If Form 3800N rounds my employee growth up to two, do I qualify for Nebraska's employment-expansion tax incentive without actually hiring two?

Plain-English summary

Nebraska's Employment Expansion and Investment Incentive Act gives tax credits to businesses that grow — but one condition is that the business must increase its average employment by two full-time employees. This ruling answers a sharp question: if the math on the credit form rounds your growth up to two, does that count, even if you didn't really add two people?

The holding: no. An expanding business does not meet the increased-employment requirement unless the taxpayer actually increases the average employment of the business by two full-time employees. A rounding artifact on the form is not a real increase.

The statutes: Neb. Rev. Stat. § 77-27,188 (R.S.Supp. 1987) makes a real increase of two full-time employees a condition of receiving the credit, and § 77-27,190 sets out when a taxpayer is deemed to have gained a new employee (based on the average number of Nebraska employees during the year exceeding the base).

The worked example: a company averaged 14.3 full-time employees in 1986 and 16.0 in 1987. The actual increase in average employment was 1.7 employees. But the rounding instructions on Form 3800N (the Nebraska Employment and Investment Credit Computation) would display an increase of 2.0. Because the real increase was only 1.7 — not a genuine two — that company would not be eligible for the tax incentive credits. Approved in August 1988.

What this means for you

A growing business claiming the employment-expansion credit

Look at your actual average full-time employment increase, not the number Form 3800N shows after rounding. If your true increase is below two full-time employees (e.g., 1.7), you don't qualify — even if the form rounds to 2.0. Build your hiring plan around a real two-employee gain in average employment.

Preparers computing Form 3800N

Don't let the form's rounding create a phantom qualification. Verify the underlying average-employment increase clears two full-time employees before claiming the credit.

Common questions

Q: Does rounding to two on Form 3800N qualify me for the incentive?
A: No. You must actually increase average employment by two full-time employees; a rounded 2.0 that reflects a real increase of only 1.7 does not qualify.

Q: Which statutes govern?
A: § 77-27,188 (R.S.Supp. 1987) requires the two-full-time-employee increase, and § 77-27,190 defines when a new employee is counted.

Q: What was the example in the ruling?
A: 14.3 average full-time employees in 1986 rising to 16.0 in 1987 — an actual increase of 1.7, which Form 3800N would round to 2.0 — did not meet the requirement.

Citations and references

• Neb. Rev. Stat. § 77-27,188, R.S.Supp. 1987 — requires an increase in average employment of two full-time employees as a condition of the credit.
• Neb. Rev. Stat. § 77-27,190, R.S.Supp. 1987 — defines when a taxpayer is deemed to have a new employee.
• Form 3800N (Nebraska Employment and Investment Credit Computation) — its rounding instructions can show 2.0 even when the actual increase is less; the form's number doesn't override the real-increase requirement.

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/rr298803_emp_increase.pdf

Original ruling text

Revenue Ruling 29-88-3

.A

ING BUSINESS DOES NOT }4EET THE
TÐ( TNCENTT\rES ITNDER TIIE
FOR'TNCENTTVE
REOUTREMENT
INCREÀSED Et{pI,owENT
. ÀCT UNLESS THE
TNVEST}ÍENT
À}TD
E}ÍPTJOT1ÍENT EXPAI{SION
OF SUCH
EUPLOr}ÍENT
À\¡ERÀGE
TTIE
TNCREÀSES
T¡XP¡IEN ÀCTt]ÀJ.TY
EMPLOEES
FIILL-TII'ÍE
TWO
BUSINESS BY
'
whether a taxpayer ¡¡ho, in
Àdvíce has been requested regarding
Credit Computaããrpi"ting the nebraslia Emploprènt and Investment
emplpYees as- a
two
of
increase
an
calcutãteË
foi¡n
3800N,
¿iñ;
on Form 3800N, will meeÈ the
result of thé-roünding instructions
for tax incentives
inãiease¿ EralifÍed émplolnrent
-nxpãnsion requiremenÈ
and Investment Incentive Àct if
under the Employment'
the taxpayer haé not actually increased eurplolzment of such
business-by two full-tine employees.
as one condition
section 77-27,188, R.S.SuPP., 1987, reguires,
a taxpayer must
ót receiving tàx incenlive credits, that
in thÍs state
increase the average enployment of such business
77-27,190t R.s.SuPp., 1987,
[i--tr" full-tÍn" "rfloyeeè. Section
to have a ne\f employee
states that a taxpayér shalI be deemed
during the ÈaIwhen the average iruir¡er of Nebraska ernployees
year _exceed! the averãge number of Nebraska
pãiãt'"
-"rþfoy"."taxable
during eãch of the three preceding taxable years '
and Invest¡nent Credit Computatig.rThe Nebraska Enplolmrent
-that
the increase in average çralified
direcls
Form 3800N,
hole nr¡mbers that are rounded
.1 and t2.7 would be rounded to
ate an increase of two full-time
00N instructions and not have an
eurployees.

average of_ 15.0
For exanple, assume company
-hadinan1986

• anáA14.3
  . Àccording Èo
  ¡.,g87
  in
  full,-tinre erpioyå"s
  employment
  average
  in
  increase
  actual
  the
  section 77-27',Lg'0,
  in
  Ilowever,
  14.3).
  less
  16.0
  (e.g.,
  would be l.i enrployees
  average
  an
  sho¡r
  pany
  would
  À
  -.g.-, 16.0 less 14.P).
  -Such a
  increased gualified emPloYment
  not eligible for tax incentive
  IncenÈive Àct.
  APPROVED:

r4r/^
4-¿^rr.
,rónn u. Boehm

State Tax Commissioner
Àugust f , 1988

Ioyment Expansion and Investment