Can property bought after a taxpayer applies for a subsequent Nebraska incentive agreement still get the property tax exemption under the first agreement?

Plain-English summary

This ruling addresses a timing trap in Nebraska's business-incentive programs: when a company that already holds an incentive agreement applies for a second (subsequent) agreement covering the same project, the date of that second application becomes a cutoff for the first agreement's property tax exemption.

The facts. A taxpayer had signed an agreement under the Employment and Investment Growth Act that gave it a personal property tax exemption, and it was receiving that exemption. It reached the end of its entitlement period for the agreement's sales and income tax benefits and filed a second application for a new agreement that included the same project. It then bought some personal property. Absent the second application, that property would have qualified for the exemption under the first agreement.

The holding. Property acquired after the date of the application for the subsequent agreement — for the same project — cannot qualify for the property tax exemption under the first agreement.

Why. Under Revenue Ruling 29-93-3, a taxpayer may include the same activities in the subsequent application that were in the first agreement. But to keep the benefits flowing, two projects that share the same location and the same activities must be separated by the date of the second application. Because that date does separate the projects, the taxpayer cannot choose to treat property purchased after the second application as covered by the first agreement.

Current status. As posted today, the document carries the Department's standard guidance-document notice and adds that applicants filing for subsequent Nebraska Advantage Act projects on or after December 13, 2017 must instead refer to Revenue Ruling 29-17-2. Treat this ruling as guidance for the earlier Employment and Investment Growth Act situation it describes.

What this means for you

A company stacking a second incentive agreement on the same project

Watch the second-application date. Once you file for a subsequent agreement covering the same project, personal property you buy after that date belongs to the new project's timeline — you can't fold it back under the first agreement to keep its property tax exemption. Plan purchases (and the timing of the second application) with that dividing line in mind.

A newer applicant under the Nebraska Advantage Act

If you're filing for a subsequent Nebraska Advantage Act project on or after December 13, 2017, this 1996 ruling isn't your guide — the document itself points you to Revenue Ruling 29-17-2.

Common questions

Q: I filed for a second agreement on the same project. Can property I buy afterward still get the first agreement's property tax exemption?
A: No. Property acquired after the date of the subsequent application cannot qualify under the first agreement.

Q: Can I even include the same activities in the second application?
A: Yes — Revenue Ruling 29-93-3 lets you include the same activities, but the two projects (same location and activities) must then be separated by the date of the second application.

Q: Does this still apply to newer projects?
A: For subsequent Nebraska Advantage Act projects applied for on or after December 13, 2017, the document directs you to Revenue Ruling 29-17-2 instead.

Citations and references

• Employment and Investment Growth Act — the incentive program under which the taxpayer held its agreement and personal property tax exemption.
• Revenue Ruling 29-93-3 — permits including the same activities in a subsequent application, with the two projects separated by the second application's date.
• Revenue Ruling 29-17-2 — the ruling the document directs subsequent Nebraska Advantage Act applicants (on or after December 13, 2017) to use instead.

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/rr299602_subsequent_agreement.pdf

Original ruling text

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 -- Property Tax Exemption After Filing for Subsequent
Agreement. PROPERTY ACQUIRED AFTER THE DATE OF APPLICATION FOR A
SUBSEQUENT AGREEMENT FOR THE SAME PROJECT CANNOT QUALIFY FOR THE
PROPERTY TAX EXEMPTION UNDER THE FIRST AGREEMENT.
Advice has been requested as to whether a taxpayer who has filed an application for a subsequent
agreement that includes the previous project can treat property purchased after the date of the
second application as eligible for the personal property tax exemption under the first agreement.
A taxpayer signed an agreement with the Nebraska Department of Revenue which qualifies for a
personal property tax exemption under the Employment and Investment Growth Act. The taxpayer
is receiving the personal property tax exemption. The taxpayer reached the end of their entitlement
period for sales and income tax benefits, and filed a subsequent application for a second agreement.
After the date of the second application, the taxpayer purchases some personal property. Without
a second application, the items purchased would qualify for the personal property tax exemption
under the first agreement.
Under Revenue Ruling 29-93-3, the taxpayer is able to include the same activities in the subsequent
application that were included under the first agreement. To continue the benefits, the two projects
that include the same location and the same activities have to be separated by the date of the second
application. Since the second application does separate the projects by the date, the taxpayer may
not choose to include any property purchased after the date of the second application under the first
agreement in order to receive the property tax exemption.