees at More Than One Location" (Nebraska Department of Revenue, issued October 5, 1987; approved by State Tax Commissioner Donald S. Leuenberger).
• Neb. Rev. Stat. § 77-4103(9) (number of new employees; 40-hour-week equivalents); § 77-4105(4)(a) (credit on compensation paid while employed at the project) (R.S.Supp., 1987).

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/rr298706_more_locations.pdf

Original ruling text

Revenue Ruling 29-87-6

Economic Develo ment Tax lncentives,-- New En¡ lo ees at More Than
One Location. NEW EMPLOYEES WHO A
EMPLOYED
T MORE THAN

ONE OF THE TAXPAYER'S LOCATIONS CAN BE INCLUDED TO
DETERMINE
THE NUMBER OF NEW EMPLOYEES OR THE CREDIT ON
.PAID,
WAGES
ONLY TO THE EXTENT THEY ARE PAID FOR WORK
PERFORI\,IED AT THE PROJECT.

Advice has been requested as to whether or not an employee who is not
a base-year employee and who woiks at the project and also at other
locations of the taxpayer would be included in determining the number of
new employees or in the computation of the credit based on compensation
for the purposes of the Employment and lnvestment Growth Act.
Section 77-4103(9), R. S.Supp 1987, provides in part that:

Number of new employees
. employed at the p roject
. shall be cjetermined by converting into equivalent
employees of forty hou rs per week the number of hours
paid

Section 77-4105(4) (a), R. S. Supp 1987, provides in part that:

A credit

the project

compensation paid

while employed at

The number of new employees is based on the number of hours worked
at the project. The number of hours worked are converted to employee
equivalents based on a forty hour week. Any part-time employees would
have the number of hours they worked included in determining the
eguivalent number of employees working at the project.

lf employees work at the project and at other locations of the taxpayer,
they are in effect part-time employees at the project. The number of
hours they worked at the project will be included in determining the
number of new employees.
For the employees who work at more than one location of the taxpayer,
the amount of the compensation on which the credit is computed wili be
based on the portion of the time that they work at the project. The
number of hours inc.luded in computing the number of new employees can
be used to determine the portion of the wages paid on which tl-re credit
can be computed.

Revenue Ruling 29-87-6

Page 2

Employees, such as auditors, who regularly work at the project, but
who also perform some services for the taxpayer at other locations, will
be considered employed full-time at the project if more than 80 percent
of the time for wlrich they are compensated is spent at the project.
A

OVED
o

Donald S. Le uen berger
State Tax Commissioner

October ù^-Ê , 1987